State leaders plan to send an unprecedented $120 million cash infusion to Jersey City to help stabilize the city’s finances as local officials grapple with a $255 million budget shortfall.
Mayor James Solomon said the state aid would be used to pay off debt and allow the city to dedicate revenue to ongoing spending. He warned that local tax hikes and cuts to city services will still be needed to resolve Jersey City’s financial woes.
“The hard part comes next,” Solomon said in a statement. “We must close a $90 million gap between how much the city spends and what it takes in and strike a balance between reducing the burden on Jersey City families and cuts to city workers who keep this city running.”
Solomon and other officials have blamed former Mayor Steve Fulop for mismanaging the city’s finances. Fulop has previously rejected the criticism, calling it politically motivated.
City officials say they’ve found $55 million in savings so far since Solomon took office in January, through steps like switching healthcare providers, cancelling the long-touted Centre Pompidou project and scaling back the Via Jersey City microtransit service.
The city is also trying to raise revenues from non-tax sources like increased code and traffic enforcement and steeper sewer and water connection fees for new developments. But Solomon’s administration estimates a $90 million gap will still remain after the state aid package, meaning tax hikes and spending cuts are on the way.
The state aid announcement comes days before the City Council votes on Solomon’s proposal to raise property taxes 20% for third quarter bills. A planned vote on that measure has already been delayed a week in the face of public outcry.
Possible tax increases and cuts for the city’s next budget are still being discussed. Solomon has said he plans to introduce Jersey City’s next budget on July 15.
Jersey City had applied for $150 million in transitional aid earlier this year. In recent weeks city officials have said they were hoping to get $120 million from the state — the figure ultimately agreed upon. The final package comes after months of closed door negotiations. State Sen. Raj Mukherji, a Democrat who represents Jersey City, said the city generates $1.5 billion in tax revenue for state coffers.
“The scale of this assistance is extraordinary because the challenge before the city is extraordinary,” Mukherji said in a statement. “We are the economic engine of the state. When that engine sputters, the effects ripple far beyond our city.”
Lawmakers in Trenton introduced the bailout late Sunday night as part of their dash to get the next state budget in place ahead of Wednesday’s deadline to avoid a government shutdown. The aid package includes a $105 million low-interest loan and a $15 million transitional aid grant.
The loan is included in a bill that tacks an additional $359 million in spending to the state’s current budget.
State Sen. Declan O’Scanlon, the top Republican on the Senate budget committee, argued the money dedicated for Jersey City would be better spent on various underfunded school districts around the Garden State, and he expressed doubt that the loan would be repaid.
“ There's a hundred million dollars in the supplemental for Jersey City. Why? Why Jersey City? Why not other cities? Why after years, apparently, of mismanagement should the taxpayers of New Jersey be bailing out this one municipality?” O’Scanlon said before voting against advancing the bill out of committee.
The $15 million transitional aid grant is money that is proposed to be part of the next state budget. As a requirement for accepting transitional aid, a state fiscal monitor will be appointed to sign-off on local spending decisions in Jersey City. State Sen. Paul Sarlo, chair of the Senate budget committee, noted Solomon’s proposed local tax increases and the mayor’s commitment to keeping lawmakers updated on Jersey City’s situation.
Both the budget bill and the supplemental spending bill advanced out of the Senate and Assembly budget committees on party-line votes late Sunday night. They will receive final votes on Tuesday.
If passed it will be up to Gov. Mikie Sherrill to sign both measures into law. Sherrill said in a statement to Gothamist the aid is a “strategic investment” in the state’s second-largest city.
“Jersey City is facing a serious financial crisis resulting from extraordinary mismanagement by former Mayor Fulop, who stuck Jersey City families with a $250 million budget shortfall,” Sherrill said. “Without state support, Jersey City would be forced to slash critical city services for working families and likely face additional credit downgrades — these consequences shouldn’t fall on the backs of cops, firefighters, teachers and the people of Jersey City alone.”
This story has been updated with more information.
