Towards A Newark Declaration of Economic Independence

This was written by Ron C. Rice with Allen Patterson, CEO of Patterson & Fraser, and posted by Newark Councilman Rice. – Promoted by Rosi

Since 1967, the City of Newark has economically struggled. In 44 years, real development did not take place until the early 1990s – the construction of New Jersey Performing Arts Center. The development of this edifice started the energy of citywide “new” construction throughout the ’90s. In 2006 and 2007, there were signs of economic retraction possibly leading to a recession and as the recession loomed, the City of Newark began to experience an even more critical condition of its economic pulse: the foreclosure rate elevated to historic highs and the city continued spending more than it was generating despite cutting substantially into the structural deficit.

Recently, the Newark Municipal Council voted for a $616M spending plan thereby ratifying a 2011 budget for the city. In doing so, the council lowered the tax increase originally proposed by Booker’s Administration from 7% to 4.6% and maintained the budget’s commitment to no furloughs or layoffs. Historically, however, Newark’s budget solutions have not tackled the main systemic problems of spending and investing.

It would be easy to say that as the structural deficit grew in our budget, the problem was masked by the use of Port Authority settlement monies to fill budget holes for a decade. It would be easy to say cut all directors’ salaries, get rid of all city perks, end all legal contracts, etc. and those cuts alone would annually balance the budget. It would also be easy to merely state that other cities in America are experiencing the same maladies and worse, from laying off half of their police forces to declaring bankruptcy. But all of those arguments hide the fact that we have real assets in our city that we have not had the collective will or the statewide support to use for the benefit of our city’s progress.

I am fully cognizant that Newark has severe economic challenges. Nearly ninety percent of city spending is set for salaries, pension and healthcare costs. One-third of our city’s land facilitates Port Authority operations – for which the city receives a paltry $70 million pursuant to agreement. Regrettably, the PILOT (Payment In Lieu of Taxes) initiatives for our six higher education institutions are insufficient and the city receives no significant revenue from city subsidized housing, hospitals, and our plethora of churches and non-profit entities. Only 20% of our city residents are homeowners and have college degrees and we have a poverty rate of over 30% and an unemployment rate of over 15%. But despite past failures to fundamentally change the trajectory of our annual budget issues, the nation’s current financial difficulties and the Newark specific barriers to our city realizing its potential, Newark must chart a course for true economic independence, but it will take a true partnership, an unprecedented collaboration between the federal, state and local governments and the end of historical/institutional arrangements.

A True Partnership

The city’s Administration must work intimately with the City Council by: beginning joint budget planning for FY 2012 this month, supporting my proposed legislation creating a Newark Citizen Advisory Budget Committee, and seriously pursuing City Council ideas to create more revenue such as creating a toll road on Doremus Avenue for intermodal traffic, a container tax at the Newark Port, stormwater tax for city parking lots, joint purchasing opportunities with school district/county government, and an airport passenger tax to name just a few.

We must jointly pursue out of the box revenue generating ideas such as a university public safety fee (we have 6 colleges and universities), a better PILOT system for federal and state buildings, a better return on our hotel tax from the state and a realty transfer fee. We must pursue ideas like those proposed to the City Council by Patterson & Fraser Enterprises, a Newark-based urban development company, such as working with the School Development Authority (SDA) to initiate a sale-leaseback of school buildings generating nearly $1.7 billion for the school district and approximately $56 million in annual property tax revenue and exploring advertising opportunities via government agencies in the city including, but not limited to: parking meters, city website, city buildings, property tax/water/sewer bills, transportation/city vehicles, Channel 78, etc.

The Collaboration Between the Federal, State and Local Governments

Our new partnership must be created with our federal representatives, our Essex County legislative delegation and the Governor. The new fees and revenue generating ideas that my colleagues and I have proposed will take our delegation sponsoring the measures, executing their passage and getting the Governor’s signature. Our federal representatives will be needed for the most controversial, but most important part of the equation to make our city economically independent.

The Dissolution of the Port Authority & The Creation of a Municipal Authority Over Our Transportation Assets

The Port Authority undertakes projects and activities in accordance with the Port Compact in 1921. The Port Authority is a financially self-supporting public agency that relies almost entirely on revenues generated by facility users, tolls, fees and rents and adopted a $7.2 billion budget for 2011. Cities like Los Angeles realize revenue sources from their own municipal authority. It is time to allow participating cities like Newark, Elizabeth and Jersey City to form our own authorities that will make us self-sufficient and no longer in need of state aid, for good.

By maximizing the use of our own assets under the construct of our own Newark Municipal Authority, the city could investigate the possibility of selling Newark Liberty International Airport for an estimated $7.2 billion and imposing an air quality departure flight surcharge of $30 on the nearly 102 million passengers that utilize the airport, for example. Or, impose a value freight tax of 3% on the $150 billion of exported and imported goods at Port Newark, more ideas imparted to us by Patterson & Fraser.

The city of Newark needs out of the box thinking and action regarding our revenue stream and our leaders to support us to realize true economic independence created from our assets and not on the backs of our residents.

Comment (1)

  1. FogerRox

    someday, right?


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