With a new fiscal year beginning Friday and a budget in place, state lawmakers may be breathing a sigh of relief, but local leaders aren’t feeling as relaxed.
The budget package, some of which was signed by Gov. Jerry Brown on Wednesday and the rest Thursday, calls for the displacement of city’s redevelopment agencies and steering $1.7 billion to the state when the fiscal year begins Friday.
The $85.9 billion budget—which was approved in both houses on Tuesday without Republican support—relies on $4 billion more in state revenue and deep cuts to higher education and courts.
Of the budget bills approved by the Legislature late Tuesday, two seek to change the way redevelopment works in California.
Assembly Bills 1X-26 and 1X-27 seek to restructure redevelopment agencies—which allow cities to develop blighted areas—in a way that diverts money to the state.
Predictions by Imperial Beach Finance Director Michael McGrane before the bill was passed estimated that the city would face a $300,000 gap in city funds the next few years without a redevelopment agency.
More will be known, he said, after the IB Redevelopment Agency, City Manager Gary Brown and city staff meet with legal counsel Susan Cola Thursday afternoon.
Though the League of California Cities—an association of city officials—plans to sue the state by the end of the week over the two redevelopment bills, many cities made moves in an attempt to protect as many local dollars from Brown’s initial proposal to completely eliminate redevelopment agencies.
The new budget “paints a picture that it will allow redevelopment agencies to survive but very few will be able to operate based on that amount of money,” said Imperial Beach Redevelopment Agency Director Jerry Selby.
“I realize redevelopment agencies may not have a great name, but not many people realize how much of that money goes toward infrastructure and capital improvements,” he said.
Today it’s “business as usual” on the city’s redevelopment projects involving third-party developers, which include a hotel to replace the Seacoast Inn and Ninth and Palm Avenue Shopping Center, but said he will know more in the coming days and weeks and after meeting with legal counsel Thursday afternoon.
In February, with the recommendation of legal counsel, the Imperial Beach City Council approved the creation of a housing authority and transferred a number of assets from the redevelopment agency to the new body.
Though the budget was approved by Democrats, the party hasn't expressed complete contentment with the results, as their original budget was vetoed by the governor on June 16.
In a statement, Senate Majority Leader Darrell Steinberg said, “This is not a budget to celebrate. There’s a lot of pain here for a lot of people. We enacted a plan that preserves our opportunity for economic recovery, and look forward to giving Californians the chance to vote on making that recovery even stronger.”
But Assemblyman Ben Hueso (D-San Diego), who also represents Imperial Beach, backed Brown in a statement, calling the budget “a balanced and comprehensive spending plan for the beginning of the fiscal year that it is a win for schools, local governments and businesses throughout the state.”
The budget addresses a deficit that once topped $26.6 billion and passed both houses without a Republican vote.
This is the sixth time in two decades that the budget was approved on time, largely due to Proposition 25, which was approved by voters in November and allows lawmakers to pass a no-tax-hike budget with a simple majority.
Though the deferment of redevelopment funds to local schools is what lawmakers are promising, the budget still postpones about $3 billion in payments to schools.
A public workshop to discuss the city's budget and financial status will be held July 13 at 6 p.m. at City Hall. City Hall is closed tomorrow for Furlough Friday and Monday for Independence Day.
To read the budget bills, visit the Legislature's website here.