“Our intention is to be prepared to file a lawsuit the day after the budget is signed,” said Chris McKenzie, League of California Cities Executive Director.
As precedent, McKenzie cited Sacramento Superior Court Judge Lloyd Connolley’s April decision that AB 1389, a provision in the 2008-09 budget that required redevelopment Agencies to transfer $350 million to the Educational Revenue Augmentation Fund (ERAF) was unconstitutional.
“It was a shell game,” McKenzie said.
The bill would have shifted tax increment financing meant for economic development projects to schools to free up money required for education to the state to balance the budget.
California Redevelopment Association, along with the redevelopment agencies of the cities of Moreno Valley and Madera protested the shift in court.
The suit cited Article XVI, Section 16 of the California Constitution that says, “Redevelopment funds can only be used to finance redevelopment project activities.”
The suit also claimed the “swiping” was an unconstitutional impairment of bond contracts, but Connolley didn’t address this issue since he had already said the shift was illegal on its face.
“One judge has said that it was illegal and we believe others will as well,” McKenzie said.
In addition to the legal implications, Nathan Magsig, Clovis city council member, called the proposed redistribution a critical blow to economic development in the Central Valley where unemployment in some areas exceeds 15 percent.
“This is true economic development,” Magsig said. “It creates jobs.”
Magsig estimated that every dollar of economic development funds leverages $8 of private money to build low- and moderate-income housing.
League representatives, standing behind a stack of silver cans, also quoted the governor’s own words when he told the legislature to “not kick the can down the road.”
JT Long can be reached at email@example.com