No organization of any size operates without a budget. The budget serves as the main record of a plan of action. For most organizations it includes more than just numbers but also a description of initiatives meant to drive the mission forward. You can NOT find a CEO or Board of Directors of any corporation who would not agree with the above.
In governments, it’s perhaps even more important. The budget serves as the legal check and balance over the spending of the executive branch. It provides the mechanism by which the legislative branch controls the executive. Because of this budgets, could be said to be a core of our democracy.
Organizations and governments that fail to budget, fail, which brings us to Trenton.
Trenton’s fiscal year runs from July 1 to June 30th. However, in recent memory the city has not operated with an approved budget before March. Trenton fiscal year 2015 budget was approved today, March 24th. That’s three quarters of the way through the year. We’ve already spent three quarters of our money without an approved budget. The money that has been spent was spent with an approval process that has less rigor than a formal review complete with public input.
Our budget and therefore our city are adrift and what’s worse NO one in the Administration or City Council seems particularly upset about it.
The Law Director explained why it couldn’t be done any sooner. The City Clerk gave some additional reasons. Basically they are saying that Trenton MUST always and for all time operate without a budget. The democratic process will apply to only one quarter of the year. We will remain adrift.
I can’t accept that and call on The Mayor to fix this problem.
- We may need to seek new State laws. Surely there would be support for allowing struggling cities to have budgets. The Clerk suggested that we need to change our type of school system vis a vis the State, well OK, maybe we should.
- We may need to make guesses about State funding. That’s why they call it a budget. All budgets bake in uncertainty, I fail to see the difficulty in this. The Clerk suggested we not be dependent on the State. Perhaps, but that’s like wishing for world peace. Meanwhile we can budget with only an estimate of State funding.
- We may need do things in parallel. The City Clerk told me that we couldn’t start work until an audit that takes six months is complete. I challenge that notion. Surely Department Directors can prepare their materials and citizens and Council can review and voice their priorities while that is happening.
- We may have to start work on the 2016 budget NOW. We have only three months until fiscal year 2016 begins. I fail to see why the administration and public can’t agree on priorities and contingencies in advance of July 1 so that shortly after the year begins, Council can begin voting. The voting should be the last and most inconsequential part of the process to paraphrase fellow activist Kevin Moriarty.
Several years ago, during the unfortunate Tony Mack administration, I, along with a small band of fiscally minded citizens, formed a group called Fix Trenton’s Budget. Among other things, we researched, developed and presented a new budget process to the Administration and City Council called Priority Based Budgeting. Other cities around the country use it to good effect. It was heavy on public participation, analytic thinking by Departments and timelines. We held public budget education forums and even collected budget priorities from the forums and over the Internet. It went nowhere because the Mack administration and City Council were happy to operate with no real bounds or public input. Let’s hope that is NOT the attitude of this Mayor.
We have it ready to re-introduce to Trenton should the Mayor ask us.
We hope that this Mayor will help re-install the good government and transparency that comes from operating under an approved budget. We hope that we can budget not just for the months of April, May and June but that he will consider the other nine months of the year as also being important in moving Trenton forward.
Times writer Jenna Pizzi brings voices to the debate over a marketing campaign for Trenton that, for the most part, miss the mark. (“Trenton officials plan $105K marketing campaign to rebrand city to tourists, businesses”, March 21). I would prefer to see this conversation rooted in the broader discussion on how to revitalize our city. Instead, the article misses several important points on the role of branding vs. marketing and at least one voice that has been discredited in the history of Trenton’s revitalization.
Since my issue is with the use of quotes in the article I’ll review the main ones point by point.
“The mayor was very interested in developing a campaign that rebrands us and allows us to determine what is our own identity,” said King-Viehland. “Now is the time for Trenton to determine what it is.”
No problem with branding as a goal. One would have thought the Trenton250 plan would have done this. But it didn’t do a great job. What we really could use is a branding strategy to evolve our brand identity in advance of a marketing campaign.
Product companies do this in parallel with developing products all the time. An easy to understand example is Apple with its iMac, iPad and iPod. Years ago the company decided that it wanted a series of products centered on the “self” that would work together. They settled on a “look and feel” and naming ahead of delivering the product and spending money on marketing. The branding drove the development effort long before it drove the marketing campaign.
