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Our View:Gov. Brown’s budget must aid business

Posted: January 15, 2011 9:29 p.m.
Updated: January 16, 2011 4:55 a.m.

Gov. Jerry Brown was elected on the promise of draconian budget cuts, and last week, he presented a spending plan that delivered on that promise.

Along with cuts in what he called wasteful spending — as well as those cuts patently painful to various social, educational and institutional interests — was another of his campaign promises: higher taxes. The governor has proposed extending a slate of tax increases implemented in 2009 for another five years.

There’s much to like in the governor’s plan.

First is its honesty. Brown has the political chutzpah to place on the chopping block many pet projects his own party champions. Whether he can get those cuts past the Democratic-dominated Legislature is another question.

Second, he not only called for cuts to wasteful spending, but immediately set in motion some of those cuts. In his first executive order, Brown ordered 48,000 state-issued cell phones to be turned in by employees, a move that could save the state $20 million.

Sure, $20 million is a drop in the bucket compared to the state’s yawning $25 billion annual operating deficit. In laymen’s terms, that means the amount we’re spending each month exceeds the amount we’re taking in by more than $2 billion.

But enough drops in a bucket will eventually fill it. We’d like to see this first executive order followed by others that cut bloated spending.

Known during previous terms as a governor who walks his talk, Brown earlier this month cut $6.4 million from his own office, abolishing several paid positions and closing three field offices around the state.

Great start, Brown. Keep it up.

Third, we agree with the governor that some tax burdens should be extended to bail California out of the hole it’s in.

As much as we appreciate some elected officials’ dedication to holding the line on taxes, a reality check indicates cuts are unlikely to be sufficient to get us back in the black. Extending existing taxes is much more palatable than adding new ones, and we call on our fellow Californians to back Brown’s tax-extension plan if it makes it on the ballot.

All that said, there’s at least one part of the spending proposal that is short-sighted in the extreme, and could spell disaster if enacted: its treatment of the business community and municipal programs that aid that community.

Calling for a phasing-out of redevelopment agencies, Brown said: “Over time, most of the increase in value of all the properties in the redevelopment area(s) has been generally the result of inflation in the economy and of property values. ... There is no growth in assessed value for the county, school districts, community college districts or special districts that also serve the redevelopment territory.”

That might be true in some gentrified communities with decades-old redevelopment agencies that were poorly constructed in the first place. We’ve heard horror stories about cities with redevelopment agencies that throw wave after wave of taxpayer money into their designated zones without any apparent master plan, goals or tangible progress.

But Brown’s statement is patently false in the case of Santa Clarita.

As the governor notes, the primary purpose of redevelopment is to cure blight. In Newhall, as in Pasadena prior to redevelopment some 25 years ago, we had high vacancies, boarded-up windows and vagrancy.

Left to its own devices with no government support, the private sector abandoned Newhall, as it abandoned Old Pasadena, for greener pastures — in our case, Valencia. In 1993, when property values in Santa Clarita as a whole were increasing 4-percent annually, property values in Newhall were actually going down.

What happens when property values decline? Fewer tax dollars are generated for “the county, school districts, community college districts or special districts that also serve the redevelopment territory.”

Now, under redevelopment, the buildings are occupied, rents are up, public improvements have cleared out the vagrants and property values are going up — generating more tax dollars for all of the aforementioned districts.

While the governor might question whether properties in California’s various redevelopment agencies are — or were, upon establishment — truly blighted, every single parcel that was included in Newhall’s redevelopment zone was carefully examined by lawyers for the Castaic Lake Water Agency, who were afraid of the very thing the governor fears.

As a result of this scrutiny by a potentially injured agency, only those parcels were included that met the legal definitions of blight.

Anyone who’s battled traffic and crowds in Old Pasadena knows redevelopment can work to the benefit of both the municipal government and state tax coffers.

John Shirey, executive director of the California Redevelopment Association, summed it up: Brown’s plan to phase out redevelopment agencies is “smoke and mirrors that will bring little financial gain for the state, but will cause widespread and significant economic pain in communities throughout California.”

Another area in which Brown’s spending plan shows ignorance of beneficial municipal-business partnerships is that of enterprise zones.

“Because the primary benefit of these zones is to shift economic activity from one geographic region within California to another geographic region within California, they are not of statewide interest,” Brown states in his budget proposal.

For many companies, the incentives offered through enterprise zones such as Santa Clarita’s are the only thing keeping them in California, and thus generating jobs.

As state Senate candidate Sharon Runner noted in a recent Signal Editorial Board meeting, what California really needs to get out of its fiscal hole is more jobs — jobs to generate tax revenue to keep state and local governments running.

But for the sake of argument, let’s pretend for a moment that Brown’s claim is true, and the “primary” benefits of enterprise zones is to shift jobs from one area to another. What’s the alternative?

In Santa Clarita, 50 percent of our work force travels out of town to jobs in L.A. What are the impacts of this daily migration on the state, and on the work force? Clogged freeways, long commute times, more and more resulting air pollution, frustrated workers.

These problems will only get worse unless we in the Santa Clarita Valley solve our jobs deficit. We simply are not adding enough jobs fast enough to close the gap.

The Enterprise Zone program can help us do that.

If nothing changes, and the slow pace of job creation continues, one effect will be failure to alleviate air pollution — one of Brown’s stated goals. Either we can keep going to the jobs, or the jobs can come to where the people live. It’s that simple.

These business-unfriendly aspects of Brown’s plan, resulting in short-sighted treatment of potential long-term solutions, reminds us how fortunate we are to live in such a well-run community, where business-government partnerships are both common and productive, and where  mutual benefit — not partisanship — is the driving force.

We have no doubt there are both enterprise zones and redevelopment agencies around the state that fail to achieve their goals and misspend taxpayer dollars.

Rather than eliminating potential business-boosting programs — and robbing municipalities of the very tools they need to achieve economic recovery — the state could demand tangible proof that redevelopment agencies and enterprise zones are working, and pull the plug if no such proof were forthcoming.

Otherwise, we’re just cutting off our noses to spite our faces.

As debate over the week-old spending plan continues, we all should keep in mind it’s just that: a plan. Brown’s bold call for cuts and more taxes is just the first step of many that must be taken before an actual budget is arrived at.

We hope both the governor and the Legislature recognize not only the need to reduce unemployment in California, but also the ways by which California can achieve that end.

We must cut waste, but programs that actually create jobs, generate tax revenue and/or contribute to a healthy business climate are not waste.

The governor and legislators could do worse than looking to Santa Clarita’s enterprise zone and redevelopment agency as models for successful programs. They could reshape the requirements for these jobs-boosting programs accordingly.


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