Brown rebuffs corporate welfare

Oct. 14, 2012

By Steven Greenhut

SACRAMENTO — In much of the country, the mere mention of the name, Jerry Brown, signifies the otherworldly nature of California politics.

Many people in other states have come up to me and said something to this effect: “You Californians are so weird that, in tough economic times, you re-elected that retread from the 1970s.”

Yet, in this season of bill signings, vetoes and elections, Gov. Brown has remained the last bulwark against the truly crazy left-wingers who run the Capitol. Brown, through his vetoes, has rejected union enrichment schemes, illegal-immigrant “rights” measures and other nonsense. And, despite his troubling push for higher taxes with Proposition 30, the governor vetoed all six bills that were designed to resurrect, in one way or another, the redevelopment process he killed last year.

Redevelopment is a land-use and tax scheme that blends Eastern-European-style central planning with American-style crony capitalism.

Started in the 1940s to provide local governments with a “tool” to fight urban blight, redevelopment morphed into a centralized planning system that obliterated property rights by giving City Hall expanded powers to condemn and acquire private property. Instead of fighting blight, city officials used the system to finance projects such as sales-tax-generating car dealerships, shopping malls, big-box stores and hotels by showering subsidies on influential developers.

‘Blight’

City councils, via their local redevelopment bureaucracies, gained the power to declare large areas of their cities “blighted” based on the widest-ranging set of criteria. Once designated as blighted, a redevelopment project area was formed, and all the “tax increment” — i.e., the growth in property tax revenue generated by improvements in that specific area — flowed to the locality rather than the county and state. Redevelopment agencies would float debt and use the added property tax money to pay off the bonds that financed the subsidies that were provided to developers, who built projects directed from City Hall.

The cities loved it because they would gain the sales taxes and bed taxes from the new projects and could micromanage development decisions. Developers profited by manipulating City Hall. Property owners got bulldozed, and all the government intervention distorted the market, but since when has government ever cared about that?

I wrote about efforts to take church property in Orange County and give it to Costco, plans to demolish an entire neighborhood of middle-class homes so that the city could market the land to a theme-park developer, and plans to give massive subsidies to billionaire developers.

These were typical examples, not aberrations. The subsidies led to the overdevelopment of shopping centers and other commercial projects.

After the U.S. Supreme Court’s Kelo decision in 2005, allowing cities to use eminent domain on behalf of private developers, many states passed serious reforms that cracked down on the abuses. Not California, which eventually passed a fake reform sponsored by the League of California Cities and the California Redevelopment Association.

But a funny thing happened. The economy soured, and the fiscal promises of redevelopment turned into fiscal liabilities. The state ran low on cash. Gov. Brown realized that he could find several billion dollars by shutting down these agencies, which operate locally but are creations of the state.

Ironically, Republican legislators who claim to care about free markets fought the governor on this one, addicted as their cities had become to redevelopment cash and as addicted as they had become to campaign contributions from subsidy-seeking developers.

Democrats, who tend to love the central-planning aspects of redevelopment, went along with killing it, for the wrong reasons (more money for the state and to be loyal to their governor).

Redevelopment alive?

Victories are never permanent in government – especially a government run by people who recognize few limits on their taxing and regulating powers. The most brazen attempt to resurrect redevelopment was Senate Bill 1156, by Senate President Pro Tem Darrell Steinberg, D-Sacramento:

“In order to more effectively address blight, the program shall be established to support development in transit priority project areas and small walkable communities and to support clean energy manufacturing through tax increment revenue.”

Basically, the Steinberg bill created redevelopment with a more limited focus and a few more safeguards. But Gov. Brown nixed this, and said in his veto statement: “This measure would likely cause cities to focus their efforts on using new tools provided by the measure instead of winding down redevelopment.” He also pointed to the need for continued general-fund savings.

The governor remains focused on the money rather than the abuses, but a veto is a veto. The redevelopment community was livid. One pro-redevelopment writer argued that Brown’s vetoes “add insult to injury,” but the folks insulted and injured by the governor richly deserve this outcome. Small property owners – the victims of insult and injury at the hands of redevelopment – should be happy.

Even when it looked like the new agencies would be resurrected, Assemblyman Chris Norby, the Fullerton Republican and longtime redevelopment foe, argued in a letter to redevelopment agency opponents that the new agencies would be a far cry from the old RDAs: “These IFDs [Infrastructure Finance Districts] have no power to forcibly take property tax increment from counties, schools or special districts.”

In his view, there would be no “free money” for cities. They could use tax increment, but that money would come from their own general fund — an unlikely development.

Nevertheless, the new IFDs would have had eminent-domain powers and would have given new life to the redevelopment industry. No doubt, next year the same officials would be back again expanding the use of tax increment. It’s far better to keep the lid on redevelopment and encourage these privilege-seekers to move on to other scams.

Brown is no dummy. He wasn’t about to resurrect something he expended so much political capital in killing. Obviously, he is no believer in limited government, so our victories this year may be fleeting. But things could be worse, and the governor deserves great credit for standing his ground against the kings of corporate welfare.

Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. Write to him at: [email protected]

15 comments

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  1. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 October, 2012, 09:38

    “In order to more effectively address blight, the ..”
    Yes, and cities such as Coronado and Beverly Hills are “blighted”.

