The Jersey City Independent "

Jersey City officials are fighting to preserve state Urban Enterprise Zone (UEZ) funding that was recently frozen by Gov. Chris Christie as part of his attempts to balance New Jersey’s budget. Advocates of the program are warning of dire consequences to urban business areas already struggling with the nation’s severe recession if Jersey City loses the $10.6 million in frozen funds.

Mayor Healy assures he is taking “several immediate steps … to develop a comprehensive strategy,” working closely with Jersey City’s state legislators, local businesses and the Urban Mayors Coalition/UEZ Coalition to keep the funds intact.

UEZ Benefits

The state Department of Community Affairs oversees the New Jersey UEZ Authority, run locally by the Jersey City Economic Development Corporation. Businesses in designated UEZs are allowed to charge a 3.5 percent sales tax, rather than the usual 7 percent, to attract customers.
 
The lower sales tax revenues are then dedicated to local economic development projects. Additionally, UEZ businesses may enjoy tax exemptions on certain purchases and other benefits – such as using low-interest loans to finance facility upgrades. The overall aim of the program is to spur development in the predominantly urban areas that most need assistance.

Jersey City’s UEZ zone, which makes up a third of the city, is the largest in the state based on the amount of revenue collected — and ultimately dispersed into the community.

“The UEZ program is very important to Jersey City in so many ways,” state Sen. Sandra Cunningham says. “Not only does it create jobs and attract new businesses, but it also provides funds to renovate old buildings in improving the city’s appearance.”

Jersey City spends between $11 and $12 million in UEZ money each year to fund a variety of items and programs within the districts, according to city press secretary Jennifer Morrill. The expenditures cover, among other things, police salaries, closed-circuit TV cameras, job training, streetscape improvements, street cleaning, “gateway beautification” projects and renovations to historic structures like the Powerhouse, the Loew’s Theatre and the Appletree House.

According to Morrill, the UEZ also contributes to Jersey City’s “economic success” by keeping property tax rates down because the program “directly fund[s] municipal services” within UEZ districts.
 
The loss of state money “could have an adverse impact on future economic development,” and increase unemployment, she worries.

But a spokesman for Gov. Christie, who has frozen about $78 million in UEZ funds statewide via executive order, says this is just one of many hard cuts the governor is making as he confronts a horrid budget situation.

“The governor’s act not only affected Jersey City’s UEZs, but many other programs throughout the state budget,” Michael Drewniak tells JCI. “His actions not only eliminated wasteful spending, but, unfortunately, affected many good programs like the UEZ.”

Christie’s office insists that the cuts to this and other programs are necessary to avoid a fiscal meltdown.

“Nothing was spared,” Drewniak insists. ”Something had to be done, and we had to act swiftly. Each day we hadn’t would have only worsened a very serious financial crisis.”
 
Yet Healy, in prepared remarks his office issued March 2, warns shrinking UEZ monies will bring despair to urban business areas already struggling with a severe recession.
 
“If the UEZ program is not restored to its full funding, there will be negative economic effects for Jersey City,” he says in the statement.

A Victim of Belt-Tightening
 
In a Feb. 11 address to a joint session of the state legislature, Christie declared a statewide financial crisis. That day, he issued Executive Order No. 14, proclaiming ”that a State of Fiscal Emergency exists” in New Jersey.
 
Drewiniak explained the order enabled the new governor to freeze ”unexpended balances and surpluses” in various state accounts, including the UEZ.
 
He noted this step required the state treasurer “to move the unused monies to a general fund” in the state budget, dedicated to deficit reduction.
 
Christie’s UEZ funds policy is outlined in a document posted on the governor’s official Web site, titled, “FY 2010 Budget Solutions as a Foundation for Reform.” It affects “undesignated project balances and reimbursements to the state of past overpayments.”
 
But the legality of Christie’s actions is being questioned. Jersey City UEZ director Roberta Farber contends that Christie’s order is couched in “technical terms” and “vague.” The fact that Christie bypassed the state legislature on this has also drawn criticism.

Drewniak counters that his boss’ actions are on solid legal ground.
 
“The governor’s ability to issue a spending freeze, via executive order, was not an issue in dispute,” he says. “We hope the legislature will now work with us in exercising its legal authority to balance the budget.”
 
Cunningham says she thinks the matter will ultimately be resolved by legislation, not by Christie’s executive order.

“I can’t tell you exactly what I intend to do,” she says. “Certainly, I will do whatever it takes in trying to help Jersey City and Bayonne restore lost UEZ funding.” 
 
Christie’s act has created great uncertainty over the viability of future projects awaiting funding in Jersey City. Morrill cites Phase II of Martin Luther King Drive improvements as one casualty placed in limbo since Christie’s order.
 
“No projects can move forward” unless legislators restore funding, she explains. However, she notes that the Jersey City UEZ program has over $5 million for “ongoing projects” it can use until some time in June.
 
“We’re hoping to have a dialogue with the governor and his officials to discuss the benefits UEZ programs have brought to urban areas like Jersey City,” Morrill says. “We’d like to jointly craft solutions so the program can keep moving forward.” 

According to Drewniak, so would the governor — to a point.

“Anybody disagreeing with us can propose alternatives,” he says. “But they have to be viable.” 

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