The governor announced on Wednesday that he officially signed a variety of budget trailer bills, but Brown has yet to give his signature to bills passed Tuesday night, which include the main budget bill (SB 87) and other trailer bills (AB 114, AB 117, AB 118, AB 121, SB 73, SB 89 and SB 92). After 6 months of fruitless negotiations, the bipartisan deal that the governor had strived for, along with tax extensions and various reforms, were left on the cutting room floor when the Democrats pushed forward on a majority vote the plan they crafted without GOP input. Among the bills that the governor has already signed include ABx1 26, which eliminates redevelopment agencies, and ABx1 27, which forces agencies to pay up if they want to exist under a new alternative and so-called “voluntary” redevelopment program.
Despite the strong efforts of a coalition that fought for the survival of redevelopment, it appeared that redevelopment agencies didn’t have a fighting chance, as it was reported early on that the governor would sign the bills related to their elimination, even though supporters of agencies demanded that Democrats produce a bill that would keep them alive. These demands for changing the bills almost scuttled the budget on Tuesday night because there were a few Democrats who held off voting until the last minute because they wanted to save the current RDA structure....to no avail.
This unconstitutional two-bill scheme will now face a strong legal fight, so it is uncertain whether or not they will take effect. The League of California Cities and the California Redevelopment Association (CRA) have been working for more than six months on a legal challenge in the event of such a budget. Senate leader Darrell Steinberg was dismissive of concerns about the legality of the RDA proposals by affirming the legislative action would hold up in court, but the bills are clearly at odds with Proposition 22, which voters just approved in November of 2010. Commenting on the legal fight, Chris McKenzie, League executive director, stated the following:
“This budget represents exactly the sort of gimmicks and nonsense Gov. Jerry Brown vowed to stop. This two-bill scheme to eliminate redevelopment agencies in exchange for so-called 'voluntary' payments is nothing short of extortion. The bills clearly violate numerous provisions of the State Constitution, including Proposition 1A (2004) and Prop. 22 (2010). If the Governor and Legislature won't respect the Constitution and the will of the voters, the League and CRA will ask the courts to do so. The Legislature and the Governor can expect to see our law suit in the coming days.”
Dan Walters, the political columnist for the Sacramento Bee, gave his view on Wednesday of the legal battle over redevelopment: “It’s hard to say whether cities will succeed since this is new legal frontier. The abolition doesn't take effect until Oct 1 so there's time for court battles built into legislation. I'd say it's about 50-50, since latest version allows redevelopment agencies to be reconstituted by agreeing to meet state standards and donate money to state.”
Cities will be forced into a tough place as the litigation plays out, as many projects could be delayed and under the terms of the bills, cities would have to fork over millions of dollars for the extortion-like payments. Take the city of Santa Monica, as The Lookout reports that City Mangaer Rod Gould told the City Council that if the City pays under ABX1 27, the first year's payment would be in the neighborhood of $27 million, followed by about $19 million next year. Gould called the payments “ransom” and commented that “The demise of redevelopment is not good for the state's economy.”
Barring the most egregious gimmicks, the budget deal that the governor and Democratic leaders agreed to this week is largely similar to the budget plan that he vetoed on June 16th. So what are the major differences? Most notably, the deal relies upon $4 billion in higher projected revenues in 2011-12, along with triggered cuts. Basically, if revenues don’t materialize, then the trigger cuts will go into effect based on various tiers. Other cuts (or gimmicks) that the new package avoids in comparison to the first majority-vote plan are as follows: $1.2 billion from selling state buildings; $1 billion from First 5 commissions; $500 million cut in local law enforcement grants; and $900 million from raising a quarter-cent local sales tax.
Key features of the plan include $200 million in Amazon online tax enforcement, $150 million cut to state courts, $1.7 billion from redevelopment agencies, $41 million by tapping county office of education reserves, and $150 million cut to both UC schools and the Cal States, among other factors. Treasurer Bill Lockyer has called the budget plan “financeable” and said it will reduce cash flow borrowing needs by up to $2 billion.
Republicans have been harshly critical of the majority vote budget that Democrats approved. Take Senate GOP leader Bob Dutton, who stated the following of the deal: “This budget not only lacks regulatory relief that is critical for creating job opportunities, it lacks the other reforms that Californians are demanding and deserve. Californians want a hard spending cap and they want reforms to fix the unsustainable state and local pension systems. Pension reform is the only way to ensure that state and local governments can continue to fund essential services in the future. This is a "Hope without Change" budget. It relies on the hope for billions of phantom dollars and does nothing, absolutely nothing, to change government as usual.”