Gov. Jerry Brown asks cities to help fix California budget

Gov. Jerry Brown implored a gathering of city officials Wednesday to work with him on efforts to balance the state budget, even as his proposal to shut down local redevelopment agencies, saving about $1.7 billion, appeared to be in trouble in the Legislature.

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Speaking to about 200 city leaders, Brown made the case for setting priorities in an era of budget austerity. The subsidies for builders that are involved in redevelopment efforts are less pressing than school classrooms or firefighters, he said.

“If we don’t do redevelopment, then what do we take?” Brown asked. “Do we take more from the university? Do we start cutting into the public schools which have been cut year after year?”

Since Brown announced his plan to close the state’s nearly 400 municipal redevelopment agencies and shift control over much of the roughly $5 billion they handle each year, local leaders, who now direct the money, have angrily denounced the idea. Cities across the state have been rushing to squirrel away redevelopment dollars in ways that would shield the funds from any state raids.

Their swift action has put the administration on the defensive before taxpayers have been able to digest most of what Brown has in mind.

The fight highlights just how difficult it will be for Brown to cut state spending. Even on an issue like redevelopment, where the benefits are not directly felt by most residents, the governor is rediscovering the clout that entrenched interests have in Sacramento. It is looking increasingly likely that he may have to settle for getting just a fraction of the money controlled by redevelopment agencies, according to legislators and their aides.

When Brown joked last week about going into the “lion’s den” to sell his budget plan, he was referring to the headquarters of anti-tax groups, the caucuses of Republican lawmakers and the meeting rooms of business organizations skeptical of his plans to extend billions of dollars in taxes that are expiring. By Wednesday, however, the lions’ den had become the League of Cities, an organization filled with fellow Democrats.

Brown conceded that the furor over recent weeks suggests that his plan may not be approved by lawmakers, at least not as proposed.

But he reminded local leaders that balancing the budget means that some things are going to have to give, and he called on them to put forward their own ideas if they disagreed with his proposals.

“We’re not there yet,” he said. “We haven’t got the votes for the budget. And you may win on redevelopment and we’ll have to take something else away. And then maybe the wheels come off. I mean, we don’t know exactly how this will all unfold.

“Wherever I look, it’s not pretty,” Brown said, discussing his proposals to cut payments to the elderly and disabled and trim $1 billion from the state’s public universities.

“None of it looks good, but tell me how else to draw the lines,” he said. “It’s pretty much a zero-sum game right now.”

Brown kept his tone conciliatory. He said he has “some legal questions” about the local efforts to shift redevelopment dollars out of the state’s reach, but he did not elaborate or threaten legislation to block them. Instead, he called for a cooling down of the rhetoric.

“I don’t see this as a time for turf wars or the state fighting locals,” he said.

Redevelopment projects often involve subsidies to developers that critics characterize as corporate welfare.

Brown’s plan to end redevelopment and shift that money to services that touch voters lives directly, including schools and public safety, has potential populist appeal.

But the plan has collided with hard political reality.

The developers receiving the funds are well-represented in the Capitol. Local leaders jealously guard the opportunities redevelopment dollars can bring to a community and the power that controlling huge pots of redevelopment money can bring them.

Brown said he made good use of that authority as mayor of Oakland, where he revitalized a historic theater, among other things.

“I like redevelopment,” he said. “I didn’t quite understand it, seemed kind of magical. I put a lot into the Fox Theater, got this beautiful theater. Tens of millions of dollars.…

“I’m sure glad I got it built before this damn budget came out,” he said to laughter from the crowd.

But, he said, political leaders must now face the reality that the state can only afford to do so much.

Key lawmakers are already looking at ways to change Brown’s plan to keep redevelopment agencies— and their funding — intact. Local governments attribute the creation of 300,000 jobs to the redevelopment projects, although Brown and his aides argue that most of those jobs would have been created whether or not redevelopment subsidies existed.

John Vigna, a spokesman for Assembly Speaker John Pérez (D-Los Angeles), said job creation and balancing the budget “should not be competing priorities.”

“Gov. Brown’s budget is a good starting point, and the best way to bring a quick and effective resolution to the fiscal crisis is to have a real discussion without drawing lines in the sand,” he said.

Proponents of redevelopment also have an effective lobbyist in their ranks in the form of Los Angeles Mayor Antonio Villaraigosa, who is Pérez’s cousin. He has called Brown’s plan “a non-starter.”

It isn’t helping Brown that local government officials feel blindsided by him. They say they learned about the plan only days before it was made public. That stands in contrast with school and teacher union officials, who met with the new governor multiple times as he was putting together his spending plan, which protects public schools from further cuts.

“You don’t propose the annihilation of a program when you’re talking about sharing the pain,” said Chris McKenzie, executive director of the League. “We have not been talked to about this and had not been asked to review it — even informally.”

McKenzie said he was encouraged by Brown’s presence — and his remarks – Wednesday.

“What they’ve done is really create a firestorm,” he said. “Now it’s important that everyone figure out a way to put it out.”

evan.halper@latimes.com

anthony.york@latimes.com