California Governor Proposes to Eliminate Redevelopment Agencies

In an effort to reduce California’s budget deficit, California Governor Jerry Brown proposed the elimination of over 400 Redevelopment Agencies in the state by July 1, 2011.  The Governor’s 2011-2012 Budget, released on January 10, 2011, proposes to eliminate the Redevelopment Agencies and amend the State Constitution to require 55% voter approval for redevelopment projects.  The Governor also proposed that annual TIF dollars in the amount of approximately $5.2 billion normally collected by Redevelopment Agencies be distributed as follows:

  • In fiscal year 2011-2012, $2.2 billion would be used to pay debt service and other contractual obligations.  The balance of the TIF dollars would be distributed to the State General Fund and to local agencies, cities, counties and special districts. 
  •  Beginning in fiscal year 2012-2013, any available TIF dollars after payment of all outstanding debt obligations would be distributed to schools, cities, counties and special districts.  In addition, after the retirement of all outstanding debt, the monies that had been used for the retirement of that debt would be distributed to the local taxing bodies.

According to the California Redevelopment Association, on February 18, 2011 the State Senate Budget Committee voted to support the Governor’s proposal to eliminate Redevelopment Agencies.  The State Assembly Budget Committee voted to take $1.7 billion from Redevelopment Agencies and deposit those funds in the State General Fund, however the State Assembly Budget Committee includes language indicating a possible reform to the Redevelopment Agency structure rather than a complete elimination of Redevelopment Agencies.  The legislature will form a conference committee to settle differences between the bills approved by the Senate and the Assembly Committees before sending a compromise bill to the full Assembly and to the full Senate for a vote.

More information about the proposed 2011-2012 California budget can be found at .

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