California slipping toward bankruptcy, again

So have California Democrats learned that government-funded crony capitalist development isn’t good for their constituents’ bottom line? Not at all. State Senate President Pro Tem Darrell Steinberg, D-Sacramento, is looking to “recreate a new set of economic development tools for cities.”

Los Angeles Mayor Antonio Villaraigosa, at center. Also seen from left: Oakland Mayor Jean Quan, San Jose Mayor Chuck Reed, San Diego Mayor Jerry Sanders, Sacramento Mayor Kevin Johnson.

California is going broke. Again. The state controller has estimated that the state will run out of money sometime this month. California will need to find $3 billion in cuts or revenues to keep the state in the black through the rest of this fiscal year.

And next year looks even worse. California’s Legislative Analyst Office projects that, even with billions in one-time revenues from Facebook’s impending IPO, Gov. Jerry Brown’s budget will run a $6.5 billion deficit.

Democrats in state government are desperate for cash. And they are beginning to cannibalize their local government brethren for revenues to make up the difference. The state’s more than 400 redevelopment agencies have become one of the first targets.

Created in the 1940s, RDAs empower a city or county to identify almost any parcel of land as a “redevelopment area.” When that is done, state property tax revenues from that area are frozen and any subsequent increase in property tax revenue beyond the frozen level goes directly to the RDAs.

RDAs are also empowered to borrow money without any voter approval. They can then buy property with that borrowed money and pay it off with the expected revenue stream from their take of the property taxes. All told, RDAs skim $5 billion from Sacramento every year.

Intended for “economic development,” RDAs quickly became the bread-and-butter of almost every pay-to-play construction project in the state. Developers would give money to local politicians, and those politicians would use the RDAs, and their powers of eminent domain, to obtain land for their campaign contributors on the cheap.


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