Governor’s signature on ‘negative bailout’ bill would mean almost $3 million annually for Stanislaus County

No one is sure how many times local and state representatives tried to appeal or change a state law that robbed Stanislaus County of an estimated $72 million in tax revenue over 35 years.

A bill that will end what’s called the “negative bailout” was finally approved on the last day of the legislative session, with the Senate vote coming at 10 p.m. Friday.

Proponents still need Gov. Jerry Brown to sign a bill that’s intended to settle disputes between the governor’s office and cities over the dissolution of redevelopment agencies. State Department of Finance staff wrote the original bill, which was amended by a legislative working group in the past two months.

Remedies to fix local government tax inequities, such as the negative bailout for Stanislaus, were included in the 104-page bill to persuade legislators to support it.

County Supervisor Vito Chiesa said the county would like to host the governor for a bill-signing ceremony.

“This is the first time I can recall that four of the five members of our legislative delegation were all rolling in the same direction,” said Chiesa, who made calls up until the vote Friday night to seek support for Assembly Bill 107.

He gave much of the credit to Assembly Members Kristin Olsen, R-Riverbank, and Adam Gray, D-Merced, and Sens. Cathleen Galgiani, D-Stockton, and Anthony Cannella, R-Ceres. “They were all whipping votes,” Chiesa said. “They were working hard and the county’s lobbyists were on the ground all day long. Unless you have your whole delegation working at the same time, your chances are minute.”

The county has sacrificed up to $3.4 million in annual revenue because of legislation intended to bail out counties that lost revenue to Proposition 13 in 1978, which put a limit on property taxes. The state’s formula for allocating the bailout money to counties actually forced Stanislaus and five other counties to give up more revenue.

Olsen said she made it a top priority to right the wrong, as did previous lawmakers from the county such as Republican Dave Cogdill.

Olsen said she started working one on one with Assembly members Friday morning, explaining how the bill would affect their districts.

“When we got the 43 votes, we asked for the bill to be taken up immediately without moments to spare,” Olsen said. “It demonstrates that persistence eventually pays off. ... It is a significant amount of money (for Stanislaus) over the long term. We could have provided a lot of services, a lot of deputy sheriffs and a lot of road projects if we had been able to keep that $70 million in Stanislaus County.”

The League of California Cities opposed the bill, even though recent amendments to the original proposals were less objectionable for cities. Cities stand to lose interest on loans they had made to their redevelopment agencies before RDAs were dissolved by state law in 2012. AB 107 is not expected to greatly impact Modesto.

Galgiani said that 17 Democrats and one Republican, Cannella, were for the bill when it was taken up in the Senate, but at least 21 votes were needed. Two key votes were secured from Republicans Mike Morrell of Riverside County and John Moorlach of Orange County, after Moorlach had spoken against the bill on the floor.

The bill was approved on a 24-15 vote, with 10 of the 14 Senate Republicans opposed. Sen. Tom Berryhill, R-Twain Harte, did not vote after local representatives begged him to support it. Berryhill’s district includes Fresno, which will lose interest money from the limits on RDA loan repayments.

“It was so long ago that Stanislaus was put at a disadvantage and it is unbelievable it has taken so long to correct it,” Galgiani said. “I am pleased the Valley caucus worked closely together and we got it done.”

Ray Simon, who served eight terms on the county Board of Supervisors, said he never thought the state would correct the negative bailout. “We appealed it year after year and of course it fell on deaf ears,” Simon said. “I thought once they had their hands on the money they would never give it up. These people who battled for it deserve a lot of credit.”

The remedy will give the county slightly less than $3 million in additional revenue each year. No funds will be reimbursed to the counties.

Simon suggested the money be spent on public safety and reducing the number of homeless people on the streets. The county could provide a place for the homeless to live or job retraining. “It is becoming overwhelming,” Simon said.

Board of Supervisors Chairman Terry Withrow said Monday that county leaders have not discussed how to spend the additional money.

“We will see,” Chiesa said. “We have plenty of needs in the county.”

This story was originally published September 14, 2015 at 5:47 PM with the headline "Governor’s signature on ‘negative bailout’ bill would mean almost $3 million annually for Stanislaus County."