The California governor’s move, which would dismantle local redevelopment agencies to free up money for schools, municipalities and other local entities, is an early test of his strategy to dig the nation’s most populous state out of a $25.4 billion budget hole.
Mr. Brown’s plan, included in his proposed budget this month, comes as cash-strapped officials from Wisconsin to Ohio have pushed for overhauls of economic-development programs whose effectiveness is unproven.
State law lets cities and counties create redevelopment agencies as a funding mechanism to cure blight through public improvements that lure private investment, generate jobs and boost tax revenue. When a city designates an area for redevelopment, the local agency sells bonds to finance projects. The agency then uses any resulting increase in local property-tax revenue, which in other cases would go to schools and local governments, to pay off the bond debt and fund other community improvements; schools and municipalities receive a smaller share of the increase.
Read more here: California, Local Agencies Face off over Funds