Paterson Top Stories

City Seeks Fiscal "Life Support'' From Trenton

PATERSON, NJ - In a desperate plea for help, municipal officials have submitted a funding application to Trenton that portrays in grim detail the financial fiasco awaiting Paterson unless the state bails the city out.
 
Paterson is asking the New Jersey Division of Local Government Services for $70 million from an available pool of $139 million in state transitional aid, a program designed to help fiscally-challenged municipalities.
 
 
But 11 other cities also are vying for funding. In total, the 12 cities are applying for about $205 million from $139 million pot, according to the state's web site.
 
"You do the math,'' said Councilman Kenneth Morris, chairman of the city's finance committee. "That's the reality of the situation.''

 
Without transitional aid from the state, Paterson's property owners face a massive tax increase. The city's average residential property owners - those with homes valued at $350,000 - face a whopping $2,923 municipal property tax increase, or almost 75 percent more than the $3,896 that they currently pay, according to Paterson's application for state transitional aid. The application was sent to Trenton on September 30 and made public by the state on October 14.

Paterson expects to get a decision from Trenton by December 1 and has scheduled its budget hearing on the preliminary $251 million 2011 budget or December 7. Residents may attend the budget hearing, or any other council meeting between now and then, to ask questions or make comments about city finances.

In the meantime, city officials are drafting plans for layoffs, unpaid furloughs and fee increases to try to close their $70 million budget gap.

"You can't do it all through layoffs,'' said Morris. "Quite frankly, you don't get anywhere near it with layoffs.''
 
Part of the  problem with layoffs is that the city is self-insured for its unemployment insurance coverage, Morris said. That means the city itself would have to pay the unemployment benefits for workers it lays off, thus negating a large chunk of the potential savings, he said.
 
The city's application to Trenton outlines other proposed payroll savings: $1.2 million from a 10-day mandatory furlough for non-uniformed employees, $650,000 from reductions in police department overtime, $300,000 from cuts in public works department overtime, $275,000 by not filling vacant jobs and $150,000 through attrition. But those initiatives combined would only cover less than 5-percent of the budget gap.
 
The state application also says the city is committed to increasing 55 municipal fee - everything from and liquor and dog licenses to illegal parking penalties and carnival permits. But again, those would amount to a drop in the bucket, or $600,000, considering the enormity of Paterson's financial crisis.
 
"I'm hopeful the mayor and his team are going to bring some ideas to the table,'' Morris said.
Mayor Jeffrey Jones did not return phone message seeking his input on the city's financial problems. Paterson's application for state transitional aid, which was prepared by top members of Jones' staff, lists a number of ways the city could improve its finances.
 
Among them are:
* increasing municipal court sessions to clear the backlog of cases and increase collections of fines and fees.
* eliminating emergency medical technician jobs by replacing them with on-duty firefighters who would perform both functions.
* imposing a three-year freeze on salaries.
* finding ways to require organizers of parades and festivals to pick up city's expenses for cleaning up and public safety.
* hiring a collection agency or consultant to recoup delinquent fines.
* increasing sewer fees.
 
 The funding application says "Paterson has grappled with an unwavering structural deficit within its annual budget for many years.''  The document says various one-shot financial maneuvers, like using money from surplus accounts, have helped the city avoid onerous tax increases. But those maneuvers are not available this year, the document says.
 
The application says state transitional aid - ranging from $22 million to $30 million - has been a crucial form of "life support" for the city.
 
Complicating the city's financial problems is the change in city property values that occurred after a 2007 citywide revaluation, which shifted the tax burden from industrial and commercial properties to residential owners, the application says.
 
As a result, 4,132 tax appeals were filed in 2009 and 2010. So far, the city has had to pay out more than $3.6 million in tax refunds, the application says, and another 2,203 cases are pending, with the potential for another $10 million in refunds.
 
 

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