Right Thinking From The Left Coast
Chance favors the prepared mind - Louis Pasteur

Sunday, January 23, 2011

The Cesspool Fights Back

Jerry Brown surprised me a bit by moving to end California’s redevelopment agencies.  These agencies are a cesspool that has left destroyed businesses and vacant lots all over California. The move could save Californians billions of dollars while dramatically improving the business environment.

Well, when you turn the lights on, the cockroaches will scurry:

On Monday the city government of Fremont voted to lock in $121 million in redevelopment funds before the state budget gets approved. San Jose is also trying to pocket $58 million in redevelopment funds.

And last week the Community Redevelopment Agency of Los Angeles (CRA/LA) responded to Brown’s proposal—which is expected to realize between $5 billion and $6 billion in savings for the state and local governments—by trying to thwart it in a meeting that was called in violation of state law and may have resulted in an illegal business deal.


California law requires 72 hours’ notice of public meetings, specifically to prevent public agencies from doing what the CRA/LA did at this meeting, which was called with less than 24 hours’ notice and ended in a transfer of about a billion dollars in funding to the city of L.A. and the creation of a new city-run non-profit that will maintain the agency’s existing projects and hire its existing staff.

That non-profit deal has an even more dubious legal basis. In private business an attempt to transfer assets in this way would most likely be considered a fraudulent conveyance under civil law. While fraudulent conveyance does not necessarily require malice aforethought, in this case the CRA’s action is also in violation of the governor’s clear intent.

The media is marching in lock-step with the local government, of course.  But Cavanaugh’s post has a rundown of the disaster that has been redevelopment in California.

The way to create jobs is not for governments to give sweethearts deals to favored corporations and certainly not politically-controlled spending, whether it’s called “redevelopment” or “stimulus”.  That way to create jobs is to create an environment in which all businesses can flourish in fair and even competition.  It’s even better if you can keep the taxes low and the regulations sensible.

This lesson is being driven home even further in Illinois, where a lame duck legislature enacted a gigantic tax increase (personal income taxes go from 3 to 5 percent; business taxes from 4.8 to 7 percent).  Illinois is a fiscal basket case, the Greece of the Midwest.  And with their taxes skyrocketing, states like Indiana, Iowa, Missouri, Wisconsin, Michigan and even New Jersey are openly enticing businesses to move.  Some are probably offering sweetheart deals.  But most are offering lower taxes.  Indiana, their neighbor, has weathered the economic storm well and currently has half the per capita spending as Illinois.  Missouri is talking of completely eliminating their corporate income tax.

In the modern age, businesses can move anywhere. Sweetheart deals and “redevelopment” don’t work—reasonable taxes and competent governance do.  Even as Illinois falls into darkness, there’s now a slight hope that California—under Jerry fucking Brown of all people—may be seeing the light.  Here’s hoping he wins his war with the media, the cities and, most likely, his own party.  California can’t afford this shit anymore.  None of us can.

Posted by Hal_10000 on 01/23/11 at 01:07 PM in Cullyforneah  • (0) TrackbacksPermalink
Page 1 of 1 pages