NEWARK – The Newark City Council announced some nominal budget cuts to plug an $83 million deficit, and announced initial approvals of big ticket items that could plug $50 million in that hole.
The city is selling off buildings and leasing the facilities back through the Essex County Improvement Authority, a quasi-governmental financing agency, in essence pawning city assets that will one day need to be bought back. In the meantime, the city will pay millions in debt service to make the deal happen.
Short on budget magic, Mayor Cory Booker’s Municipal Utilities Authority proposal was rejected in early August; now the mayor and council are scrambling to find a solution.
Although the leaseback sales may avert layoffs, service reductions, and tax increases in the short-term, it will increase the debt of the city in the long run.
“We don’t like doing one-shot revenue deals,” West Ward Councilman Ronald Rice said today. “The reality is, with less than three months left in this year (…) we are left with bad decisions.”
The city’s structural deficit is already $90 million, although Rice said the city reduced that from $180 million in 2006. Now another $5 million will be added if the leasebacks go through.
The timeframe on the sale-leaseback budget fix is extremely tight; having gotten ECIA approval yesterday, the city still needs approvals from the Essex Freeholders and the State Local Finance Board.
Today, the council reduced or eliminated their own professional funding for travel, postage, recreation, meals, and transportation. Staff reductions are optional.
East Ward Councilman Augusto Amador said the city is also on a hunt for unnecessary city-funded cell phone and Blackberries.
Booker’s office hasn’t responded to the council’s budget proposals.
“There’s not going to be no Doug Flutie last touchdown pass for us,” Central Ward Councilman Darrin Sharif said at a press conference today.
The budget crisis is also hitting libraries in Newark – all have reduced hours and two branches are targeted for closure. Libraries everywhere are struggling, but especially in lower income areas where they are relied on for more services than other areas.
North Ward Councilman Anibal Ramos said he is willing to raise funds personally for the closing library in his ward, but the budget is so tight that it’s unlikely that a last minute miracle will save the libraries unless the leasebacks are approved.
“I remember growing up,” Ramos said, “my first access to computers was at the libraries.”
Protestors outside City Hall over the past 24 hours have been reading books and poetry in objection to the pending closures, hour cut-backs, and possible layoffs.
“It’s business as usual until the council sits down with the mayor,” said library advocate Terri Suess. “They have some power here and they need to use it.”
A budget task force will also report their recommended cuts to the administration next week.
Another protest outside the building today included union custodians who are claiming that the city doesn’t meet its prevailing wage ordinance in regard to its own custodians. According to a release, the city is required to compensate janitors $15.70 an hour plus $3.50 in supplements and paid leave, but the custodians were making only $11.94 with few benefits.
Council President Donald Payne, Jr. attended, as did other members of the council, and told the crowd, “This is a shame. I am embarrassed for the city.”
“Don’t let the suit fool you. I’ve been a working man,” Payne said. As a youth he worked as a union employee in a family business. “My uncle fired me. My father was the hearing officer. It was the union that got my job back.”
