How Will Governor Brown's Budget Plan Affect Local Governments?

What are the key elements of Governor Jerry Brown's budget proposal? And, how might local governments be impacted if Brown's budget is passed by the state legislature? We speak with John Myers, from "The California Report," about the governor's budget proposal. Author Joe Mathews joins us to discuss the potential long-term impacts of the plan. And, National City Mayor Ron Morrison talks about how his city could be affected by a proposal to eliminate local redevelopment agencies.

Guests

John Myers, Sacramento bureau chief for "The California Report"

Joe Mathews, former staff writer for the Los Angeles Times, now an Irvine Senior Fellow with the New America Foundation. He's author of California Crackup: How Reform Broke the Golden State and How We Can Fix It

Ron Morrison, Mayor of National City

Read Transcript

MAUREEN CAVANAUGH: I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. California governor Jerry Brown said it was time for the state to face the music has he unveiled his first budget proposal earlier this week. And already critics are calling key elements of the plan distinctly out of tune. In addition to billions in spending reductions and in taxes, proposals to eliminate redevelopment agencies across the state and shifting the responsibility for many state programs back to local governments are creating shock waves in political circles. Joining us now to outline some of the major parts of the governor's new budget is my guest, John Myers, Sacramento bureau chief for the California report. And John, good morning.

MYERS: Good morning, Maureen.

MAUREEN CAVANAUGH: You know, while he was campaigning for governor, Jerry Brown wasn't for specific about what he would do about the budget. So were there a lot of surprises in this budget proposal?

MYERS: Well, that's obviously gonna depend on your world view and whether you, you know, how you viewed the last few budgets and what we should have done and what you would like to see happening here with a $25 billion shortfall. I think that brown got criticized a lot, and somewhat rightly so, but criticized during the campaign for not offering more specifics. But the governor emphasized in all those times that he had to get in there and see what was going on, he didn't want to make promises he couldn't keep. And that the process of crafting budgets and finding compromise was really what he knew how to do from the past and what he was going to do. So during the transition period, we saw him very little. I think he really was nose down in the books of the budgets of the state. And you know, he came out with a budget that I think reflects a lot of the reality of what California faces. I mean, the governor said in his inauguration that he's not interested in, quote, delay and denial, in this stage in his career and his life. And I think this is a budget that reflects neither delay or denial in a lot of cases. A $25 million problem that is almost split down the middle with cuts and taxes over a year and a half period that's trying to solve that gap, 12 and a half in tax, 12 in cuts, deep cuts, controversial and tough taxes. But the governor trying to bring a day of reckoning forward, and I do think compared to the budgets that I know that aye covered in the last few years, Davis, Schwarzenegger, now Brown, this is the most clean from a macro sense, documents that I have seen in terms of very few real gimmicks and tricks and assumption that you really can't bear out.

MAUREEN CAVANAUGH: Now, there are some promises that the governor makes to schools in this budget, though, what are they?

MYERS: Well, in particular, K312 education, the governor singled out as a program area that not only the voters care about but have taken a lot of hits in the last few years. We all know the nudes headlines of teachers hayed off and class sizes growing and school supplies dwindling. So the governor's plan is to keep school funding basically level from the year past to this year. Which, you know, effectively is not great, I don't think for educators because they were already at a low level, they will tell you. But to keep it level, to not make those cuts any deeper there. But the catch there is to do that, he's gotta have an extension of the taxes that are set to expire this summer. And these are increases that were put in in 2009, in income taxes, sales taxes and car taxes. And so the governor wants a special election, probably in June, I state wide election where sorts would say, yes, we will extend these taxes for five years, byes way, we will extend these taxes or we will not extend the taxes. And the governor seems to be pretty honest. If the voters say no, he'll accept that. But then he's gotta cut another 12 billion out of state spending.

MAUREEN CAVANAUGH: I see. I'm speaking with John Myers, he's Sacramento bureau chief for the California report, and we're talking about governor Jerry Brown's first budget. And he unveiled that earlier this week. Let's get to the most controversial part of this proposal, at least for some, and that is governor brown plans to shift the resources and the responsibilities for some key services to local governments. Now, what kinds of services is he talking about?

MYERS: Well, ape variety of services. And let me add a lot context here.

MAUREEN CAVANAUGH: Sure.

MYERS: To the beginning of the discussion on it, if I can. What effectively we have in California is we have a relationship between state government and local government that was changed dramatically in 1978 when voters approved proposition 13 because those local property taxes funded a lot of local services. The state stepped in when all those property taxes went away, started sending state controlled tax dollars down to the local level. But through the years also exerted a lot of control, created a system that was fairly Byzantine about who controlled what, who spent what, how it worked. [CHECK AUDIO] local state government relationship. Of that's the context in which the brown proposal comes forward. So the governor's plan would effectively, over time, shift control and funding largely for fire services, court security services, community based corrections, he wants to move some low level offenders back to county jails, mental health services, foster care, a few other things like that. Wants to fully move control and funding, and that's the real question here about the funding I'll talk about in a moment.

