California’s new governor shocked many around the state when he laid out his proposal to eviscerate redevelopment agencies and prevent cities from starting new projects with them.
That brought out the fire in San Diego City Councilman Kevin Faulconer.
“It’s not San Diego’s job to bail out the state, which should tackle its own spending and runaway pension costs,” Faulconer wrote in a statement.
That’s some good, red-meat localism. It’s enough to make you want to secede. If only we could get Sacramento’s water…
Unfortunately for Faulconer — and all of the boosters seething at the governor — the governor has a potentially much more powerful way to frame this.
He is going right for our hearts: Are Faulconer and others ready to pit their projects against education?
The governor is.
Here’s how the Sacramento Bee quoted him talking about his proposal:
“We take from redevelopment and we put $1 billion into schools — that’s a good thing,” Brown said at a Sacramento breakfast celebrating Dr. Martin Luther King Jr. “We’ve got to make sure whatever we do, we give a chance to those who are coming along in the next generation. And that is a civil rights issue.”
Does that mean Faulconer opposes civil rights?
Eek! Call the Justice Department.
No, Faulconer and others will argue that education versus redevelopment is a false choice.
But is it? Doesn’t look like it.
Property owners pay property taxes. Those taxes all flow to the county, which divvies up the money to local agencies according to a formula the state provides. Remember, the money stays local. Yes, all of it.
Local schools receive most of it — followed by the county, local cities, libraries and special districts.
Redevelopment is a (supposedly) temporary change to this formula. Local officials can declare an area blighted and secure it as a redevelopment zone. At that point, officials measure property value. From then on, any increase in property values — and the resulting increase in property taxes collected — can be kept in the neighborhood and used to subsidize construction projects.
The idea is that construction and improvement wouldn’t have occurred in the blighted neighborhood without this investment. That development creates a better neighborhood and higher property values and on and on and on. At some point, it is supposed to end.
There are a few problems with this. One is that sometimes property values just go up on their own because of the market. The resulting increase in property taxes just stays in the redevelopment area.
But if you own property outside of that redevelopment area, and your property values rise, your taxes go to fund the schools, cities and county that depend on it. And as those governments grow, they depend on property owners outside of redevelopment areas. They all get less than they would have but we all worry most about schools.
This is where the state comes in. Vladimir Kogan, our one-time correspondent turned academic, gave me a bit of a history lesson on how the state decided to oversee this process five decades ago when it began.
The state knew that education officials would not let a redevelopment agency abuse its powers. If officials abused the redevelopment process or it were unnecessary, education officials could sue to protect their cut of the property taxes.
So there were checks and balances.
“It was a brilliant idea. They said, ‘Instead of providing direct oversight, we’ll create fire alarms because if the other local governments see this being abused, they’ll file a lawsuit to stop it,’” Kogan said.
But then came Prop. 13. It lowered and capped property taxes. To appease people concerned about schools, it gave control of the formula to the state and the state promised to backfill schools for any property taxes that education lost to redevelopment.
With that, redevelopment lost its check and balance. Schools no longer had an incentive to watch redevelopment like a hawk.
That is, until now.
The governor would like to get those who care about schools to care about eliminating redevelopment agencies. Cities could keep paying off redevelopment debts in the same way they have, but no more new ones would be allowed.
This would send property taxes to the schools. With the schools getting their fair share of those funds, the state would be relieved of the duty to backfill them. However, the state, through Prop. 98, is still required to give a set portion of its budget to schools.
That would go on top.
Here’s how the nonpartisan Legislative Analyst’s Office described it:
The additional K-14 district property taxes would augment their existing state funding (not offset state education spending) and would be distributed to districts throughout the county based on enrollment.
We think this makes sense, as the state’s costs associated with redevelopment have grown markedly over the years even though there is no reliable evidence that the program improves overall economic performance in the state.
And that’s where the governor got his “eliminate redevelopment and send $1 billion to schools” argument.
It’s a pretty good one.
Kogan says teachers, parents and students should not open the champagne yet. The struggling state could still suspend Prop. 98 and underfund schools. But the funding would still be better than if that money weren’t available.
Local cities can argue, until they’re blue in the face, that the state should clean up its house and become more efficient before cutting out redevelopment. Projects like a new football stadium, new Convention Center and the myriad other dreams for downtown San Diego and other parts of the city are too important.
That is Faulconer’s point.
But Brown has now illustrated better than ever before that the money for these dreams comes from education more than anything. The state will continue to plow money into education but it’s time for downtown and other redevelopment areas to do their part.
And, in so many words, he’s telling San Diego leaders that if these construction projects are still so incredibly vital for a region’s economy, and they won’t happen without government money, then we should raise taxes to build them.
What Faulconer’s basically saying is that taxpayers would never vote to do that.
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