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Redevelopment agencies filed suit Monday in California Supreme Court to prevent California from squeezing $1.7 billion out of nearly 400 local entities to help solve the state's budget deficit.

The agencies, which subsidize construction in downtrodden areas, had vowed to challenge the state ever since Gov. Jerry Brown proposed eliminating them altogether in January. Cities were fiercely opposed to the move, while Brown and Democratic lawmakers said the money should go toward basic needs rather than private projects.

The governor and legislative Democrats ultimately agreed on a plan that allows agencies to survive so long as they contribute an estimated $1.7 billion to schools and local governments this fiscal year, followed by $400 million annually thereafter. California plans to reduce the funds it provides to schools by a like amount, thereby saving the state money.

The California Redevelopment Association and the League of California Cities were joined Monday in their suit by San Jose and Union City. The two Bay Area cities contend that they are unable to make the payments and would face elimination under the plan.

The plaintiffs say the state violated voter-approved Proposition 22, which added protections for local government funding. Redevelopment agencies backed the measure after the Legislature took their funds to help balance the state budget.

They filed suit in California Supreme Court, choosing the state's highest venue because they said the budget plan impacts cities across the state and only the Supreme Court can act authoritatively before the first payment is due in January.

Lawmakers agreed to the two-bill proposal, Assembly Bill X1 26 and AB X1 27, in a mostly party-line vote in June. The lawsuit can be found here.


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