The Calm Before the Storm

Despite daily rumors to the contrary, neither chamber took up the issue of redevelopment last week.

Both the Senate and Assembly held brief floor sessions Friday morning without voting on either SB 77 or AB 101, the bills eliminating redevelopment. While both houses remained on-call over weekend and today, the next floor sessions are not scheduled until Tuesday, March 29.

Meanwhile, there have been intensive lobbying efforts in support of the CRA and League of California Cities Alternative solution. Essentially, they are proposing that redevelopment agencies voluntarily suspend their housing set-aside for 2011-2012 with an equivalent amount of funds being contributed to local school districts in redevelopment project areas. In exchange, the agency would be allowed to extend the life of its project area for two years. Alternatively, they could contribute up to 10% of their non-housing tax increment revenue stream each year to local school districts for 10 years, in exchange for which they could extend the life of their project areas for one year for each percentage of tax increment so contributed.

Under either scenario, money contributed to local schools by redevelopment agencies could be counted by the State as an offset against its Proposition 98 guarantees to the school district.

Because this would be a “voluntary” program, it would not violate Proposition 22, which prohibits the State from seizing redevelopment money. However, it is unclear whether this proposal is gaining any serious traction.

In view of this public silence, it may be tempting to think that the abolition of redevelopment could slip through the political cracks for this budget cycle. This would be a mistake.

Last Thursday, Ventura Mayor Bill Fulton, publisher of the land-use newsletter California Planning & Redevelopment Report was quoted as bluntly stating “I do believe that probably redevelopment will not survive in anything close to its current form.” Speaking at a redevelopment conference in Sacramento on Thursday, Fulton urged cities to look for alternatives to traditional redevelopment for financing urban revitalization.

Speaking at the same conference, Steve Shea, an aide to Senate President Pro-tem Darryl Steinberg, said that Brown’s proposal to end redevelopment “will fall into place as the larger budget deal come together.”

Thus, if the Governor is unable to place the tax extension on the June ballot and instead is forced to proceed with a ballot initiative in November, it is possible that the he may likewise take a new approach to his attack on redevelopment. Some alternative to AB 101 and SB 77 may be in the works. Whether these would be subsequent trailer bills introduce for a simple majority vote or some alternative approach remains unknown.

What is fairly certain is that this battle is far from over.

Fate of Redevelopment Remains in Limbo

Both the Senate and Assembly have adjourned for the weekend, but what a week it has been in the battle over the future of redevelopment.

The bill to kill redevelopment, SB 77, came up for multiple votes in the Assembly on Wednesday. The bill initially garnered only 50 of the 54 votes needed for the two-thirds majority. The Governor, working out of the Speakers office just off of the Assembly floor, personally lobbied and cajoled legislatures throughout the day. Eventually, he won over two wavering Democrats and one Republican, Chris Norby of Orange County. By the time of the bill’s final call late Wednesday night, the vote remained 53-23 - one vote short.

Though SB 77 was back on the Assembly's agenda for Thursday, Democrats did not take up the issue again, presumably because they are still hunting for that last vote.  Meanwhile, the Senate has yet to take any action on the parallel bill before it, AB 101. 

The Governor's main budget bill was approved Thursday on a party line vote, passing 25-15 in the Senate and 52-26 in the Assembly. You may realize that these numbers fall short of the two-thirds majority we've been discussing all week.  To get the main budget bill passed, the Democrats for invoked the first time Proposition 25, which changed the legislative vote required to pass a budget from two-thirds to a simple majority.

Having wrapped up the main budget bill with nearly $14 billion in spending reductions, the revenue side of the equation remains in limbo. The Governor must get his proposed tax extensions on the ballot and obtain voter approval in a June election. He also needs approximately $2.2 billion in redevelopment money to bridge the remaining gap for the upcoming fiscal year.

For both of those items, two Republicans in each chamber must cross over and vote with their Democratic colleagues, because the Governor needs a two-thirds majority vote. Or does he?

Some Republicans have argued that there is legal authority for placing the tax extension on the ballot by a simple majority vote of the Assembly and Senate. Democrats counter that Proposition 26, passed by the voters in November, requires a two-thirds margin for increasing taxes or fees

Abolition of redevelopment could also likely be passed on a simple majority vote if SB 77 and AB 101 were reintroduced as non-urgency legislation. However, this is not a particularly desirable solution for the Governor because rather than taking effect at the commencement of the upcoming fiscal year, they would not take effect until January 1, 2012.  Thus, a substantial portion of the $2.2 billion in redevelopment money needed to balance the Governor’s proposed budget would not be available, leaving a gap in this year’s budget.

Since there is a consensus that the constitutionality of abolishing of redevelopment agencies will ultimately be decided by the courts, such a gap may exist in any event. As we discussed in previous post, the California League of Cities and the California Redevelopment Association have already laid out their game plan for challenging these measures.

They will argue that they violate the constitutional amendment implemented by Proposition 22, which prohibits the State from directly or indirectly compelling the use of redevelopment tax increment for the benefit of the State or any agency of the State. The Governor’s proposal to divert tax increment to fund Medi-Cal and trial courts - both state programs - seems to run afoul of this prohibition.