CAVANAUGH: Right, right.

MYERS: But he wants to move all of that into the local level. Two questions: One is are you giving them the tool to do this well? And that means are you giving them the revenues that they can actually rely on? Is and the second is, what about the rest of the ramifications when you move all of this forward? Because not only do you have to look for money now, but you've gotta look for money in the long-term, and one his ideas for looking for money in the long-term is a major change in what we see in redevelopment projects throughout the [CHECK AUDIO] cancel out, almost 300 redevelopment agencies that exist in California, they are funded with property tax dollars right now. The governor doesn't want to change the obligations they have on the books now, but he wants to take the money going forward. Which could be, you know, upwards of $2 billion that would be redirected towards other local programs. And I think that is where you're really getting a lot of questions about the effectiveness of economic development, using those tax dollars, leveraging private dollars. On the other hand you've got people saying, look, when we're cutting school and social programs and tax dollars are scarce, shouldn't we be using them for those services first? And that is it the debate that the governor has sparked here this week.

MAUREEN CAVANAUGH: A lot of news stories have characterized this idea to eliminate redevelopment agencies as taking money from cities and counties. But it -- isn't it really more like redirecting that money, John?

MYERS: Well, again, I think this is -- this is the subject of a great debate on which side you sit. Technically, yes, it is moving the money it a different entity, a different operation. But these are, you know, the problem here is that redevelopment agencies really are quite different all across the state. As I said, there are about 400 of them, some controlled by counties, some controlled by cities. Some spend money on things like libraries and football fields for the community. Some leverage dollars for large development projects as we saw in the budget deal back in October, there was a lot of talk about leveraging redevelopment money there in San Diego for a new football stadium.

MAUREEN CAVANAUGH: Right.

MYERS: And so it really does run the gamut across the state. And the good afternoon, rash trying to pick and choose those agencies, says let's change the whole process. I do think what you'll see some of the negotiation over the next few weeks is, can you start to hook at the different redevelopment agencies and say, well, these have more traditional operations, these are maybe somewhat more creative, you know, is that really where we want to spend the money? All of this has to be figured out, but I will say this, Maureen, that the time frame is really short here for the governor of he's got to get all of this on a special election ballot. And let's be clear: He's in the putting everything on the ballot. He want business to put the taxes on the ballot.

MAUREEN CAVANAUGH: Right.

MYERS: But to get those taxes, which are key to the entire package on the ballot, he's gotta have consensus here in the capital in about 60 days, which gives him about March. That's a really tight time frame to wrestle to the ground these very complicated problems and issues. And you know, the governor really has bitten off a lot here in this first week. But again, it goes back to his core philosophy, I think, which we all have heard him say, I think, over the last few weeks, which is, you know, I'm just being honest, there's no smoke and mirrors. We've gotta accept where we are in California. We have massive structural financial problems, we can't walk away from it, we can't smoke and mirror this again for another year.

MAUREEN CAVANAUGH: And the proposals to extend those taxes and frees would presumably be on the ballot this summer, right?

MYERS: June. June is when that would be a the ballot.

MAUREEN CAVANAUGH: Yes.

MYERS: [CHECK AUDIO] and a controversial part of this too is that the governor is talking about a five-year extension. And some people are gonna say, wow, five years. The governor's claim is that, look, we gotta let the economy come back. And a lot of that money would get directed to this realignment, local state program that we talked about. But in a tough economy, what are the voters gonna say? Let's not forget, two years ago, Arnold Schwarzenegger in the legislature with almost the same taxes, a slightly different proposal, but the same taxes, the voters said no. And so a lot of folks are wondering, is that a harbinger of what's to come if Jerry Brown puts this forward in June?

MAUREEN CAVANAUGH: Now, this realignment we've been talking about when it comes to services and the possible elimination of redevelopment agencies, can the governor do that himself or does he have to get legislative approval?

MYERS: This is a ledge slave approval issue. The governor doesn't have the executive authority to do everything on his own. And a lot of what you're hearing here and over the last day what I've heard is a lot of concern about whether his proposal on the redevelopment agencies is heel or illegal based on prop 22, which the voters passed on the ballot in November. [CHECK AUDIO] it did mention redevelopment money in it. The question is, is this a taking of money from redevelopment as prop 22 defined, or is it something else? And you know where that's gonna go, that's gonna go to the Courts. As things often do when we start talking about budgets proposals that are controversial, we all run to the courts to get an opinion.

MAUREEN CAVANAUGH: I wonder, how has this new budget been received in Sacramento, John?

