Mayor Jose “Joey” Torres’ administration introduced a $275 million fiscal year 2017 budget on Wednesday night.
Torres’ introduced budget calls for a $149.2 million municipal levy. This is a drop from $154.6 million the previous fiscal year, according to budget records.
Budget officer Margaret Cherone said the city generated an $11.4 million operating surplus last fiscal year through four lien sales. This led to questions whether taxpayers will see some relief in their property taxes.
“We are reducing the tax levy from last year to this year. So there is going to be, albeit it’s not a material decrease in the tax bills as we calculated, but it is a decrease in taxation,” said Cherone.
The talks of surplus led to speculation homeowners could see meaningful reductions in their tax bills, said Kenneth Morris, councilman at-large.
“That is not likely to happen. This is going towards other outstanding debt,” said Morris, who is the chairman of the finance committee. “It’s not a surplus in the traditional sense because it has already been spent.”
Morris found fault with the administration’s use of the word surplus. He said a surplus means the city has excess money set aside.
Cherone said the additional revenue that came into this year’s budget from the last fiscal year is called a surplus in accounting language. “We’re just using the proper term,” added business administrator Nellie Pou. “That’s the term we’re required to put into our budget.”
Morris said when the public hears the administration touting there is a surplus they are thinking of receiving tax relief. He said the public will ask, “What happened to all the money? You said you had an $11 million surplus. My taxes went up or stayed the same. What did you guys do with the money?”
“It was spent as soon as it came in,” said Cherone.
“If it is spent, it’s not a surplus,” said Morris.
Council members gave preliminary approval to the mayor’s budget. A public hearing has been scheduled for December 20th, 2016 at 8 p.m. It will take several months for the city to have a final budget.
The city has not yet applied for transitional aid. The administration obtained an extension to file after the November 4th, 2016 deadline, according to the state. The city is anticipating $25 million in state aid.
In the meantime, the city has been operating through a series of temporary budgets since the start of this fiscal year in July. Council members approved a third temporary budget of $36.21 million to run government from December through January.
Paterson will have spent $147 million at the end of January, according to city records.