☆ Moses: is San Jose becoming a “zombie city”?
Responding to Mayor Mahan’s statement on San Jose’s budget squeeze, municipal finance expert Mark Moses warns that “tightening belts” only works when “belts still have notches left.” The author of The Municipal Financial Crisis says San Jose risks drifting toward “zombie city” status if it keeps protecting politically attractive programs sustained by financial gimmicks, while neglecting the basics of a functional organization. An Opportunity Now exclusive Q&A response.
Opportunity Now: The Mayor said "Tightening our belts doesn't mean abandoning our progress." You've written about zombie cities, which keep borrowing and raising taxes while neglecting maintenance and infrastructure. Is San Jose a zombie city?
Mark Moses: When the Mayor speaks of not "abandoning our progress," he means maintaining politically popular programs and social initiatives. But in a proper government, progress isn't measured by how many programs a city launches and maintains; it is measured by the city's ability to protect the rights of its residents and maintain its infrastructure without resorting to financial gimmicks. Moreover, "Tightening our belts" only works when the belts still have notches left. There aren't enough notches in the city's budget belt left to preserve the status quo; the Mayor wants to have his cake and eat it.
A "zombie city" is one that has lost agency over its future. It maintains the appearance of life—shiny projects and ribbon cuttings—while its vital organs (service levels and infrastructure) are being eaten by debt and obligations to retirees. Once a city reaches this point, it has no hope of achieving financial stability; the organization simply struggles to survive each budget cycle and pay its current obligations. By emphasizing that the $56 million deficit is substantially fixed by liabilities, the Mayor is describing a city that is no longer being driven by its leadership, but by its past mistakes. It has become a passenger in its own body.
I would hesitate to label San Jose as a zombie city just yet, since it is projecting a surplus in fiscal year 2029-2030. But I would say that the current year-to-year survival mode—in which the annual budget objective is merely to balance the budget somehow—is deeply concerning.
ON: When Mayor Mahan says he has limited options for closing the projected $56 million deficit, is that actually true? You've talked about how San Jose's budget problem is structural, and not a short-term balancing act. How should readers interpret the Mayor framing the problem this way?
MM: Although the Mayor acknowledges the scale of the deficit, he frames the challenge as a short-term balancing act or a belt-tightening exercise. But, yes, San Jose’s budget deficit is structural; it is an ongoing mismatch of revenues and expenses that requires a conscientious commitment to resolve.
In this context, I interpret "limited options" as "limited political will." Options are only limited if you refuse to reexamine the City's purpose and goals. If you define the City's role as solving homelessness, increasing housing, and promoting economic growth, your options are indeed limited because those are bottomless pits for capital. If you define the City's role as protecting rights, ensuring public safety, and maintaining the conditions by which local residents, businesses and nonprofits can flourish, your options for cutting the mission creep are actually quite vast. Moreover, you unleash private capital and innovation that can solve the housing and other local challenges.
The Mayor is also holding the service delivery method constant. He is calling on departments to "make their dollars count more," but he is doing so without changing how those services are actually delivered. When you keep the same bureaucratic structures and the same labor models, you hit a hard ceiling on efficiency. By holding the delivery method constant, the Mayor is guaranteeing that belt-tightening will eventually lead to service degradation. You cannot achieve breakthrough efficiency gains while clinging to the stagnant delivery models that helped create the deficit in the first place.
The Mayor's framing of the budgetary challenge is a defensive crouch: the City is trying to protect its current scope and methods of service delivery rather than reimagining what a functional organization actually looks like.
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