CITIES SUE STATE, SEEK TO HALT RAID ON REDEVELOPMENT AGENCY FUNDS

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July 18, 2011 (San Diego’s East County) – The California Redevelopment Association and the League of California Cities today filed suit in California's Supreme Court. They seek to block implementation of state budget measures that would force redevelopment agencies to either dissolve or fork over hefty sums to the state coffers.

 

San Diego Mayor Jerry Sanders held a press conference to support the law suit today, joined by La Mesa Mayor Art Madrid, National City Mayor Ron Morrison, and other local leaders.

 

Two budget bills signed by Governor Jerry Brown would dissolve redevelopment agencies or alternatively, force them to pay 40% of this year’s tax revenues and 10% of future revenues to stay in business. Redevelopment funds help to revitalize blighted areas and have resulted in dramatic transformations in areas such as San Diego's Gaslamp District and downtown El Cajon.

 

Some cities, include the East County communities Santee and El Cajon, have voted to opt in and pay what the state asks, albeit reluctantly, to keep the doors open at their redevelopment agencies, Santee Patch.com reported. In Santee, that amounted to paying $3.7 million to retain an agency that generated $41 million this spring along. Santee City Manager Keith Till reportedly called the payments “voluntary ransom.”
 

 

Plaintiffs in the lawsuit argue that the measures violate Proposition 22, a constitutional amendment approved by voters last year. That measure made it illegal for the state to raid funds for redevelopment, transportation, or other local programs.
 

“These bills are unconstitutional, plain and simple,” Mayor Sanders said.
 

“The Governor and Legislature have blatantly ignored the voters and violated the state constitution,” said Chris McKenzie, executive director of the League of California Cities, in a prepared statement. “We are confident the Courts will uphold the will of the voters.”
 

Plaintiffs, which also include by the cities of San Jose and Union City, asked the high court to consider the case on an expedited basis, since local redevelopment agencies have until September 1 to decide whether to disband or pay monies required by the state. The laws require redevelopment agencies to disband by Oct. 1 or if they remain open, to pay half the funds due by January 15.
 

According to the San Diego Union-Tribune, San Diego would be forced to pay $70 million this year and $16 million a year in the future to keep its redevelopment agency.
 

H.D. Palmer, spokesperson for the California Department of Finance, insists the state is on “solid legal footing.” He notes that redevelopment agencies were created by the Legislature and claims that “similarly they can be dissolved by an act of the Legislature In this particular time, we believe it’s important to prioritize our resources for things such as education and public safety that have been suffering significant budget reductions.”
 

Palmer said Prop 22 deals with the narrow issue of what the state can do with property tax dollars, but not the broader question of the existence of redevelopment agencies, the San Francisco Chronicle reported.
 

Senate president pro tem Darrell Steinberg called the Legislature’s actions legal. Legislative Democrats passed the budget after Republicans refused to consider any form of revenue increases (fees or taxes) instead insisting on an all-cuts budget. Without the redevelopment funds, legislative leaders contend that even deeper cuts in education, health and other programs would have to be made.
 

“Redevelopment agencies keep 93 percent of their money going forward,” Steinberg has said. “This is not the agencies’ money, nor the state’s, it’s the taxpayers.”
 


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