Redevelopment agencies across the state got a stay of execution today when the California Supreme Court agreed to hear the petition challenging the constitutionality of  recent budget bills AB 1x 26 and 27 that would eliminate the agencies unless they agree to pay $1.7 billion to fund other budget shortfalls.

The Court also ordered that the agencies don’t have to make payments to the state until the issue is resolved, which could happen as soon as January. In the meantime, the Court has also put redevelopment agencies on a short leash, restricting them from incurring new debt, transferring assets, buying property or entering into any new contracts.

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“We’re very gratified that the California Supreme Court has agreed to take our case, issued the stay we requested to preserve the status quo, and that it is moving forward on an expedited basis,” said Chris McKenzie, Executive Director, League of California Cities. “The redevelopment bills are unconstitutional, violating Proposition 22 and other provisions of the state constitution. We look forward to presenting our case to the Court very soon. We’re confident the State Supreme Court will ultimately strike down this unconstitutional legislation that ignores the voters’ will and that will destroy local economies.”

Proposition 22, which establishes a constitutional amendment, was approved by 61 percent of the voters in November 2010. The vote sent a clear message to Sacramento that budgets were not to be balanced on the backs of the cities or other municipalities.

The court established an expedited briefing schedule designed to facilitate oral argument as early as possible in 2011, and a decision before January 15, 2012, the date when redevelopment agencies are required to make their first payment.