Business administrator outlines 2025 budget, cites revaluation, state loans and property tax increase

Eric Pennington, the city's business administrator, presented the mayor's recommended 2025 general fund budget to the Newark Municipal Council on Sept. 12 and described a mix of one-time and ongoing fiscal pressures that underlie the plan.

Pennington said the 2025 recommended general fund is $970,000,000 and told the council: "The 2025 general fund budget contains a property tax increase of $735.12 from 3.803 to 4.016 per $100 of assessed value over 2024 on the average residential assessment." He listed major drivers of the increase as higher pension costs, rising health insurance and debt service, and an increased Essex County tax levy.

Why it matters: Pennington and council members framed the tax change as part of a multi-year adjustment linked to an overdue property revaluation and temporary state loan arrangements. Without the loans and other measures, Pennington said the average homeowner's bill would have risen much more.

Most important facts

- Budget totals and scope: Pennington told the council the recommended 2025 general fund budget is $970,000,000. He said the city manages more than 3,800 employees and serves a population of more than 311,000 residents.

- Property tax change and drivers: Pennington described a property tax increase on the typical residential assessment and identified specific cost increases: pensions (+$15,000,000), health benefits (+$4,200,000), debt service (+$10,400,000), Essex County levy (+~$30,000,000) and workers' compensation (+$1,300,000).

- Revaluation and state loans: Pennington said Newark has not performed a revaluation in more than a decade and is currently conducting one. He explained the city received state loans tied to equalization issues (including a previously budgeted $22,000,000 loan and a separate $30,000,000 loan) and said the city has negotiated payment timing so that some repayments will not begin until 2027.

- Loss of one-time federal/state aid: Pennington said the expiration or decline of special state and federal funding has reduced general revenue by approximately $45,000,000, increasing pressure to raise tax revenue or cut spending.

Council questions and clarifications

- Revaluation timing: Pennington told the council he expects revaluation to be completed later than initially hoped, saying "I was hoping, by the 2026, but it's more likely 2027" and added that revaluation is intended to produce a 1:1 assessed-to-market value ratio.

- Loans and restrictions: Pennington said the loans tied to transitional aid are loans, not gifts, and that the city's MOU with the state delays repayment obligations. He said the loans must be used to cover the equalization gap the state identified and that the city will cooperate with state oversight per the MOU.

- Effect on homeowners: Pennington said the state loan arrangements and other measures reduced a larger potential increase in the average homeowner's bill, explaining the effect in dollar terms when comparing scenarios the city faced.

Background and context

Pennington noted the local economy is still recovering from COVID and that American Rescue Plan Act funds are constrained in timing and scope. He and council members repeatedly referenced the long delay in completing the legally required property revaluation, which shifted tax burdens across property classes and required the city to secure temporary financing.

Ending

Council members asked a series of follow-up questions about details of the loans, how the revaluation will change future bills and what positions or services might be adjusted. Pennington said his office and the Office of Management and Budget will provide additional written detail to the council and that the administration expects to present a final adopted budget on the council's October 1 target date.

Speakers quoted or referenced

- Eric Pennington, business administrator (presenter) - Darlene Tate, director, Office of Management and Budget (present with Pennington) - Council President (on the dais) - Councilman Ramos (questioner) - Councilman Gonzales (questioner) - Councilman Kelly (questioner)

Authorities referenced (as stated by speakers)

- Transitional aid MOU with the State of New Jersey (referenced by Pennington)

Clarifying details

- Recommended 2025 general fund budget: $970,000,000 (as stated by Pennington). - Reported reduction in general revenue (approximate): $45,000,000 (Pennington). - State loan amounts discussed: $22,000,000 (previously budgeted/renegotiated) and $30,000,000 (0% interest, repayment timing negotiated); details referenced by Pennington. - Property tax change described by presenter: from 3.803 to 4.016 per $100 of assessed value for the average residential assessment; Pennington said this equates to an average dollar increase (he cited $735.12 on the average residential assessment).

Provenance (selected transcript evidence)

- topicintro: block_id:"s:71.99-e:164.92" evidence_excerpt:"I'm Eric Pennington, business administrator for the city of Newark... The office of the business administrator provides long term budgetary guidance... The 2025 recommended general fund budget of $970,000,000..." reason_code:"topicintro" - topicfinish: block_id:"s:241.26-e:299.67" evidence_excerpt:"The 2025 general fund budget contains a property tax increase of $735.12 from 3.803 to 4.016 per $100 of assessed value over 2024 on the average residential assessment." reason_code:"topicfinish"

Searchable tags:["budget","taxes","revaluation","state-loan","Newark","Pennington"]