Californians Lose in Fight Over Redevelopment Funds

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Winchester Mystery House

You may have seen news coverage of a recent California Supreme Court on a bid by redevelopment agencies to overturn new laws that eliminate such agencies -- unless they give the state money that in turn would go to schools.

The agencies argue that a 2010 ballot initiative prevents the state from taking money from redevelopment agencies.

Please forgive yourself if you found it hard to follow the news.

It's a complicated topic, as are most things having to do with the California budget and state governance. But it's also important -- and it goes right to heart of what's wrong with California.

So here's a simple way to understand the legal dispute:

Imagine the state built a big house, which the state still owns.

This house would be called Redevelopment. But the house was built for local redevelopment agencies, and they added onto it and filled it with all kinds of furniture.

The homeowner -- the state -- has been having money problems, so it's been taking some of the furniture out of the house. To protect themselves, the agencies got a rule passed that the state can't take their furniture.

So this year, the state said: we're taking the house back.

If you want to keep your furniture and additions -- your local redevelopment agencies-- you've gotta pay us.

Who is right?

The state argues that it has every right, since it authorized the house in the first place.

The state's money also was in play since it kept up the house -- and that the local agencies got the value of increases in the house -- money that might otherwise have gone to state purposes.

The locals respond that we've invested our money and time in this house, and that there's a rule that says you can't take the contents of the house from us. You're using this to violate the rule.

In redevelopment, both sides have a case.

The state is right in pointing out that redevelopment agencies are funded with tax proceeds that would otherwise go to schools, and the state needs that money.

Redevelopment agencies, and their cities, rightly argue that, in California's centralized system, they have few ways to control their own revenues and economic future.

Redevelopment is one of those ways -- and the state is effectively taking that away, and threatening the work they've done on previous projects.

Whatever happens in the case, Californians will be losers. Either schools or local agencies will be hurt.

What would be a victory then?

If the state gave local governments power to set their own tax rates, such a fight wouldn't be necessary.

Each local government could decide what it wanted to do on redevelopment, and come up with the tax dollars to do so.

But California doesn't permit local governments to set their own tax rates -- only state legislators (and voters) can do that.

The result are these difficult fights over a house -- when what is needed is a new system that allows local communities, free of state interference, to build their own homes.

Let us know what you think. Comment below, send us your thoughts via Twitter @PropZero or add your comment to our Facebook page.

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