In July, billionaire CEO Elon Musk announced that he would be ditching California after the state’s newest 2SLGBTQIA+ law eradicated parental rights in the government school system, calling it the “final straw.” The Lone Star State will welcome two more multi-billion-dollar companies – and their capital – as Musk will transfer SpaceX’s headquarters, Starbase, and social media platform X’s office to Austin. What is the response from San Francisco officials to the website fleeing Frisco? Like a desperate boyfriend pretending not to care that his girlfriend dumped him, they are telling the press, “Good riddance.”
San Francisco Shrugs Off Musk
Local leadership appears to be rubbing its hands in delight that Musk is moving his company’s headquarters out of Frisco. City Attorney David Chiu recently told The New York Times: “I share the perspective that most San Franciscans have, which is good riddance.” It should be noted that Chiu was a member of the city’s Board of Supervisors and supported a tax break that attracted then-Twitter – known as the so-called Twitter Tax Break – to San Francisco in 2012.
Mayor London Breed admitted to the newspaper that she met with the billionaire CEO several months ago but refrained from extending financial offers to ensure the social media firm stays in the California city. “I’m not going to beg anybody,” Breed stated. “But I made it very clear that my goal is to ensure that companies succeed.”
Relations between the company and the city have deteriorated since Musk took over and rebranded the social media giant. In July 2023, Musk erected a glowing X atop the outlet’s headquarters. However, the sign was quickly removed after a flood of complaints from bureaucrats and neighbors. While not spending taxpayer money on corporate welfare would be a fiscally responsible decision for a fiscally irresponsible city, officials might not be so ebullient when X ceases injecting cash into San Francisco’s empty coffers.
The Books of San Francisco
The city is enduring a fiscal black hole. With a $14.6 billion annual budget for fiscal years 2023-2024 and 2024-2025, the city is staring at a $800 million deficit over two years. San Francisco could face a $1 billion annual budget shortfall by 2027 without substantial changes. Policymakers have alluded to lackluster revenues from the sales, hotel, and real estate transfer taxes. As a result, the mayor is requesting all departments to comb through their finances and employ the necessary cuts to plug the city’s gaping hole. If the cuts are unsuccessful, the mayor has proposed raising fees of up to 180% on businesses.
Supervisor Rafael Mandelman, who is a part of the city’s budget and finance committee, was blunt in his assessment of San Francisco’s pecuniary plight. “We are in a rough place budgetary [sic]. We had to make pretty significant cuts last year, and we are going to have to do that again this year,” he said. “I’m concerned about basic services, public safety, of course, but I’m also concerned about housing. We have more than 10,000 people every night who used to be homeless and are now housed.”
Of course, progressives in The City by the Bay will blame the post-pandemic downturn for the abysmal state of its finances. However, Truth in Accounting already sounded alarm bells in January 2018 when it warned that the jurisdiction was drowning in debt, requiring $7.5 billion to pay its bills. In the short term, officials are trying to keep essential services running. In the long-term, according to the think tank promoting fiscal transparency, San Francisco is grappling with approximately $6 billion in unfunded pension promises and about $4 billion in unfunded retiree health care benefits.
“While San Francisco has promised these benefits, little money has been set aside to fund them,” the report stated.
Others have noticed, too. This past spring, S&P Global Ratings downgraded its outlook on San Francisco’s outstanding and mounting debt. totaling roughly $5 billion. Attached to the red ink flooding the dirty streets is an additional $696 million “to pay principal and interest on outstanding general obligation bonds.”
‘They Were Already Gone’
Experts have informed the former paper of record that X has dwindled so much since the Elon Musk regime that its exodus will barely affect San Francisco’s finances. Ted Egan, the city’s chief economist, says that “they were already gone.” Since going private, the company’s books are unavailable for the public eye to scrutinize. But the digital public town square is performing well, with 600 million monthly active users, according to Musk. It is unclear how much of this translates to more revenue, though media coverage ostensibly implies that the website is hemorrhaging cash.
That said, if Musk’s track record is anything to go by, X dumping San Francisco will be a colossal miss for a declining city. As Charles Foster Kane remarked in Citizen Kane: “You’re right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars next year. You know, Mr. Thatcher, at the rate of a million dollars a year, I’ll have to close this place in… sixty years.”
