While the federal income tax is the most famous assault on personal property, another more insidious process operates with most people’s support and blessing without them knowing how they are being robbed. The culprit is Redevelopment under the Health and Safety Code, and while the biggest losers are education and county services, in fact ultimately we all are the losers. Redevelopment causes the diversion of property tax increment dollars away from the schools and the county to the extent that they can not maintain mandated levels of service.
While the voters pass laws mandating prison terms, the county does not have enough money to build the jails necessary to house the new inmates, so lower priority prisoners must be let go. While the schools have an increasing enrollment, the budget shortfall means the state must make up the difference through what is called backfill, which means higher income taxes, sales taxes and special taxes for everybody. It is reasonably estimated that Redevelopment diverts some $850 million each year in California.
A case in point is the City of Cerritos. Last year the city’s Redevelopment Agency received some $55 million in tax increment funds, most of which would have gone to the schools and county had there been no Redevelopment Agency. It is fallacious to say there would not have been any development without the agency creation, when in fact, the record shows Redevelopment has not been used to eradicate blight, but instead to subsidize development where it would have happened anyway.
Many people do not see the connection between a $2 million per year subsidy to a performing arts center and schools so short of funds they have to lay-off support people such as counselors and librarians and postpone maintenance, but there is a direct connection. Even with the reform legislation AB 1290, the schools still do not get their full share from new projects much less make up for money lost under the old law.
Who are the beneficiaries of this patronage system? The large city staffs that manage the programs, the bond underwriters and bond holders, the lawyers and consultants, the special interest groups that make Redevelopment a cottage industry and the developers who extort give-aways from a city staff inexperienced in real estate transactions.
No change is likely to happen until the teachers themselves realize how they are being affected and have the California Teachers Association lead the battle against Redevelopment to bring the schools back onto a sound financial footing. Additionally the police officers and other public workers who are paid from the cities’ general fund should be incensed over how their money is being diverted to special interests outside the city and should have their organizations join in the repeal effort. The shortfalls created by Redevelopment are not only preventing salary increases, they are causing increased income taxes which are coming directly from their own pockets as well as ours.
The massive accumulation of unpaid debt, the deterioration of public services and the violation of property rights all add to the list of reasons why government sponsored Redevelopment is one of the great frauds of our time and is nothing more than redistribution of wealth by government fiat.