Passaic introduces $118.7 million 2025 budget; officials project a 3.9% municipal tax-rate impact

Passaic City officials introduced the mayor's 2025 municipal budget at the July 15 council meeting, proposing $118,671,554 in appropriations and a 4.25% increase in the tax levy that administration says translates to a roughly 3.9% municipal tax-rate impact after higher assessed values. The administration said the typical municipal tax bill on a $275,000 assessed home would rise to an estimated $7,415 from $7,137 in 2024, an increase of $278 a year.

Omar Garcia, the city's chief financial officer and finance director, framed the budget as a balance of rising costs and service preservation. "The proposed appropriations for 2025 is a $118,671,554," Garcia said, and he highlighted major cost drivers: a $2,470,000 increase in employee health benefits, a $1,992,000 rise in salaries tied to contractual obligations, and higher garbage-collection costs driven by new bid contracts.

Garcia said the city will rely on multiple revenue changes to balance the plan. Federal American Rescue Plan funds were fully allocated as of Dec. 31, 2024 (reducing revenue by $4,785,000), a two-year municipal relief program from the state expired (reducing revenue by $1,308,000), and the proposed budget uses $13,400,000 in fund balance or surplus. The administration reported that the amount to be raised by taxes under the proposal is $79,900,080.

The budget packet presented line-item breakdowns: salaries and wages at roughly $52,725,000 (44% of appropriations), other expenses (including health benefits and liability insurance) at about $46,111,000 (39%), deferred charges (pensions) near $15,258,000 (13%), and a 2025 debt-service repayment shown as about $2,076,000. As of Dec. 31, 2024, Garcia said the city had outstanding debt of $18,000,003.34 and cited remaining borrowing capacity.

Council members pressed administration on the health-benefit outlook. Garcia said the State Health Benefit Commission approved an approximate 15% premium increase for plan year 2025 and noted that a consulting actuary had at one meeting recommended a 32% rate increase for a future year. To blunt the short-term impact, the city will use an additional $500,000 from reserves toward benefit costs. Administration said it had asked brokers to identify alternatives, including self-insurance and other provider arrangements, but cautioned that leaving the state plan can require multi-year commitments and carry transition costs.

"Once it's introduced," the business administrator said during the meeting, the budget will be sent to the state for review; the council set a public hearing and possible adoption for Sept. 2, 2025 after the state's review period.

Votes at a glance - Motion to introduce the 2025 municipal budget (item 18): motion passed by roll call; public hearing and adoption scheduled for Sept. 2, 2025. - Motion to introduce ordinance to exceed municipal appropriation limits (NJSA 40A:4-45.14, item 16): motion passed by roll call. - Motion to authorize executive session (item 19): approved; executive session scheduled after a short recess. - Consent/communications items and other routine agenda votes (items 1'4, 7'14, 20'50, ordinance introductions): motions passed by roll call as recorded in the meeting.

Why it matters The budget reflects the tension facing many small cities: stable core services and public-safety commitments versus rapidly rising benefit, insurance and contract costs. City officials said maintaining public-safety capacity, parks and recreation programming, and basic infrastructure remains a priority even as surplus is tapped and health-insurance spending grows. The council and administration signaled continued work between introduction and public hearing to provide additional detail to members and to monitor state or federal policy changes that could affect retirees and other costs.

What happens next The budget is formally introduced and will go to the State of New Jersey for review. The council will hold a public hearing on Sept. 2 and then may adopt the final budget, after any state comments and further council deliberations.