By most standards, it would be called theft. But in the netherworld of Sacramento budget legerdemain, it is all part of what passes for deficit reduction.

At stake is $2 billion in local city and county redevelopment funds Sacramento clawed back in one of the many gimmicks it invented last year to hide the state's ongoing structural budget deficit. It had planned to redirect the funds to schools.

Earlier this month, a Sacramento Superior Court judge ruled the theft is legal. But the California Redevelopment Association promises to appeal.

There is a lot at stake for local community projects.

According to data from the redevelopment association, the claw back would mean a loss of millions in redevelopment funds previously designated for projects in Sonoma, Marin and Napa counties.

An economic official in Solano said $35 million was at stake for the county.

"If the court says, 'You can take redevelopment money whenever you wish and for whatever purpose you wish,' that means redevelopment agencies will have no assurance from one year to the next that they will have any money to work with," said the redevelopment association after the judge's ruling.

"If they don't know that, they can't make any long-term commitments to housing or public projects of any sort because they don't know if they will have the money."

California is facing an $18.6 billion budget deficit this year based on January projections. That figure may get worse as April tax revenues fell short of expectations.

Winning the redevelopment case could help reduce the deficit on paper. But the real impact on the state's broken finances is a mirage. Meanwhile, cities and counties will be severely impacted.

If the judge's ruling stands, "Not only does that mean a lot of community improvements won't be done, but the thousands of people who could be put to work mostly in construction won't get those jobs. That's bad enough given the current economic climate. But the longer-term implications are even more severe," said the redevelopment association Executive Director, John Shirey.

The implications of the judge's decision for California's fragile economic recovery are clearly bad.

An earlier version of the claw back scheme was rejected. This one should be, too.