According to an LA Times article, last weeks California Supreme Court decision ruled unanimously in favor of a state law passed last summer that abolished redevelopment agencies. They also voted 6 to 1 to strike down a companion measure that would have allowed the agencies to continue if they shared their revenues.
“More than 400 redevelopment agencies will cease to exist after Feb. 1. Authorized by law since 1945, the agencies have been responsible for such success stories as Old Pasadena and San Diego’s Gaslamp Quarter but also plagued by projects that some argued had little public benefit.
Redevelopment agencies, which use a portion of property tax money to partner with developers to encourage development in blighted areas, control about $5 billion a year in tax revenue. After agencies repay their existing bonds, those revenues will go instead to schools and special districts.
Gov. Jerry Brown, who first proposed eliminating redevelopment agencies to help solve the state’s fiscal crisis, expressed satisfaction with the court’s decision, noting that it “validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety.”
TIF – few short-term successes, much long-term debt and increased unfairness to taxpayers that also hammers the budget. California’s redevelopment problem grew too big to ignore.
The court upheld the constitutionality of AB 1X26, which dissolves the state’s redevelopment agencies and redirects their property tax revenues. Opposition even tried to bargain with proposing AB 1X27, which would have allowed the agencies to operate if they agreed to a plan that included annual payments (revenue sharing). That sounds something like kickbacks. Does it not sound like, let us continue to take too much as long as we give you some?
I suppose the recaptured, captured revenues would go instead to schools and special districts from the Economic Development scheme because once the government gets their hands on revenue, the last thing they think about is giving it back to the taxpayer. If any government agency finds they have a surplus, they immediately devise a way to spend said surplus to guarantee the same or larger amount the following year. They use lots of tricks to keep that revenue flowing steady and strong. Bloating the budget is another fine trick to keep coffers full.
I’m waiting for the day we can put a number on corruption, waste, fraud and abuse from every government program and agency. Currently we can only view the tip of the iceberg on that one. It wouldn’t surprise me if that number consumed 40% – 50% of your government contributions.
With every reform or regulation, we inherit bureaucracies and bureaucrats that run them, with all their golden compensation packages. To add insult to injury, we also get taxed more, charged more fees and acquire more red tape grief. Your labor is what you trade for money to pay your bills, government essentially steals your labor. Two years studying this mess has lead me to conclude getting rid of these economic development programs entirely is the best option. They’re full of cronyism and corruption and they just don’t work, nor are they financially feasible. They’re not even constitutional, if they were held to constitutional standards, they wouldn’t be able to steal your labor to fund them.
A non-partisan analysis group from Iowa, the Iowa Fiscal Partnership is crying out for TIF reform, they write…
“Without serious reform, we can look forward to a future in which increasing numbers of cities TIF all or most of their city for the primary purpose of shifting taxes to nonresidents,” Fisher said. “More cities will join the incentive wars in retaliation for the piracy of retail and other businesses by their neighbors.
“The result will be a local property tax system that is increasingly unfair, and a serious erosion of revenues. That will threaten the ability of cities and counties to finance important public services, many of which are part of the foundation for future economic growth. It is ironic to think this will all have been done in the name of ‘economic development.’ In most instances it is just ‘economic displacement’ that, among other things, distorts the free market.”
Iowa’s not the only state that should follow California’s lead and dial back on economic development errors. They all should.
States and local governments should be keeping more of the revenue they collect instead of sending it off to filter through federal agencies. It was the intention of the constitution to give the most power to local governments and less power to the Federal. We’ve progressively turned – or, allowed progressives to turn things upside down.
Solution: Why don’t we demand getting ourselves righted again?