Brown Signs Redevelopment Elimination Bill, Poway to Pay $10M

With a new fiscal year beginning on Friday and a budget in place, state lawmakers may be breathing a sigh of relief, but local leaders aren't feeling as relaxed. 

The budget package that makes up a series of bills, some of which have been signed by Gov. Jerry Brown on Wednesday, calls for the displacement of redevelopment agencies, steering $1.7 billion to the state when the fiscal year begins on Friday.

"We're much poorer than we were a few days ago," Poway City Manager Penny Riley said. "I see it as a devastating blow for redevelopment agencies, but we still have a workable future."

The $85.9 billion budget—which was approved in both houses on Tuesday without Republican support and is expected to be signed entirely by Brown soon—relies on $4 billion more in state revenue and deep cuts to higher education and courts. Of the budget bills approved by the Legislature late Tuesday, two seek to change the way redevelopment works in California.

Assembly Bills 1X-26 and 1X-27 seek to restructure redevelopment agencies—which allow cities to develop communities in blighted areas—in a way that diverts money to the state. An estimated $10 million will come from the city of Poway next fiscal year and $2 million for each of the two years after, Riley said.

The city manager said she wasn't surprised about the approved budget as the state has "raided" municipalities for "many, many years."

"It's not unexpected," said Riley, who described the bills as "job killers" and said that funds that go toward repairing facilities and communities will be affected.

"This is going to be severely damaging and our program is going to be no exception," she said. "This isn't a full elimination, but it's awfully close."

Though the League of California Cities—an association of city officials—plans to sue the state by the end of the week over the two redevelopment bills, many cities made moves in an attempt to protect as many local dollars from Brown's initial proposal to completely eliminate redevelopment agencies.

In March, with the recommendation of legal counsel, the Poway City Council approved of the creation of a "Poway Housing Authority," and transferred a number of assets from the redevelopment agency to the city, including: 75 grant deeds, $9.2 million in redevelopment debt service and operating funds, $23 million in housing funds and $7.7 million in notes receivable. Also transferred to the city was the authority to collect property tax increments through the year 2037, a revenue stream of $610 million for capital projects and $346 million for low and moderate housing.

Like city officials, Republican leaders who represent Poway at the state level aren't happy with the budget. 

Sen. Joel Anderson (R-Poway) blasted Democrats for passing the budget with a simple majority.

"This Democrat-controlled budget throws the most vulnerable, the weakest and our children under the bus," he said. "They have installed funding ‘trigger’ cuts that close classrooms but prohibit even one public employee from being laid off." 

Assemblyman Nathan Fletcher (R-San Diego) also shared dissatisfaction with the budget's passage but said he was relieved it didn't include a tax hike.

“While I am disappointed we missed an opportunity to reform our state’s chronically troubled budget and that Democratic lawmakers rejected a budget that would have fully funded education without raising taxes, I am pleased that small businesses and families across California will see some tax relief starting July 1," Fletcher said in an emailed statement.

Though the budget was approved by Democrats, the party hasn't expressed complete contentment with the results, as their original budget was vetoed by the governor on June 16.

In a statement, Senate Majority Leader Darrell Steinberg said, “This is not a budget to celebrate. There’s a lot of pain here for a lot of people. We enacted a plan that preserves our opportunity for economic recovery, and look forward to giving Californians the chance to vote on making that recovery even stronger.”

The budget addresses a deficit that once topped $26.6 billion and passed both houses without a Republican vote. This is the sixth time in two decades that the budget was approved on time and is largely due to Proposition 25, which was approved by voters in November, that allows lawmakers to pass a no-tax-hike budget with a simple majority. Though the deferment of redevelopment funds to local schools is what lawmakers are promising—the budget still postpones about $3 billion in payments to schools. 

City staff will present the Council with a revised budget within 90 days after consulting with experts and its legal counsel.

To read the budget bills, visit the Legislature's website here.