From the California State Senate Republican Cause:

Some very troubling details are starting to emerge from one of the 11th-hour “trailer” bills passed by the Democrat-dominated California legislature, and signed into law by Governor Jerry Brown.With no advance-warning, the State of California gave our local cities a three-day notice they would have to pay millions of dollars in newly calculated fees, with the threat that any delays in those payments would accrue late fees. These sudden, last-minute payments were all part of the fiction that Democrats had passed a “balanced” budget.

Per the Contra Costa Times:

League (of California Cities) Executive Director Chris McKenzie characterized the agencies’ shock as reasonable given the insertion of the bill’s more severe provisions within hours of its passage. In particular, he cites the threat of a state deduction of a city or county’s sales tax receipts and steep interest penalties if it fails to pay.

In 2011, California Democrats dissolved our state’s 400 redevelopment agencies in a vain effort to close the state budget gap. Their action left agencies and local governments scrambling to pay their outstanding obligations.

This year, to pour salt in that still-fresh wound, Democrats passed another bill demanding repayment of some previously distributed redevelopment funds.

This week, the Department of Finance wasted no time calculating the bills, sending them with notices that the full amount, in some cases millions of dollars, must be paid within 3-days without incurring severe financial penalties*.

On July 12th, even while some local agencies were still attempting to question the amounts or negotiate lower payments, the Governor, via the Department of Finance, issued a letter stating that the previous demands for payment will not be reduced.

During the budget deliberations earlier this month, Republicans raised the issue of cost and the impact to our local communities.  The legislative Democrats ignored these concerns and voted to place our cash-strapped local governments in financial jeopardy.

We’re already losing local services. Teachers, police officers, and firefighters are being laid off. Three California cities have declared bankruptcy, with several more cities expected to seek such protection in the near future. The last thing our communities need is a state government literally passing the buck, demanding more money.

*Additional Penalties:

  • Any successor agency that fails to make payment by July 12, 2012, under shall be subject to a civil penalty of 10 percent of the amount owed to taxing entities plus one and one-half percent of the amount owed to taxing entities for each month that the payments are not made.
  •  Additionally, the city or county or city and county that created the redevelopment agency shall also be subject to a civil penalty of 10 percent of the amount owed to taxing entities plus 1.5 percent of the amount owed to taxing entities for each month the payment is late.
  • A successor agency that does not pay the amount required by July 12, 2012, shall not pay any obligations other than bond debt service until full payment is made to the county auditor-controller (unable to pay future admin costs).
  • Any city, county or city and county that created the redevelopment agency that fails to make the required payment under this paragraph by July 12, 2012, shall not receive the distribution of sales and use tax scheduled for July 18, 2012, or any subsequent payment, up to the amount owed to taxing entities, until the payment is made.
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