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Budget Settlement: City Taps UEZ Money to Eliminate Deficit in Plan That Would Result in Three-Percent Tax Hike

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PATERSON, NJ – With three-quarters of the 2012 fiscal year already over, municipal officials late Tuesday night finally reached an agreement on their budget that would eliminate the lingering city deficit and would include a three-percent tax increase.

As a result of the tentative deal, Paterson property owners will end up paying the same amount of taxes in May as they did on their most recent quarterly bills. But those bills represented an average increase of about $207 dollars compared to the November bills.

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In the end, the City Council prevailed in its ongoing wrestling match with Mayor Jeffrey Jones’ administration over the size of the municipal tax levy, which is the total amount of taxes to be collected under the budget.

Under the agreement reached Tuesday, the tax levy will be $135 million, slightly lower than the $137.67 million target the administration had been shooting for. But the $135 million still amounts to an increase of about three-percent over the fiscal 2011 tax levy, which had been $131.1 million. Early in the budget discussions, the council members had insisted that any tax increase would be unacceptable, but they had backed away from that position in recent months.

In order to balance the budget, the administration decided to tap into its Urban Enterprise Zone account to use $2.2 million of that money to cover the costs of various city services, including police patrols, in Paterson’s business districts.

The city council has scheduled a public hearing on the revised budget for 7:30 pm on Tues., April 3 and plans to vote to adopt the budget after the hearing. That timing would allow the council members to avoid fines totaling more than $1,000 apiece that the state Department of Community Affairs has threatened to impose if the city does not have an adopted budget by April 3.

On Tuesday night, the Jones administration continued its attempts to convince the council to set the tax levy at $137.67 million. But that triggered a barrage of criticism from council members who chastised the administration for not making enough spending cuts and accused the administration of engaging in delaying tactics in an effort to get the budget passed without additional reductions.

Councilman William McKoy said the administration was trying to “bamboozle” the council. “Before you know it, you’ll have appropriated all the money at the $137 million level,’’ McKoy said.

“There was no effort on the part of the administration to reduce spending,’’ said Council Finance Chairman Kenneth Morris.

But City Business Administrator Charles Thomas pointed out that the administration had made about $3 million in budget cuts over the past five months.

By setting the tax levy at $135 million, the city council is forcing administration officials to scramble this week to find an extra $2.67 million in last-minute budget cuts. That may seem like a difficult task, considering it took the administration almost five months to come up with an initial $3 million worth of cuts to address the deficit. But city finance officials said late Tuesday night that they would be able to make the cuts needed to reach the $135 million tax levy.

In response to the city council’s criticisms of the administration’s budget performance, Finance Director Anthony Zambrano pointed out Tuesday night that Paterson actually was spending less money on city services than it did during the previous fiscal year. But the loss of $7 million in state aid left the city in a budget hole that has been exacerbated by factors like millions of dollars in unemployment payments stemming from last year’s layoffs of almost 400 municipal workers, he said.

Throughout this year’s budget discussions, officials have emphasized they could not ask city taxpayers to take an additional hit after 2011’s devastating 29-percent tax increase.

Council members Aslon Goow and Rigo Rodriguez on Tuesday night criticized Jones for not attending the crucial budget meeting. “The mayor’s not here, the mayor’s not fighting this fight, the mayor doesn’t want to fight this fight,’’ Goow said.

“Where is the mayor in all this?’’ said Rodriguez. “I want to have a conversation with someone who is making the decisions.’’

 

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