Gov. Brown’s ambitious plan to shift billions of dollars in state
programs to the locals, eliminate redevelopment agencies,
cut enterprise zones and raise taxes may face its most
profound opposition not in the Capitol or at the ballot
box but in the courts.
“It (eliminating redevelopment agencies) is another gimmick that will likely result in extensive
litigation,” John Shirey, executive director of the California
Redevelopment Association, said in a written statement.
California cities and redevelopment agencies denounced
the proposal, while the counties remain wary. No decisions
have been reached by anyone on whether to go to state
or federal court – or both - to try and block the plan, which would shift $5.9 billion in state programs to the counties and raise
$5.9 billion in taxes to finance it. As the proposal unfolds,
it would shift $7.3 billion by 2015 and ultimately $10 billion, the administration said.
But those discussions are under way, and in the end
they likely will depend on the outcome of negotiations
in the coming weeks with the Brown administration.
Barring a breakthrough, a court fight is likely. Brown,
the former mayor of Oakland, is considered well versed
in redevelopment issues.
A key issue is Proposition 22, a voter-approved ballot measure that bars the state from tapping
local money to balance the state budget. The initiative,
approved in November, specifically included the funds
of some 400 redevelopment agencies under its protection.
Brown’s budget doesn’t take their funds - it first eliminates them, then makes use of the money.
To Shirey’s group, it looked like “budget smoke and mirrors … representing a series of contradictions and inconsistencies.”
The cities, too, had similar concerns.
Under Proposition 22, “the state can’t directly or indirectly do this,” said Dwight Stenbakken, the deputy executive director
of the League of California Cities.
He noted three constitutional issues that may be related
to the realignment and the elimination of the redevelopment
agencies in Brown’s budget. First is Proposition 22, second is Proposition 13 of 1978 and third is Article 16 of the state constitution, under which the redevelopment
agencies were established.
“They are sitting down and trying to sort this out,” he added.
In a written statement issued Tuesday, the League said
the Brown plan should be “further vetted on constitutional grounds” and said Brown and lawmakers should “reflect on what the voters have repeatedly communicated
at the ballot box on the importance of protecting local
The Legislative Analyst, the Legislature’s nonpartisan fiscal analyst, noted that issue and
others as well, such as ballot measures that tie lawmakers’ fiscal hands.
“The administration’s plan will require considerable work by the Legislature
to sort through many legal, financial and policy issues,” the LAO said. “Certain voter-approved measures will also constrain the Legislature’s authority to shift program responsibilities to counties….
“For example, Proposition 63 may not permit the proposed shift in mental health
funds. In addition to requesting voter approval for
any proposed tax increase, the Legislature may also
wish to request voter approval of these elements of
the realignment plan.” Proposition 63 imposed a new tax on the state’s wealthiest people to raise money for mental health
The LAO also noted that some programs use federal money,
and others have restrictions related to the federal
health care reform law.
The governor’s initial $5.9 billion realignment package includes 13 programs, in addition to the redevelopment elimination,
which is separate and would bring the state about $1.7 billion. The programs include fire and emergency response
services, foster care and welfare services, courthouse
security, mental health programs, correctional programs
for lower-level offenders and parole violators, juvenile justice
services, drug programs and community health services.
That Brown has placed realignment at the top of his
budget plans is clear: One lobbyist said it was the first time in nearly
four decades that an incoming governor had hastened
to the counties’ headquarters to confer on budget issues. And the counties
weren’t alone: Brown made a similar visit last week to the League
of California Cities. Brown and his top staff have
been quietly meeting for days with legislative leaders
to sell the program, signal the coming budget pain.
Thus far, the most consistent response is the Republicans
oppose new taxes, but don’t want to roll out their own budget proposals.
While there is a general feeling that realignment is
valuable, the sticking point is on the financing.
“There is no question that everybody agrees with it
(the concept of realignment). The question is, how do you do it while still having
enough revenue for the state and sufficient revenue
at the local level to meet the responsibilities you’re giving them?,” Lenny Goldberg of the California Tax Reform Association
The point of realignment is to clean the state’s plate and have the programs administered by officials
closest to those using the services. Ideally, it saves
the state money, boosts local control and weans the
locals from state subsidies.
It’s been tried before, most notably in 1991 during Gov. Pete Wilson’s first term.
Wilson, tapping an idea that emerged during George
Deukmejian’s administration, and the Legislature shifted nearly
$2 billion in health and social service programs to the
counties, then gave them pieces of a statewide sales
tax hike and vehicle license fees to pay the tab. Over
two years, 1991-93, California faced a staggering $24 billion shortfall – the equivalent of about $38 billion in 2010 dollars, and fully $10 billion larger than the current shortage facing the
state over the next 18 months.
By most accounts, the 1991 shift worked. “They planned it right, they got the money, they covered
the locals,” said a lobbyist who worked the issue.
Others didn’t end so well, and over the years, the cost of running
the program has outstripped the money to finance it.
“There has been a gradual deterioration, and now look
where we are.”
Four years later, Wilson tried another realignment
plan, this time to boost the locals’ share of welfare costs. It was rejected. Years later,
other programs were realigned, including courts and
some corrections programs.
Brown sees the realignment as a way of loosening the
centralized system that emerged after two-thirds of the voters approved Proposition 13 in 1978, during his first term.
Proposition 13 cut property taxes 57 percent, rolled back assessments to 1975 levels and limited new increases. The initiative choked
off local revenue, and cities and counties went to
Sacramento for help. The state, with a $6 billion surplus, provided a continuing bailout, but
the result was that the locals became increasingly
more addicted to the flow of state money.
Assemblyman Jim Beall Jr., a San Jose Democrat, spent
26 years in local politics, including 14 years on the San Jose City Council.
“All are wary of the paternalistic nature of the state,
which is why realignment did not work in the past,” he said. “We have to overcome that addiction.”