Aid was slashed from $149 million to $10 million earlier this month
TRENTON — Negotiations between Gov. Chris Christie and legislators on restoring up to $139 million for New Jersey’s neediest cities are likely to begin this week, according to sources with knowledge of the situation.
Christie stunned local officials across the state when he cut funds for struggling cities from $149 million to $10 million with one of his budget vetoes, all but eliminating the emergency aid.
“What concerns me greatly is that this is going to become a political issue for the upcoming elections, and it’s going to polarize positions, and that’s not going to be healthy,” said Bill Dressel, executive director of the state League of Municipalities.
If the governor and the Democrats who control the Legislature don’t strike a deal on the money, known as transitional aid, cities including Paterson, Trenton and Camden will face financial collapse. Municipal officials say defaults, mass layoffs and unprecedented cutbacks to public safety are in the offing as violent crime surges across New Jersey.
“This is the worst-case scenario,” Dressel said.
Where to find the money is another matter. State Treasurer Andrew Sidamon-Eristoff said last week that almost half of the state’s $640 million surplus was set aside to pay the bills. If all the transitional aid were restored, the surplus would sink to around $225 million.
“We are fully cognizant of our limitations,” said Michael Drewniak, a spokesman for the governor. “It’s premature to talk about this right now.”
Any wrong moves could set off a chain reaction. Transitional aid not only covers salaries, but helps cities pay down their debts to investors.
Moody’s Investors Service has warned its clients that a dozen New Jersey cities’ bond ratings would be downgraded if the transitional aid funds aren’t restored. That would make it even harder for cities to borrow.
City officials in Camden, which expected transitional aid to cover 38 percent of its budget, and in Trenton, which needs it for 12 percent, have remained optimistic that the money will be at least partly restored once the political churning runs its course in Trenton.
“We have a temporary budget that’s been approved,” said Robert Corrales, a spokesman for Mayor Dana Redd of Camden. “We still have revenue coming in, so we’re paying our bills.”
But other cities, including Paterson, have been preparing to take temporary loans, drafting contingency plans and warning of extreme lapses in services in case a deal doesn’t come within the next few weeks.
Dressel said the cities’ budget timelines have been completely derailed.
“It’s throwing a wrench, a hammer, a screwdriver, a backhoe and an air hammer into their operations,” he said, adding that many were already planning to downsize their police and fire departments when transitional aid was still on the table.
Derek Roseman, a spokesman for Senate President Stephen Sweeney (D-Gloucester), said Sweeney is ready to discuss a deal “at any time.” According to people who will participate in the negotiations but are not authorized to speak publicly on the negotiations, Christie — back in Trenton after a two-week absence — plans to take up the matter this week.
But before any solutions are reached, Christie and the Democrats will have to find common ground.
Senate Democrats tried to override dozens of Christie’s vetoes last week, including his cuts to transitional aid, but failed because Republicans refused to approve more spending. At the same time, a group of leading Republicans introduced a bill that slices off some of the transitional aid and redirects it to the state agency overseeing the cities.