Guv Vetoes Every Bill to Enhance Cities’ Econ Development Powers w/ IFDs; RDA Funds Scarce

Cities have their hands tied behind their backs and the governor has tightened the noose after vetoing various bills that would have given local governments tools for economic development in the absence of redevelopment. In fact, the governor vetoed every single bill related to economic development powers under Infrastructure Financing Districts (IFDs). These legislative efforts focused on reducing some of the more cumbersome aspects of IFDs, as there are an array of challenging tasks necessary to pass a bond under these arrangements, including the electorate approving the plan by a two-thirds vote.

Under Assembly Speaker John Pérez’s bill, "infrastructure and revitalization financing districts" could have moved forward with 55% of voters. And Senate President Pro Tem Darrell Steinberg’s bill, SB 1156, would have given cities the authority to establish "sustainable communities investment authorities.” Then there was SB 214 (Wolk), which was viewed most favorably by the League of CA Cities because it would have removed the existing vote thresholds, authorized rehabilitation and maintenance, and would have made numerous other changes focused on making the tool more flexible for cities.

So why did the governor veto these economic tools for cities? See if you follow this logic: the governor called such legislation “premature” because the winding down of redevelopment is not complete and he doesn’t want to “prevent the state from achieving the General Fund savings assumed in this year’s budget." But guess what? The funds that the state budgeted for from RDA-elimination are nowhere to be found. New figures released from the Administration on Friday indicate that the savings from the dissolution of redevelopment have fallen way short of expectations; in fact, only about one-third of the funds the state expected to snatch up have been collected. This is in keeping with the warnings that the state ignored from the LAO, which cautioned the defunct agencies would provide the budget with less money than the Administration was hoping for---further proof of dissolution’s short-sightedness.

The governor seems to think the IFD bills will distract from cost savings that simply aren’t there and in the meantime city efforts to promote economic development have been hampered once more. Brown’s veto messages for these bills seem to suggest that cities should just sit tight instead of “focusing their efforts on using new tools.” For a state that needs jobs and economic growth, you can judge for yourself whether that’s a wise approach.

And in case you hadn’t already heard, it’s worth noting that the League of CA Cities, along with the city of Vallejo, the Vallejo Successor Agency, and League Executive Director Chris McKenzie, has filed a lawsuit against the state Department of Finance, the Board of Equalization and the state controller in order to challenge the power of the state to take and withhold tax revenue from cities under AB 1484. It’s yet another example of local governments being forced to file a legal challenge against a state budget that includes constitutionally questionable policies. The League contends that the legislation establishes an unconstitutional delegation of legislative authority to the Department of Finance. The lawsuit also seeks an administrative process that guarantees certainty and transparency for cities, as the Department of Finance has not complied with the Administrative Procedure Act.

League Executive Director Chris McKenzie commented the following: "AB 1484 was enacted to secure revenues for the state budget, but it also puts the property and sales tax revenues of cities at risk at a time of great fiscal uncertainty. These are the same funds cities use to provide vital public safety and other city services. We are filing this lawsuit to protect the ability of California cities to effectively deliver services to their residents and to insist that the voter-approved constitutional protections of these revenues be respected by our state government."

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