The Trenton Times published the following article on February 27, 2013. To read the full article, click here.

New Jersey hands $25.4M in transitional aid over to Trenton

By Erin Duffy/The Times of Trenton 
on February 27, 2013 at 9:26 PM

TRENTON — The state will give the city $25.4 million in transitional aid this year, a sum that is higher than last year’s figure but that amounts to a cut in funding when other state payments that are being stopped this year are accounted for.

The city received $22 million last year and had expected about $18.7 million this year as the state works to wean cities from the transitional aid program.

In a letter to the city, Thomas Neff, the director of the Department of Community Affairs’ Division of Local Government Services, said the extra aid is supposed to make up for about $6 million of payment-in-lieu-of-taxes agreements for state buildings that will
expire soon.

Subtracting the $6 million, the actual aid figure comes to about $19.4 million, slightly more than the expected amount.

Still, that did not stop Mayor Tony Mack’s administration from celebrating last night.

“This award amount exceeded last year’s award amount and far exceeds our expectations for this fiscal year,” Mayor Tony Mack said in a statement. “This is a major victory for our administration in that it shows our efforts to shore up Trenton’s structural integrity is being noticed.”

Council members said they hope the additional funds will be used for badly-needed property tax relief.

“Of course I’m very happy we’re getting more,” Councilwoman Marge Caldwell-Wilson said. “This will allow us to go back to the drawing board with this budget and possibly avoid a tax increase.”

“This doesn’t guarantee we’ll get the same amount next year, but it gives us some breathing room now so we can start looking at the police budget, the cost of taxes and maybe we can do something to move forward,” she said.

In the fiscal year 2013 budget introduced in September, business administrator Sam Hutchinson said the city was requesting $21.2 million in transitional aid but actually expected to get $18.7 million after DCA advised municipalities they should brace themselves for a 15 percent reduction in the overall transitional aid pool.

Created by Gov. Chris Christie in 2010, the transitional aid program doles out extra cash to struggling cities and municipalities, but cuts that amount year by year in an effort to wean municipalities off the special aid. This year, the total amount of transitional aid available dropped to $94.5 million, a $14 million cut from last year.

In Trenton, the yearly allotments have replaced $35 million in Capital City Aid provided for years as a special payment in lieu of taxes to compensate the city for tax-exempt state buildings.

Even with the $18.7 million in transitional aid that had been expected and $44 million the city will receive in the form of Consolidated Municipal Property Tax Relief Act dollars and other aid, Trenton was still anticipating a $4 million budget hole, requiring a substantial tax hike.

The projected 19-cent tax rate increase would boost the city tax rate to $3.88 per $100 of assessed home value, an increase of $143 for homes assessed at $75,000 and $190 for houses assessed at $100,000. The prospect of the increase alarmed taxpayers who said they could not absorb another double-digit tax hike.

With the increase in transitional aid, Council President Phyllis Holly-Ward said she hoped city officials can whittle down that tax increase.

“We prepared to get a significant amount less, so to be able to get that amount will take a weight off the taxpayers,” Holly-Ward said. “That’s what everyone is complaining about, people moving, putting houses up for sale. They’re saying they can’t take it and had this amount not come in, we’d surely see a big exodus.”

She and Caldwell-Wilson said Mack and his administration should see the aid increase as an incentive to budget and spend city dollars more responsibly. Mack, who was indicted in December on federal corruption charges, has also come in for criticism from council members and others for his management of the city budget.

Caldwell-Wilson said it would be tempting to use the money to hire more police officers to beef up a department stretched thin by layoffs and ongoing bursts of gang violence, but the city has to remember the increase could be a one-shot deal. Trenton cannot hire more officers if the money to pay them will not be there next year, she said.

“We just have to be smarter about spending,” she said. “We can at least save by bringing the tax levy down.”

To receive the money, Mack must still sign a Memorandum of Understanding that gives the DCA continued control over several aspects of city spending and personnel decisions, which has been a sticking point for Mack in the past.

Since last year the state has had the authority to approve all senior hires. The city also cannot fire high-ranking officials without DCA permission after the department raised concerns over the revolving door of Mack’s cabinet appointees.

“It’ll be interesting to see what terms are in that, as to how we can apply that funding,” Caldwell-Wilson said.

Contact Erin Duffy at (609) 989-5723 or eduffy@njtimes.com.