Brown

Friday, July 20, 2012 – 09:00 p.m.

Is Governor Jerry Brown’s cash grab to help balance California’s budget having unintended and unforeseen consequences?

You bet it is.

And he didn’t even see it coming and, more importantly, really doesn’t seem to care either.

Brown’s move to convince the legislature to rip away redevelopment cash flow from cities and other local entities is beginning to cascade in a very negative fashion.

That is municipal bankruptcy!

The city of Stockton has already filed for chapter 9 bankruptcy protection. The city of San Bernardino is in the process of doing so.

A few days ago the city of Compton, with a projected $5 million in bills due in August and only $3 million cash available, put out the warning flag that it may go bankrupt within the next month or so.

Yes. This really is only the tip of the iceberg.

It’s really no secret in California government circles that cities, in order to pay for core services, had been using redevelopment property tax increment to augment their respective general funds. Whether the cities were wrong in doing so is for a later discussion. The fact is they did it.

Now that Brown, with the assistance of the democratically-controlled state legislature, has cut-off that funding source many cities are scrambling to cut expenses and seek out new revenue.

But with so many hurdles to raising revenue, particularly that of a voter approval requirement, cities are in a no win scenario.

If one doesn’t believe more bankruptcies are on the way, think again.

Many California cities were already in the electric chair. Brown just pulled the switch.