California redevelopment agencies lost their battle for survival Thursday after the state Supreme Court ruled lawmakers legally eliminated the local offices that subsidize construction in blighted areas, such as Sacramento's downtown railyard and K Street corridor.

Officials in Sacramento and other cities called on the Legislature to fast-track legislation that reinstates redevelopment in some form. But such prospects are hazy because Gov. Jerry Brown remains a redevelopment skeptic.

The decision marks a significant budget win for the Democratic governor, who began the year by asking lawmakers to eliminate redevelopment agencies without offering to rebuild them.

He has criticized the agencies for using property tax dollars to subsidize private development.

"Today's ruling by the California Supreme Court validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety," Brown said Thursday in a statement.

Brown and lawmakers counted on their redevelopment plan to produce $1.7 billion in state budget savings this fiscal year.

The court's decision will likely result in lesser savings of about $1 billion this year but more money for the state budget in future years, according to the Department of Finance.

That's because the court struck down the original plan in which redevelopment agencies would have made significant upfront payments to help the state budget this year. Instead, the state will see savings by stopping the flow of property tax dollars to redevelopment agencies.

Sacramento City Manager John Shirey, who previously led the California Redevelopment Association, said the decision threatens efforts to energize the city's core.

"It means the same for us as it means for every city and county in the state, which is the redevelopment agency's out of business," Shirey said. "Along with it are various affordable housing projects and projects to continue the revitalization of downtown that are now gone."

Shirey does not believe the decision affects the city's efforts to build a new downtown arena for the Sacramento Kings. But city officials said it could affect construction in the surrounding railyard area, where redevelopment dollars could have gone toward housing and retail projects.

The court's decision may have been the worst possible outcome for the roughly 400 redevelopment agencies across California.

Cities and redevelopment agencies sued the state in July to block the state's plan. In doing so, they argued that the two-bill proposal was unconstitutional because the state had forced redevelopment agencies to make payments in violation of Proposition 22, a local funding protection that voters approved in 2010 at the urging of local leaders.

The first bill, Assembly Bill 1X 26, eliminated redevelopment agencies. The second bill, AB 1X 27, allowed them to continue only if they made the state-mandated transfers.

Cities hoped the high court would reject the two bills together, said League of California Cities executive director Chris McKenzie. But the court instead upheld the elimination bill while blocking the law that would have allowed re-establishment of the agencies.

"Legislators repeatedly said on the floor of the Legislature that these bills would not end redevelopment agencies," McKenzie said. "It was not their intention, nor was it their desire."

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Thursday that lawmakers will revisit the redevelopment issue in the coming months, though he observed that "the governor doesn't seem all that enamored with doing that."

Steinberg has been a vocal critic of the manner in which local officials have fought the state in recent years. He said the main reason lawmakers set up their plan with an elimination component was because local governments asked voters to tie the Legislature's hands with Proposition 22.

"I think it's important to recognize but for Proposition 22, the League (of California Cities)-inspired initiative, we would have a lot of flexibility to amend redevelopment in a way to keep it alive and help fund schools," Steinberg said. "I hate to say it, but it's an example of all-or-nothing politics that leads to nothing."

The proposal was backed mostly by Democrats, but it was not entirely a partisan issue. Assemblyman Chris Norby, R-Fullerton, was a frequent critic of redevelopment agencies and voted to eliminate them.

Meanwhile, Sen. Rod Wright, D-Inglewood, bucked his party and defended redevelopment. He said Thursday he doubted that the Legislature and Brown would do much this year to help rebuild the agencies.

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