Jersey City’s 2006 municipal year budget was introduced at the City Council meeting on Wednesday, projected at $410 million, up from $396.9 million last year.
The good news is that the spending plan was introduced earlier than usual in Jersey City. Hearings will begin on Jan. 18, 2006, and people can suggest alternative expenditures and revenues.
The bad news is that it’s possible that a $40 million shortfall will need to be filled by a tax increase.
Officials are talking about other solutions, hoping that refinancing the city’s debt or using tax abatement payments from developers will help fill the gap.
The budget includes increased salaries for city police and fire officers as mandated by their contract, a rise in the city’s pension costs, and higher insurance costs for city employees.
The budget covers spending from this past July 1 through next June 30.
Business Administrator Brian O’Reilly said that it is likely that there will be a tax increase, but hopefully it will be kept small if other revenues are increased and spending is further cut.A tax increase?
The current property tax rate in Jersey City is $46.06 per $1,000 of assessed value. There has not been a property tax increase in Jersey City since 1998, during the administration of former Mayor Bret Schundler.
Last week, O’Reilly said if there were a tax increase without looking at other alternatives toward filling the budget gap, it would come out to over $6 per $1,000 of property, or an extra $1,200 per year on a $200,000 home.
However, that amount will likely be lower after various means are explored to balance out the city’s expenditures and revenues.
O’Reilly said there are five initiatives the mayor is pursuing, as suggested by City Council members, to close the budget gap: * Restructuring the municipal debt for the next 10 years so yearly debt service payments would be steady rather than fluctuate year to year, which would save money for future budgets. The debt service payments for this fiscal year will be $59 million, a $13 million increase from last year. The restructured amount would be around $40 million.
* Selling surplus city property such as vacant buildings and lots. The City Council took the first steps at Wednesday’s meeting by approving a city-owned building at 325 Palisade Ave. for redevelopment, which would lead to a possible sale of the building.
* Anticipating PILOTS (payments in lieu of taxes) approved by the City Council in the next couple of months for luxury residential projects. The City Council recently approved 20-year abatement for an 83-unit condo building at 203-207 Van Vorst St.
* Carrying out a “more aggressive” collection of parking ticket payments.
* Increasing in tax ratables, or taxable developments in the city. O’Reilly explained that some projects were exempt from conventional taxation for a number of years now, but are going back into the city’s conventional tax base, producing more revenues. The council also approved an accelerated tax sale, or a public sale of property for non-payment of taxes.
“Municipal taxes have not gone up in seven years or so,” O’Reilly said last week. “With the property values being as high as they have been in Jersey City’s history, a tax increase is a lot more palatable now when property values are down. And if people haven’t had a municipal tax increase in the past seven or eight years, they should count their blessings, because we are one of the very few cities that haven’t increased their municipal tax levy.” Salaries, benefits on the rise
Jersey City government spending is up this fiscal year from 2005. Employees’ salaries are expected to rise from $178.8 million to $192.4 million, a $13.6 million difference. This includes the projected increases in Police Department salaries from $78 million to $81 million, and $53 million to $58 million in Fire Department salaries.
The amount that the city contributes to the state pension system went from $6 million to $12 million this year. The city will be paying $55.5 million in health benefits in 2006, up almost $6.5 million from the amount paid in 2005. Insurance costs for city employees went up from $6 million to $7 million.
Also, the city is paying $2.2 million for ambulance services to the Jersey City Medical Center for 2006, as opposed to paying nothing the year before. O’Reilly pointed out this is because the new medical center on Grand Street needs money to cover the debt incurred from construction.
There will also be a pronounced falloff in city revenues.
The city receives a fee from the Jersey City Municipal Utilities Authority (MUA), an autonomous agency that operates the city’s sewerage and water systems. The MUA will be paying a $14 million fee this year, down from $20 million last year.
And the cash surplus accumulated from state aid was $16 million in 2005 but will be $6 million 2006, as $10 million was used for last year’s budget.
However, $9.5 million was gained this year from the sale of the old Medical Center complex on Baldwin Avenue to Metrovest Equities. Four million dollars was acquired last year from the sale. Why does it take so long?
For the last 10 years, approving the Jersey City Municipal Budget has occurred as late as May, less than two months before the fiscal year ends.
O’Reilly pointed out that the process is lengthy due to the complications of studying and shaping a municipal budget in Jersey City, which is the second largest state municipality.
“For a smaller town, the budget can be introduced in August or September. Jersey City is very big, very problematic, and our receivables and expenses deviate so drastically from year to year,” he said. “For example, take the pension, the health [insurance], the debt service, and the cash surplus. That deficit this year is probably larger than half the budgets in New Jersey.”
O’Reilly said he and Mayor Jerramiah Healy wanted to work at closing the gap further to show the City Council the small, unfunded portion that a tax increase would cover. But the council wanted the budget sooner.
O’Reilly said the budget could be adopted sometime in March or April. Ricardo Kaulessar can be reached at rkaulessar@hudsonreporter.com