diff --git a/compute_tools/src/pg_helpers.rs b/compute_tools/src/pg_helpers.rs
index 10d8f2c878..94467a0d2f 100644
--- a/compute_tools/src/pg_helpers.rs
+++ b/compute_tools/src/pg_helpers.rs
@@ -213,8 +213,10 @@ impl Escaping for PgIdent {
 
         // Find the first suitable tag that is not present in the string.
         // Postgres' max role/DB name length is 63 bytes, so even in the
-        // worst case it won't take long.
-        while self.contains(&format!("${tag}$")) || self.contains(&format!("${outer_tag}$")) {
+        // worst case it won't take long. Outer tag is always `tag + "x"`,
+        // so if `tag` is not present in the string, `outer_tag` is not
+        // present in the string either.
+        while self.contains(&tag.to_string()) {
             tag += "x";
             outer_tag = tag.clone() + "x";
         }
diff --git a/compute_tools/tests/pg_helpers_tests.rs b/compute_tools/tests/pg_helpers_tests.rs
index 53f2ddad84..04b6ed2256 100644
--- a/compute_tools/tests/pg_helpers_tests.rs
+++ b/compute_tools/tests/pg_helpers_tests.rs
@@ -71,6 +71,14 @@ test.escaping = 'here''s a backslash \\ and a quote '' and a double-quote " hoor
             ("name$$$", ("$x$name$$$$x$", "xx")),
             ("name$$$$", ("$x$name$$$$$x$", "xx")),
             ("name$x$", ("$xx$name$x$$xx$", "xxx")),
+            ("x", ("$xx$x$xx$", "xxx")),
+            ("xx", ("$xxx$xx$xxx$", "xxxx")),
+            ("$x", ("$xx$$x$xx$", "xxx")),
+            ("x$", ("$xx$x$$xx$", "xxx")),
+            ("$x$", ("$xx$$x$$xx$", "xxx")),
+            ("xx$", ("$xxx$xx$$xxx$", "xxxx")),
+            ("$xx", ("$xxx$$xx$xxx$", "xxxx")),
+            ("$xx$", ("$xxx$$xx$$xxx$", "xxxx")),
         ];
 
         for (input, expected) in test_cases {
diff --git a/test_runner/regress/test_compute_catalog.py b/test_runner/regress/test_compute_catalog.py
index b66b326360..6ee6837cd2 100644
--- a/test_runner/regress/test_compute_catalog.py
+++ b/test_runner/regress/test_compute_catalog.py
@@ -19,6 +19,16 @@ TEST_ROLE_NAMES = [
     {"name": "role$"},
     {"name": "role$$"},
     {"name": "role$x$"},
+    {"name": "x"},
+    {"name": "xx"},
+    {"name": "$x"},
+    {"name": "x$"},
+    {"name": "$x$"},
+    {"name": "xx$"},
+    {"name": "$xx"},
+    {"name": "$xx$"},
+    # 63 bytes is the limit for role/DB names in Postgres
+    {"name": "x" * 63},
 ]
 
 TEST_DB_NAMES = [
@@ -74,6 +84,43 @@ TEST_DB_NAMES = [
         "name": "db name$x$",
         "owner": "role$x$",
     },
+    {
+        "name": "x",
+        "owner": "x",
+    },
+    {
+        "name": "xx",
+        "owner": "xx",
+    },
+    {
+        "name": "$x",
+        "owner": "$x",
+    },
+    {
+        "name": "x$",
+        "owner": "x$",
+    },
+    {
+        "name": "$x$",
+        "owner": "$x$",
+    },
+    {
+        "name": "xx$",
+        "owner": "xx$",
+    },
+    {
+        "name": "$xx",
+        "owner": "$xx",
+    },
+    {
+        "name": "$xx$",
+        "owner": "$xx$",
+    },
+    # 63 bytes is the limit for role/DB names in Postgres
+    {
+        "name": "x" * 63,
+        "owner": "x" * 63,
+    },
 ]
 
 
@@ -146,6 +193,10 @@ def test_compute_create_drop_dbs_and_roles(neon_simple_env: NeonEnv):
     """
     Test that compute_ctl can create and work with databases and roles
     with special characters (whitespaces, %, tabs, etc.) in the name.
+    Also use `drop_subscriptions_before_start: true`. We do not actually
+    have any subscriptions in this test, so it should be no-op, but it
+    i) simulates the case when we create a second dev branch together with
+    a new project creation, and ii) just generally stresses more code paths.
     """
     env = neon_simple_env
 
@@ -159,6 +210,7 @@ def test_compute_create_drop_dbs_and_roles(neon_simple_env: NeonEnv):
         **{
             "spec": {
                 "skip_pg_catalog_updates": False,
+                "drop_subscriptions_before_start": True,
                 "cluster": {
                     "roles": TEST_ROLE_NAMES,
                     "databases": TEST_DB_NAMES,
@@ -202,6 +254,7 @@ def test_compute_create_drop_dbs_and_roles(neon_simple_env: NeonEnv):
         **{
             "spec": {
                 "skip_pg_catalog_updates": False,
+                "drop_subscriptions_before_start": True,
                 "cluster": {
                     "roles": [],
                     "databases": [],