Redevelopment Agencies’ Loss — Public Schools’ Gain

We noted recently that newly elected California Governor Jerry Brown has proposed that redevelopment agencies in California be abolished, so that the tax money they siphon off from municipal tax revenues can be devoted to plugging some holes in the state budget. Naturally, as we noted, this has precipitated a giant kerfuffle as redevelopment agencies and their groupies have rushed into the public forum to inform one and all that should that happen, the sky will surely fall and that would spell the end of civilization as we know it. For our take on this problem, particulary its financial implications, go to http://gideonstrumpet.info/?p=774

But now we can add to that discussion by providing some facts. Today’s (Los Angeles) Daily News (Connie Lianos, Schools May Gain From loss of Redevelopment Agencies, Daily News, Feb. 8, 2011, at p. 1), tells us that if the Guv gets his way and the state’s redevelopment agencies get the boot, that will result in some $1.7 billion in funds that in the past have been siphoned off from local property taxes by redevelopment, becoming available to the state. Of that amount, around $1 billion would go to California schools, where all that money should have gone to begin with. The Los Angeles Unified School District (which is currntly running a $400 million deficit) would get an additional $114 million.

Mind you, we are not entirely enamored with the way our school districts have been spending money, particularly on land acquisition and school construction, but hey man, spending that money on schools is a lot better for society than seeing it go into the pockets of redevelopers and redevelopment tax-free bond holders.

The moral is that there ain’t no such thing as a free lunch, even if all these years redevelopment agencies have been so pretending. Tax money is tax money, and when you divert it to redevelopment, that means that it won’t go to other places. Calling it “incremental tax revenues” and diverting it from schools to redevelopment malls doesn’t make it any less tax money, nor any less of a misallocation of increasingly scarce public funds.

Being an old curmudgeon with a cynical bent, your faithful servant doubts if this gubernatorial proposal with actually see the light of day, but at least somebody is trying to do the right thing. After all the redevelopment scandals reported by the Los Angles Times a few months ago, redirecting that money to schools is surely a better way to spend it.

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