A Fiscal Hail Mary Pass: Paterson Heaves $28.5 Million Request Down to Trenton
Wednesday, October 17, 2012 • 2:02pm
PATERSON, NJ – In a desperate attempt to balance its budget, Paterson is asking the state for $28.5 million in Transition Aid, a request that is larger than those submitted by every other city in New Jersey.
Paterson is asking the state Department of Community Affairs (DCA) for an increase of 33-percent compared to last year’s allotment, but officials in Trenton have made it clear they intend to reduce the amount of transition aid given to cities.
In the eight transition aid decisions rendered so far this year, the DCA has granted every city less money than it asked for. That includes Newark, which applied for $24 million and got $10 million.
The DCA has not said exactly how much transition aid is available statewide. So far, it has awarded a total of $16.6 million in response to the first eight applications. There are three other pending requests in addition to Paterson’s: Trenton is seeking $21.2 million after getting $22 million last year, Camden $18.5 million compared to $61.4 million last year and Union City $16.8 million compared to $12 million last year.
Paterson’s application, submitted last week, paints a bleak picture of city finances.
“Year after year, many services are being curtailed, reduced or simply eliminated,’’ reads the city’s application. “In a post-2008 real estate market crash, the values of the ratables on which the annual budgetary costs are assessed have substantially decreased. In fact, the amount of abandoned, foreclosed or bankrupt properties is still growing and will continue to increase as the property taxes of the city are disproportionate to the market values of the properties.’’
“The idea that the City of Paterson can achieve property tax stabilization when it faces a consistent decline in revenue streams with simultaneous cost increases (many of which are mandates) should come to a screeching halt,’’ continues the application. “The balancing acts have used up all of the ‘one-time’ solutions, such as the sale of city owned properties.’’
Paterson’s preliminary 2013 budget includes $20 million in state transition aid and would increase taxes by 9.9 percent. But under state law, the city can only raise taxes this year by 3.5 percent. That means another $8.5 million in spending cuts or revenue increases would have to be made before the budget becomes final, city finance officials said.
If the DCA ends up giving Paterson less than $20 million in transition aid, the gap will grow larger. If the state gives Paterson all $28.5 million requested, then the budget could be balanced without additional cuts, officials said.
“I think it’s reasonable that they made that request given the situation we’re in,’’ said Councilman William McKoy. “But whether or not that’s practical is another issue. The governor has been very direct and very straightforward with respect to the availability of transition aid and the notion that there won’t be any increases anytime soon.’’
“We’re hopeful that we made the best case for ourselves and I think we have,’’ said Mayor Jeffrey Jones. “The state is intricately involved and aware of our financial situation. We have been doing what the state has asked us to do.’’
But several council members pointed out that the Jones administration has not always followed the state’s wishes in the past year, including its failure to recoup overtime from high-ranking officials that the DCA deemed inappropriate. “My concern is what’s going to happen with some administration officials not returning the money they were supposed to,’’ said Councilman Andre Sayegh.
Councilman Kenneth Morris, chairman of the finance committee, called Paterson’s request for $28.5 million “simplistic,” adding that the city seems to be banking on Gov. Chris Christie’s good will. “I don’t know if he’s going to extend that courtesy considering the concept behind transitional aid, in that it’s transitional,’’ Morris said, adding that the city was supposed to find ways to wean itself off the special aid.
“There’s been no indication at all from this governor that he will increase aid to cities,’’ Morris added.
Last month, for example, Christie said Paterson’s finances were being mismanaged when the council considered asking him to declare a state of emergency to funnel extra money to the city to fight crime.
Morris said it was not a good sign for Paterson that the state gave Newark less than what it had requested.
“Newark has a stable ratable base and good fiscal management by the mayor and his administration – two things Paterson doesn’t have,’’ Morris said.
Last year, Paterson received about $55.9 million in total state support, including other categories of funding besides just transition aid, according to the DCA’s website. Four other cities received more than that: Camden with $109.7 million, Newark $97.3 million, Trenton $68.6 million and Jersey City $67.7 million.