Don’t trust the locals yet

California’s redevelopment agencies were corrupt and had to go. But it’s hardly obvious that re-empowering local officials with “new and improved” economic development authority is a wise idea.

Don’t misunderstand. It wasn’t that city officials who served on state redevelopment agency boards received bribes and kickbacks, or engaged in what most people would acknowledge to be lawbreaking. The corruption was of a more insidious kind – the kind that encourages unhealthy alliances between government and business at the expense of the greater public good.

It’s also worth acknowledging that Gov. Brown and the Democrats in the Legislature last year did the right thing for the wrong reason, voting to end the decades-old redevelopment regime because the state wanted to tap more than $1.7 billion in additional tax revenues.

Generally speaking, local government is preferable to state or federal government because locals are more accountable to the people they represent. But as Steven Greenhut has reported at length for City Journal and elsewhere, the late, unlamented agencies were best understood as “secret governments” that piled on billions in debt, abused eminent domain, and handed out subsidies to favored developers without much scrutiny or accountability.

A constitutional amendment making it easier to float even more debt to finance projects of dubious public worth is the last thing this fiscal basket case of a state needs right now.

What we need instead is more rigorous, less elastic definitions of “public use” and “public benefit.”

Great evils have been done in the name of economic development, and not just in Palm Desert. The U.S. Supreme Court’s 2005 decision in Kelo v. New London put a constitutional seal of approval on government’s use of eminent domain to take private property for private development. An older, working-class neighborhood in New London, Conn., was destroyed to make way for a conference center that was never built, all because city leaders figured they could raise more taxes.

“Public benefit,” properly understood, should mean projects that benefit the whole public: police stations, hospitals, schools, and libraries. Not auto malls or upscale hotels.

And insofar as government has a role in promoting economic development, it’s in building and maintaining an infrastructure that makes a city attractive for private enterprise. Instead of subsidizing a big-box store owner’s parking lot, try filling some potholes on surrounding city streets.

In short, local governments need to get their priorities straight before they get a new pile of money to spend.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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