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Unwrapping our Thanksgiving Present from New Jersey

I know, I know: Thanksgiving isn’t one of the gift-giving holiday this season. Work with me here.

This past Wednesday, the last workday before the big holiday weekend (did that get your Spidey-sense tingling? It should have), the State Department of Community Affairs awarded Trenton and 11 other municipalities its Fiscal Year 2011 Transitional Aid grants. Trenton had requested $39,375,000; we received $27,100,000. The difference between those two amounts is $12,275,000. I speculated on Wednesday that this amount, plus the additional $9 Million of unfunded payroll costs announced by Mayor Mack on November 4 for fire and police officers spared the layoff ax might cost taxpayers as much as an additional $1.15 or so in our property tax rate – without taking into account any further budget cuts or additions.

What I failed to take into account on Wednesday is that the State already anticipated this situation as part of the Transitional Aid process. Remember, Governor Christie and his Administration created this Transitional Aid process primarily so that it could wean towns and cities such as Trenton off state aid, largely through the mechanism of budgeted and planned cost reductions, and preferably not through higher taxes on its citizens. The Transitional Aid program is intended to last no more than four years, at which time the state is expecting to reduce its municipal aid to Zero. I will leave aside today any discussion of the special case to be made for Trenton as New Jersey’s capital city. I want to stay focused on the Transitional Aid program as its rules are written and accepted by the city of Trenton when it sent in its application.

Here is the application that the city submitted on September 30. The cover page lists departed Business Administrator Andrew McCrosson as the city’s contact person for the application, although the document is signed by Mayor Mack, City CFO Janet Schoenhaar and City Clerk Leona Baylor, all of whom are still with us.

I direct your attention to Page 17. In Section XI, titled “Impact of Limited or No Aid Award,” the State asks its applicants to indicate what action will be taken if the state were to make no transitional aid – as it did in the cases of Weehawken, Hillside Township and Orange City – or  a limited award, as in the case of Trenton and the other eight towns.

This is an important page. Since the main objective of the Transitional Aid program is to wean its recipients off the Transitional Aid, this section is the beginning of the hard process by which the towns and cities are to demonstrate to New Jersey that they will start to reduce its costs – even with whatever aid the State is to provide during the transitional period.  This is emphasized by the statement in bold print on the worksheet: “The cuts outlined here are one [sic] that the municipality is committed to make if they do not receive aid” or, it is assumed, based on the title of this section, if they receive only Limited Aid.

So, how did Trenton answer this request? On Page 17, you will see a list of budget cuts offered by the City totaling a little over $19.1 Million dollars, spread over the entire city structure. Although this section allowed an applicant to rank departments by the order in which it intended to make these budget cuts if required, Trenton filled out this section ranking all of the departments as “1’s,” meaning that any budget cuts required in this section would be pro-rated across all city departments equally. This page of the application also required cities to state what services would be affected by these budget cuts, their detailed cost savings under this plan, and the impact on those services of the budget cuts. Trenton either neglected to complete that section, or declined to do so. It apparently did not affect the outcome of the aid award.

The offered – no, committed – cuts on page 17 of the application total a little over $19 Million. The difference between the Transitional Aid requested and the Limited amount awarded is $12.275 Million. Does this now mean the City is obligated to make two-thirds of the cuts on Page 17? This is the urgent question that now needs to be asked tomorrow morning.

What might this mean? In our application, the city offered budget cuts in, for instance, the Police and Fire Departments totaling $13.171 Million. Two-thirds of that would be about $8.5 Million.  This is just about the same amount that the Mayor added back to the budget by exempting those uniformed departments on November 4. Do we now again face the need to make those layoffs? This would seem to go against Governor Christie’s statements that state aid would first go toward preserving public safety. Yet those statements themselves seem to go against the intent of the written rules of the Transitional Aid program, which seem to now obligate us to cuts across the board, including the uniforms.

How will the State now require us to respond to this Award?

So, now let’s review. Wednesday’s State Transitional Award grant is $12.275 Million less than requested. Trenton is still at least that amount plus another $9 Million in police and fire uniform short of balancing its budget. We will either need to cover that amount by either: severe tax increases; further massive city-wide layoffs that we have already committed to NJ we are prepared to do; or big chunks of both.These seem to be the choices facing us as we go back to work tomorrow.

Whew! No wonder no one give presents on Thanksgiving. No matter how they’re wrapped they all end up looking like turkeys.

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