MYERS: It's very interesting. Very interesting. I mean, Republicans predictably are unhappy with the taxes. Also predictably, I think saying it's, you know, they're not gonna get out in front and propose solutions issue that's also because of the November ballot, prop 25, which makes a majority vote budget happen in the legislature now, they say hey, you don't need our votes. Democrats can do it. So that's not terribly surprising. But I think it's disappointed some of brown's advisors, from what I've heard. Democrat, very interesting dynamic here. These are cuts they do not like. Large cuts to MediCal, which is healthcare for poor people. Large cuts to CalWorks, which is welfare assistance. Large cuts to the UC and CSU systems. These are cuts that they absolutely would have railed against if Arnold Schwarzenegger had put them forward, and yet they are holding their fire somewhat and saying, well, this is a constructive dialogue, we're looking at a broader systemic fix. Let's get with the governor and work with him. And that's a really interesting dynamic. Democratic, governor, democratic legislature, how is that gonna work in the next few weeks?

MAUREEN CAVANAUGH: We'll have to watch it. Thanks so much, John.

MYERS: Thank you, Maureen.

MAUREEN CAVANAUGH: I've been speaking with John Myers, Sacramento bureau chief for the California Report. We will continue our discussion about Governor Brown's new budget after a short break. You're listening to These Days on KPBS.

I'm Maureen Cavanaugh You're listening to These Days on KPBS of we're talking about governor brown's new budget proposal which calls for deep budget cuts, voter approved taxes, as well as limiting resources and responsibilities for important programs from Sacramento to local governments. And the elimination of city and county redevelopment agencies. I'd like to introduce my next guest, Joe Matthews, former staff writer for the LA Times, now an Irvine senior fellow with the New America Foundation. He's author of California Crackup: How Reform Broke the Golden State, and How We Can Fix It. Joe, good morning. Thanks for being here.

ROSENBERGER: My pleasure.

MAUREEN CAVANAUGH: Now, we are inviting our listeners to join the conversation. What do you think about governor Brown's budget? Can counties handle more responsibility for fire protection and social services? Are redevelopment agencies too important to eliminate? Give us a call with your questions and comments. The number here is 1-888-895-5727. That's 1-888-895-KPBS. Well, Joe, what is it that you might like about governor brown's budget proposal?

MATHEWS: Well, I think, you know, some of the things that John Myers talked about, it's certainly more --

MAUREEN CAVANAUGH: I think that --

MATHEWS: Sorry, I think I may have lost you there a second.

MAUREEN CAVANAUGH: Hi, Joe.

MATHEWS: Hi. It's certainly more honest than -- and more straightforward than what we've seen. That doesn't mean it isn't entirely straightforward. You know, there have been some picking at claims that some of the cuts aren't really cuts. There's a -- people haven't noticed it, but in the null extensive many hundreds of pains budget summary, there's quite a bit of one time solutions in this budget, almost $8 billion, which hasn't gotten a lot of attention. But it's an attempt, and I think, actually, one of the strongest parts of it is the redevelopment agencies piece. Whatever you think of redevelopment agency, what he has done there in terms of trying to [CHECK AUDIO] power is probably the most interesting and significant structural reform in the budget 'cause he's not thought giving back power and authority. He's not just eliminating sort of a, you know, state support of this thing. He's actually trying to change the constitution to allow local governments to raise funds to do redevelopment in the future. So it'll be much more on them. I actually wish that the other kinds of devolution in the budget proposal in fire and some correctional issues and social services actually looked more like that. Because what's happening in those others, those seem -- that seems much more half baked, in that the state is still gonna hold the purse strings. They're gonna have dedicated funds, but they're gonna hold the purse strings, and that plan is only limited to five years. Local governments don't get the power to raise their own revenues, it's still -- they're still essentially spending entities. And that's been the problem in our state. The local governments spend but they never have to set taxes. They never have to -- they get power without, you know, responsibility and accountability of having to be a tax setter. And the only good -- the only place where we really get back to that sort of basic principle is in the redevelopment agencies. And you can see how hard real reform is in California because that's the area that's been the most controversial and there's been the most push back.

MAUREEN CAVANAUGH: Can you Joe, can you explain to us how redevelopment agencies work right now?

MATHEWS: You know, that's hard to do in part because they all work very different. I'm based in Los Angeles, and our experience with redevelopment is, you know, essentially what happens typically is that a redevelopment agency declares some piece of land or some section of land blighted, and then can acquire it and essentially make improvements usually selling bonds to make the improvements and then turn it over to a developer, who does something to -- who then redevelops it. Of and if it's a good project, money is made, the bonds are paid back. Unfortunately there have been a lot of bad project, and there are a lot of cases where, you know, you're turning over pieces of property to very politically connected people. People want to build things like, you know, football stadiums, or people are billionaires, and may not necessarily need our help at a time of budget cuts and the other issue with redevelopment is when you take -- when you put that land into a redevelopment area you're taking property taxes from that land off the table. It goes into funds part of the governmental lands in schools and other local governments. So redevelopment, you know, if that's done well, it can be very successful. But there's a lot of history, particularly in Los Angeles where I live, of it not going so well. There was an LA Times report last year that showed almost a billion dollars spent in different redevelopment agencies here in Southern California on projects that were supposed to be for housing, and not a single unit of housing was built. There's been a lot of that.

