The City of Newark, New Jersey




For Immediate Release

August 21, 2006

For Further Information, Contact:

Desiree Peterkin Bell (973) 733-6368;

David H. Lippman (973) 733-3697

MAYOR BOOKER UNVEILS NEWARK BUDGET;

TAX HIKE NEEDED FOR LONG-TERM FINANCIAL FIX

          Mayor Cory A. Booker today unveiled a proposed budget for the City of Newark that calls for an 8.3 percent property tax increase with no further tax hike next year, combined with long- and short-term measures to confront “the most daunting fiscal picture in Newark in 30 years.”

          Addressing the Municipal Council in their City Hall chamber, Mayor Booker outlined the failures of the previous budgets and explained his plans to restore long-term financial stability to Newark’s budget and professionalism to the budget process.

          Noting that the previous administration had not met its statutory deadline to present a municipal budget by April 28, and that half the year was gone, Mayor Booker said that his first budget was in “the difficult and unenviable position of establishing a tax rate to generate sufficient revenue to cover those expenditures and policy priorities, and insufficient revenue collections. While serious in and of itself, it is merely a foreshadowing of the enormous fiscal challenges our city now faces.”

          The proposed budget calls for expenditures of $697.1 million, which is $44.5 million less than the $741.6 million budget introduced by Mayor Sharpe James to the Council before Mayor Booker’s inauguration.

          However, it calls for a property tax rate of 2.49 percent per $100 of assessed property value, a line Mayor Booker said will be held next year. The average Newark homeowner will thus face an annual tax hike of $322.50.

“For the past two decades, the City of Newark has seen massive changes and enormous growth. We have witnessed new construction, new businesses and even new centers of learning and the arts.  While this should have signaled a period of abundance and financial stability for our city, it has not… To the contrary, we find ourselves facing the most daunting fiscal picture in Newark in approximately 30 years,” Mayor Booker said.

          He noted that under the plans the City is unveiling, there will be no need for a further tax hike in 2007. “I am asking Newarkers to make sacrifices now, so that we can avoid making larger ones later,” he said.

          “Our city is headed over a financial cliff. If no changes are made in our current financial practices, Newark’s structural deficit will sharply increase year after year – in five years it will tower at over $240 million. A $240 million deficit would result in an increase in taxes of more than 100 percent just to keep our city solvent. This is unacceptable to me, our municipal council, and our taxpayers,” Mayor Booker said.

          Mayor Booker also assailed the previous administration’s practices of revenue collection and spending, calling the former “incompetent” and the latter “abusive.”

          The complete text of the budget message is attached.

          Mayor Booker pointed out that the City of Newark had thousands of Workmen’s Compensation cases still outstanding, was paying out welfare to residents who did not qualify for it, and had failed to send out water bills on time for months and years. These practices and failures had gone unchecked because there was no internal audit process, a situation he will remedy immediately.

          He also pointed out the previous Council’s use of $80 million of Port Authority of New York and New Jersey money for two new trusts, calling them a serious misuse of funds. The State ordered that action rescinded and the new Council did so.

          Among the plans: the hiring of 60 additional police officers, investing in additional technology and infrastructure for the Police Department, hiring forensic auditors to evaluate the city’s finances, and investing resources in the Municipal Court to make it more friendly to customers and effective in generating revenues.

          Mayor Booker said he would also set a personal example, taking an 8.3 percent cut in his $142,089-a-year salary, which is roughly $11,000. “I will not ask Newark residents to make sacrifices if I am not making them,” he said.

Many of these issues were uncovered by forensic accountants, who reviewed Newark’s books and financial practices. Mayor Booker said that their recommendations for change would be taken into account in the reorganization of the city’s government and budget process.

          Mayor Booker also noted that the forensic accounting and reviews had uncovered serious incidents of financial abuse by the previous administration, which he said would no longer be tolerated.

“It is disgraceful that the previous Mayor of Newark would be allowed to run up more than thousands of dollars in expenses on Police Department credit cards for vacations in Puerto Rico and Brazil,” Mayor Booker said. “Such behavior sets an appalling example for the entire City. Abuse of this or any other sort will not be tolerated on my watch.

“These incidents of abuse will be investigated and appropriate action will reported to the responsible authorities and be taken where necessary. We will be held accountable for what we do.”

