Moses: will SV cities keep taxing their way to short-term solvency? A “budget and service reckoning” looms
Nobody’s arguing a city can’t survive year-to-year by deferring maintenance and raising taxes. But Mark Moses, author of The Municipal Financial Crisis, cautions that if Silicon Valley cities fixate on this year’s budget cycle, they risk ignoring the “compounding burden” of underlying, unaddressed liabilities. This could mean major service cuts by the end of the decade. An Opportunity Now exclusive warning for 2026.
As we enter 2026, Silicon Valley faces a taxpayer reality check. While San Jose and Palo Alto struggle with structural deficits, Santa Clara’s surplus masks a much deeper issue: councilmembers eyeing a new city hall while facing hundreds of millions of dollars in deferred maintenance.
During 2026, I hope to see Silicon Valley city leaders manage their budget cycles proactively. Traditionally, government agencies grow their scope of activity indiscriminately and treat their financial struggles as a revenue problem. The only antidote to the inevitable structural deficits that follow is scrupulous management of a delimited organizational scope.
There is no question that Silicon Valley municipalities can continue to survive year-to-year by relying on personnel vacancies, deferring maintenance, and periodic tax increases. I fear that, because this is the path of least political resistance, municipal leaders will remain addicted to these short-term fixes.
Such myopia blinds us to the true scale of the crisis. Bill Gates famously wrote "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten." While municipal leaders fixate on the immediate 2026 budget cycle, they are vastly underestimating the compounding burden of neglected liabilities and deferred maintenance. Unless leaders take preparatory steps today, this burden will precipitate a severe municipal budget and service reckoning by the end of the decade.
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