No easy answers to city's redevelopment quandary
Published: Friday, February 3, 2012 at 3:00 a.m.
Last Modified: Wednesday, February 1, 2012 at 10:50 p.m.
As you must have heard by now, the City of Petaluma, as well as all the Cities of Wherever Else in California, has lost a major source of its funding, tax revenue from the redevelopment agency.
This action is the result of Governor Brown deciding the State of California is more entitled to those funds than cities, and the Governor's action being supported by the high courts.
There is no question that the action is a major blow to Petaluma. This city, which has long ranked near the bottom of the county in per capita sales tax (with the likes of Cotati and Windsor) is ill prepared to withstand another funding blow such as losing redevelopment money.
By one estimate, Petaluma stands to lose about $14 million in funding that has covered everything from downtown improvements to critical funding for some of our leading non-profits.
For Petaluma, this is no longer a case of needing to cut the fat, since we are already dealing with a fairly emaciated workforce skeleton in City Hall. Petaluma has already, as the result of the economic meltdown blitz, cut more than 70 jobs, about one out of every five city workers.
And, while with perfect hindsight it appears the city may have been overaggressive in salary and retirement benefits, it is also a fact Petaluma was doing what it needed to do be competitive in attracting good people to work here.
By the same token, if Petaluma were to, say, unilaterally slash City employee salaries by a healthy percentage, it is almost certain our best employees would simply go somewhere else to be replaced by ... ?
Would you go to a doctor that was getting paid half of what all other doctors make? Do you want a public safety unit working here because they are the only police and fire personnel in the region working for far less than the average wage?
It is a dilemma, and there are no easy answers. Petaluma's problems are complicated because the bizarre anti-corporate retail attitude that has prevailed here for a decade or so has strangled the sales tax revenue picture, further pushing the City into a fiscal corner.
So how did we get in this mess? You have to go back to the passage of Prop. 13 in 1978. While that initiative did indeed provide major tax relief to property owners, it also yanked the funding rug out from under property tax-dependent local government, and at the same time, included the devilish requirement that local voters couldn't replace that funding except by a two thirds vote, virtually assuring that a local tax increase would be a very rare critter.
So, local governments got creative, adding development fees of all sorts (the development of Lucchesi Park and the Community Center happened in large part because of those fees.) Cities were also supported by Prop. 13 bailout money from the State. And, they got really creative with redevelopment money.
When times started to get tight, back in the early ‘90s, the State started yanking back the bailout funds, and local governments howled about the State stealing their money, but, what Sacramento giveth, it also taketh away. And it tooketh.
There is also no question that there have been some flagrant misuses of redevelopment monies at some spots around California. So, the Governor was probably correct in assuming that these violations had to be stopped, but in this case, it was a classic example of throwing the baby out with the bathwater. For Governor Brown, that was probably okay, because he needed all the bathwater in the form of funds that he could get. The baby was just a bonus.
So, the meat-axe approach has punished the innocent and misdemeanor-guilty along with the really bad guys, and our City and our non-profits are in a genuine fix.
Now there is talk of special interest groups scrambling to put tax measures on the local ballots to secure money for favorite causes. This idea needs some serious exploration unless we have a feeding frenzy from the municipally needy, all fighting for limited funds. That could leave us all back where we started, in fiscal quicksand.
(Don Bennett, a business writer and consultant, has been involved with city planning issues since the early 1970s. His e-mail address is firstname.lastname@example.org.)
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