Mayor Booker stressed that the measures the City is taking are to restore financial stability and strengthen government for now and the long term.

He added that the city had turned over documents on the credit cards to the U.S. Attorney’s Office as well as the State Attorney General’s Office, and would continue to both investigate the abuses and cooperate with state and federal probes on the matter.

Mayor Booker also paid tribute to the City Council, whose members were involved in the budget planning and hearings for the first time, calling their participation and input “unprecedented” in city history. “The budget that we ultimately proposed was the one they presented in these meetings to us,” he said. “I want to thank my colleagues on the City Council for their participation in this process.

“While I present this budget with a somber appreciation of our difficult financial realities, my hope and optimism for our city remains undeterred. Newark is a strong, resilient, and growing city. We will claim our bright future, we will lead this nation through its current domestic challenges and become a shining light to America of fiscal responsibility, community safety, and strong economic growth that benefits its families and children. This is our goal, this is our destiny,” Mayor Booker concluded.

 

MAYOR CORY A. BOOKER’S BUDGET MESSAGE

TO THE MUNICIPAL COUNCIL, AUGUST 21, 2006

 

During the past years, the previous administration routinely missed its statutory deadline in April. By law, the 2006 budget should have been completed by April 28, 2006 – a full two months prior to the new administration’s entering City Hall on July 1, 2006.  Consistent with its prior failures, this was not done. Instead, we find ourselves in the difficult position of completing a budget for a year that is now more than half complete and for which significant decisions and expenditures were made over which we had no control. Further, we are in the difficult and unenviable position of establishing a tax rate to generate sufficient revenue to cover those expenditures and policy priorities (or lack thereof) and insufficient revenue collections. While serious in and of itself, it is merely a foreshadowing of the enormous fiscal challenges our city now faces.

 

For the past two decades, the City of Newark has seen massive changes and enormous growth.  We have witnessed new construction, new businesses and even new centers of learning and the arts. While this should have signaled a period of abundance and financial stability for our city, it has not.  Instead during these years, the prior administration made tragic financial decisions marked by serious mismanagement, profoundly poor investments, failure to invest in critical infrastructure, egregious waste, unrealized revenue, and patently poor financial planning.  This period of economic growth in our city should have not only yielded more opportunities for Newarkers in terms of jobs and career options but it also should have secured for Newark a bright financial future.  To the contrary, we find ourselves facing the most daunting fiscal picture in Newark in approximately thirty years. 

 

This crisis stems principally from the prior administration’s policy of steadily increasing expenditures while relying on one-time payments to achieve temporary fiscal stability, which has led to longer-term fiscal turmoil.  The city has lurched from crisis to crisis, consuming one-time balloon payments from Port Authority funds without reducing expenditures and preparing for the day when those funds would end.  The prior administration borrowed against our future with no regard or plan for repayment.

 

This irresponsible financial practice was made significantly worse by the prior administration’s wasteful spending, failure to collect and develop other sources of revenue, clear mismanagement, and bad planning.  Further, as is the case with every governmental entity, our annual expenditures will increase by tens of millions of dollars due to the increases in pension and insurance costs for personnel.  This growing structural deficit, together with the near term cessation of the Port Authority settlement dollars, means that without some serious and significant changes in our financial practices, our city is headed over a financial cliff.  If no changes are made in our current financial practices, Newark’s structural deficit will sharply increase year after year – in five years it will tower at over $240 million.  A $240 million deficit would result in an increase in taxes of over 100 percent just to keep our city solvent.  This is unacceptable to me, our municipal council, and our taxpayers. 

 

There is little we can do in the remaining months of this year to insulate taxpayers from this grave reality.  The damage done by the prior administration over the previous years and in the first half of this year is simply too great.  Unfortunately, what is now required from our city is sacrifice and some pain. It is with somber resignation that I must propose a budget with a tax rate of $2.49 per hundred dollars of assessed value, which is a $.19 increase or 8.3 percent increase over last year. The unfortunate result is that the average Newarker will have an increase of approximately $322.50 over their bill last year.  This is difficult news to deliver, but this is the reality we now face, this is the difficult burden we must now bear to ensure we can stave off a financial catastrophe now or in the future.   

 

My administration is taking immediate action to try and deal with this crisis. Even with the expenditures of the previous administration for 2006, I am proposing a 2006 Municipal Budget that calls for total expenditures of $697.1 million. This budget is a decrease of approximately $44.5 million dollar in expenditures over the previous administration's introduced budget.

