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Lawyers for the California Legislature have informed Gov. Jerry Brown that his plan to eliminate the state’s redevelopment agencies (RDAs) fails to pass legal muster because the state cannot reimburse itself with local property taxes.

The governor has sought to eliminate the RDAs in an effort to slash $1.7 billion from the state’s $15.4 billion budget shortfall.

Gov. Brown’s team, however, stands by their proposal.

“The administration’s opinion remains unchanged,” Department of Finance spokesman H.D. Palmer said. “We think this proposal crafted in such a way we think it will withstand any legal challenge.”

Falling gas tax revenues may prevent Congress from drafting long-term highway legislation, says Max Baucus (D-MT), Chairman of the Senate Finance Committee.

President Barack Obama has pressed Congress to approve a six-year, $556 billion transportation bill that would create jobs needed to help the economy rebound from the recession, but Senator Baucus says that financial realities may force legislators to craft a two-year plan.

Congress extended the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), which provides funding for transportation projects nationwide, for the seventh – and likely final – time last month.

With revenues from the gas tax and vehicle registrations down in recent years, the Texas Department of Transportation (TxDOT) lacks the funds to construct new roads in 2012.

“Texas has the best roads in the nation, you hear that everywhere you go and we’re at risk of losing that prestige,” Gene Powell, Public Information Officer with TXDOT, said.

The department has a mere $1.2 million available for new road projects.

Some experts have advocated raising the vehicle registration and gas tax, though lawmakers have been cool to the idea.

California State Senator Joel Anderson called on Governor Jerry Brown to disband the Department of Transportation (Caltrans) last week, saying that the agency’s responsibilities should be transferred to local governments.

According to the senator, the move would save the state approximately $2 billion.

Many of the state’s Republicans see Caltrans as wasteful and inefficient, a view that has gained traction since a Sacramento CBS-affiliate investigation into the department’s decision to send 52 employees to a conference at luxury hotel. In total the junket cost Caltrans $80,000.

The Professional Engineers in California Government, however, oppose Anderson’s proposal. They counter that it would be costly to local governments and that Caltrans consistently completes projects on time and on budget.

Moreover, as NBC LA’s PropZero blog points out, it is unclear how much axing Caltrans would benefit the state’s General Fund since most of the agency’s funding comes from other sources.

California lawmakers are also facing tough decisions regarding the budget as whole. Governor Brown’s talks with Republicans broke down yesterday, but Senate President Pro Tem Darrell Steinberg and his colleagues will be putting the governor’s budget plan to a floor vote tomorrow.