California Proposition 22, the “Local Taxpayer, Public Safety, and Transportation Protection Act of 2010,” was adopted by approximately 61% of California voters in the November 2nd election.  Proposition 22 prohibits California from shifting tax revenues away from local government, public safety and local transportation agencies, and eliminates the State’s ability to tap into local funds to cover the State budget shortfall.  Proposition 22 declares that the State has been acting illegally by requiring redevelopment agencies to transfer TIF funds for non-redevelopment purposes, and includes a provision that prohibits the State from forcing redevelopment agencies to transfer TIF funds to the State in the future. 

Public approval of Proposition 22 may also impact a pending legal challenge filed by the California Redevelopment Association (CRA). On October 20, 2009, the CRA filed a lawsuit against the State, claiming that the State’s requirement that redevelopment agencies transfer $1.7 billion in TIF funds to school districts by May 10, 2010 and an additional $350 million by May 10, 2011 is unconstitutional.  A Sacramento County Superior Court ruled in favor of the State on May 4, 2010 and the redevelopment agencies transferred $1.7 billion to the State prior to the May 10^th deadline – that ruling is being appealed.

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