If that’s what this $105,000 is for then hopefully the contract winners will be working on helping neighborhoods and business district establish sub-brand identities under Trenton’s umbrella brand. My block is preparing define our own sub-brand right now and a fair question is how it might fit with other similar efforts in the history. However, from what’s been said, I don’t believe this is the focus of the contract. Instead the city is jumping straight to spending $30K on creative and $75K on a campaign on targeted support for private events. Classic cart before horse.
“The problem with Trenton is that it has always been, in my mind, the perception rather than the reality,” Prunetti said. “Their perception is wrong.”
Well Bob, Trenton is among the national leaders in homicides per capita. We have the second lowest per capita income in the State. Our tax rate is the highest in the State. I believe, Mr. Prunetti that our reality is a problem and you are delusional.
I’m from North Carolina whose State motto is “Esse Quam Videri”, which means “To Be Rather than to Seem” It’s taken from a work by Cicero on the value of having virtue rather than just seeming to. Mr. Prunetti’s could be “Seem rather than be”.
And finally we should all realize that Mr. Prunetti not only claimed 15 years ago that an arena, a ballpark and a hotel would form an economic triangle that would revitalize Trenton. It was a delusion then and just ridiculous now. Furthermore, the notion that Mr. Prunetti represents businesses that would move here is misguided. He represents businesses that are already in the region. I’d rather hear from a relocation consultant that advises businesses on where to move. What do these people think of a marketing campaign?
“If you are trying to turn around a negative image it is a tougher sell,” McCarty said. (marketing professor from the College of New Jersey) “That is true with anything in marketing. I do think that Trenton may have some difficulties in this arena, the same way that Atlantic City has and so on. It is not to say it can’t be done.”
I’ll be fair about this quote and say that Mr. McCarty is saying that turn-around marketing is difficult. His underlying opinion seems to be that a turn-around marketing campaign for Trenton would have a tough time accomplishing a useful goal, but that anything’s possible.
With that I agree. If we believe Mr. McCarty then we should classify this proposal as risky and unlikely to succeed. In fact, turn-around campaigns are generally very expensive (think BP spending all that money on the Gulf Shore). $105,000 is a drop in the bucket and not sufficient for a turn-around campaign.
Darrell Bartholomew, an assistant professor of marketing at Rider University, said he sees Trenton as set apart from other struggling cities like Camden because it has much more to offer in the way of historical attractions, museums, arts and tourism opportunities.
Mr. Bartholomew, is saying that Trenton is special. That’s what everybody says, but the use of the quote implies that because we think we’re special, we’re not really such a turn-around case as Mr. McCarty thinks.
I’m here to tell Mr. Bartholomew that every city is special in its own mind and that despite all our specialness and I’m including all of the great festivals we produce, that we still aren’t revitalizing. If he needs some help analyzing the situation I can lead him to some good source material
“In Trenton they have to do something physical. They can’t just go out there and run new ads,” said Roger Brooks, CEO of his own community marketing and tourism firm. “They have to do something that makes Trenton pretty cool.”
Whether that includes showcasing urban development in a particular area, investing in a project to revitalize an area or highlighting the historic assets of a municipality, the community must determine the identity and why people should come visit, work or move to an area, Brooks said.
“The question is really, what do you want to be known for when you grow up?” Brooks said.
Finally a mature, head’s up and clear perspective. Thank you Jenna for including it. What he’s saying is that we need to really figure out our brand and perhaps implement policy that supports that notion.
Trenton250 tries to say something about a vision and what we want to be. I think it’s a garbled vision but it’s what Trenton paid a consultant lots of money to develop. So are we using it?
Trenton First: A Premier Economic and Cultural Center Built on Arts, Industry, and Education
If this is what we’re using for our branding vision then I believe we’ve got trouble. Very few economies in this country are actually built on arts, industry or education. There are a few arts communities in the U.S. two of which literally started as artist havens, Santa Fe and New Hope. It would be a ballsy move to go that direction and I don’t think that’s what the City is thinking of. Industry left the U.S. for the most part 30 years ago, so I don’t know what that’s all about. The Education angle is a bit more interesting but it also seems the longest of long shots given that we’re so far down on the education pecking order.
So what are we doing here?
Clearly I don’t support a publicly funded marketing campaign for 2015. I might support one in the future but only after reading a cogent and believable revitalization plan that has measurable goals, budgets and tactics included. In the meantime I would really appreciate the media’s help in bring clear thinking voices to bear on the business of revitalization in the City of Trenton
I don’t send Letters to the Editor to papers anymore. I’ve had bad experiences in the past and besides its more useful in my mind to have the discussion on the Internet.
