Prop 22, Redevelopment Agencies & Pension Reform


As I lobby for Republican Assembly and Senate Members to shut down CA redevelopment agencies, a property rights colleague/attorney shared some related insight this morning that warrants publication.

In addressing this stalemate he points out that people should read the text and fine print of Proposition 22. Some electeds we’ve contacted have used Prop 22 as a crutch for not supporting the governors request to cast an aye vote for SB77/AB101.

His six bullet points are as follows:

  1. Prop 22 is intended primarily to protect local TRANSPORTATION funds, not redevelopment funds. That’s what voters were approving.
  2. The redevelopment portion was secondary and intended to protect funds once RECEIVED BY A CRA.
  3. Proposition 22 explicitly preserved the Legislature’s power under H&SC 33607 to divert funds before they arrived at any CRA. That is, expand the AB1290 diversions. The Legislature still controls the internal functions of all CRA’s since they are STATE agencies.
  4. The governor’s proposal merely places FUTURE funds in a receivership mechanism in order to sort out the bogus debts from legitimate debts that need to be paid.
  5. AB101 and SB77 have already passed the respective houses on majority (party line) votes, but less than 2/3rd’s. To go into effect immediately as URGENCY bills and change the fund allocations on 7/1/2011 they need 2/3rd’s.
  6. If governor Brown and the Democrats would accept a later effective date of 1/1/2012 the bills could be passed by Democrats alone. This might prevent the retroactive review of debts back to 1/1/2011, but the bill could be worded to prevent any FUTURE expenditures not approved by a committee of taxing entities and the state, and allowed only if the CRA has no other funds in its savings accounts. The state Controller’s recent audit found hundreds of millions in these accounts doing nothing but waiting for a developer to be subsidized. Starting 1/1/2012 the law could require that no check could be written on any CRA funds without the concurrence of the County Auditor and state Controller. The CRA’s would still nominally exist, but their financial and accounting powers would be controlled by new rules.

An interesting sidebar of our discussion, relating to Prop 22, is that it overtly repealed the 2008, 2009, 2010 and 2011 budget deals yet no one is suing to get their money back. This raises the question. Why didn’t they sue?

Prop 22 drew attention to how much money these agencies were hoarding.

While our main focus was on our state budget we also addresses pension reform which is one of the GOP sticking points. Perhaps part of the answer is altering the top heavy participants. A perfect example is the city of Bell, the poster child for pension abuse, where city administrator Robert Rizzo’s pension could reach $700,000. These mega pensions need to be investigated. City managers should not become members of PERS. We also agreed that it would be better to set a monthly, rather than a lifetime, cap on pensions.

While this is not the ultimate solution, its a start. What say you?

About Larry Gilbert