The state will appeal a Superior Court decision blocking the state from shifting $350 million of tax increment revenue from redevelopment agencies to schools

In the midst of the state's larger budget crisis, the amount at issue in the litigation suddenly appears piddling. Still, the case, if pursued, could be important, especially to redevelopment agencies.

Attorneys for the Department of Finance filed the notice of appeal earlier this week. The notice does not contain any arguments, and state officials have declined to discuss their legal strategy. The state did not request a "stay" of the April 30 decision; hence, redevelopment agencies are off the hook for now.

It's entirely possible the state is simply keeping legal options alive while other things develop in the background, including a likely legislative remedy.

As we reported earlier, Judge Lloyd Connolly based his ruling entirely on the Legislature's findings and declarations in support of the money shift. A move is afoot to draft new findings and declarations that could withstand Connolly's scrutiny, renewing the shift. Don't forget, though, the California Redevelopment Association has other legal arguments against the shift, including the contention that it would unconstitutionally interfere with contracts between redevelopment agencies and bondholders.

Of course, the $350 million of redevelopment money amounts to only 1.44% of the state's projected $24.3 billion budget gap for the 2009-10 fiscal year. The two-house Conference Committee on the Budget began tackling the mess this week, and I have to say I do not remember the mood in Sacramento ever being more somber. Proposals that in past years might have served as political threats – emptying some prisons, cutting off health care for a million children, eliminating job training and college grants, shortening the school year, closing the majority of state parks – are being taken seriously as budget-balancing ideas. They're no longer talking about quality of life issues at the Capitol, they're talking about life, death and the most basic public services.

The League of California Cities is organizing its "budget action day" on Wednesday, June 3, during which local government officials will lobby lawmakers not to increase local government responsibilities while the state simultaneously borrows $2 billion in local property taxes and outright takes gas tax revenues locals have been receiving. However, local officials – including Los Angeles Mayor and former Assembly Speaker Antonio Villaraigosa – made their pitch all this week and appear to have gotten nowhere.  

- Paul Shigley