For several years various individuals and groups have played around with the notion that the 300 Block of S. Broad could and should be much more than it is. It’s a compelling notion.
The block is one of the most trafficked in the city and has some great historic building stock. It’s part of the Old Mill Hill Historic District and as such is adjacent to the second most prosperous neighborhood in the city (in terms of median income). It’s near downtown, the train station and the arena so it’s easy to find. It’s home to the venerable Mill Hill Saloon, the hip and trendy New Trenton Store and Studio and the new Whitaker condo development. The block has a lot going for it.
However the block struggles. Half of the retail store fronts are empty. Foot traffic is light and too much of the foot traffic we do have is up to no good. Furthermore none of the individuals and groups that have tried have managed to generate sustained momentum past the talking stage.
Can anything make a difference on the 300 block of S. Broad?
It could take just a few investors with common cause to turn the area around. I’ll be upfront and say that I’m already one of them as the only owner / occupant on the block. Because of that I’ll take a position on what this common cause should be.
We have plenty of retail and rental space catering to a demographic short on money and not particularly concerned about style. As has been written many times on this blog, Trenton can’t revitalize its economy on the back of this demographic. Instead we’ll need to attract childless, young people with disposable income. That is, the much sought after millennial. This is exactly the approach HHG is taking in its new Roebling Wire Rope District project just 3 blocks away.
Just four new businesses catering to the millennial market could put us on the right track
Trenton Social owner, TC Nelson, has it right when he proposes to call the portion of S. Broad between the Sun Bank Arena and Market street, SoBro, including the 300 Block of S. Broad. This branding is a play on well-known SOHO district in New York and conjures up images of trendy clothing shops, art galleries, coffee shops and restaurants catering to young hipsters. Of the 20 or so retail spaces on the street, three businesses are already going after that group with varying degrees of success. But success loves company.
If just four new businesses opened in SoBro it could provide the critical mass necessary to turn the area into a destination for millennials throughout the region looking to escape the strip mall and avoid the pricey streets of New Hope. If a walk from Trenton Social to Mill Hill saloon could include a stop at a gallery, shopping for Trenton made gifts at New Trenton, a coffee and desert and who knows maybe even a comic book, then I’d say we’d have something. With targeted retail like this, SoBro would become not only a destination to visit but also a place in which to live. When that happens the virtuous circle of revitalization will have begun.
Some city government “help” could go a long way
Everything is hard in Trenton and for something good like the birth of SoBro to happen we might just need city government to lean forward and help. When I say help I don’t necessarily mean provide funding. Instead, it would be nice to think that if an investor group got organized, the city would send a representative with authority to act to come to a meeting and ask “What can we do?”
I’d say there is plenty the city can do. Keep being aggressive with abandoned property fines and enforcement. We need to force the derelict owners on the block out. Help us find a way to keep the streets and sidewalks clean. Make sure street lighting is maintained. Be helpful in making the permitting and inspections processes easy
The problem may not be so big that it can’t be solved for modest amounts of money
A neighbor pointed out that Trenton has the highest effective tax rate in Mercer County and another neighbor blamed Governor Christie for it while also suggesting that Princetonians shouldn’t complain about their taxes because Trenton’s tax rate is so much higher. Rather than tie up the neighborhood e-group I thought I’d comment further on Reinvent Trenton.
Trenton has had the highest effective tax rate in the entire State of NJ (not just Mercer County) for a long time. Trenton’s rate is 4.753% and Princeton’s is 2.031%.
Mercer County Tax Rates by municipality
Despite any partisan claim that this is somehow the current Governor’s fault, we’ve had the highest rate since as long as I’ve been tracking it which goes back to Corzine and McGreevy. If one wants to assign blame, we’ve had Democratic Mayors for the 24 years it took for our tax rate to climb to where it is.
And while we’re on the subject, let’s not forget what the situation would be if we weren’t an Abbott school district (that’s what you are if you’re so destitute that you can’t pay for education), our tax rate would be double than what it is now. The State pays for our public schools.
However, The comparison to Princeton is correct. People are generally oblivious to their tax “rate” and instead focus mistakenly on absolute value of the tax bill. It’s our tax rate (in some cases higher than mortgage interest) that scares away new investment.
