First comments on the November Election: Proposition 22

Prop. 22 is local government’s latest attempt to tell the state to keep its hands off the local treasury.  In many ways, the ballot measure makes sense, although we need to keep in mind that WE created this mess more than thirty years ago when the voters passed Proposition 13, tying the hands of state and local government to collect the revenue needed for government services.  If you don’t like police layoffs, fire station “brown-outs”, state park closures, furlough days, etc.,  ask yourself if you voted for Prop. 13.  If you did, you’ve got yourself to blame for our current fiscal mess.

Here’s the Sacramento Bee’s explanation of the measure with supporters and opponents, pros and cons:

http://www.sacbee.com/2010/09/11/3021098/ballot-watch-ban-on-state-using.html

There’s little question that having the state government digging into local government’s wallet makes it harder and harder for local government to make ends meet.  However, there’s big one piece of local government that would be  protected by Prop. 22 but which, in my opinion, doesn’t deserve protection:  that’s redevelopment agencies.

For one thing, redevelopment agencies, while they’re housed in local government, aren’t really local.  Legally, they’re part of the State of California, and, while they’re often officially run by the city council wearing another hat, they  are often REALLY run by an executive director who has close to total autonomy in how redevelopment funds get used, especially when (as is often the case) the city council doesn’t pay a lot of attention to how the agency gets run, as long as it brings in money.

Another issues with redevelopment agencies objecting to the state taking their money is that it’s a case of the pot calling the kettle black.  Under state law, redevelopment agencies are largely funded by what are called “tax increment funds”.  These are increases in property taxes due to increased property value in the redevelopment area.  In theory, the redevelopment agency “primes the pump” by using bond funds to invest in the redevelopment area.  The resulting increased property value, and increased property tax revenue, is then used to pay off the bond, leaving everybody happy.

Sounds good  in theory, but when the redevelopment agency siphons off the property tax increase over the thirty years term of a redevelopment project, the losers are often other local agencies, including cities, schools, and special districts, that would otherwise get that revenue.  Over time, the legislature has tried to ameliorate the situation by requiring redevelopment agencies to include a “pass-through” of funds to local agencies to replace the funds the redevelopment agency took away.  However, the passthroughs are complicated and one often gets the feeling that other local agencies are getting the short end of the stick.

Aside from that, redevelopment agencies have had a mixed record in California and elsewhere.  Their eminent domain powers have led to some shocking abuses, including taking people’s homes and handing them over to private developers who replace them with projects such as glitzy shopping malls that make lots of money for the developer (and the redevelopment agency) but can literally leave former residents (especially tenants) out in the cold.

While I acknowledge the problem created by the state stealing local revenue, I can’t support including redvelopment agencies in those being protected.  Besides, the real culprit here is Proposition 13, and passing Prop. 22 will just continue to “prop” up a failed tax system badly  in need of major overhaul. 

My recommendation?  Vote NO on Prop. 22, but also let your legislators know that you expect to see reform of Prop.13 if they want to remain in office.

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