Half Moon Bay, like many cities in California, has been struck with falling revenue and high costs amid the dour economy.

This week, a City Council member tossed out the idea of dissolving the municipality if a sales tax ballot measure does not pass during the November election to help plug its fiscal holes.

“The council has done everything in its power to keep the city whole,” John Muller told the San Mateo County Times. “If it doesn’t pass, we could seriously not be in business much longer.”

Muller told the newspaper the city may have no other choice but to disincorporate if the one-cent tax increase does not pass.

However, other officials for the city of about 12,000 residents are more optimistic.

Laura Snideman, a spokeswoman for the city, said Half Moon Bay will look at contracting out additional services and other cuts to balance the budget if the tax measure misses, but said disincorporation is highly unlikely. She noted bankruptcy would come first and added even that is unlikely.

“The City Council had not had any discussions about disincorporation at all,” Snideman said.

Half Moon Bay sold $17 million of judgment obligation bonds last year to pay a legal settlement with a developer.

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