Paterson asks state for $38.4 million in transitional aid
By Jayed Rahman
Published: December 18, 2015
The city is seeking $38.4 million in state financial aid to balance its fiscal year 2016 budget, according to documents municipal officials submitted to the New Jersey Division of Community Affairs (DCA).
The city’s request is $13.4 million more than the amount it received last year in transitional aid. The city received $25 million in state aid in fiscal year 2015.
Mayor Jose “Joey” Torres who has been nonconsecutively running city government for nearly a decade stated in a letter to the state: “We were expecting to see a larger than ordinary increase in our deficit, but once the final numbers were official, we were stunned and simultaneously fearful.”
Torres’ administration introduced a municipal budget that had a $26 million deficit even after a $25 million state aid figure was calculated into the budget. The deficit, without adding in the estimated state aid figure, stood at $51 million.
“I’m not surprised the request is in the 30s,” said Kenneth Morris, councilman at-large, who chairs the council’s finance committee. “As to whether or not they’re going to see that number — I’m not hopeful.”
“Hopefully we can get at least $30 million,” said a skeptical Mohammed Akhtaruzzaman, 2nd Ward councilman.
“It’s not a sin to aim high,” said Andre Sayegh, 6th Ward councilman. He said it would be “unprecedented” if the state issues the entire amount.
The deficit is largely driven by $10.44 million queued for collective bargaining agreements (mostly police and fire), $5.9 million increase in health benefits, $3.6 million increase in debt service payments, and $3.2 million increase in reserved for uncollected taxes.
Officials have reduced the deficit by $12.7 million. $6.9 million in savings was found through the elimination of vacant positions. $2.74 million was slashed in other expenses. And $2 million is expected to be raised through tax lien sales, according to municipal documents.
The adjustments reduced the city’s $51 million deficit by $12.7 million to $38.4 million. To reduce spending the city has instituted an overtime freeze, according to city records.
With limited or no state aid the city could end up furloughing workers with the exception of public safety employees by February 1st, 2016. The city may also have to cut 233 full-time employees with $30,000 annual salary. However, both combined would generate less than $8 million, according to city documents.
“I’m not surprised that’s in there. I predicted that,” said Morris. He warned the city would have to let go employees if it did not bring spending under control during the impasse between the council and the mayor over a temporary budget last month.
Council members have criticized Torres for failing to curb spending. Between April 2014 and July 2015, the city added 150 posts to its payroll, according to city records.
Torres did not return a call for comment.
“Those are not good options,” said council president William McKoy. “We’re just now trying to recover from the devastating blow from the layoff of the police officers. I don’t think anyone wants to repeat that kind of a situation.”
McKoy said deep service cuts hinder economic development.
“That’s a dooms day scenario that I hope doesn’t play out,” said Sayegh.
The 3rd Ward councilman expressed great optimism for the city’s future and hoped the state would make short term investments through transitional aid to financially stabilize the city.
“We’re looking forward to increasing our revenue as we move forward,” said McKoy. He cited the hotel project in South Paterson, the new vista project in the Totowa section, and a plan to coax neighboring municipalities to pay their fair share of sewer fees among positive steps the city is taking to increase revenue.
Torres’ letter paints a very bleak picture of the city’s finances and the dire need for the full $38.4 million. It also mentions the uproar from a third of taxpayers resulting from the recent property revaluation; and highlight the potential negative impact a big tax increase will have on homeowners.
“We must stress, again, the importance of this state aid, referred to as ‘Transitional Aid,’” reads the city’s state aid application submitted in late November. “In our case, it is ‘LIFE SUPPORT.’”
This article was last revised and updated on December 19th, 2015 at 8 p.m.