California court says state can kill redevelopment agencies

Reuters News
Posted: Dec 29, 2011 2:13 PM
California court says state can kill redevelopment agencies

SAN FRANCISCO (Reuters) - California redevelopment agencies can be dissolved by the legislature, but the state cannot force those agencies to make payments to other government funds, California's high court ruled on Thursday.

Faced with a continuing budget shortfall, California legislators earlier this year passed a law dissolving local redevelopment agencies in an attempt to save money.

Another law, however, gave the agencies a chance to continue operating, on the condition that they pay $1.7 billion this fiscal year and $400 million each year thereafter to schools, transit and fire districts.

A group of plaintiffs, including the California Redevelopment Association and the League of California Cities, asked the California Supreme Court to declare both laws unconstitutional.

In a ruling on Thursday, the court found that the dissolution law "is a proper exercise of legislative power." The funding law, however, violates the California constitution, it said in the ruling.

(Reporting by Dan Levine; Editing by Leslie Adler)