MAUREEN CAVANAUGH: I'm speaking with Joe Matthews, a former staff writer for the LA Times. His new book is called California crack up. And in that book, Joe, you talk about the decisions that led to California's sort of structural budget problems. You offer some solutions about how to fix those problems. Do you think there are elements in this budget plan that can fix California's long-term budget problems?

MATHEWS: To put it -- too fine a point on it, no.

MAUREEN CAVANAUGH: Okay.

MATHEWS: I mean, I think that's an element of the redevelopment. If brown is prepared to do in all local services what he's offering to do in redevelopment, which is give the responsibility back to local governments, but also give them the ability to raise revenues. Buff this doesn't really attack that. He sort of walks up to the precipice of reform there and stops. And he doesn't do anything to change the fiscal structure, the budget structure, the initiative process, and you know, our whole system sort of is a ratchet that conspires to ratchet up the budget deficit, because it can do things to spend money or to limit taxes in our system, than it is to do the opposite. And there's really no way through our election system to hold people accountable. So the problem with this budget is everyone can stand and say, you know, this is very fair, he's got about the same number of spending cuts as tax increases, that's balanced. But he's making those changes and exacting that pain without, you know, doing anything about the underlying system, which is gonna continue to make the problem worse. So we get pain, but there's no -- a lot of pain across the board in this. But there's no path in this building to at a gain, to a better future where we have a system that works for the. It doesn't mean we're always having to be ratcheting down, you know, where -- I mean, this is it tough stuff. We're gonna be raising taxes, he wants to raise taxes.

MAUREEN CAVANAUGH: Right.

MATHEWS: At a bad economic time, and he's sort of cutting all these important services and not doing much for education the I time where everyone who studies these things says we actually need to do more.

MAUREEN CAVANAUGH: So were you actually expecting more from governor brown's first budget proposal?

MATHEWS: I guess the opposite optimist to me was. I mean, my hope for brown had been here's someone who comes from the most important political family in the history of California. Someone who really knows this stuff inside and out. And I find it sort of dispiriting and disappointing that someone who understands what's wrong, clearly, has decided that it's just too scary and difficult politically to tackle the systemic reform. I mean, I had a call last night and a long discussion that became sort of an argument with one of governor brown's closest advisors of it was about this. He was telling me, you're being unrealistic, you know? But realism in operating within the system that sort of condemns us to, you know, constant budget deficits. And the inability to do the things that a lot of voters want who voted for brown. It strikes me as kind of a crackpot kind of realism. You need to -- we really need to stop in this state and try to redesign our system, you know, it can be done. There's constitutional conventions in reforms, all over the world. Other states have done it since World War II, the European union has done it twice in the last 30 years of it's hard, but -- that kind of stuff, and it sounds scary. But the fix we're in where we're not able to do very much, where even a governor hike this decides, you know, the best I can do is try to make the -- try to make the pain and help things from getting too much worse. It's a very dispiriting kind of position to be in, and a very strange place to start a new administration.

MAUREEN CAVANAUGH: Right. I'm speaking with Joe Matthews, as I said, he's now an Irvine senior fell we on the new America foundation, and author of California crack up. And we are inviting our listeners to join the conversation. Asking you, what do you think about governor brown's budget proposal. Were you perhaps hoping for more long term plans for the state? Give us a call with your questions and your comments of our number is 1-888-895-5727. That's 1-888-895-KPBS. I wonder, you know, some -- I remember reading that some people were very concerned about the fact that there would be no more federal stimulus coming into this particular budget. How does Jerry Brown handle the loss of this federal stimulus money?

MATHEWS: He's very up front about it in the budget that it's not gonna be there. And he tries to come up with cuts and sometimes one time revenues or tax increases to partly cover it. I think the budget at least in what it attempts to cover the scope of all the stuff we're losing, he's very -- he's very honest about that. He talked in the campaign a little bit about trying to push back and get more money from DC. But that hasn't -- there hasn't been a lot of -- there hasn't been that conversation in the context of this budget proposal. Which I also think is in something of a missed opportunity. I mean, this is a state that, like other big urban states has been a big net donor to the federal government over the last generation. And I think we have a -- you know, we have a strong case to make for aid, as politically difficult as that is in Washington any time. And it's probably very political difficult when Republicans have just made gains based on running against stimulus.

MAUREEN CAVANAUGH: Right. And also in this budget is a whole section devoted to what kinds of savings the state can actually realistically try to make when it comes to California prisons. In fact there's an idea to have a commission together to eliminate unrealistic savings estimates that have been part of recent budgets. Of is that a step in the right direction?

