Update 2/21 1:24 PM – At the SF Business Times, Eric Young has the details of the cities’ alternative proposal:

• 5% of tax increment from each city’s RDA will be sent to Sacramento to service the $1.7 Billion loan
• Higher pass-throughs of revenue to counties and school districts, and perhaps a cap on the amount that can be used for “economic development activities”
• Restrictions on how and how much land and area can be placed in a redevelopment zone

I still don’t think it’ll work for the Governor, but at least it’s game attempt. Not sure how this works for San Jose, whose RDA is so poor in terms of ongoing revenue stream that the 5% being discussed may be problematic going forward.

The day of reckoning for redevelopment is coming. The State Senate appears to be in lockstep with Governor Jerry Brown regarding redevelopment, which is to say it should be eliminated. A budget is working its way through the State Assembly and has been approved in two committees. Like Brown’s budget proposal, this one calls for $1.7 Billion in cuts to redevelopment. While the big number appears to be the same, the approaches couldn’t be more different.

The plan approved by the Assembly budget committee, for example, calls for a $1.7 billion cut to redevelopment, as did Brown’s plan – but instead of eliminating the economic development program, the committee seeks to achieve the savings “through reforms in lieu of elimination.”

These reforms come courtesy of numerous mayors and other interests, who pressured worked with their local Assemblymen to come up with the alternative. The mayors of the 10 largest cities in California, headed by Los Angeles Mayor Antonio Villagairosa submitted an alternative redevelopment proposal to Brown. The alternative calls for a $1.7 Billion loan to cover the redevelopment-related deficit and would send $200 million per year in tax increment to the state. Already, sources within the governor’s office are calling such a loan a nonstarter, and Republicans are casting doubt as to whether cutting redevelopment will truly result in $1.7 Billion in savings.

Brown has been criticized for not attacking the biggest issues in the budget, such as entitlement and state employee pension reforms. Such criticisms are similar to what’s being debated in Washington, where no budget proposals from the House, Senate, or President Obama are tackling Medicare, Social Security, or the Defense budget. Instead, these politicians are going after what seems to be the low-hanging fruit, which is no way to structurally address the deficits at the state or federal levels. Whether Brown is saving his bullets for those battles down the road or he simply sided with the unions because that’s his base is unclear. What is clear is that there are no easy answers to balance the state’s budget, and if Brown wants a budget passed by July 1st, he’s gonna have to look beyond scapegoats and start making the difficult choices sooner rather than later.