Thursday, July 22, 2010

Behind the Headlines: Why Newark May Cut Spending on Essentials

New Jersey remains in a bad fiscal state, even with closing the deficit this year. Localities in New Jersey are also in a bad way - because their profligate spending of years past coupled with state funding to bail out their spending ways is at an end.

So, it isn't really a surprise that blare that Newark is going to cut purchases of essential office supplies, and even toilet paper, to close a $70 million budget deficit. Newark Mayor Cory Booker is calling for a shortened work week, reductions in spending, and cutting nonessential services as a means to help close the budget deficit.

Why are those cuts necessary? Well, because the Newark City Council twice refused to act on a move to create a municipal utilities authority that would have enabled the city to close the deficit without enacting new taxes.
The extreme measures Booker said he will implement starting next month come on the heels of the city council’s decision earlier this week to defer action on the creation of a Booker-backed municipal utilities authority. The authority, which would take over Newark’s vast watershed holdings is a linchpin in his budget.

Without the MUA, the budget is left with a $70 million hole the mayor said he must attempt to fill without resorting to draconian tax increases that could push homeowners over the edge and cripple the city’s fragile economic revival.

"In the meantime, I’m going to shut down as much of city government as I can," Booker said during a City Hall press conference. "We’re going to stop buying everything from toilet paper to printer paper. Call me Mr. Scrooge, if you want, but they’ll be no Christmas decorations around the city."

Barring any city council action, Booker said, the belt-tightening will begin Aug. 2 with the closing of Newark’s city pools and the popular Camp Watershed in West Milford. On Sept. 27, allowing for the required civil service notifications, the city’s non-uniformed employees — all except police, fire, water and sewer — are to begin a 4-day work week, the equivalent of a 20 percent pay cut. And, he said, he’s "taking away" the council’s gasoline debit cards and asking members to voluntarily join their City Hall colleagues on the furloughs.

Rebuffed over his $600 million spending plan, which already includes the prospect of as many as 350 police and firefighter layoffs and the closing of the city’s two branch libraries, Booker threw the budgetary ball back at the nine-member council.

The problem is that Booker, a Democrat, still needs to cut spending. The city needs to reduce its budget deficits structurally as well as fiscally on a year-to-year basis. The municipal authority would have been a one-shot to close the budget this year, but wont solve the city's problems long term, which includes overstaffing.

So, while the City Council has balked at the proposal, they've done nothing to fix the structural deficit. Booker has little choice but to push for the furloughs to prod the council into acting.

It didn't take long for the Newark City Council to cast Mayor Booker's cuts as nothing short of savage. What choice did the City Council give Booker exactly?

They weren't going to cut spending on their own.

They weren't going to go along with the utility authority plan.

They were only looking to preserve the status quo in fiscal operations - namely when revenues fall short, look to raise taxes.

Those are the only options that the City Council has looked at and when tax and spend is all you operate with, that's not a choice.

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