We do not have a cost problem.
Our costs are comparable to similar cities. Politicians like to suggest to citizens that they are cutting costs but in a city like ours, that’s like cutting bone, a bad idea. Even our wasteful spending on parades and festivals is just a drop in the overall budget.
One notable exception is that Camden’s (a city with slightly lower median income than Trenton) policing costs are now much lower than Trenton’s and for what appears to be a superior level of service. Camden’s solution was drastic and many people (mostly those in police unions) deride it. Nonetheless regionalization (whether its union busting or not) should be considered.
While we can certainly be smarter about our spending, it’s not the big problem.
Our Big problem is revenue!
Hopefully everyone in Trenton is up to date on the drivers of our municipal and school budgets and the actual structural problems as they relate to State payments to Trenton (CMPTRA formulas, Energy Tax Receipt formulas, State PILOT payments, Transitional Aid and Abbott funding). All of these sources measure in the millions. Our immediate problem with the state is that the formulas are either incorrect, not being maintained or both.
Federal law prevents Municipal governments from taxing State governments. That hasn’t prevented other state capitols in this country from being successful cities. If one investigates some of those cities (“Fix Trenton’s Budget” did a few years ago) they find that NJ’s compensation package to Trenton is on par or better than most. It’s what we’ve done with our limited resources that has caused the problem.
Trenton has been shortchanged on CMPTRA (includes taxes on business that the state collects on our behalf) and Energy Tax Receipts (state collects money from for energy companies on our behalf). The previous administrations (Mack and Palmer) were asleep at the wheel on these issues. We’ve forfeited millions of dollars (at last count over $20M as I recall). Meanwhile the league of municipalities has spearheaded an effort to fix this. Our current admin and council are somewhat more familiar with the subject and will hopefully lend Trenton’s weight to the effort to overhaul this payment system.
The fundamental problem revenue side of the equation. Not one single policy has been enacted to drive investment in Trenton since I’ve lived until this week. The “Vacant Property Registration Fee” measure is the first policy I know of in the last 14 years that seeks to stimulate an increase in our tax base. The proposed property revaluation would be another and if we get our act together on use of the Abandoned Properties Act and Homesteading (buying City owned houses for $1) those will be 3 more.
We’ll continue to have the highest tax rate in the state until we straighten out our revenues. Cutting costs is easy, anybody can do that and then not take blame for the results. Fixing a city’s revenue picture takes imagination and thought.
It might be humorous if it weren’t so tragic.
Trenton is awash in crime, losing its tax base and graduating only half of its high school students. And yet, Mayor Eric Jackson at the behest of a group of special interests along with 2200 Trenton citizens is seeking to make Trenton an even more expensive city in which to do business than its neighbors and the country in general.
The Mayor proposes to force ALL businesses in Trenton to pay for sick leave for all employees.
While I’m sure this is a lovely idea to some, the fact of the matter is that this no different than the City of Trenton requiring businesses to raise pay. Apparently the Mayor thinks Trenton is influential enough to get away with setting a national trend.
He doesn’t get it.
Trenton is a business backwater with a GDP that some have estimated is smaller than a single shopping center in Hamilton. That’s right Hamilton Marketplace generates more revenue than all businesses in Trenton put together.
And yet Hamilton isn’t leading this charge. Neither is Yardley. Neither is Princeton.
The citizens and Mayors of those towns know that municipalities don’t set national policy. They know that creating a positive business environment is necessary for economic solvency. Mayor Jackson has something else in mind. He apparently suspects that by appearing to help the poor folk of Trenton he will gain political currency. After all who will be able to link this arrogant policy decision to Trenton’s underperformance vs. the regional economy? Yours truly is the only person in town who actually tries to measure our performance vs. the State and nation. Regular Trentonians will never attempt to link policy to result.
City Council members will undoubtedly fall in line with this ordinance absent an organized protest by the business community (though the North Ward Councilwoman has registered her opposition). There really aren’t enough business people with employees left in Trenton to even organize a protest. Many of the independent business people left don’t know about this measure. It’s been put on Council’s docket rather suddenly and even if they do know they won’t have time in their busy lives to spend 2 hours at a City Council meeting waiting for a chance to defend their right to run a business as they see fit.