MATHEWS: Well, it is. But it's also a step back. There was a commission early in governor Schwarzenegger's first term, chaired by former governor Deukmejian which kind of did that work. And then it was dead on arrival up against, sort of, the power of, you know, crime victims groups issue the prison guards' union. It was too much. And one of the telling things in this budget is that, you know, the areas that have gotten the last in the way of cuts, actually, in the actual proposal are prisons and education where the public employee unions are -- those are two of the most powerful -- the California teacher's association, and the prison guards union, are the California correctional peace officers association. So I think it's nice to talk about a commission. But to me, a commission feels a little bit like a dodge there. Though the budget is right in saying that we've used a lot of unrealistic assumptions, they're in another area.

MAUREEN CAVANAUGH: 1-888-895-5727 is the number to call. Allen is on the line from San Diego. Of good morning, Allen, welcome to These Days.

NEW SPEAKER: Hi.

MAUREEN CAVANAUGH: Hi.

NEW SPEAKER: Well, whey need a total monetary reform nationwide because we're borrowing money from the Fed that loans us, you know, at interest, which creates the debt. But until we do that on a national level, we can do what north Dakota has done on a local level and have a state bank that we can use to issue loans and then have California ark crew interest, and you know, we can fund some of our state's problems and alleviate some of our monetary problems by having our own state bank.

MAUREEN CAVANAUGH: Allen --

NEW SPEAKER: Like North Dakota that is doing very well.

MAUREEN CAVANAUGH: Let me get a response from that. Thanks for the call. A state bank, Joe. Of what do you think?

MATHEWS: Well, it's an idea. It's come up, it has been talked about sort of in kind of ivory tower policy circles in California in the last couple of years. As with anything, it depends how you do it. [CHECK AUDIO] strength these days. One of the lower unemployment rates in America. Can also has, you know, a lot of mineral resources, and it taxes those resources aggressively. California sort of famously doesn't have a severance tax when you take oil and other things out of the ground. So that the structure there, tax wise, is a little more friendly to the government, at least in that area. And that changes a lot of the dynamics. These are very different kinds of places. But sort of looking at it, I think again, like so many things, the notion of a state bank is a difficult notion. It would be a significant change and thus it's very easy to stop that politically. It's easy to think of Republicans, for example, saying, you know, the state should not be in the banking business. That's socialism.

MAUREEN CAVANAUGH: Let's take another call. We're taking your calls at 1-888-895-5727. Below the new state budget. And David is calling from Hillcrest. Good morning, David. Welcome to These Days.

NEW SPEAKER: Thanks for taking the call.

MAUREEN CAVANAUGH: You're welcome.

NEW SPEAKER: Listen, this governor hasn't even been in for a month. And there's a lot that I don't like about what is going on or what he's proposing. But at the same time, you gotta start somewhere. This is something he's inherited, this is it a malaise that is endemic to a number of things, as the author has said. But at the same time, we have to give the idea and the reception that there is a longer range plan, but this is the first part of it.

MAUREEN CAVANAUGH: David, thanks for the call. So I guess -- do you look at this, Joe, as maybe a good first step?

MATHEWS: Well, I would if there was a long range plan. But they are saying that this budget contains a long range plan. And on, you know, the big, sort of systemic change here, realignment long range for this governor seems to mean five years. Essentially what he's saying is the state tea gonna -- we're gonna ask taxpayers at the poles in June to provide some money that helps us pay for some things and also provides money to push down a lot of these responsibilities to local governments. But it's not a permanent realignment. Those tax increases will go away in five years, and at that point, the budget of the state will cover that. Though it's not clear how the state will have the money to cover that. It becomes sort of another unfunded obligation in a sea of unfunded obligations. I actually think that's no indication of a long range plan. And throughout the campaign where I've had exchanges with governor Brown, he has been determinedly avoidant -- sort of hostile to the idea of long range plans. One of the things he loved to say in his first governorship when pressed on this kind of subject of a long term reform was, what we need is it a flexible plan for an ever changing world. And I think that's still very much the attitude of this fellow, even in his inaugural address, there was a lot of talk about, you know, skepticism of big plans, that essentially California doesn't face problems so much as conditions that need to be managed and addressed and always will be with us. So I think he comes from a -- to my thinking, a narrow mind set, perhaps too narrow a mind set.

MAUREEN CAVANAUGH: Well, Joe Matthew, thank you so much for speaking with us this morning. I really appreciate it.

MATHEWS: My pleasure.

MAUREEN CAVANAUGH: I've been speaking with Joe Matthews, the author of California crack up. We have to take a short break and when we return we'll continue to talk about some aspects of governor Jerry Brown's new budget proposal with the mayor of national city, Ron more son, and continue to take your calls at 1-888-895-5727. You're listening to These Days on KPBS.

I'm Maureen Cavanaugh. You're listening to These Days on KPBS. Welcome back. My next guest is in a position to have a crucial interest in one of governor brown's budget proposals. Ron Morrison is mayor of national city. Two thirds of national city is designated as a blighted area and qualifies for redevelopment agency funds. Of governor brown is proposing eliminating redevelopment agencies and redirecting those funds of and welcome, Mayor Morrison, welcome to These Days.

