MOTION BY SUPERVISORS YAROSLAVSKY AND KNABE July 21, 2009
Last night, the Governor and State legislative leaders reached agreement on closing the $26 billion state budget deficit. Among other things, this budget is balanced on the backs of local government, especially California’s counties. This includes a State proposal to take approximately $2 billion from local redevelopment agencies, and possibly billions more, in order to fill its budget gap. Moreover, the budget deal proposes to extend the life of redevelopment agencies by as much as 40 years without making the legally required finding of blight.
Extending redevelopment projects without a finding of blight is a fundamental violation of law and of the principles of redevelopment. Under the law, Counties and Cities are permitted to use the tool of redevelopment in order to eliminate blight by capturing the property tax increment that is generated in project areas as a result of redevelopment efforts and reinvesting them in those same areas.
However, the constitution and redevelopment law provide that once the cost of curing blight in a particular area is paid off, absent a new finding of blight the tax increment is to be returned to the local taxing jurisdictions. It is this legal compact that the Governor and State legislative leaders are proposing to abrogate. The cost of this scheme to Los Angeles County government alone over the next 30 years could be as high as $24 billion, with a net present value of $8.2 billion. The cost over 40 years would be even higher. It should be noted that the extension scheme even hurts State revenues, because it borrows from future school funding sources.
In addition, it is apparent that the State may be preparing to take as much as $1.7 billion in Highway User Tax Account (HUTA) funds over the next two years. These are funds on which local governments depend for the construction and maintenance of roads and highways within their jurisdictions. The transfer of HUTA funds would cost Los Angeles County approximately $109 million this year, and $82 million next year. It is the County’s own taxpayers who help generate these funds for the transportation infrastructure in their communities, and they should not be the target of such a heist.
For the State to balance its budget on the backs of the state residents most in need of help, and the counties that serve them, is fiscally reckless and morally bankrupt. State spending and significant tax giveaways, among other things, have brought us to this precipice. Transferring local funds into the State treasury does nothing to address these policy failures. Taking advantage of counties that serve the elderly, ill, mentally ill, disabled and the impoverished is wrong on its face, and it is illegal. This scheme is all the more galling inasmuch as local governments are being punished for having done a far more responsible job in managing their fiscal affairs than has the state.
WE, THEREFORE, MOVE that County Counsel be directed to file a legal challenge to any action that extends the State’s redevelopment projects without meeting established constitutional and other legal requirements;
WE, FURTHER, MOVE that County Counsel be directed to file a legal challenge to the withholding of Highway User Tax Account funds from local government if and when the final budget deal includes the withholding of these funds and if it determines that there are sufficient legal grounds to do so;
WE, FURTHER, MOVE that these legal filings be made immediately upon the approval of these proposals by the legislature and the Governor.