Pleasanton Weekly

Opinion - May 14, 2010

State's raid on local tax revenue needs to stop

Here we go again. The state government, which since 1992 has taken billions of dollars in local tax revenue from cities and counties to help balance its budget, has just won the right to seize another $2.05 billion from the 75 percent of California cities that have redevelopment agencies. A Sacramento Superior Court judge allowed the state to proceed with its confiscatory plan last week, and Monday the agencies were ordered to start writing checks to the state treasurer. Livermore, which is the only Tri-Valley city with a redevelopment agency, sent $1.5 million from its agency, according to Assistant City Manager Troy Brown, and will have to write another $323,000 next year as part of the state's demand for payments over a two-year period. The San Leandro Redevelopment Agency was forced to turn over $4.26 million. Brown said that Livermore had set aside the money it paid while the state sought court approval, but still these were funds being siphoned off to help pay the state's obligations instead of going to fund local job creation, economic growth and urban revitalization projects. Among cities with redevelopment agencies, Livermore has been a shining example of how these agencies can work with the private sector to remove blight and revitalize a city's downtown and central district.

Even though Gov. Arnold Schwarzenegger, who ordered the grab of funds from the redevelopment agencies, has said it's only for two years, local leaders aren't so sure. Back in 1992, then Gov. Pete Wilson ordered a two-year "borrowing" of property tax revenue from local city and county governments to help close California's budget deficit for two years. Called the Education Revenue Augmentation measure (ERAF), it was a temporary program to help pay deficits in the state's education fund used to fund school districts. That was ERAF I. ERAF 2 followed without a break and, for the last two years, Schwarzenegger added another takeaway called ERAF 3. The ERAFs continue with Pleasanton now having sent more than $100 million in local tax revenue to Sacramento. One consolation: Voters approved Proposition 1A which now limits future state takeaways to no more than two every 10 years, with an additional requirement that the state repay those funds within three years with 4 percent interest. This year, Pleasanton will send $4.4 million in ERAF funds to Sacramento.

Even with the billions of dollars seized from cities under the ERAF program, there's little to show for it. State spending has increased, the budget deficit continues to worsen and school districts, supposedly the beneficiaries of the local property tax money grab, are in worse financial shape than ever. Taking funds from the redevelopment agencies, as Schwarzenegger did this week, will stall job creation efforts in many California cities at the worst possible time. The money Liverm0re and other cities turned over to fund state obligations was going to be used for local revitalization projects, as Livermore has done with its First Street improvements and to build more affordable housing.

It's incredibly narrow-minded of Sacramento to reach into the pockets of local redevelopment agencies, one of the state's strongest job-creating engines, at a time when job creation and economic development are desperately needed. Sacramento's continued raids on local tax revenue need to stop.


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