LAO Predicts Redevelopment Dash

Katy Grimes: The Legislative Analyst’s Office likes Governor Jerry Brown’s $26.4 billion proposed budget — $12. 5 billion in spending cuts, $14 billion in new taxes — and they don’t. The overall feel of the Overview of the Governor’s 2011-2012 Budget is that most of the proposed budget changes Brown proposed “have merit” and “seem reasonable.”

The analysis runs along a predictable path: each section begins with a statement about how this or that proposal “has merit,” but then deeper in the paragraphs the analysts start expressing significant reservations, even sometimes warning of some potential serious pitfalls.

Picking apart the LAO report is beyond the scope of a mere blog post, but something really caught my eye. Deep in the report, the Legislative Analysts warn of one potential, hitherto unmentioned danger zone with Brown’s proposal to “dissolve the state’s 425 redevelopment agencies.” The LAO recommends that the Legislature take immediate action to pass “urgency legislation” as soon as possible, “prohibiting redevelopment agencies from taking actions that increase their debt.”

That means now.

The LAO is worried that if redevelopment agencies know they’re doomed, they’ll throw everything they have right now into new projects before the cuts are formalized, “increasing their bonded indebtedness and contractual obligations” — which would make future deficit reduction that much harder to achieve.

I agree with the LAO that redevelopment agencies can and most likely will do this, with their budgets about to be sliced and diced. But as for asking the Legislature to pass urgency legislation… I’m not holding my breath.

JAN. 12, 2011