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Mayor: 5.6% introduced tax increase is a placeholder; city aims for about 2% after transitional aid
Summary
Paterson officials held a virtual town hall to correct misinformation about a 5.6% tax increase in the introduced budget, outline the city's request for $33 million in transitional aid and explain how state aid and programmatic incentives affect residents' tax bills.
Mayor (unnamed) told residents at a virtual town hall that the 5.6% tax increase shown in Paterson’s introduced budget "only serves as a placeholder." He said the city’s objective is that, after state transitional aid is applied, the increase be “closer to 2%.”
The mayor explained that Paterson is a transitional aid city and that the administration has requested $33,000,000 in state transitional aid for the coming year because of rising cost drivers including insurance, pensions and escalating salaries. "Last year, dollars 27,000,000. This year, we're asking for $33,000,000 because of cost drivers," he said.
Nut graf: The introduced municipal budget shows a higher rate because it does not include the yet-to-be-determined transitional aid award from the New Jersey Department of Community Affairs (DCA). City officials and members of the local legislative delegation are lobbying Trenton for the aid; if Paterson receives the full requested award, officials say the mandatory 2% municipal tax increase would be the only amount shown on residents’ bills.
Mayor comments outlined the budget’s major cost categories: a more-than-$300,000,000 operating budget with roughly 33.4% earmarked for police, fire and OEM; insurance at about 20.2%; and pension and fringe benefits about 12.7%. The mayor said the municipality portion of an estimated tax-bill increase is 2.8%, schools 1.2%, county 1.0% and library 0.7%, with Passaic County open-space at 0.2%.
The mayor described the process and timing for transitional aid: an introduced municipal budget is required so the state can calculate an aid award; municipalities typically introduce budgets in April–May and receive a DCA letter in the summer indicating the award. "Any changes to your bill, your tax bill, only go into effect after adoption of the budget," the mayor added.
In response to a resident question about tax abatements and incentives for developers, the mayor cited the state Economic Opportunity Act’s Garden State Growth Zone program as the statutory framework that provides abatements and PILOTs (payments in lieu of taxes) for new construction in designated urban zones. He said abatements escalate over time and properties enter full taxation on a long-term schedule (he described an escalator to full taxation over about 30 years) and that participation in the program is an "as-of-right" state policy for qualifying projects.
The mayor said the administration has pursued other revenue opportunities, including licensed cannabis businesses and a growing dispensary sector. He also noted that the city reduced the number of abandoned properties from about 1,200 to fewer than 200 since earlier revitalization efforts began.
Ending: City officials repeated that the introduced 5.6% increase is not the final tax bill figure and urged residents to follow updates as the council adopts the budget and the DCA issues a transitional-aid determination.
