SACRAMENTO (CN) - Cities across California have sued the state twice, accusing it of raiding local coffers in an unending, and unconstitutional, effort to balance its budget.
Both Superior Court lawsuits have roots in recent legislative history.
In 2011, California lawmakers passed AB1X26, banning city redevelopment agencies. The redevelopment agencies (RDAs) were created to fight urban decay and revitalize blighted neighborhoods. And, as revitalization projects are wont to do, they racked up hefty bills.
Before AB1X26, the RDAs issued tax allocation bonds to finance redevelopment projects. The bonds are secured by the promise of tax increment revenue - the expected tax increases generated by redevelopment - and are senior to all other potential uses of the money.
California in 1952 became the first state in the nation to use tax increment financing.
By 2008, more than 400 California redevelopment agencies had an aggregate of more than $10 billion per year in revenue, $28 billion in long-term debt and $674 billion of assessed land values.
And according to one of the recent complaints, from 13 cities from across California, the Legislature "eliminated redevelopment agencies so that it could capture the revenue such agencies generate."
AB1X26 dissolved the RDAs, pushing their projects and expenditures onto the cities, unless the cities opted out.
(The City of Bellflower, as successor of its dissolved RDA, is the lead plaintiff in that complaint. The lead defendants in both cases are state Finance Director Ana Matosantos, and the State Board of Equalization. The lead plaintiff in the second complaint is the California League of Cities.)
This year, the Legislature passed AB 1484, amending AB1X26. According to Bellflower's complaint, the Legislature designated AB 1484 as a budget trailer bill, meaning it took effect the instant Gov. Jerry Brown signed it, "even though it did not attain the 2/3 vote in each chamber of the Legislature required by California Constitution, Article IV, section 8 for urgency legislation."
"[T]he State fashioned AB 1484 as a mechanism inconsistent with the California Constitution and several established legal doctrines whereby it could unilaterally decide to withhold tax proceeds due local agencies based on the State's unilateral decisions without judicial review or any of the checks and balances fundamental to fair administrative practice and to the checks and balances fundamental to our democracy," Bellflower claims.
The cities, as successor agencies for the RDAs, send two reports per year to their county's auditor-controller, the State Controller and California's Department of Finance, detailing the former RDAs' repayment obligations for that time period. These reports are approved and signed off by seven-member oversight boards in each city that had RDAs.
Bellflower calls AB 1484 an "unprecedented grant of power to the Department of Finance to eliminate or modify an enforceable obligation otherwise approved by the oversight board for a successor agency to a former redevelopment agency and to simply help itself to the successor agency's or affected city's (a legal stranger to the redevelopment agency, the successor agency and the oversight board) shares of the general sales and use tax, as well as the property tax which Proposition 13 ... guarantees to local governments."
Bellflower claims that AB 1484 granted California's Department of Finance the power to order the Board of Equalization to suspend sales tax payments to the cities if they miss the obligation repayment report deadline - even if the delay is caused by the state.