Let’s be clear about this. We’re talking about the type of policy that is best enacted at a national level so as to not disadvantage the economy of one state over another. Minimum wage policy, social security, work week duration and child labor laws are examples of similar policies.
The City of Trenton has no business going out on a limb to enact policy that is blatantly anti-business. We’re a small poor city in a small state surrounded by local governments eager to attract new investment. We already create a bad environment for business through our antiquated inspections processes, our repressive property tax rate, our high crime rate and our “2nd lowest in the state” household income. We can’t afford to gain an even worse reputation for business climate.
Now that Mayor Jackson has taken office it’s squarely on his shoulders to not just talk but to show results in improving Trenton.
We all express our displeasure differently. Residents, business owners and those considering a move to Trenton say it in many different ways:
- “Things have gotten bad”
- “Restaurants are moving away”
- “Trenton used to be great”
- “My taxes are killing me”
- “It’s not safe anymore”
We all have emotional responses to the situation we’re in and it’s difficult to put our finger on what bothers us most.
If we really think about it though there are five key indicators of Trenton’s health. Five symptoms that show how well we’re doing. And if all five of these indicators started showing signs of improvement, all Trentonians would notice the city coming back to life. If we could see progress in these five areas we’d have hope again that would be contagious.
The indicators are all well-known statistics that are easily and regularly measured in Trenton. They are:
- Crime levels as measured by the FBI’s Crime Index
- Population growth as measured by the U.S. Census Bureau (in the case of Trenton, every year)
- Graduation rate as measured by the NJ Department of Education
- Median Household Income as measured by the U.S. Census, and
- Economic success as measured by our tax base
To be a successful Mayor, Eric Jackson must lead Trenton to show progress on these 5 measures. It’s not nearly enough to say “I’m working hard”. Mayors have said that before and the problem was they were working on the wrong things. Doing the smart thing is much more important than working hard on the wrong thing. Over the next several years I plan to do my part by reporting to Trentonians on Mr. Jackson’s progress on these basic measures. I’m looking for results not promises of results.
The following is my initial report.
Our people are leaving the city
Trenton’s 2012 census estimate is 84,447 residents
The most important measure is the simplest one, is Trenton such an attractive place to live that our population is growing. Unfortunately the current answer is NO.
- Since 2000 our population has declined by 1.2%
- Meanwhile New Jersey’s population has grown 5.4% in the same period
Relative to our neighbors, Trenton has become a less desirable place to live. Over the past 44 years Trenton has steadily under-performed with the State growing 43% faster than Trenton.
While New Jersey’s growth has accelerated Trenton’s population has shrunk. We benefit from the same factors that drive growth in the state so it is especially disappointing that Trenton continues to lose people. Some have pointed out that Trenton’s population loss has slowed, but that is blatantly misleading. It has only slowed because New Jersey’s growth has accelerated.
It will take an influx of new residents to begin the process of rebuilding our tax base. We have room to grow. At its peak in the 1920s, Trenton housed 140,000 residents.
Our economy is losing wealth
In 2011 Trenton’s tax base, the value of property on which we can charge a property tax, was $2,009,731,470. By 2014 it has declined to $1,993,783,800. This represents a .8% loss in ratables for the city.
The implications of this statistic are large. It means our economy is getting worse instead of better and most importantly, it means that our policies are not working.
We can never have a lower tax rate or afford to spend more money on parks, police and streets unless our ratables go up.
Our incomes are relatively low
Trenton’s Median Household Income is $36,727 (2012)
- This is in stark contrast to NJ’s median household income of $71,637, which is almost double that of Trenton’s.
- Hamilton’s median household income is $72,735
Worse yet, the percentage of households in Trenton with income over $200,000 is 1.6%,
- The compares poorly to 9.1% for New Jersey and 4.3% for Hamilton
- High income households spend money on amenities at a much higher rate than low income
Income levels are very important to the health of a city as they determine how much money residents will spend, which in turn, determine the attractiveness of a city to retailers and other amenities. While NJ’s median household income is double that of Trenton’s, NJ’s per capita retail spending is three times our rate. This means that retail spending falls off disproportionately to income.
Making Trenton attractive to retail and entertainment business is important as the presence of those amenities makes the city attractive to new residents and businesses but we won’t get new amenities without more spending power in the city.
Our children are dropping out of school
The Trenton school district’s 2013 graduation rate was 48.6%.
- This means that almost half of the students who entered 9th grade in 2009 graduated in 2013.
