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LAO, local officials face off on redevelopment plan

By Josh Richman
Tuesday, February 8th, 2011 at 2:40 pm in Jean Quan, Jerry Brown, Oakland, state budget.

Oakland Mayor Jean Quan, Union City Mayor Mark Green, Livermore Mayor Marshall Kamena, Emeryville Mayor Nora Davis, Concord Vice Mayor Ron Leone and other Bay Area elected officials will gather with business, affordable housing and labor leaders tomorrow in Oakland in opposition to Gov. Jerry Brown’s proposal to eliminate California’s local redevelopment agencies and use their money to help close the state’s gaping budget deficit.

Brown proposes to end the redevelopment agencies, while giving local governments more power to promote economic development themselves by amending the state constitution so that local voters can approve tax increases and general obligation bonds by a 55 percent majority rather than the two-thirds required now.

Those planning tomorrow’s press event insist this is the kind of state raids of local funds that voters oppose, and will bring little benefit to the state while destroying hundreds of thousands of jobs – including an estimated 29,000 in the East Bay – and billions in local economic activity.

But as these local officials – acting as part of a coalition of local governments and business groups – take their complaints to the street, the nonpartisan Legislative Analyst’s Office released a report today saying Brown’s plan is the way to go, shifting responsibility for local economic development to local governments with a level of transparency that’s been lacking with the redevelopment agencies:

Given the significant policy shortcomings of California’s redevelopment program, we agree with the Governor’s proposal to end it and to offer local governments alternative tools to finance economic development. Under this approach, cities and counties would have incentives to consider the full range of costs and benefits of economic development proposals.

In contrast with the administration’s proposal, however, we think revenues freed up from the dissolution of redevelopment should be treated as what they are: property taxes. Doing so avoids further complicating the state’s K–14 financing system or providing disproportionate benefits to K–14 districts in those counties where redevelopment was used extensively. Treating the revenues as property taxes also phases out the state’s ongoing costs for this program and provides an ongoing budget solution for the state.

Ordinarily, we would recommend that the state phase out this program over several years or longer to minimize the disruption an abrupt ending likely would engender. Given the state’s extraordinary fiscal difficulties, however, the Legislature will need to weigh the effect of this disruption in comparison with other major and urgent changes that the state would need to make if this budget solution were not adopted.

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