The Murrieta Redevelopment Agency is preparing to cough up more than $2.5 million in tax dollars this year to the state to comply with a new California law that strips revenue from the agency.
The Murrieta City Council unanimously passed an ordinance Tuesday night authorizing the mandatory payments, which are projected to total nearly $600,000 next year. Future payments of an unknown size were also approved.
Temecula will be forced to pay $4.7 million under the same law, and agencies operating in unincorporated Riverside County owe more than $31 million.
The council ordinance reserves Murrieta's right to sue the state over the new remittance law--fostered under Assembly Bill 1x26 and 27--which city officials and staff have said violate the state constitution. The California Redevelopment Association and League of California cities, two organizations Murrieta is affiliated with, have filed a lawsuit challenging the law.
Mayor Pro Tem Doug McAllister described the payment as a "ransom" no less than three times throughout the meeting.
"The reality of this is since the city is liable for this, not the redevelopment agency, if the redevelopment agency doesn't pay this ransom then the city is on the hook for it," McAllister said.
The redevelopment agency pumps money into infrastructure projects like new bridges and road improvements to entice businesses to set up shop locally and create new jobs. Reconstruction of the Clinton Keith Road bridge over Interstate 215 was partially paid for by the agency. The ongoing work on the California Oaks Road/Interstate 15 interchange is also benefiting from redevelopment funds.
Murrieta Redevelopment Agency Director Mary Lanier said at least 200 jobs were created by those two projects.
The cut to agency funding, while grave, isn't expected to impact ongoing projects, Lanier said. But future projects could be affected by the drop in funding.
When the agency was set up in 1999, a snapshot was taken of the property taxes currently being paid by local businesses and homeowners in Murrieta. As redevelopment projects spurred new construction and created jobs, more property tax revenue was created. That additional money was used, in part, to fund the agency.
Catastrophic budget deficits and a protracted budget battle in Sacramento led legislators to pass a bill that requires redevelopment agencies to pay a portion of their revenues back to the state or face closure.
City officials questioned the wisdom of taking tax money garnered through new construction and job creation from the very agency that likely created those conditions.
"Redevelopment is simply a tool. And how well a tool is used depends on the skill of the folks using it," Councilman Rick Gibbs said. "We've used the tool well. ... We've used it primarily for infrastructure that helped create opportunities for growth in any given area."
"(Sacramento) came up with a scheme that is nothing less than extortion."