The Governor’s office has expressed confidence that the proposal does not violate Proposition 22. With the abolition of redevelopment agencies, there are no longer any redevelopment tax increment funds. However, a lawyer from the office of the Legislative Council of California has added a cautionary note. In testimony before the Senate and Assembly Budget Conference Committee, an attorney from that office acknowledges that the proposed legislation is “problematic” because Proposition 22 “specifically prohibits the legislature from enacting a statute that requires an (redevelopment) agency to transfer tax increment money for the benefit of the State..”

Another Dramatic Legislative Session, But (So Far) Redevelopment Still Intact

The Assembly has been in session since 11:00, and as best I can tell (I haven't been able to watch the feed the entire day), it has not yet taken up SB 77 or redevelopment again today.  My understanding is that further discussion is planned before the session ends, and that SB 77 was - at least at the beginning of the session - "item #7" on the agenda. 

In the meantime, the 11:00 session started a bit late this morning, and both houses almost immediately convened in caucuses.  Later, they moved forward with a few of the budget bills, taking them up and (apparently) approving them based on a simple majority vote after some controversial procedural maneuvering. 

To add a bit of color, the relatively tame debate of yesterday has also taken a decidedly more negative tone today, as allegations of "fear mongering" resulted in demands for apologies.

Now (just after 4:00 p.m. Thursday), the Assembly is waiting for some bills from the Senate, and it still has not taken up SB 77.   In fact, it's starting to look like SB 77 may not come back to the Assembly floor today, as the Assembly speaker's office is saying the measure is still one vote short, so a floor vote may be delayed until that last vote is found.

We'll let you know if anything happens as the session progresses. 

P.S. Happy St. Patrick's Day (I wonder whether a bunch of kegs of green beer would help move the process along).

UPDATE, 5:35 p.m.  The Assembly just adjourned for the day, without further discussion of SB 77.

Bill to Eliminate Redevelopment Agencies Still One Vote Short as Assembly Adjourns for the Night

As the evening has worn on in the Assembly, SB 77 has been called to a vote several more times.  What started as 50 yes votes (four short of passage) has now become 53 "yes" votes - now a single vote away. 

Just before 7:00, the vote was 53-23, with 3 still abstaining.  Another vote was called at about 7:10, but the tally remained 53-23.  The plan at that time was to adjourn at 8:30 barring some change, but discussions continued until well past 9:00.

At about 9:20 p.m., the vote was called one more time.  It remained 53-23, one vote short.  At that point, the Assembly adjourned; it is scheduled to reconvene at 11:00 tomorrow morning. 

By the way, if you want to follow things live, The California Channel is airing the session live.  We'll see what tomorrow brings.  Stay tuned.

UPDATE,  7:30 a.m. Thursday:  For a detailed summary of yesterday's events, see John Myers' article, "Brown Cajoles, GOP Demurs."

Initial Vote on Bill to End Redevleopment Falls Short

SB 77 - the budget trailer bill to eliminate redevelopment agencies in California - has been debated on the Assembly floor much of the afternoon.  When it finally came time to vote at a little after 4:00 p.m. this afternoon, it was still unclear whether Governor Brown would receive the two-thirds vote necessary. 

As the votes came in, it became obvious that (1) the votes, as expected, would fall largely on party lines, with Democrats approving the bill and Republicans rejecting it, and (2) that the final result was going to be very close, one way or the other. 

Ultimately, the vote came in with a substantial majority voting yes - but not quite two-thirds.  Rather, Governor Brown fell four votes short, with Assemblyman Chris Norby from Orange County casting the lone "yes" vote from the Republican aisle.  The final tally:  50 yes and 21 no, with 8 abstentions.  (Apparently, there was one person missing; the Assembly contains 80 members, meaning a two-thirds majority requires 54 votes.)

UPDATE, 5:10 p.m.:  Just moments ago, the Assembly voted on several other components of the Governor's plan: SB 74, SB 80, and SB 82 all fell a few votes short, while SB 72 passed, with exactly 54 votes. 

Then, just before 5:00 p.m., SB 74 was called again.  This time, SB 74 passed, with 56 votes.  SB 80 also passed during another vote right at 5:00, with 54 votes, and SB 82 passed, also with 54 votes.

Finally, the Assembly called for another vote on SB 77, the redevelopment bill.  At 5:05 p.m., the Assembly once again failed to obtain the required two-thirds majority; it remained stuck at 50 yes votes. 

I'm guessing this isn't the end.  More to come. 

Vote on Governor's Plan to End Redevelopment Planned for Today

It looks like Governor Brown's proposal to end redevelopment as part of his overhaul of California's budget may come to a vote on both the Assembly and Senate floors today.  AB 101 and SB 77 are scheduled for a 1:00 p.m. vote, and both include within them the plan to eliminate redevelopment agencies.  They require a 2/3 vote for passage.

In the meantime, the California Redevelopment Association is promoting an alternative proposal that it hopes will be presented on the floor.  They claim that the CRA proposal will:

  • Provide significant funding to schools which could also help close the state’s budget deficit;
  • Avoid the unconstitutional provisions of the Governor’s proposal that would lead to contentious and costly legal battles; and
  • Continue local redevelopment’s contributions to reviving the state’s economy and supporting hundreds of thousands of jobs.

For more on the story, see the article in the Huffington Post, "California Legislature To Vote On Governor's Budget Proposal Wednesday."  It should be an exciting day.