Cities throughout the state received good news Thursday, April 30, when Sacramento Superior Court Judge Lloyd Connelly ruled unconstitutional a provision in the FY 2008-09 budget signed in September 2008 that would have required redevelopment agencies statewide to transfer $350 million to be used to fund state obligations.
“Redevelopment is the only real economic development tool and local stimulus mechanism cities have to support our community businesses,” said Linda Kelly, Sonoma City manager. “We are thrilled at this judgment and hope that the state will not appeal the ruling. We need our local funds returned to help our community with economic recovery.”
Kelly went on to report that the ruling means that the city should receive a refund of $395,000 of redevelopment funds previously withheld.
The lawsuit by the California Redevelopment Association argued that state raids of redevelopment funds to balance the state’s budget are unconstitutional, violating Article XVI, Section 16 of the California constitution, which states that redevelopment funds can only be used to finance redevelopment project activities.
Judge Connelly agreed, writing in his ruling Thursday that AB 1389, “in its general and ordinary operation, inevitably conflicts with and violates the terms and intent of Section 16, to allocate tax increment revenues to the financing of redevelopment projects.”
It is not yet known whether the state will appeal this ruling. The California Redevelopment Association and the League of California Cities hailed the decision as a victory for local control of locally generated taxes, but cautioned that the state may indeed seek an appeal, especially in light of the state’s budget crisis.