MORRISON: Oh, thank you very much for having me.

MAUREEN CAVANAUGH: Now, I want to remind our listeners, we are taking your calls about governor brown's budget, and about redevelopment agencies. Our number is 1-888-895-5727. So let me first of all get your over all reaction to governor brown's budget plan that was unveiled on Monday.

MORRISON: Well, I think from a city standpoint, I think it's very shortsighted. You know, there's this big push saying that local government is so important. Well, if we were so important, why didn't we brought in, and says, how did we work this thing out? Instead we're hearing this thing at the tail end. So this is government from the top down and not incorporating the people who are actually at the ground floor and working with this stuff. And saying, how does this work, or what doesn't work, and how do we make this happen? But instead we come up with a plan that has nothing to do with local government, and yet is gonna have a huge impact.

MAUREEN CAVANAUGH: And I imagine that since national city and redevelopment agencies are so are so deeply link indeed a sense, that the proposal to eliminate local redevelopment agencies will have Dwight an effect on national stay.

MORRISON: Well, national city and state wide, as a matter of fact. If you could, look, redevelopment agencies are set up to do a number of things not only for blight, but also for job creation, and then also for infrastructure and then to provide housing, all of these different things of if you take a look at them, for infrastructure, housing, the number one provider for state funds in the U.S. government is the federal government. Second one is redevelopment agencies. So if we do away with that, there is our job creation for the future, there's our infrastructure, which our infrastructure situation in California is devastated.

MORRISON: It eliminates all of that. The job creation, the housing, the state's pushing on us for housing and they're giving all these new requirements, how do we meet those requirement fist they take away the funding?

MAUREEN CAVANAUGH: Right. Now, our reporter, KPBS reporter, Joanne Faryon, reported that National City stands to lose up to $40 million in tax revenues if the plan to eliminate local redevelopment agencies goes through. First of all, how do you arrive at that figure.

MORRISON: Okay. It's a number of ways. The actual -- and how the figure comes up and what redevelopment does, it does not take property off the tax roll and take it away from schools and all that. I've heard that earlier, and that's not quite true. What it does is it will take property and you look at the base tax base right now that goes to schools and everything else. Then you make improvements on it, and the incremental change, the increase is what stays in the redevelopment agency. The base always stays with the schools and everything else. All that stays there. So our amount currently over the last few years, an average of about $14 million a year in that tax increment comes in. Of that, three million of that has to be used for low and moderate income housing and we're looking at actually trying to increase that. Then about four million of that goes for indebtedness, but we take that 14 million dollars and we leverage that with other opportunities, and we bring that up to close to $40 million of revenue that can come in for job creation, infrastructure, housing and all those different elements within an area. All of that would be lost and go back up to the state. And if I could -- you know, another thing is that we have went through a number of initiates to protect local government because the state keeps raiding local government. We went through Prop 1A, over 80 percent passed by the voters and said leave local government alone. State, quit raiding it. So then the state said, well, wait a minute, it didn't specify redevelopment agencies, so we'll money from redevelopment agencies and we'll borrow money. So we just did Proposition 22, and once again, the voters said no, stop taking -- don't take money from redevelopment agencies don't take this. And now the state's looked at it and said, okay, maybe we can find a way we can eliminate redevelopment and take the money. So this is it a constant circumventing, every time we turn around, they're constantly circumventing the will of the people of the California and trying to steal this money away from the local people.

MAUREEN CAVANAUGH: And we're taking your calls at 1-888-895-5727. And to be clear, it's not actually the state confiscating this money, it's just redirecting it away from redevelopment agencies to be spent in other areas, I mean they're not actually going to take money and put it back to the state. They're gonna force you, really, to spend it in other ways.

MORRISON: Well, their deal is, says that they're gonna go and put it back to local. Their system like local schools, that local government has nothing to deal with it. This is all part of the state situation. Local government has been forced to make changes. We have had to stay within our budgets. So we have, you know, down sized, we have eliminated a lot of departments, merged them and everything else of we're not seeing the state government doing that. Of state government, if you'll even look at the proposals in this damage, really does none of that, they're not addressing their problems issue they're just reshuffling the deck, and then trying to bring money from other areas and I sag, okay, we'll take this money from the local government, and we'll look at giving you the opportunity to raise new taxes to replace it. Why? Because they can't raise taxes 'cause people don't have faith in what's going on in Sacramento so for some reason we're supposed to be able to raise new taxes to replace the money that they're taking and going somewhere else.

MAUREEN CAVANAUGH: Well, let me ask you something. There was a study gone, and the results were released last summer, and basically it looked at redevelopment agencies across the state. And it found that for the amount of money that's being transferred to redevelopment agencies to redevelop blighted areas and so forth, that basically there hasn't been a great deal of return on that money, state wide. How would you counter those results? What do you see in national city?

