Fixing Newark

[J. Sharpe James, J.D.]

Fixing Newark: What to cut and what to taxNJ Voices Guest Blogger/For NJ.com
06/15/2012 12:07 AM
By Robert Curvin and Dan O’Flaherty

Newark’s fiscal house rests on a shaky foundation. This fiscal disarray has received little comprehensive discussion, even though Newark’s problems ultimately will be felt well beyond its borders.

City taxes have been rising and services have diminished, but Newark does not have enough recurring revenues to cover its recurring expenses. The solutions the city has come up with have been*unsustainable fiscal maneuvers
*such as borrowing, selling assets, accelerated tax sales, multimillion-dollar “loans” from the state and proposed municipal utility authorities.

These schemes usually relieve the pressure for a little while, but they exact a costly toll in the long run. In the short term, they divert time and attention from the real problem: how to balance recurring expenditures and recurring revenues. They should not and cannot continue.
New Jerseyans who do not live in Newark may not realize that they, too, would be affected by a fiscal meltdown in the city.
More New Jersey residents work in Newark than in any other municipality (except New York), and most live outside Newark.*
Newarkers, most of whom work outside Newark, do more work in New Jersey than the residents of any other New Jersey municipality.

Almost everything that comes or goes in North Jersey comes through Newark. A serious fire in eastern Essex County cannot be controlled without the Newark Fire Department, and the Newark Police Department is North Jersey’s major bulwark against crime
.
Only by setting its fiscal house in order now can Newark assure that the growth it needs — and the growth New Jersey needs from Newark — will occur
.
Newark must cut costs and raise revenues. The gap between recurring expenses and recurring revenues — those expected to be roughly the same from year to year — in the mayor’s proposed 2012 budget was about $50 million.*

Unless serious painful steps are taken, the gap will keep growing. The mayor’s proposed budget raises property taxes by 29 percent over the 2009 rate, and he laid off a significant number of city employees in 2010. These steps were not enough.
Perks and employment in the upper reaches of City Hall should be slashed, and the police department should return to the ratio of supervisors to officers that it operated under in 2005. The savings from reducing perks are small, but they are important for trust, morale, and engaging the state and county in rebuilding Newark’s finances.

The county should expand its responsibilities in policing, parks and libraries. Fire protection should be regionalized.
State aid should return to the pre-Gov. Christie Whitman formula. If state aid grew from 1988 to 2012 at the rate of inflation, Newark would be receiving in excess of $70 million a year more.

New Jersey has a centralized system for collecting taxes. Except for property tax and a few exceptions, the state collects all taxes. Everybody in Newark’s economy pays income, corporation and sales taxes to the state. Under the state constitution, municipalities are creatures of the state and the state is responsible for their viability
.
The 1 percent payroll tax should be replaced by a 1 percent tax on all income earned in Newark. Previously authorized taxes should be imposed on large retail purveyors of alcohol. New taxes should be placed on stored shipping containers and surfaces that generate stormwater runoff.

The parking tax should be extended to all parking, however it’s paid for.

Everybody benefits from a stable, functioning city of Newark, so everybody should chip in. The budget can be balanced soundly and equitably — but not if Newark homeowners and rank-and-file city workers are the only ones who contribute.

If anyone has better ideas for recurring revenue increases or spending decreases, please let us hear them.
Robert Curvin is a Newark resident, homeowner and visiting scholar at Rutgers’ Bloustein School of Planning and Public Policy.
Dan O’Flaherty is a professor of economics at Columbia University. This article was co-authored by Richard Cammarieri, a lifelong Newark resident with a career in neighborhood-based community development. More information can be found at*ihnanewark.org
.*.

[Inkwell]

I guess hearing facts about Newark's mismanaged government -- from those unrelated to Mayor James -- is too much for some to handle. The lack of responses is not surprising. I suspect this type of exposure is the beginning of woes for Mr. Booker. Great post John!

[JoefromPGH]

I have to put on my very small, microscopic, Republican shoes on for a moment and say that a 1% tax on all income (net income or revenue; revenue being a much larger base) would turn off a lot of potential growth in business and industry. The fiscal mess that the city is in, of course, is a major impediment for new businesses relocating. That brings us to Newark's number one funder (after property taxes), the State of N.J. The fact that the State needs Newark to prosper is unchallengable. Therefore, it is NOT in the State's interests to let Newark crumble. The state needs to pony-up! That goes well beyond just a moral responsibility.

Therefore, the City needs a mayor and council that doesn't kiss the governor's hind side but, instead works in partnership with the Governor and state legislature.

Where Newark winds up, the State will follow. This is reality!

[Make Newark Clean]

Whether one agrees with his tax proposals or not, the writer's premise is correct. Newark's fiscal track is unsustainable. And the MUA is just another scheme for the city to eat its seed corn.

[Doofus1]

Originally Posted by Make Newark Clean

Whether one agrees with his tax proposals or not, the writer's premise is correct. Newark's fiscal track is unsustainable. And the MUA is just another scheme for the city to eat its seed corn.

Indisputable.