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Legislature Drives Hard Bargain with Redevelopment Agencies [Updated]

Update: Late this morning, Gov. Jerry Brown vetoed the budget package that the Legislature sent him yesterday. Brown said that the budget was imbalanced and that the legislation "contains legally questionable maneuvers, costly borrowing and unrealistic savings." Brown reportedly wants to hold out and force a popular vote on tax extensions that he considers critical to overcoming the state's remaining multi-billion dollar deficit. He did not mention redevelopment in his veto statement.  

As in a common mugging, the California Legislature has made the state's redevelopment agencies an offer: "your money or your life?" 

The legislation that passed yesterday was not quite so pithy. But, according to critics of the proposal to help close the state's remaining $9.6 billion budget deficit, that is essentially the deal that lawmakers have struck in the six-month battle to do away with redevelopment agencies. Yesterday, the day of the state's budget deadline, the Assembly and Senate voted in favor of a so-called "two-bill strategy," which hinges on pairs of bills introduced in both houses. 

The governor contends that the garnishing of tax increments is an unfortunate but necessary maneuver to ease the state's budget crisis. 

SB 14x/AB 26x would eliminate redevelopment agencies outright, as Gov. Jerry Brown first proposed in January. Then AB 27x / SB 14x  would allow agencies to salvage themselves in exchange for voluntary transfers of tax increment funds to their local school districts, transit agencies, and fire protection districts. Those that do not "volunteer" would be shuttered and have their assets liquidated.  

The bills call for the transfer of $1.7 billion in redevelopment funds this fiscal year and $400 million annually thereafter. Many agencies say that they simply cannot come up with that kind of cash. In fact, many analysts contend that the governor's hoped-for $1.7 billion windfall would turn out to be far less given the amount of redevelopment funds that are already obligated for projects and bond repayment. 

The strategy arose only in the past week as negotiations over previous efforts to eliminate redevelopment had stalled several months ago. 

Votes in both houses were largely along party lines, with Democrats in favor of the bills.  Members of the Assembly voted, 47-31, in favor of the scheme to shift funding and, 52-24, in favor of the elimination of redevelopment entirely. The Senate voted similarly on the respective bills, 21-15 and 21-16. 

Supporters of redevelopment had been clamoring for the Legislature and governor to spare the state's agencies and instead adopt a slate of reform measures. The Legislature is considering AB 1250, which, supporters say, contains a major package of reforms. 

Representatives of the California Redevelopment Association and the League of California Cities have condemned the vote, saying that it undermines reform efforts and, in fact, is illegal. As with the governor's original proposal, they contend that even the "voluntary" payment scheme violates Proposition 22 and other constitutional provisions. 

"While many legislators who voted in favor of this package spoke of protecting and reforming redevelopment, these bills do neither," said CRA Executive Director John Shirey, in a statement.

Opponents have threatened to take legal action, claiming all along that any elimination of redevelopment or imposition of forced payments would be unconstitutional. 

"If the governor signs these bills, we will be prepared to defend the constitution and the will of the voters in court very soon thereafter," said League Executive Director Chis Mckenize in a statement. "It is a very sad day for Californians when their State Legislature knowingly acts in such direct violation of our highest laws."

Gov. Brown has 12 days to sign the bills, along with the rest of the budget that the Legislature passed yesterday.  

--Josh Stephens

 

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