- There is no world in which this is healthy.
- It can be argued that fixing the schools isn’t a prerequisite for revitalizing the city. The easiest target market for new residents is the millions of people without kids. However, failing schools don’t help.
With 50% of our young adult population grossly under-educated, they are likely to become a drain on the economic future of our city. High school dropouts are more likely than graduates to turn to crime and create a social cost for the rest of us.
The cumulative effect of moving the graduation rate up to 75% could halve our crime problem in the long run if the correlations between dropout rate and crime follows.
Our crime rate is still high
Trenton’s crime problems have tracked the national trend downwards over the last decade.
Uniform Crime Reports for 2013 are 3443
- This is a decrease from 2012 of 14% which shows we’re moving in the right direction,
- However in 2013, Trenton set a murder record of 37 which placed it among the most dangerous cities in America.
- Meanwhile neighboring Hamilton had a crime index 2057 and only 1 murder in 2013.
There is a direct correlation between population decline and crime
In “CRIME, URBAN FLIGHT, AND THE CONSEQUENCES FOR CITIES”, economists Julie Berry Cullen and Steven D. Levitt found that each FBI index crime leads directly to one person moving out of an inner city, like Trenton. That’s bad enough but high income residents are 5 times more likely to leave due to crime than average. Families with children are 3 times more likely to leave. Finally crime rate is negatively correlated with depopulation, home values and per capita income.
These conclusions alone are quite damning for Trenton. However, it gets worse. If a city becomes depopulated, the crime rate goes up because the criminals stay behind. Also, because high income people leave, poverty becomes more concentrated.
We don’t have a lot of flexibility in our budget to fix things
Our expenses can’t change much
Debt, fire and police make up almost all of the budget and other functions are cut to the bone.
Our revenues can’t change much either
Property tax makes up less than half of our budget so any change in the budget will have a large effect on taxes.
This is a complicated problem
A city is a complex system. When dollars are invested in crime fighting in one part of the city, street paving may go undone in another. That lack of street paving may have a larger or smaller impact on investment in the city than the crime fighting.
Investment will lead to a higher tax base but not for some time. In the meantime, there may not be enough money to fund basic services and taxes have to be raised.
Higher taxes will devalue the investment, leading to lower than anticipated increases in the tax base.
And so it goes in any economy. 1st and 2nd order causes and effects are at play making seemingly simple policy decisions difficult. This is especially problematic in an environment where the public doesn’t appreciate the non-intuitive nature of such decision-making.
How can we turn this city around?
We’re in a vicious cycle
- High crime leads to depopulation and greater expense in policing
- Depopulation leads to higher taxes which drives people away faster
- In a city where almost half of its budget is fixed on debt services and benefit obligations, our ability to fund discretionary budget items such as city services is limited
- Lack of services drives people away even faster thus creating a vicious cycle.
How can we turn a vicious cycle into a virtuous circle?
- A virtuous circle is the opposite of a vicious cycle
- Good things build on one another
- Eventually enough good things happen that they overwhelm the bad things and the city grows despite itself
- This is happening in some cities in America like New York and Washington and even New Brunswick and Jersey City
Mayor Jackson will do well to ask himself every time a program or initiative comes across his desk, “How will this move the needle on these five basic measures of a city’s health?”
Historically (before Mack and Christie) the state funneled four main sources of revenue to Trenton: Capital City Aid, CMPTRA, PILOTs on State Buildings and Energy Tax Receipts.
Two of those sources, CMPTRA and Energy Tax Receipts, are meant to be pass-through payments the state collects from corporations on behalf of every city in NJ. CMPTRA includes business taxes (but in the case of Trenton also included some ill-defined PILOT payments). Energy Tax Receipts are paid from utility company fees. It turns out that the State has been shortchanging cities across NJ for many years in both of these revenue streams. Neither of them have transparent funding formulas. The NJ League of Municipalities has taken the State to task over this but Trenton has been silent up until now. Support for A-2753 to end diversion of Energy Tax Receipts is especially important.
There is no very accurate measure of the level that we have been shortchanged but experts in Trenton estimate the amount to be in the millions. The next Mayor of Trenton will add his voice to those of other municipalities in formulating a better mechanism for transferring the money that rightly belongs to the cities.
