Who Has the Final Say on What's Good for Your City?

Above It All
Above It All | Photo: Michael Daines /Flickr/Creative Commons License

The office of the state's Legislative Analyst - which provides the Legislature with non-partisan analyses of fiscal and policy issues - has released its take on the end of redevelopment. And it turns out that the end is not an end at all, but only the start. (You can read the entire report here.)

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Early on, the report lays out the sorry history of the state's financial chaos, starting in 1972:

Here and elsewhere in the report, the Legislative Analyst's Office (LAO) builds a rationale for the end of redevelopment by implicating redevelopment agencies (and the cities that created them) in the unresolved conflict between the state's guarantee of school funding and the the state's inability to balance its budget.

(Cities have a spectator's interest in the issue of school funding and had nothing to do with the irrationality of the Legislature's fiscal decisions.)

The Legislature could have devised other taxing strategies to achieve school funding equity or given school districts more authority to raise revenues or taken steps to restrain its own spending, but Prop. 13 left the Legislature with limited and politically unappealing options. Flummoxed, the Legislature continued its unsustainable ways, becoming addicted to highly volatile income tax receipts (in good economic cycles) and massive borrowing (in bad times).

By itself, redevelopment had little to do with financing schools or preventing state deficits. Combined with SB 90 in 1972 and Prop. 13 in 1978, however, redevelopment changed in both perception and purpose. From the perspective of the state, redevelopment represented sequestered revenue that might otherwise backfill the state's guarantee of school funding. From the perspective of cities, redevelopment - although limited by the Legislature - provided a sheltered revenue stream in an era of repeated state takeaways of local revenue. As the LAO report tells it:

In the LAO's telling, the sins of the few (those two cities and the ambiguous "at least") are called on to justify (in part) the punishment of the many. What's missing is an honest evaluation of California's irrational system of government financing - a system that drove cities to shelter as much local revenue as possible under redevelopment. Cities can be blamed for using the blunt instrument the Legislature gave them. But if all you have is a hammer, as the saying goes, everything looks like a nail.

The Legislature now recognized the growing imbalance between state sovereignty and local autonomy, as represented by tens of millions of dollars in redevelopment revenue the Legislature could not touch. Cities, too, saw protection of municipal revenue as a platform on which larger issues of local control might be presented to anxious voters. In the LAO's account:

The LAO fails here to illustrate the actual scope and depth of the citizen/local government coalition that led to the adoption of Prop. 1A in 2004 and Prop. 22 in 2010. These measures were in response to the state's extraction of billions of dollars in local revenues and the multiple failures of the Legislature since 1978 to manage the state's finances and not, as the LAO report implies, primarily to protect redevelopment authority.

In effect, the voters changed the state constitution to constrain the Legislature's reach in order to favor of the kind of government voters actually trusted: their city and city council members.

For worried state legislators and Governor Brown, that constraint had to be weakened, and not because the end of redevelopment will magically end the state's deficit or because new revenues will now suddenly appear. (The end of redevelopment redistributes revenues in ways that will relieve some of the state's education costs and pay off some of the state's deficit. But both of those outcomes come at the expense of cities.)

The LAO's report makes for illuminating reading for anyone concerned about the future of California's cities:

Here is the heart of the issue. Who will determine what benefits you, your neighborhood, and your city more? You might naively think that the government closest to you and your neighborhood might make that choice, that elected officials you can see at city council meetings might be best able to see your needs clearly.

"Statewide benefits" means whatever the Legislature wants it to mean, subject only to constitutional initiatives and the state Supreme Court. The LAO report notes (with apparent concern) that:

"Statewide objectives" - not local interests - are now paramount, even when the objectives of the state Legislature are poorly framed, developed in a culture of political back scratching, and adopted with no public participation at all. But the LAO could hardly speak to these fundamental issues. The LAO is non-partisan, but it's (by necessity) biased toward the interests of the Legislature

Redevelopment in its final form wasn't pretty or even wholly defensible, except as a strategy to keep government revenues as local as possible. State constitutional initiatives - Prop. 1A and Prop. 22 - weren't entirely in the best interests of all Californians, except as ways (failures it turned out) to limit further damage to cities and neighborhoods after repeated cycles of local revenue takeaways by the state.

And now the Legislature - while the LAO mildly frets - is already looking at new ways to further its own interests at the expense of your city and your neighborhood.

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