BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Patricia Wiggins, Chair
BILL NO: SB 530 HEARING: 5/6/09
AUTHOR: Dutton FISCAL: No
VERSION: 4/28/09 CONSULTANT:
Weinberger
REDEVELOPMENT AGENCIES' PROPERTY TAX INCREMENT REVENUES
Background and Existing Law
State law lets redevelopment agencies divert other local
governments' property tax increment revenues so that they
can fight physical and economic blight. To alleviate the
financial burden and detriment that these other taxing
entities may incur as a result of the adoption of a
redevelopment plan, redevelopment officials must return a
portion of their tax revenues from redevelopment projects
adopted or amended after January 1, 1994 to other local
taxing entities in the form of mandatory "pass-through"
payments (AB 1290, Isenberg, 1993).
After reviewing the practices employed by school districts,
community colleges, and redevelopment agencies related to
the distribution and reporting of these pass-through
revenues, the California State Controller's Office issued a
report in May 2008 which found that:
Many school districts and community colleges
understated the amount of pass-through payments they
receive from redevelopment agencies.
Some redevelopment agencies failed to make their
mandatory pass-through payments.
Redevelopment agencies made numerous reporting
errors which resulted in an understatement of
pass-through payments made to schools.
The State Controller estimated that the cumulative effect
of these problems resulted in an excess State General Fund
obligation to schools of $33.8 million in 2005-06 and $29.4
million in 2006-07.
In response to the Controller's report, a State Budget
trailer bill enacted procedures to identify and recover
pass-through payments that redevelopment agencies failed to
make to K-14 education agencies for fiscal years 2003-04
through 2007-08 and ensure proper payments in 2008-09 (AB
1389, Assembly Budget Committee, 2008).
SB 530 -- 4/28/09 -- Page 2
Redevelopment officials want the Legislature to fix
problems that they have identified as their agencies try to
comply with the new procedures.
Proposed Law
Senate Bill 530 applies the redevelopment pass-through
reporting and repayment requirements enacted by last year's
State Budget to redevelopment project areas that were
formed before January 1, 1994 and amended after January 1,
1994 to:
Increase the limitation on the number of dollars to
be allocated to the agency, or
Increase, or eliminate the time limit on the
establishing of loans, advances, and indebtedness,
pursuant to specified statutes, or
Lengthen the period during which the redevelopment
plan is effective if the redevelopment plan being
amended contains specified provisions.
Comments
1. A consensus correction . There is consensus among
redevelopment officials, county officials, and the State
Controller's Office staff that pre-1994 project areas that
have been amended since 1994 were inadvertently omitted
from the redevelopment language in AB 1389, last year's
budget trailer bill. SB 530 corrects that error. However,
significant disagreements over the implementation and
interpretation of last year's redevelopment pass-through
reporting and repayment requirements remain unresolved.
Discussions continue on how to reconcile redevelopment
agencies' last five years of pass-through payments.
Legislators should expect additional amendments to SB 530
once the stakeholders reach agreements on some of these
remaining disputes.
2. Double referral . The Legislature's fiscal committees
review bills that appropriate money, change state
SB 530 -- 4/28/09 -- Page 3
departments' duties, affect state revenues and spending,
and create new state mandated local programs. Although the
Legislative Counsel's Digest does not identify SB 530 as a
fiscal bill, the Senate Rules Committee has nevertheless
ordered a double-referral; first to the Senate Local
Government Committee for a policy review and then to the
Senate Appropriations Committee. Because the pass-through
payments that redevelopment agencies make to school
districts offset State General Fund spending, SB 530's
changes to redevelopment agencies' pass-through payments
may result in costs to the State General Fund.
Support and Opposition (4/30/09)
Support : California Redevelopment Association.
Opposition : Association of California School
Administrators, California Association of School Business
Officials.