California Redevelopment Agencies Take a $2 Billion Hit

Judge’s Ruling Saves State Budget More Than $2 Billion¬†

Los Angeles Times, May 4, 2010

The state budget dodged a $2-billion bullet Tuesday when a judge ruled that last year’s shift of funds away from redevelopment agencies to pay for local schools was legal.¬†

In a 26-page ruling issued Tuesday, Superior Court Judge Lloyd Connelly ruled the state was within its rights to shift the funds last year. The maneuver allowed the state to save more than $1.7 billion in the current budget year and $350 million in the 2010-11 budget year.

State lawmakers have looked to borrow and shift various pots of money as part of the continuing effort to balance the state’s books, which are about $20 billion out of whack. The shifts have been subjects of lawsuits, some of which have ended in rulings that the state acted illegally.

In fact, last year, Connelly ruled a similar taking of redevelopment funds was illegal. That left the state on the hook to repay $350 million. Lawmakers used Connelly’s ruling from that 2009 case to craft a proposal in last year’s budget that would pass legal muster.

A spokeswoman for the California Redevelopment Agency said the group was still reviewing the ruling and discussing what its next move will be.

— Anthony York

Follow up: Stay tuned for the inevitable appeal.

Second follow up. For the coverage of these events by the Sacramanto Bee, see Loretta Kalb, Redevelopment Agencies Turn $1.7 Billion Over to State, May 11, 2010. Go to

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