Yesterday, the Senate and Assembly passed a budget package by majority vote. Today, the Governor vetoed two of the largest budget measures.

However, two key redevelopment bills that also passed yesterday with the budget package remain on the Governor’s desk in limbo. Those two bills would effectively eliminate existing redevelopment agencies. The Governor has not yet indicated what he plans to do with those two bills although in the past he has said he wants redevelopment to be eliminated, not reformed.

The first bill, AB 26X, would abolish redevelopment agencies and provide for them to be phased out over time. The second bill, AB 27X, would create “an alternative voluntary redevelopment program”. When a community elects to participate in this new alternative program, it would be exempt from elimination. However, that exemption comes with hefty price tags: those that participate would have to agree to pay their share of $1.7 billion to schools in 2011-12, and thereafter shift their proportional share of $400 million to school, fire districts, and transit districts. Those payments could be reduced if agencies agree to projects and programs that meet state goals. For new debt or new project areas, communities would have to shift 80% of the school shares minus pass-throughs to schools. The housing set-aside would be fully funded beginning in 2012-13 and thereafter. These financial concessions might make it infeasible or impractical for some agencies to go this route.

APA took a position early in the year to support reforming redevelopment law and oppose across-the board elimination. Redevelopment agencies perform important planning and economic development functions and should remain an important tool for local governments to use.

Brown today said he has not yet taken action on several trailer bills in the budget package, and indicated he wouldn’t veto them all. He also did not specify which bills he would sign.

He has 12 days to make a decision about the redevelopment measures. We will keep you posted.