 

My administration will take proactive means to ensure that this necessary tax increase does not affect senior citizen homeowners in Newark.  We will work diligently with the New Jersey State Treasury Department to ensure that all of our eligible senior residents benefit fully from the senior citizen tax freeze program.  There are currently approximately 1,100 seniors in Newark being helped by this program who each receive an average annual payment of approximately $1,100, significantly more than the required tax increase.  Unfortunately, we do not believe that the majority of eligible seniors in Newark participate in this program, so we will work diligently to enroll our seniors this year.

 

Further, we are taking extensive measures to extricate Newark from its financial crisis and ease any pain our citizens might face in the long term.  It will take our city years to correct the damage done by the negligent financial practices of the prior administration, but we have already begun the process of getting our financial ship back on course. 

 

Since taking Office on July 1, we have started to plan for the future, make investments in our economic growth and develop a responsible municipal government. My proposed 2006 budget sets the foundation and positions Newark to fulfill its destiny as a leading American urban city in safety, prosperity and nurturing of family life.

 

  • Ensuring the safety of our communities and residents as our number one priority. This budget commits to rebuilding the strength of public safety in Newark by budgeting for the hiring of an additional 60 police officers, providing developmental and job specific training to enhance personnel, including a significant investment in technology and infrastructure to ensure that our Police Department has vital essentials to continue to combat crime and create safe neighborhoods.

 

  • Developing an efficient and effective government, with performance management metrics – while this is a necessary development for any responsible government, the prior administration’s practices have highlighted its urgency and necessity to ensure a bright future for the City of Newark. Further, we have invested in forensic auditors to evaluate and complete an analysis of all finances and workflow. By creating a more effective and responsive government we will not only create a more user-friendly government for Newark’s citizens but we will create one that uses all taxpayer dollars more efficiently and responsibly. We are establishing an internal auditing unit that will promote the efficiency and integrity of day-to-day operations in City Hall.

 

  • Working to increase revenue throughout our city. One example in this budget is the strategic investment of resources in our municipal court system, which will enable our courts to be more efficient, more customer-friendly, and a better generator of revenues for the city. Throughout our city we will begin to strategically invest in ways to increase revenue and develop new revenue sources.

 

  • Increasing our focus on economic development. By deploying assets on economic development, we will further develop our infrastructure, support existing businesses, and attract appropriate businesses to our communities thus creating jobs and employment opportunities for many Newarkers not a chosen few. We will create a City Planning Division, which will include neighborhood planners, an urban designer, and a historic preservation officer. We will also focus on updating the City’s antiquated Master Plan. We will work with experts to establish criteria and a process for how City owned land is transferred.

  

We are transforming the way Newark does business, serves residents, and manages its finances. We are creating a professional and responsible city government that plans for the short and long term. We are creating a caring and responsive government that hears citizens’ issues and provides effective and professional services promptly.

 

Our aim is to remove the barriers and impediments to Newark’s growth and progress, and to assure that its future is as glorious as the past. This budget, with its new direction, new leadership, and new ideas, will begin the work of moving Newark into that future.

 

While I officially present this budget to my colleagues on the new Municipal Council today, I already give them my thanks for working with my administration in an unprecedented manner to ensure that this budget is responsible and a reflection of our community’s priorities. In preparing this budget, Municipal Council representatives participated in this administration's budget hearings and actually cooperated in the creation of this proposed document.  For this I am grateful.  I am also grateful that they have already been helpful in identifying not only places to reduce expenditures but also strategic places to invest and to realize more revenue.  With their leadership we will ensure that our city is financially strong and that the budget process finally begins to run in a timely manner in accordance with the law. In fact, if they adopt this budget by our mutually agreed upon goal of September 30, we will have successfully completed the budget process in a more timely manner than has been done in the previous 5 years.    

 

While I present this budget with a somber appreciation of our difficult financial realities, my hope and optimism for our city remains undeterred.  Newark is a strong, resilient, and growing city.  We will claim our bright future, we will lead this nation through its current domestic challenges and become a shining light to America of fiscal responsibility, community safety, and strong economic growth that benefits its families and children.  This is our goal, this is our destiny. 

 


© Copyright 2006 The City of Newark, NJ. All rights reserved.