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Judge OK's state raid on local redevelopment funds

Santa Clarita could lose $1.1 million this year, $233K next

Posted: May 6, 2010 3:12 p.m.
Updated: May 6, 2010 3:00 p.m.
The Santa Clarita Redevelopment Agency may lose $1.1 million this year and $233,000 next year to the state's budget crisis, after a judge's decision Tuesday.

City officials had socked away the million dollars as they waited for a court decision. The $233,000 would be skimmed off the agency's budget for next fiscal year, which begins July 1 and is being developed now.

Sacramento County Superior Court Judge Lloyd Connelly ruled that the state can take more than $2 billion from local redevelopment funds and transfer the money to school operations to help close California's budget deficit.

Local governments objected to diverting the money, which generally is used to promote public works projects and rehabilitate downtowns.

But the $2 billion is a fraction of California's projected revenue shortfall of roughly $20 billion in the coming fiscal year.

It will likely do little to save the state from having to make deeper cuts to education, social services and health care for children and the poor and teachers, labor groups and social service advocates are already gearing up for battle before Gov. Arnold Schwarzenegger releases his revised budget later this month.

The decision was a relief to the governor's office.

"We dodged a bullet," said Schwarzenegger's spokesman, Aaron McLear. "This would have added $2 billion to our deficit."

Tuesday's court decision settled just one piece of the budget puzzle. But The California Redevelopment Association, the leading plaintiff in the case, said it will appeal.

Schwarzenegger and lawmakers had agreed to use more than $2 billion from redevelopment funds for schools in those districts as a way to make up for declining general fund revenue.

The redevelopment association and local governments argued that shifting that money was unconstitutional and would halt projects that create jobs at a time when California's unemployment rate is at 12.6 percent.

Judge Connelly sided with the state, saying California could use that money to help support schools located within redevelopment agency boundaries because it served a public purpose.


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