MORRISON: Okay. Well, if you look at, you know -- in a macro and a micro type concept, if you look at some specifics, you're gonna find some projects that were not good. If you look I think locally, if you look at the national city project, if you look at CCDC and what has happened downtown, I grew up in that downtown when I was a kid, if we had not had redevelopment, it would still be in that position, or actually worse. I mean, it was skid row. Now it is a place people from all over the country come to because of redevelopment, and it has brought in jobs, it has brought in revenue that goes to the state. You know, the governor made a great analogy in his inaugural speech and he talked about the pioneers coming to California. And he talked about that in some depth, and I think it was a great analogy. The only deal is, if those same pioneers coming and left St. Louis Missouri and they got all the way to Utah, and they said, well, wait a minute, we've been storing up our seed corn that we've been using for planting in California, well, let's eat it. They would have destroyed their future. They would have gotten to California and they would have had no future. Redevelopment basically does not say let's pay our bills today. Let's make and develop our state and regions for the future and develop tax money for the future for the state and local government. If we eliminate this and redistribute the money out just to pay bills and to solve the state's problem without them redesigning the state government, which is what they need to do, we've destroyed our future. I mean, that makes absolutely no sense. I know he refers to this as -- this plan as vast and historical. And that was his terms. But some of us mate see this more as devastating and hysterical. Because it just really doesn't make the sense when you take a look at what redevelopment agencies fully do. Because if you take a look at national city, we've condition some projects out there. One of the things is right in the center of town, we've build an education center. It now houses a junior college, it also has a county board of education, their training center. Wait a minute, those are state projects aren't they? Well, goes what, the state doesn't have any money to do that. So the city, we put up $20 million, and we did it. Of course the state doesn't give us any credit for that.

MAUREEN CAVANAUGH: Now, let me ask you, how long has national city been designated -- wide areas of national city been designated a redevelopment area?

MORRISON: For the most part, and there are specific areas, but for the most part since about 1970.

MAUREEN CAVANAUGH: So one might say, shouldn't national city be redeveloped by now?

MORRISON: No, because you're taking -- these are very long range situations. And so when -- in your first few years, you have no money at all because you have no tax increment. You're planning for the first, about ten years. And you borrow against future incomes, planned incomes, which is kind of sketchy, and you get very little. So yeah, so this is something that takes many decades to actually make it happen. Same thing, I mean, downtown San Diego did not happen over night. You know, look at how long that has taken, and with all the effort that's went into that. Smaller communities are much different of the other thing is that you have smaller communities now, the City of San Diego has a lot of different redevelopment agencies. CCDC, being one of them. And these are entirely separate from the city, and they have separate staffs and everything else. Smaller agencies like national city and everything else, we are taken and we've combined our city staffs and our redevelopment staffs together for efficiency and cut down. I mean, we have a smaller administration now than we did in 1970. State government can't say that. I'm sorry. And so yeah, and so if we do away with all of this. What are local governments doing? Local governments are gonna be devastated.

MAUREEN CAVANAUGH: We're taking your calls at numb null. My guest is Ron Morrison, mayor of national city. And Ron is on the line from Bonita, good morning, Ron, welcome to These Days.

NEW SPEAKER: Good morning, thanks for taking my call. I understand what the mayor is saying but I have a hard time with the argument that if redevelopment agencies do not exist, the job will not get done. This is all about -- about focusing tax money in a direction to an organization that has that -- that job of doing redevelopment. But I don't buy that it that if you organization doesn't exist that cities or municipalities and the people who vote within them won't find a way to make it happen. It may mean this texts get raised, absolutely. But I don't see the vision that San Diego would be skid row today downtown where mayor Morrison grew up just because -- if a redevelopment agency never existed.

MAUREEN CAVANAUGH: Let me get --

NEW SPEAKER: People find a way to make it happen.

MAUREEN CAVANAUGH: Ron, thank you for the call. And let me get a reaction to that.

MORRISON: Well, certainly. If you take a look, Horton plaza, which the Horton Plaza I grew up in looked entirely different than the one that's there today. That was done with redevelopment money. Petco Park, all that stimulus that was done down there was done through redevelopment.

MAUREEN CAVANAUGH: I guess Ron's question is, couldn't that have been done some other way.

