SAN BERNARDINO, Calif.—This old city at the foot of the mountains limped to its bicentennial two years ago, its finances in tatters from a housing bust that sapped tax revenues and ballooning salaries and pension obligations for city workers.
Then came the final blow—Gov. Jerry Brown’s decision to eliminate state funding for local redevelopment agencies to help close California’s yawning deficit. The move cost the city $30 million annually and highlighted something else: San Bernardino was using about $6 million of those funds to back fill its general fund.
Without that money, things only got worse. The city hit bottom last week when it filed for bankruptcy.
“One might say it was the nail in the coffin in terms of our unbalanced budget,” Mayor Patrick Morris said of losing redevelopment funds.
Across California, from tiny Huron in the Central Valley to Oakland to Calexico in Imperial County, the loss of redevelopment funds was felt most by communities in the worst financial shape. Like San Bernardino, many relied on the funds for basic government functions.
“Redevelopment had become like the line of credit that a business operates on,” said Larry Kosmont, a Los Angeles-based economic development consultant who advises a number of California cities. “When the music stopped, the cities had no chair to sit on because that was their immediate cash.”
Critics say that buttressing general funds and paying municipal salaries was never the intention of redevelopment money. And cities may have abused the system if they were in fact using funds for project-specific purposes removed from boosting run-down areas. More click link…….