The legality of the State of California’s unprecedented $2.05 billion raid on local redevelopment funds is under appeal, following a California Redevelopment Association filing on Monday.
In May, Sacramento Superior Court Judge Lloyd Connelly upheld the raid’s legality, passed in July 2009 to balance California’s 2009/2010 budget. The $2.05 billion was taken from local redevelopment agencies, directed to county auditors, and ultimately submitted to school districts in lieu of the state’s mandated education spending.
In its filing to the Third District Court of Appeal, the CRA argues the move violates the State Constitution by transferring redevelopment funds away from their stated purpose of eliminating blight.
“Unless overturned, Judge Connelly’s ruling gives legislators unlimited discretion to change the definition of redevelopment to suit their purpose for the sole reason of plugging the budget deficit,” said John Shirey, executive director of the CRA. “Last year through ABX4-26 (the bill authorizing the take), legislators took local redevelopment funds under the guise of benefit to schools when all they really did is short-change schools the same amount of money that would normally come from the state.”
The CRA’s argument hinges upon Article XVI, Section 16 of the California Constitution, which states that redevelopment tax increment funds can only be used “to finance or refinance… the redevelopment project.” Using redevelopment funds to balance the state’s budget is not a constitutionally permitted use of the funds, according to the CRA, despite lawmakers’ arguments that education spending benefits redevelopment.
“If legislators are allowed to redefine and ultimately obstruct the Constitution just because they want to, then there is no end,” Shirey said. “Redevelopment funding should be used to create jobs, improve neighborhoods, and bolster economic development in blighted areas. That’s how the State Constitution says redevelopment funding should be used, that’s how it has been used, and our appeal, if upheld, will assure that’s how redevelopment funding continues to be used.”
The CRA is seeking state repayment of the first, $1.7 billion installment paid May 10, and a prohibition of the second payment of $350 million, due in 2011.
The City of Turlock Redevelopment Agency’s share amounted to $3.3 million paid May 10, with an additional $686,564 due May 10, 2011.
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