The State discontinued the Capital City State Aid program in 2011. It was essentially replaced with Transitional Aid though, at a lessor amount as you can see in the revenue charts below. Capital City State Aid was a very undependable source of funding because it had no formula and was supplied through a yearly act of Legislation. Obviously this Governor has decided that this outright grant is untenable. I agree with him.
Transitional Aid was meant to be transitional, a gradual decrease in State funding with a lot of conditions monitored by the Dept. of Community Affairs (DCA) but really, the State wanted a plan to revitalize the city, a plan that it never got. All of us in Trenton are aware of how that has gone under the Mack administration. Because DCA and the Governor couldn’t trust our former Mayor, funding was cut and the restrictions became tighter.
The final form of funding is what’s most important for our future relationship with New Jersey. Several State owned buildings in Trenton have had negotiated PILOTs with the City. There is no rhyme or reason to this other than it was a mechanism in which to transfer additional funding to the City for various reasons. Only a handful of State buildings have PILOTs. The total amount comes out to about $9M. This is an ad hoc approach to funding.
No State in the U.S. has any obligation to pay a City anything. Governments can’t tax each other. However, many States understand that especially in Capital cities the state is a major property owner and employer and must behave more like a corporate landowner. I propose that we formalize this approach through negotiation and State legislation to generate a funding PILOT based on either the assessed value of State land in Trenton or the proportion of land owned by the State. The Fix Trenton’s Budget group has analyzed this issue by examining the city’s tax rolls and report that the State of NJ owns roughly 19% of all property value in Trenton. However, we have reason to believe these values are under-assessed by quite a bit (perhaps 50%). Additionally, the State owns about 28% of the acreage in the City.
The question is, if the State were taxed like a corporation, what would it pay?
Let’s say that after a reassessment the State is found to own 30% of the land and property value. Total values in Trenton are roughly $4B. Our current tax rate is 3.85%. Therefore the State could theoretically pay 30% X $4B X 3.85% = $46.2M. This is more than it pays today in Transitional Aid and PILOTs (roughly $32M) but less than it did in 2010. This is a good formula.
Trenton is in a dire situation though and we do need the State of NJ’s help in recovering from this. Our next Mayor will do well to ask for State assistance in many areas mainly around legislative relief to overhaul our tax system and create incentives to invest in Trenton. In the meantime we will request that Transitional Aid be maintained until our economic plans can begin to bear fruit, likely 4-5 years.
Jim Golden’s Trenton Forward plan is unique in that it includes a detailed plan to revitalize the city that specifically seeks to rid us of the need for transitional aid as long as our funding formulas can be formalized. The BIG goal in that plan is to make Trenton much more self-sufficient. Our lack of self-sufficiency puts us all at risk because our budgets will be uncertain. We’re entirely too dependent on the whims of a Governor or Legislature.
Trenton Revenue Source Comparison
Source: Trenton City Budgets, Fix Trenton’s Budget.
Trenton Forward “Asks” to New Jersey: Beyond the Funding Formulas
- Support for consulting project to define and implement Best in Breed
- Seek a Land Value Tax capability to replace PILOTs and Vacant property registration fees
- Allocate $50M to a Residential Investment subsidy over 10 years
- Enact enabling legislation for Income Tax Credit Zone that caps state income taxes in Trenton
- Continued funding for temporary police assistance
The fundamental reason Trenton has abandoned / vacant properties in Trenton is that it costs more to rehab a property than it would be worth once completed. We can help developers and potential homeowners by lowering their financial cost, establishing a more fluid market for vacant / abandoned properties and creating a marketing message that includes more people who might be interested in living in Trenton.
I estimate the number of abandoned / vacant properties to be over 3,300.
In general Trenton will have to attack the problem of revitalization of abandoned / vacant properties one neighborhood at a time starting with downtown. We don’t have the resources, yet, to address the entire city at once.
Our efforts will address both city owned and privately owned abandoned, vacant and underused properties. For city owned property our goal will be to get them on the tax rolls, not make money from selling them.
