State awards Newark $10 million in transitional aid

By Naomi Nix | NJ Advance Media for NJ.com
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on October 01, 2014

 

NEWARK — New Jersey department of community affairs awarded Newark $10 million dollars in transitional aid to address its 2014 budget crisis.

The transitional aid--money given to municipalities in fiscal emergencies--is only a third of the $31 million dollars the city originally asked for in August.

In a letter dated September 30th and addressed to Newark city council members and Newark Mayor Ras Baraka, the division of local government services said it will give the city the money so as long as Newark accepts state oversight.

"The aid will be provided contingent upon Newark executing a Memorandum of Understanding that contains standard provisions of oversight," wrote Thomas Neff, director of the division of local government services.

When the state gives municipalities transitional aid, it typically requires certain concessions in exchange, such as making the municipality seek permission before hiring personnel or placing a state auditor in the city to oversee spending.

Newark officials disclosed in April the city would need about $93.5 million to balance its 2014 budget. Part of that budget gap is a $30.1 million deficit from 2013, which is required to be rolled into the 2014 budget year.

In addition to the transitional aid, the state may also help Newark balance its 2014 budget by restructuring its debt and spreading the payment of part of its 2014 budget deficit over time, the letter said.

Neff wrote that Newark needs to adopt its budget on or before Oct. 7, 2014 in order for city to issue its tax bills on time and to be able to hold an accelerated tax sale, when the city plans to sell liens of delinquent tax payers before the end of the year.

On its Facebook page, the city said the transitional aid will allow Newark to balance its 2014 budget and not layoff employees.

“There will be no cuts happening in the police or fire departments. As a city, we would not be able to function," Baraka said in a statement.

"Our focus is to make operations more efficient. We cannot afford to lay off hundreds of employees and still be operational.”

The local finance board expects to ratify the city's budget at a meeting on Oct. 8, 2014.

Newark's municipal council introduced a budget on July 1 of almost $800 million. The proposed spending plan would increase taxes for the average homeowner to $5,333 from $5,082.

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