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If redevelopment agencies were to be eliminated, as Governor Jerry Brown has proposed in his budget, California’s public schools would receive an extra $1 billion a year.
That administration estimate is an illustration of the huge amount of property tax dollars being wasted by these agencies—created to eliminate slums but now used mostly to subsidize land developers. Brown wants this money to be shifted to the schools and other important services, such as law enforcement.
In other areas, the Brown budget would cause widespread misery. Medi-Cal, which provides medical are for the poor, would be cut by $1.7 million. The Medi-Cal cuts would limit doctors’ visits to 10 a year and payments for prescription drugs would be sharply cut, among other reductions. The University of California and California State University budgets would be cut by $500 million each. The CalWorks program, which provides funds to welfare recipients getting back into the work force, would be reduced by $1.5 million.
That leaves the proposal to eliminate the hundreds of local redevelopment agencies just about the only bright spot.
Redevelopment agencies acquire land at a low price, either through purchase or eminent domain. They sell the land to developers at bargain basement rates and then float bonds to pay for infrastructure needed to develop the land. Property values often rise in a redevelopment zone, as do property tax revenues. But most of the tax increase goes to pay off the bonds issued by the redevelopment agency. This amounts to a subsidy for developers.
Proponents say the new developments raise property values and tax revenues tax revenues and create jobs. But the Brown team convincingly argues that property values would rise without redevelopment.
`“Over time, most of the increase in value of all of the properties in the redevelopment area has been generally the result of inflation in the economy and of property values, “ the budget document said.
Saddled with the need to pay off bonds, the redevelopment agencies get most of the property tax money. That money should go to schools, law enforcement and other services that help the public.
The administration proposal would provide an immediate shot of additional revenue for Medi-Cal, the courts and other local services. By the time the program is fully underway in 2012, schools would get an additional $1 billion a year; counties $290 million; cities $490 million and districts that provide various other services $100 million.
Mayor Antonio Villaraigosa and redevelopment officials all over the state are opposed. There will be a fierce battle in the legislature. But, hopefully, in the end advocates for public schools and their students will be able to defeat the land developers and their allies.
