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State raids city fund for $1.67 million
Cities lose court fight over control of redevelopment funds

by Daniel DeBolt

In the ongoing legal battle over the state's ability to raid municipal coffers to balance its budget, California cities are took it on the chin last week.

A Supreme Court decision two weeks ago against redevelopment authorities required Mountain View to write a check to the state for $1.67 million on Monday.

"It is disappointing," said City Manager Kevin Duggan, who called it part of "a pattern of inappropriate fiscal maneuvering," by the state.

The California Redevelopment Association, representing redevelopment authorities like the one in downtown Mountain View, was denied a temporary stay by Sacramento Superior Court Judge Lloyd Connelly. The stay would have prevented the state from raiding $2.05 billion from redevelopment funds to balance the state budget

Last year it was looking like the cities were winning the ongoing legal battle, Duggan said, but the state went to great efforts to learn from their court reversal last year.

The California League of Cities is working on a November ballot measure to prevent such raids by the state in the future. Several years ago, California voters passed a similar measure, Proposition 1A, by a wide margin, Duggan said, but it did not preclude the state from taking RDA funds.

Before the payment last week the city reported that the downtown tax district had $6 million in funds and was receiving about $4.7 million a year in property taxes, some of which would normally be diverted to schools. The funds are used for downtown improvements, such as parking garages and street trees. The City Council also hopes to subsidize a grocery store downtown if a recently commissioned study finds it to be economically feasible.

The state had justified the taking of the RDA funds by saying the money would be allocated to local schools, which local city officials called a "shell game."

"We don't expect them to bail us out and they shouldn't expect us to bail them out," Duggan said of the state.

Unless the redevelopment association eventually wins the court case, it appears that there will be a delay in additional funding for schools. About $800,000 per year for the Mountain View Whisman School District was supposed to come after the downtown tax district expired and debts were paid off by 2019. As a result of the decision, the city may be allowed to extend the tax district another year, officials said.

E-mail Daniel DeBolt at ddebolt@mv-voice.com