Potential losses for Silicon Valley

A Silicon Valley slowdown is coming, and Sacramento isn’t ready. Although some insiders even let the dreaded “B” word — bubble — pass their lips, it doesn’t take a crash of the app economy for California’s fragile fortunes to be shaken to their foundations.

The warning signs suggest that the Golden State may already have hit peak productivity from the digital tech it relies on to fill coffers, fuel markets, drive investment and justify largesse and inefficiency in policymaking. It’s time for a wake-up call.

Venture capital dropped 20 percent for startups in 2016, even though investment funds have more than $800 billion in uninvested funds. Some 3,200 Silicon Valley jobs have been shed since August. Sky-high rents are sinking, but the dip, from an average of $4,400 a month to $4,200, won’t relieve the region’s acute housing shortage.

True, these figures could suggest a healthy and relatively smooth correction. No boom can last forever, and a gentle shift toward a new equilibrium can help ensure that big, sudden gains aren’t shed just as abruptly.

But California’s disproportionate reliance on the world of bits suggests that policymakers are loathing to interpret the downturn prudently. After all, they lack any comparable way to sustain the big budgets and utopian sensibility surrounding deep-blue politics.

Gov. Jerry Brown has labored year in and year out to correct for such errors in thinking and spending, well aware that the last time a tech and housing bubble hit, the state was plunged deep into the red. He has ensured that California can boast a multibillion-dollar rainy day fund.

Yet, with Proposition 55, voters, egged on by tax-and-spend politicians, doubled down on an even higher take from tech wealth. As the share of income tax collection drawn from the top 1 percent of earners has risen to around 50 percent in recent years, income tax collections this year have already fallen well short of projections.

Meanwhile, more than three-quarters of state income comes from taxes — a third from the top 1.5 percent of earners. California even risks losing tech income if IPOs dry up, since it takes a cut whenever companies go public. Sacramento has embraced a risky policy of counting the tech goose’s golden eggs well before they hatch.

Negative trends in the rest of the state might worsen the pain that could be on the way. Since 2004, California has experienced net outmigration of more than 1 million residents, totaling dozens of billions in yearly income. Since 2008, about 10,000 businesses have been lost, with a $15-an-hour minimum wage poised to eat away even more.

Yet, Sacramento continues to spend 8 out of 10 dollars on entitlements, social programs and interest on debt, with more than a third of its budget reliant on federal funds.

Divisions in tech are deepening over whether Silicon Valley can innovate its way out of the state’s risky mess. Some are now focusing on lobbying Washington to keep federal supports in place for the state’s imbalanced ideology. Others are eyeing San Francisco’s exits — and warning that even a little turbulence could turn Sacramento’s utopian dreams into a California nightmare.