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Council adopts ordinance creating a municipal cap bank and raising the appropriation cap to 3.5%
Summary
The council adopted an ordinance to increase the statutory cap on municipal budget appropriations from 2.5% to a maximum 3.5% and to create a ‘cap bank’ allowing unused appropriations to be carried forward. Finance staff said the measure is a recurring tool used to prepare balanced municipal budgets.
The Newark Municipal Council adopted an ordinance allowing the city to exceed the normal 2.5% municipal budget appropriation limit and to establish a cap bank that would hold unused appropriation capacity for future use.
Benjamin Guzman, acting director of finance, briefed the council: “Adopting this ordinance will allow the city of Newark to increase that up to a maximum of 3 and a half percent, and then creating the cap bank will allow any unused portion of the prior years or even this current year's appropriations that is not spent can then be put into a bank to be used in preceding year's budgets to allow the city to be able to prepare a balanced budget for that given year.” He told the council the city has adopted a similar ordinance in prior years.
Public comment during the hearing included sharp criticism of city budgeting, accountability, and recent rate increases. Speakers cited past budget delays and raised concerns that a larger cap could be used without sufficient public oversight. “This is nothing more than another slush fund,” a commenter said during the public hearing.
Council members completed a roll call and adopted the ordinance. Staff described the measure as a standard municipal budgeting tool permitted by state statute; the acting finance director said it is intended to give the city additional flexibility while preserving a cap bank for future use.
What’s next: The ordinance will be advertised and the administration said it will provide further documentation if residents or council members request detail on prior years’ cap bank usage and the proposed application of the authority in the forthcoming budget process.
