California Gov. Jerry Brown stands next to a chart that shows dollar amounts in the millions that were cut from the State's budget following a bill signing on March 24, 2011. Use of $1.7 billion of redevelopment agency money helped ease the deficit.
The California Supreme Court has ruled that the state can take $1.7 billion from redevelopment agencies and apply it toward the state's debt.
The ruling affirms the legislature's move from earlier this year, when they pushed 400 agencies out of business.
Arguments against the the cash grab pointed to a potential violation of Prop 22, a measure designed to bar the state from seizing local funding to pay state bills.
The court split the decision by affirming the state's right to eliminate redevelopment agencies but upholding Proposition 22, which banned the state from raiding local government funding, saying the state could not force payments from agencies as a way for them to remain in business.
Oakland, San Francisco, Concord and Walnut Creek had hoped to hang onto their agency money, with Oakland earmarking it to fight a move by the Oakland A's to San Jose.
Redevelopment agencies were created 60 years ago. Gov. Jerry Brown maintained that the state had the right to use those funds for its own ends -- going so far as to say the agencies took money from schools, counties and state services.
Agencies maintained the money was for urban renewal and affordable housing projects.
-- The Associated Press contributed to this report.