Cities refuse to hand over redevelopment money

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Twenty-seven cities have not forked over all of the redevelopment money the state says they owe, according to Gov. Jerry Brown’s administration.

The state says the cities owe $129 million total, but they’ve only returned $6.7 million.

The dispute involves an accounting shuffle that helps close the state’s $15.7-billion budget deficit. Because redevelopment agencies are being dissolved this year, Brown wants to shift $3.1 billion to schools, helping offset the state’s obligation to fund education.

Right now the state is trying to secure the first wave of money -– local tax revenue that officials say was mistakenly paid to redevelopment agencies in the first six months of 2012.

The Brown administration set a target of $685 million and has threatened financial penalties if cities don’t pay up, but they may not meet their goal.

“It may be half of that amount. It may be a third of that amount,” said Marianne O’Malley of the Legislative Analyst’s Office, which has repeatedly warned that there may not be as much redevelopment money available as expected.

H.D. Palmer, a spokesman for Brown’s Department of Finance, said the state may release more information on how much redevelopment money was collected some time this week.

Stockton, which declared bankruptcy earlier this year, is one of 16 cities that haven’t handed over any redevelopment money and is withholding a $2.5-million payment.

Mission Viejo hasn’t made a $2.64-million payment, and officials there say they don’t owe the state anything.

“They didn’t use the correct numbers in their calculation,” said Cheryl Dyas, who handles finances for the city. “It’s basically bad math.”

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-- Chris Megerian in Sacramento
twitter.com/chrismegerian