This story was reported for San Diego News Network on October 22, 2009.
A redevelopment organization is attempting to protect its coffers by filing a lawsuit, students are disappearing from universities and some state employees are seeing hefty dollars from overtime hours. Here’s what’s happening in the money world of California.
Suing over money: The California Redevelopment Association filed a lawsuit over Assembly Bill X4-26. The bill allows the state to tap into $2.05 billion in local redevelopment funds but CRA says the bill violates the State Constitution. The CRA, a non-profit that represents more than 400 redevelopment agencies and allied firms, is concerned that the state’s actions will leave necessary projects without funding.
“The lawsuit alleges ABX4-26 is unconstitutional for two main reasons:
– First, Article XVI, Section 16 of the California Constitution, approved by voters in 1952, states that redevelopment tax increment funds can only be used for specified redevelopment activities, specifically “to finance or refinance … the redevelopment project.” Taking redevelopment funds to balance the State’s budget – the unquestioned purpose of ABX4-26 – does not qualify as a constitutionally permitted use of redevelopment funds and is therefore unconstitutional.
– Second, raiding $2.05 billion in redevelopment funds constitutes an unconstitutional impairment of contracts. Under Article XVI, Section 16 of the State Constitution, redevelopment agencies irrevocably pledge redevelopment (tax increment) revenues to pay back bonds and other obligations that raise the capital to fund redevelopment projects. By raiding funds that are pledged to pay back bonds and other creditors, ABX4-26 impairs the contractual pledge of revenues on which redevelopment financing is based.”
The lawsuit is the second filed by CRA. In 2008, the CRA sued California when it attempted to take $350 million in redevelopment funds.
“We believe the second budget raid by lawmakers is just as unconstitutional as the first,” said CRA executive director John Shirey. “Lawmakers ignored the State Constitution and attempted to write state budget legislation around it. That’s simply irresponsible policy-making, and it illustrates why many have concluded state government is broken and needs fixing.”
The Union City Redevelopment Agency in Alameda County and the Fountain Valley Agency for Community Development in Orange County are also named plaintiffs in the lawsuit.
Blaming judges: Gov. Arnold Schwarzenegger is pointing his finger at federal judges, the Sacramento Bee reported.
Schwarzenegger “said judges especially on the federal level are preventing California from solving its problems,” such as furloughs, the prison system and other issues, according to the Bee.
The governor went on to say California needs to have “a very serious conversation with the federal government.”
Empty campus: The Los Angeles Times had an interesting article about a “busload of future college students from Whittier High School” who took a trip to Cal State Fullerton on Wednesday – only to find an empty campus.
“But they did receive an unexpected lesson on the state’s budget crisis, thanks to a three-day faculty furlough and the cancellation of most classes — part of a broad plan of cuts and student fee increases to stem the university’s $36.7-million shortfall,” stated the article.
At San Diego State University, president Stephen Weber sent an email to “alumni and friends,” notifying them of admission changes. The email stated:
“As a direct result of devastating state budget cuts of $571 million, the California State University System is reducing enrollment state-wide this year and next by 40,000 students. San Diego State’s share of that reduction will be 4,618 students. There are 1,850 fewer students on campus this fall and we expect to reduce our enrollment by an additional 2,768 students next fall.”
Weber also addressed the end in guarantee admission for local students who reach certain requirements, because of the budget cuts.
The move received criticism from Assemblymember Marty Block (D-San Diego), who hosted a forum regarding the move on Tuesday.
“Current local high school and community college applicants have played by the rules, followed the advice of their counselors, and met SDSU’s published admission requirements,” Block said. “Now, SDSU is changing the rules. That is fundamentally unfair. Postponing changes for one year would allow opportunity for further study with community input and would give future applicants reasonable warning of possible changes.”
According to Weber’s email, the university rejected 22,164 qualified students this fall semester because of the budget cuts.
Billions in overtime: California auditors say some state employees earned more than $150,000 a year in overtime as the state paid out more than $2.1 billion in overtime during the past five years.
The highest overtime payments went to 26 firefighters, four highway patrolmen and 110 employees at the departments of Veterans Affairs, Mental Health, and Developmental Services.
The audit released Tuesday did not include overtime paid to corrections employees at prisons staffed around the clock.
The audit of overtime payments came after Gov. Schwarzenegger imposed unpaid furloughs on state employees three days each month to help close a massive budget deficit.
State Auditor Elaine Howle acknowledged that some state facilities are understaffed, forcing managers to rely on overtime. But her report notes excessive overtime was earned by a relatively small number of employees at state mental hospitals and developmental centers, which “may compromise their own and patients’ or consumers’ health and safety.”
For instance, 19 of the 489 nurses at the mental health department’s Napa State Hospital averaged $78,000 in regular pay and $99,000 in overtime. Just 27 of the 430 psychiatric assistants at the Sonoma Developmental Center averaged $41,000 in overtime on top of their average $33,000 annual salary.
The Associated Press contributed to this report. Hoa Quach is the political editor for the San Diego News Network.