With New $15 Million Hole in 2011 Budget, Jersey City Says it’s Turning to ‘Plan B’By Matt Hunger • Sep 15th, 2011 • Category: Featured, News, Politics
Although the $15 million land deal that would have brought Jersey City the tri-state area’s first proton therapy cancer treatment center is now off the table, and the 2011 budget hearing scheduled for Wednesday has been postponed for another two weeks, the Healy administration insists everything is under control, with business administrator Jack Kelly assuring the public that the city’s “Plan B” will fill the $15 million hole without a property tax increase.
The land deal fell apart late yesterday, just hours before the City Council was hoping to pass the city’s 2011 budget, immediately throwing the spending plan — which had included the $15 million in projected revenue from this sale — into question. But the administration quickly followed the news of the deal’s demise with a promise that the city would move a budget forward “with no tax increase.”
“We have been working on a Plan B for some time in the event that this deal was not finalized for this year’s budget, and have identified additional revenue sources and areas where cuts can be made,” Kelly said in a statement released yesterday afternoon. “We have been able to realize additional revenues that were not readily apparent earlier in the year and conservative revenue estimates have proved just that, conservative. Items such as PILOT [Payments in Lieu of Taxes, from abatements] revenues, receipts from delinquent taxes and hotel tax revenues have been realized above initial projections.”
But residents at Wednesday night’s council meeting seemed unconvinced, with a handful of public speakers at the meeting hammering Kelly about the budget question.
The often-unperturbed Kelly, who said he receives daily emails from “20 or 30 people” about the budget, showed more irritation than usual at the constant questioning.
“It’s disingenuous to say we don’t have a budget or a spending plan. We have a spending plan that we haven’t veered from,” the business administrator said. He called the budget “a living document,” noting how things can change through the course of a year.
“Yes, this one item of $15 million did not come to fruition, but it’s not like we were resting on our laurels. We were looking at additional spending cuts and revenue,” he continued. “The budget process is 12-month-a-year process.”
He said that the council will meet with the administration on Tuesday to address in detail how the city will make up for this shortfall.
At least one council member — Ward E councilman Steven Fulop — remained as skeptical as the residents, dismissing the notion of a “spending plan.”
“I spoke with the state today,” said Fulop. “They’re concerned about the budget.”
The state, which has to sign off on Jersey City’s spending plan, warned the administration back in July that the city could face state penalties, a bond downgrade, or even the loss of control over the setting the property tax rate if it failed to adopt its budget by August 26. Kelly responded with a letter promising that the city would adopt a budget by September 14; that promise is now broken as the budget must once again change before being approved.
Fulop hammered home a point he’s made for several years about faults in the city’s budgeting process, which usually involves the spending plan being passed well into the year it covers, with the majority of its funds already spent through emergency appropriations. As of the last council meeting, 86.2 percent of the then-$496.6 million 2011 budget — $428 million — had already been allocated.
The councilman and mayoral hopeful also pressed Kelly on where the $15 million was coming from.
“Now miraculously we find $15 million, when we were fighting about the [free health] clinic and about our library cuts and layoffs?” Fulop wondered, saying he was surprised how “easy” it was to find the money all of a sudden.
“It hasn’t been easy; just ask the [hundreds of] people laid off,” Kelly replied. “We did not miraculously find money; we were conservative with our revenue projections.”
What exactly the administration’s “Plan B” is remains unclear, since all of the increased revenue items touted in yesterday’s announcement were also touted when the previous budget amendment was unveiled — and that plan still included the $15 million land sale deal.
It also remains unclear how the administration will keep its promise to not raise property taxes. The most recent budget amendment, which included the land sale, called for $215,107,176 to be raised by taxation; that was already $30 million higher than the amount raised by taxation in 2010′s budget, $185,058,594. However, city spokesperson Jennifer Morrill told JCI earlier this month that property taxes “will be slightly lower in calendar year 2011 versus 2010″ despite that change, a message reiterated yesterday by the administration’s promise of “no tax increase.”
A special meeting of the City Council has been scheduled for Tuesday, September 20 to introduce the revised budget amendments, and a public hearing will be held on Tuesday, September 27, prior to the regularly scheduled City Council meeting. The council will then be able to vote on adoption of the budget at that same meeting.
Like what you've read here? Please consider making a donation or becoming a sustaining member. As a grassroots news organization, we rely on community support -- as well as paid advertising -- to survive.