MORRISON: Well, you find the money to do that, to put in the public improvements, and to do all those things. Good luck. With the kind of economies we have faced over the last 20 years, that money is not there. And if we continue to send it to Sacramento and just to give you an example, in the 1990s, when we went through the -- what, the ERA shift, and we took local money away from local governments, sent it to Sacramento to go to schools, local governments state wide, their budgets decreased six percent. During that same time period, state government increased six percent by the tame they said they had no money. They were increasing their billions every year, local government was decreasing. This is what will happen. Your local moneys will be drying up, and we're down to basic services only at this stage. These are the kind of moneys issue you're not using money, your regular general fund money anymore for capital improvements of cap 258 improvements, your infrastructure everything else is coming out of redevelopment anymore. And as I say, that has been the source. If that dries up, then you're gonna see, these projects are gonna become almost nonexistent. Will progress still happen? Yes. But at a micro level of course we will no longer be competitive. This is not what other states and other regions are doing of they're doing the exact opposite. They're doing stimulus. Same thing with the enterprise zone that they to eliminate. They're doing stimulus to try to generate jobs, generate infrastructure. The State of California is saying now, let's pull it back away from jobs and infrastructure. We're already at, what? 12 percent unemployment state wide, a lot of our areas well over 20 percent. This will only exacerbate that situation.

MAUREEN CAVANAUGH: To play devil's advocate though.

MORRISON: Sure.

MAUREEN CAVANAUGH: What part of what California finds itself in is a very, very tight budget situation and has for a number of years now. And it seems to me that the people who advocate this plan are saying right now we cannot divert property tax dollars into these redevelopment agencies. What we need to do is direct more of it into general funds so it can be used so that local education doesn't have to be cut, local public safety doesn't have to be cut. All of these things, we need to do that right now. We can't afford the luxury of redevelopment agencies. Theft as things stand right now. How do you answer that?

MORRISON: Well, because this is not a temporary lapse. This is it a permanent lapse without any long range planning go with it. How do you look at this long range and how they're increasing the tax base for the state, if it was not for redevelopment agencies, the state budget which actually increases each year, unlike a lot of city governments, their base is increasing issue a lot of that is because of redevelopment agencies that are bringing in the shopping and centers and all the different retail, and all the different things along this line, the majority of that money goes to the state. Is it doesn't go locally. So this is, you know, this has actually happened the state. And by what we're doing, this is so shortsighted, what we're doing, we're saying let's take care of our situation today, let's not have any long range planning for either revenue or for reform. This reform is not long range. We're not changing state government. We're not looking at how state actually performs. We're only looking at reshuffling the cards in the poker game, so to speak.

MAUREEN CAVANAUGH: Right, right let's take another call. David's calling from San Diego. Good morning, David, welcome it These Days.

NEW SPEAKER: Good morning. For the mayor, wonderful that you're making these points. But at the same time, let's think of what the last caller just said. The redevelopment agency is not the only way for something to occur. I believe that the governor, and this is the way a number of things are gonna start happening, the governor is placing right back into the hands of the representative government, locally, in your hands the opportunity to come up with new emphasis in order to go forward. And what does that do? It puts it between you as a representative and the electorate. The actual population that's involved. And those people are gonna have to come together and come from the grass-roots not just redevelopment agency already having made their decisions, their forward movement. Somebody else has to do it, and I think the electorate has to become responsible and understand their obligation to raise taxes.

MAUREEN CAVANAUGH: Well, David, thank you for that call. And let me ask you, then, how, mayor Morrison, how difficult might it be to actually get the electorate to approve redevelopment and raise their taxes to see a new civic center go in or an area be -- a new housing development go up?

MORRISON: Well, they basically already do in so many areas. I mean, 'cause a lot of city money also goes into these different areas and, we use different pots of money to make these projects happen. And along with it goes services also. But that can be turned around in both directions. Because what the state is saying, see, this money has already been developed at the local level, this was nothing that was developed at state, and the state's giving the money to us. This money was developed at the local level. Now the state wants to move it over to take care of their problem, and now they're saying at the local level, you need to go out and get the confidence of the voter to raise taxes just to take care of what you were already do. That works for the goose and the gander. The state's got such a great program, and they're working this thing saying, and their structure is -- and they can show the people of California that they're administering Sacramento right, why aren't they going and saying let's raise taxes to keep what we have? But that's not what they're saying, they're finding another way to take money from somebody else. This was money that was raised tat the local level. And I'll be honest, with you, there's not a lot of trust. The state works kind of as a bank. Just as, you know, a lot of times you'll have your check directly deposited into a an account, and you expect it to be there, and you expect your bank to distribute it back to you. A lot of local money goes to the state, and they redistribute it. Local government isn't always real confident about how the state redistributes our money. And I can give you a real quick example.

MAUREEN CAVANAUGH: Actually, we don't have time for it. But --

MORRISON: Okay. No problem.

MAUREEN CAVANAUGH: But I tell you, I don't think this is the last time we're gonna be speaking about this, mayor Morrison.

MORRISON: I betcha we're not.

MAUREEN CAVANAUGH: So hold that thought.

MORRISON: I will do that.

MAUREEN CAVANAUGH: I want to thank you so much for being with us today.

MORRISON: You're very welcome.

MAUREEN CAVANAUGH: And if you have any comments, please go on-line, KPBS.org/These Days. Stay tuned for hour two of These Days coming up in just a few minutes her on KPBS.