Passaic administration introduces $118.7 million 2025 municipal budget; council sets Sept. 2 adoption hearing

The city of Passaic introduced its 2025 municipal budget at the July 15 City Council meeting, with Omar Garcia, the city's chief financial officer and finance director, presenting the mayor's proposed plan that would appropriate $118,671,554 for the year.

Garcia told the council the proposed budget breaks spending into salaries and wages ($52,725,000, about 44 percent), other expenses including health benefits and liability ($46,111,000, about 39 percent), pension contributions ($15,258,000, about 13 percent), debt service ($2,076,000, about 2 percent), capital improvements ($700,000, about 1 percent) and a reserve for uncollected taxes ($1,800,000, about 1 percent). "The proposed appropriations for 2025 is $118,671,554," Garcia said.

Why it matters: the budget shows sharp increases in employee health-care costs that echo a broader statewide issue. Garcia said the State Health Benefit Commission approved about a 15 percent rate increase for 2025 and that the city has seen roughly a 50 percent increase in the state health benefit premiums over three years. To offset part of the 2025 increase, the administration plans to use $500,000 from reserves; the budget as proposed uses $13.4 million of fund balance or surplus to balance revenue and appropriations.

Key numbers and impacts - Total appropriations: $118,671,554. - Amount to be raised by taxes: $79,900,080 (about 67 percent of revenue). - Proposed increase in amount to be raised by taxes: $3,257,000 (reported as a 4.25 percent increase to the tax levy; the administration reported a 3.9 percent municipal tax impact on the average assessed home after increased assessment values are included). - Effect on an average assessed home (assessed at $275,000 in the administration's presentation): municipal tax bill rises from $7,137 in 2024 to $7,415 in 2025, an increase of $278 a year ($23.17 per month), according to Garcia.

Garcia identified categories driving the spending increases: a roughly $2.47 million increase in health benefits (largely driven by statewide premium increases), $1.992 million for salaries tied to contractual obligations, higher liability and workers' compensation costs, and increased garbage collection costs tied to new bid contracts. He said the city's outstanding debt at 12/31/2024 was about $18 million and that the municipality retains substantial borrowing capacity.

Council discussion and administration responses Council members pressed the administration on health-benefit options, comparisons to neighboring municipalities, and the use of surplus. Councilman Love and others thanked the administration for maintaining service levels in public safety and recreation despite fiscal pressure. Garcia and the mayor said the administration has asked brokers to shop the market and explore alternatives (including self-insurance and other products), but cautioned that statutory constraints and market volatility make changes complex. The administration noted a possible three-year requirement for municipalities that exit the state plan to remain out before rejoining, and that any alternative must meet contractual "equal to or better" requirements for employee benefits.

Schedule and next steps The council voted to introduce the budget on July 15, send it to the state for review, hold a public hearing and adopt the budget at a scheduled meeting on Sept. 2, 2025. The administration said the state review typically returns comments requiring minor corrections; the council will review and then hold the public hearing and adoption on the same September meeting.

Votes at a glance - Motion: Introduce the 2025 municipal budget and send to state for review and set public hearing/adoption for Sept. 2, 2025. Mover/Second: not specified on the record. Roll call recorded: Councilman Love ' Yes; Councilwoman Melo ' Yes; Councilman Mayer ' Yes; Councilman Garcia ' Yes; Councilwoman Colombo Montanez ' Yes; Council President Scherer ' Yes. Outcome: introduced. - Motion: Adoption of ordinance NJSA 40A:4-45.14 (to exceed municipal budget appropriation limits and establish cap bank) for introduction prior to budget introduction. Outcome: introduced by roll call (all yes). - Motion: Resolution authorizing current year municipal budget to be read by title and budget introduction (procedural). Outcome: approved by roll call (all yes).

What the administration emphasized and caveats The administration emphasized the role of outside factors beyond municipal control: state-set health premiums, joint insurance fund increases, and volatile bid markets for services such as garbage collection. Garcia warned that if state health premiums continue to increase significantly, future budgets will need to absorb more of those increases.

The council and administration noted the city has used grants and federal ARP funds in prior years; Garcia said ARP funding was fully allocated by 12/31/2024 and that the expiration of temporary municipal relief reduced revenue. The administration also reported the city's fund balance and noted the budget relies on drawing from that fund balance this year.

Next steps and public process Per the municipality's budget schedule, the council will hold a public hearing on the introduced budget on Sept. 2, 2025, at which residents can comment before the council votes on final adoption. The administration will respond to any state review comments during the review period.

Sources: Presentation and figures supplied by Omar Garcia, chief financial officer and finance director; procedural votes recorded on the July 15 city council meeting transcript.