City, state in a financial showdown

New law could garnish Rocklin?s property, sales taxes to help fill state budget gap
By: Jon Brines, Placer Herald Correspondent
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When Gov. Jerry Brown signed a budget trailer bill last Friday, he gave the state additional power to force Rocklin to pay money once earmarked for redevelopment. The move has been condemned by city officials. ?Our concerns lie in the punitive nature of the bill towards cities, successor agencies and the power granted unto the (state) Department of Finance at expense of local oversight boards,? Rocklin City Manager Rick Horst said. The state wants the city to sell off former Redevelopment Agency properties, including the Rocklin Historical Museum, Big Gun Quarry site and the newly renovated library building on Granite Drive as well as a couple of vacant lots in downtown. City officials have indicated they?re doing everything they can to keep most of the properties out of the proposed fire sale. The 2012-13 state budget is depending on $1.4 billion from the collection assets tied to the 400 former redevelopment agencies throughout the state. During last week?s hearing before the Senate budget panel, an official from the State Department of Finance admitted cities were holding out on money promised through the dissolution of the RDAs to the tune of $500 million for the month of June. That?s one reason why the new law gives the state power to garnish Rocklin?s sales and property tax allocations in an effort to close its budget gap. The law allows the state to withhold sales and property tax revenue if officials think Rocklin is failing to make good on its redevelopment obligations. It also would let the state seek $10,000 a day in civil penalties for failing to file required reports. Both Sen. Doug La Malfa (R-Butte) and Assemblymember Beth Gaines (R-Roseville) voted ?no? on the bill. Chris McKenzie, executive director of the League of California Cities, said the bill was passed too quickly and without input from cities. He warned of a possible lawsuit against the state. ?(The law) will very likely widen the divide and promotes more conflict and litigation. We hope the Legislature takes a second look at this measure and corrects its flaws before any more damage is done,? McKenzie said in a statement issued last week. Redevelopment funds had been used frequently over the last few years helping to put sidewalks and infrastructure in the older parts of downtown, remodeling the Rocklin Event Center on Sunset Boulevard and funded affordable housing. The law comes just five months after the closure of the state?s 400 redevelopment agencies, including Rocklin?s. It has forced the city council to oversee the agency?s unfinished business through an Oversight Board. Rocklin has $64 million in obligations from the RDA dissolution, including money the city loaned its redevelopment agency, bonds issued to non-housing projects and funds to officially close the mining operation at the Big Gun Quarry. The city may have to reopen its new $43 million balanced budget passed on June 26 to deal with the state ?claw backs? or garnishments. ?On the whole, the city of Rocklin will need to fend for ourselves. The only help we can expect is the help we generate for ourselves,? Horst said. ?Rocklin has proved to be up to the challenge.? Rocklin Council member George Magnuson suggested the city should be more aggressive with the state. ?Considering how the state keeps tightening the noose, I am wondering if it might be wise to just let the state take over everything and dissolve our role as a successor agency,? Magnuson said. In February, council members voted unanimously to give up one of the important duties of the Redevelopment Agency by transferring Rocklin?s affordable housing function to the California Department of Housing and Community Development. Now Magnuson suggested the council?s role as a successor agency to the RDA needs to end as well. ?Our budget is tight as it is. Let the State spend their money to make sure everyone gets paid,? Magnuson said. ?That way we won?t risk losing the sales tax or other funds that they are threatening to take away. If all municipalities and counties refused to act as successor agencies the State (Department of Finance) might just back off.? City officials decided to cancel Monday?s Oversight Board meeting. The next one is scheduled for Aug. 6. Placer County has until Monday to tell redevelopment successor agencies, like the Rocklin City Council, how much money they need to transfer, if any. The city would then have to transfer the funds by July 12. And if that doesn?t happen, the state Department of Finance could start levying penalties against the city as early as July 18. ________ City vs. State $64 million: Rocklin?s RDA obligations to date $8 million: This year?s obligations July 18: State can withhold city?s tax revenues $10,000 per day: New fine for uncooperative cities Source: City of Rocklin/League of CA Cities