San Francisco bracing for life after the tech bubble
SAN FRANCISCO is preparing for a different kind of Big One.
Municipal officials are drafting an “economic resiliency plan” – one of the first of its kind in the United States– to ensure the city of 865,000 can better withstand a financial earthquake akin to the one that roiled global markets in 2008 and left some US cities on the verge of economic ruin.
San Francisco leaders are still haunted by memories of the dotcom bubble of the early 2000s and the Great Recession, which caused the largest collapse in state revenues on record and forced cities to reduce police spending, close libraries and wade deeper into public-pension debt.
Some cities and states are trying to ensure they aren’t caught off guard again by boosting reserves and girding their residents against the next collapse.
Utah is stress-testing its budget to find weakness in advance.
“There are things that you need to do to prepare your house so it doesn’t fall down,” said Todd Rufo, director of the San Francisco Office of Economic and Workforce Development.
“We haven’t forgotten what 2008 was like and that’s why we want to be as prepared as we can be.”
A tech boom spurred by companies like Twitter, Uber Technologies and Airbnb has transformed San Francisco into one of the hottest economies in the US.
The unemployment rate was 3.1 per cent in April, the lowest since 2000, and home values are at a median of US$ 1.1 million ( RM4.3 million), the largest among the 50 biggest US cities. Mayor Edwin Lee on May 31 released a record US$ 9.6 billion budget proposal.
But officials haven’t forgotten when a projected US$ 460 million shortfall in the fiscal 2010 budget forced 1,600 job cuts, the closing of city- owned recreation centres, reductions in street cleaning and a program that provided subsidised meals for seniors, and the need to pull US$ 79 million from a rainy- day fund. Statewide, the cities of Stockton and San Bernardino filed for municipal bankruptcy.
“The impacts of the last economic downturn resulted in near double- digit unemployment with thousands of residents out of work and our small businesses left struggling,” Lee said in a statement.
“We must not take for granted the vibrancy of our economy. Now is the time to plan ahead.”
San Francisco’s report, to be released in about eight months, will offer step-by- step actions aimed at protecting jobs and industries and spell out how to best spend tax dollars and federal stimulus funds on public works projects to prop up the local economy.
Some local governments aren’t doing enough to prepare, given that the current economic expansion that’s heading into a seventh year is projected to end in the next two to three years, said Dan White, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.