    Redevelopment is and always has been a major scam, to help connect developers become multi millionaires at the expense of taxpayers.

    Reply this comment
  2. Ted Steele, The Decider
    Ted Steele, The Decider 14 October, 2012, 09:55

    Corp welfare is killing us—- stop the largest one– oil co subsidies!

    Reply this comment
  3. Bob
    Bob 14 October, 2012, 10:12

    It is one of the very few things the old buzzard has done that is good. And considering what lunatics the DemoNcrats are I guess we should be grateful. After Ahnode didn’t get rid of RDA.

    I just got the Cauli(as Ahnode sez)phony Official Voter Information Guide and in there it says that at $48k where the current 9.3% marginal tax rate kicks in the new marginal tax rate will be 10.9% if Molly Mongrel’s tax increase passes!

    An 11% marginal income tax rate at under $50k???? Geez, what in the world is Molly Mongrel thinking? Even the Brown stain, Darrell Stinkbug and Johnny Perez wouldn’t try that, at least not until they get their two-thirds majority in the legislature.

    Reply this comment
  4. Dyspeptic
    Dyspeptic 14 October, 2012, 11:54

    “An 11% marginal income tax rate at under $50k???? Geez, what in the world is Molly Mongrel thinking?”

    Bob, its obvious Molly Mugger doesn’t care about middle class taxpayers. For the filthy rich elitists who run Kali. it’s all about their pet lefty causes like teachers unions, illegal aliens, “endangered” minnows and the like. I bet Molly doesn’t even know what her tax bill is. She probably has a handful of CPA’s, a business manager and a personal investment manager at some swanky hedge fund to take care of such hum drum realities. Molly probably has more money lost in the cushions of her antique French sofa than most people make in a year.

    We really are in a world of hurt when the adult in the room is Governor Moonbeam. Krazy Kalifornia.

    Reply this comment
  5. Ted Steele, The Decider
    Ted Steele, The Decider 14 October, 2012, 12:55

    dysphoric— for once I agree with you— Munger is a true 1% moron. Good job figuring that out!— Teddy

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 October, 2012, 13:57

    Bob, its obvious Molly Mugger doesn’t care about middle class taxpayers
    ==
    Geez, what in the world is Molly Mongrel thinking
    ==
    Even the Brown stain, Darrell Stinkbug and Johnny Perez wouldn’t try …
    ===================

    See, this is why we are the go-to website for politics in this state, we have the best nick-names in the business.

    The only one better is Teddy STEALS 😉

    Reply this comment
  7. Ulysses Uhaul
    Ulysses Uhaul 14 October, 2012, 14:10

    Poodle: paying only 2% state tax is not worth the barrage of hate posts against struggling state leaders.

    Think you have a disposition toward being tight…that’s ok you’re like Joe Biden..

    Molly is fighting the good fight. Too too many residents skate on incme taxes.

    Reply this comment
  8. Bob
    Bob 14 October, 2012, 15:02

    An 11% marginal state income tax at under $50K is simply insane.

    Even a 9.3% rate is more than millionaires in other states pay.

    Forget the wealthy fleeing this state, the middle and even lower middle classes certainly have a strong incentive to do so if their jobs permit it.

    It proves what greedy [email protected]@rds Mongrel and the unions are.

    But don’t kid yourself, if that old buzzard and the rest of the DemoNcrats like Stinkberg and Porky thought they could get away with it they’d do it in a second.

    And that’s exactley what they’ll do when they get their two-thirds majority.

    Reply this comment
  9. Ulysses Uhaul
    Ulysses Uhaul 14 October, 2012, 16:39

    Yep…your correct!

    Reply this comment
  10. surfpunk
    surfpunk 14 October, 2012, 16:49

    ted,oil co. subsidies biggest form of corp. welfare!_ Your a math teacher ,i was wondering what part of the goverment class you were in.You should be proud of your part in suporting green energy.

    Reply this comment
  11. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 October, 2012, 17:38

    Forget the wealthy fleeing this state, the middle and even lower middle classes certainly have a strong incentive to do so if their jobs permit it.
    ==
    The sales tax scam is even worse on the poor and middle class htna the so called millionairs tax, that applies at $250K……………I am SO GLAD Prop 30 is going down in flames, I am going to LMFAO at Clown, and Teddy and Molly and Teddys sock puppets on Nov 6…. 😉

    Reply this comment
  12. Ted Steele, The Decider
    Ted Steele, The Decider 14 October, 2012, 17:58

    LOL— Can’t get me out of your head Poodle? I probably owe alot of rent for the prolonged campout in your tiny poodle brain locker!

    0 for 13 ™ !

    Reply this comment
  13. Rex the Wonder Dog!
    Rex the Wonder Dog! 15 October, 2012, 00:03

    Teddy- just disappear for a few weeks after I mop the floor with your GED brain on Nov. 6-thank you, The Readership 😉

    Reply this comment
  14. Ulysses Uhaul
    Ulysses Uhaul 15 October, 2012, 00:06

    Nov 6th will come and go Bob and Poodle, but you both will still be miserable!

    Happiness comes from generosity not hoarding your time, talent and treasure.

    Reply this comment
  15. Ted Steele, The Decider
    Ted Steele, The Decider 15 October, 2012, 08:19

    WOW U Haul– Right on!

    I hope the trolls learned something here today!

    0 for 13 ™ !

    Reply this comment

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