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California's budget crisis a chance to rethink redevelopment funds

Should California continue to use redevelopment funds for such things as mermaid bars at a time when critical services and programs are being cut?

February 21, 2011|George Skelton | Capitol Journal

Look, I've got nothing against mermaid bars. In fact, state government used to work best when legislators hung out in one near the Capitol.

I just question whether state government — any government — should be helping to pay for a mermaid bar.

Redevelopment funds helped construct one that recently opened in Sacramento, a couple of blocks from the Capitol.

It'll have to go some to match the success of the old mermaid bar. In the '60s and '70s, it was a popular watering hole for lawmakers, lobbyists, journalists and hacks.

Located off the lobby of the El Mirador Hotel and dubbed "the Snake Pit," the bar featured a pimp/guitarist and the glass-sided lower portion of a swimming pool where a mermaid frolicked. Maureen Reagan, the governor's daughter, would sometimes drop in to play the piano and sing.

It was a great spot for camaraderie and compromising.

Ultimately, the El Mirador became a senior citizens' home. I suspect some of the bar patrons never left.

But I've rambled far afield. This is supposed to be about redevelopment.

The new Sacramento mermaid bar is called Dive Bar, part of a relatively small downtown redevelopment project that benefited from a $6.8-million city subsidy.

That also means a state subsidy, because local redevelopment funds come from property taxes. And property taxes diverted from schools must be made up for — "backfilled" — by the state. That, in turn, means less state general fund money for other programs, such as universities and healthcare.

Dive Bar features what is billed as the largest nightclub aquarium in the world. That's impressive, sort of. But is a mermaid bar — any bar — really what tax money should be spent on when governments are struggling to keep their heads above water?

Maybe laid-off teachers can land jobs as mermaids.

"You can always pick a few things out" to criticize in redevelopment, says Chris McKenzie, executive director of the League of California Cities.

"But if we don't continue to invest in rebuilding urban areas, we're going to see declines in property values, increased crime and less affordable housing for families that send their children to public schools."

Critics, however, contend that the taxpayer subsidies are an unnecessary gift to private developers.

"It's a Democratic program that Republicans get rich off of," says Assemblyman Chris Norby (R-Fullerton), a former county supervisor and city councilman.

Let's acknowledge that many redevelopment projects are beneficial locally. The issue is whether state and local governments can afford them today when virtually every other public program — schools, police, healthcare, parks — is being slashed.

Because of a never-ending budget deficit — currently around $25 billion — cash is low and California has the worst bond rating of any state. Public works bonds aren't being sold. Highways deteriorate.

Redevelopment promoters claim that their projects produced more than 300,000 jobs a year. Nonpartisan Legislative Analyst Mac Taylor contends that estimate is "seriously flawed" and "implausible."

Moreover, the analyst figures that redevelopment agencies siphon off about $1.5 billion annually from other local entities, mainly counties and special districts. The agencies deprive schools of more than $2 billion, the analyst says, but the state makes that up — adding to its deficit.

Gov. Jerry Brown is proposing to abolish California's roughly 400 redevelopment agencies and transfer much of their $5 billion in property tax revenue to schools, counties and the state. He'd use $1.7 billion this year to help balance the state budget. Payments on current redevelopment debt would continue.

"In our view," the legislative analyst says, "the governor's proposal merits consideration…. We see little reason for the state to continue its financial support for this program."

Brown says if local citizens want to spruce up their blighted areas, they should vote to do it themselves. And he'd allow them to with a 55% majority vote.

But then many cities would have to explain to voters why redevelopment kitties, as The Times reported Friday, are being misused to pay for such basic services as police and fire protection and even council members' salaries.

The cities' lobby and the mayors are vigorously fighting Brown. "A nonstarter," is how Los Angeles Mayor Antonio Villaraigosa characterized the governor's proposal.

Brown and Democratic legislators say they're willing to compromise if a deal can be reached to gain the state $1.7 billion this year.

"The time is short, the door is open, but it won't stay that way for long," Assembly Budget Committee Chairman Bob Blumenfield (D-Woodland Hills) declared Friday.

The cities' McKenzie has been balking. He notes that Proposition 22, approved overwhelmingly by voters in November, specifically prohibits the state from seizing redevelopment funds. "It's clearly an illegal proposal," he says.

Perhaps. But in this initiative-happy state, another group could put a measure on the ballot to drown redevelopment agencies in the mermaid bar.

"He's making a mistake," Villaraigosa says of McKenzie's reluctance to negotiate.

"One thing I know, having worked in the Legislature," the former Assembly speaker continues, "not one of us mayors has a vote. So it behooves us to sit down with people who do and try to work something out."

Villaraigosa has been floating a draft proposal that would allow the state to borrow $1.7 billion against $200 million in annual redevelopment contributions to the general fund.

Please spare us more borrowing.

Redevelopment agencies need to clean up their acts or perish.

No more tax money for mermaid bars.

On the other hand, if it were a real dive where legislators could once again meet, relax, bond and cooperate…. But that's probably just dreaming in the past.

george.skelton@latimes.com

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