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L.A. County threatens suit

Posted: July 21, 2009 10:16 p.m.
Updated: July 22, 2009 4:55 a.m.
 
Los Angeles County supervisors agreed Tuesday to sue California if lawmakers pass a proposed state budget that could cost the county $420 million.

The Legislature is expected to pass the spending plan on Thursday.

The proposed budget - hashed out between Gov. Arnold Schwarzenegger and top Republican and Democratic lawmakers to cut $26 billion in state spending - would borrow $3 billion from redevelopment agencies throughout the state.

It would also raid local tax coffers of cities, counties and special districts.

"We (the county) will sue if the budget passes as it has been presented," said county spokeswoman Judy Hammond.

Assemblyman Cameron Smyth, R-Santa Clarita, said lawsuits filed in response to the state budget are both expected and warranted.

"The budget gets sued every year," he said. "Local governments have the right to protect their funding."

The Schwarzenegger-backed plan calls for cities and counties to voluntarily hand over redevelopment agency funds in exchange for extending the time the agencies can exist.

"Normally, redevelopment agencies sunset after 30 years," Smyth said. "This would allow the redevelopment agency to extend its lifespan to 40 years."

County officials believe extending the life of redevelopment agencies violates the state Constitution, Hammond said. That claim will be part of the county's lawsuit.

Redevelopment agencies collect property taxes to fix blight within redevelopment zones, she said. Continuing a redevelopment agency after the blight is corrected is contrary to its intended purpose, Hammond added.

Redevelopment agencies would have the right to opt out of the state's plan. But if too many did so, and the state came up short of $3 billion, then the state would go after highway utility taxes, Smyth said.

"I am adamantly against the state taking the (highway utility tax) money," he said.

The highway utility tax money is a gas tax that pays for local infrastructure. The county stands to lose $191 million during the next two years if the state raids that fund.

Failing to close the gap through borrowing from the redevelopment agencies would also trigger the state borrowing from cities, counties and special districts under provisions of Proposition 1A.

Proposition 1A allows the state to borrow money from counties, cities and special districts during a fiscal emergency to balance the budget. The state has three years to pay back the loans.

Under the proposed plan, the state would also borrow $2 billion from cities, counties and special districts.

"I have real concerns about the Prop 1A borrowing," Smyth said. "This would be a big hit to the general funds of local government, and in three years the economy is not going to be turned around enough to pay the money back."

County officials are frightened by the proposals presented by the state and claim the budget crisis is evidence of fiscal irresponsibility.

"In addition to it being reckless, by hijacking county funds it may be unconstitutional," said Tony Bell, spokesman for Fifth District Supervisor Michael Antonovich. "The county has its fiscal house in order. Now the state's going to victimize counties and cities."

Smyth said the state is shifting the responsibility for balancing the budget from Sacramento to city councils, county governments and special districts.

"I am very hesitant to shift the burden to local government," he said.

Smyth, who served six years on the Santa Clarita City Council before voters sent him to Sacramento, said he knows too well the difficulties of balancing a budget that's in the state's cross hairs.

"I know firsthand what it's like to have the state tap your resources when you're trying to balance your own budget," he said.

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