Riverside, CA: In California, a Proposed Cut Angers Local Officials

Nobody around here doubts that the pie is getting smaller. With the state facing a $25 billion budget gap, cuts have to come from somewhere.

So in the two weeks since the newly installed Gov. Jerry Brown released his budget proposal, the howls of complaints have come from nearly every corner. But perhaps the loudest protests have come from city and county officials, who say that after years of slashing local budgets, Mr. Brown’s cuts could cripple them.

Most significant, the governor is proposing to eliminate local redevelopment agencies, which funnel hundreds of millions of dollars to real estate projects meant to improve struggling areas. Such projects, he argues, cannot be immune to cuts while other basic services, like education and health care, are trimmed yet again.

“You’re all riled up,” Mr. Brown said recently at a meeting with city leaders from across the state. As a former mayor himself, Mr. Brown says he is empathetic to their concerns, but he has not backed off his own demands. “I look all across it, and none of it looks good,” he said. “But tell me where else to draw the lines. It’s a zero-sum game right now.”

Redevelopment agencies were created in the 1940s as a way to revitalize blighted areas. Now, city and county officials say that such projects have sharply improved once-sagging neighborhoods, but critics say they are simply a gift to private developers. Mr. Brown said eliminating the agencies would save the state $1.7 billion this year.

City officials across the state argue that gutting the agencies will kill the state’s most important economic development program. Chris McKenzie, the executive director of the California League of Cities, which is leading the push against the cuts, said the projects created by the agencies generate $2 billion in tax revenue and 300,000 jobs annually.

“Right now, this is the only way we are creating anything that will give people affordable housing and jobs,” Mr. McKenzie said. “For the state to get rid of that is unthinkable. It’s like a farmer eating his seed corn. Why would you destroy the very thing that is going to protect jobs in the future, year after year?”

“Cities have been far, far ahead of the state in making the tough decisions,” he added, “and they all think this is something worth keeping.”

The way redevelopment money is used varies widely, from fire stations in one city to sports stadiums in another. In Riverside County, one of the areas hardest hit in the downturn, officials say they have primarily used the money to build fire stations and libraries in particularly poor parts of the county. San Diego officials relied on its redevelopment funds to overhaul downtown, creating the Gaslamp Quarter, a prime tourist attraction, and a nearby baseball stadium.

“Downtown was a really tough place, and now it’s one of the most vibrant downtowns anywhere,” Mayor Jerry Sanders said. “We stand to lose that, and that’s the very thing that is keeping residents in a place like downtown. We need the tax base to stay there if we are going to keep what we have.”

The same redevelopment agency is now trying to create a football stadium just east of downtown, but critics say there is little evidence that the project is worth the public money.

“The problem is, once an area is declared blighted, that distinction never goes away,” said Christopher Sutton, a lawyer who is involved in a lawsuit against San Diego over their redevelopment money. “Why should we have this pool of money cordoned off? It can’t be touched at all for other government services. If we’re in such a terrible budget situation, why should this be exempt?”

After meeting with mayors of the state’s largest cities last week, Mr. Brown referred to the redevelopment money as a “piggy bank” that should be opened to pay for other local needs.

The state controller, John Chiang, said he planned to review the spending of 18 redevelopment agencies to examine how the money is spent and whether projects are “engines of local economic and job growth or are simply scams providing windfalls to political cronies.”

In recent days, several cities have rushed to transfer money from their redevelopment agencies to specific projects, in an effort to make an end-run around the governor’s proposal. The Los Angeles City Council allocated $52 million for a new art museum downtown created by the philanthropist Eli Broad.

The state is also pushing to transfer the cost of many services from the state to county governments, requiring them, for example, to provide all mental health services for the poor and to run their own parole programs.

While many county officials say they would welcome the autonomy, they are skeptical that the state will provide enough money for them to do so. The current proposal includes a tax stream for the next five years, but John Tavaglione, the president of the California State Association of Counties, said many worry that the money is not guaranteed in the long term.

“If they shift without funding for the future, we are going to be in an even bigger mess,” said Mr. Tavaglione, who is also a supervisor in Riverside County. “This is the worst any of us has seen since the Great Depression, and I don’t see it getting any better. The difference between the local governments and the state is that we’ve all bitten the bullet and been cutting. The state is only starting to do that now.”

Riverside, he said, has eliminated 2,000 positions in county government in the last two years, even as more and more residents are reliant on county services like public health clinics and work placement programs.

In Los Angeles County, officials estimate that they will absorb more than $1.2 billion in costs from the state. County officials across the state also worry that the changes will further overwhelm their already overcrowded county jails.

None of the complaints seem to surprise the governor, who has taken on the task of balancing the budget with a sort of missionary glee.

“The hallways are going to be crowded in the coming months with people who say, please keep the money coming. And my message is, the money is not there,” Mr. Brown told reporters last week. “My message is, if not you, who?”