1) Lower the cost of revitalization
Enhance our tax and subsidy package for redevelopment
- A standardized Revenue PILOT for large projects reduces risk for developers and provides transparency for all taxpayers into how the city works with large developers
- A graduated abatement on improvements of up to 15 years. This includes the existing 5 year abatement plus a new abatement in redevelopment areas as per NJ law
- We will add an additional subsidy on improvements in the downtown district
Reduce risk for redevelopers by
- Improving the public safety situation while development is going on
- Increasing code enforcement on adjacent buildings in focus areas
Launch Homesteading in a few neighborhoods
- Properties will be sold to homeowners for $1
- Abatement Programs will apply
- Buyers will be matched with local contractors and architects where needed
- Neighborhoods will apply to participate and will be required to show support
Demolition: where a buyer wants it and our professionals agree it’s appropriate, we will sell a property to a developer, cleared.
2) Establish a more fluid market.
Use the NJ Abandoned Properties Act in Trenton for the first time. It’s been used now in Jersey City
Track all vacant properties with help from
- Efforts from non-profits like Isles, TCCA
- Expanded responsibilities in our economic development and inspections department to track and identify vacant properties (our proposed budget will include funding for this)
- Making a city-wide ticketing system available that allows residents to report abandoned properties
Outside Legal help on Closings to speed up a process that has been woefully slow and disorganized
4 hour inspections appointments instead of the current practice of allowing 22 days to review simple plans
3) Create demand by
Establishing a public / private marketing entity “Trenton Sells” co-founded with realtors and developers. This group will be the conduit for our marketing efforts. It will:
- Publish a web site and newsletter
- Target Millennials along the Northeast corridor
- Publish our vacant property inventory on the web site
- Hold regular Open houses for the city
Matching up homebuyers with architects and contractors. We can make renovation easier for buyers buy helping them find local development help that knows how to work in Trenton
Developing a neighborhood level branding plan. Neighborhoods will have the opportunity to sell their neighborhoods by establishing the right message. Hopefully the Master Plan includes this work
Pitching to New Urbanist Developers. There are developers who specialize in building urban neighborhoods. They are part of a large and growing national trend. A revitalization-minded Economic Development department will seek out these developers and invite them to Trenton.
Key Reorganization tactics
Reorganize inspections under the Economic Development Department. This will focus inspections on the job of meeting our goals
Set measurable goals that require us to put property back on the tax roles
- Increase our ratables by 10%
- Increase our population to 90,000
- Track our progress on reducing abandoned properties
State regulatory Asks
The job of a Mayor is to make sure the State is working for us, not against us. A Trenton Mayor should work with our legislative team and urban Mayors across the state to enact pro-redevelopment legislation.
Land Banks: Potential enhancements to our ability to use Land Banks beyond what is currently in the Abandoned Properties Act. We want to provide mechanisms engage for-profit firms to help and to make sure our laws help us deal with quiet deeds and that they don’t prefer subsidized housing.
Land Value Tax: A two tier tax system can be used to make it harder to hold on to vacant land and profitable to develop it. Land Value Tax legislation would provide a cleaner mechanism to encourage redevelopment than tax abatements as it would be available to all property owners.
Urban Income Tax Zone: Push to have Trenton become a test city for an urban income tax zone. The maximum income tax bracket in Trenton would be set at 2% instead of 5% making it very attractive for higher income New Jerseyeans to move to Trenton.
No clever new policy idea today. Because what would it matter? Trenton is governed, at least legally, by the worst Mayor ever. I’m mad. All Trentonians should be mad. Our City Council members should be furious, except for the worthless three who’ve propped up the Convicted Occupant of the Mayor’s Office, Tony Mack.
I’m so mad that I think of storming City Hall often. I imagine thousands of angry citizens with torches and pitchforks, busting through security up to the Mayor’s office and knocking down the door. I think of riot police with tear-gas being forced into duty.
I envision CNN, ABC and the BBC covering the riot with choppers and camera crews.
Then, after days of international media coverage, the Attorney General refers the matter to the State Supreme Court. Out of fear of more public backlash, the court rules on the matter and sends Tony Mack to the deepest pit of prison hell, takes away pensions and for good measure re-writes our statutes concerning succession. Out of fear for their political futures (and a bit for their physical well-being) the legislature pass it in a week so this travesty never happens again.
You’ll excuse the vitriol. It’s been 3 ½ years of suffering this fool and I’m tired and angry.
Many things have led to Trenton’s economic problem but they aren’t unique to post-industrial America. If you don’t understand how it happened I can recommend some books.
The question is how to turn it around. Some cities have. Some have done fairly well simply by having good leadership over the years. Trenton, like Detroit, hasn’t been that fortunate.
We’re in a situation where brave leadership will have to offer creative solutions.
Our crime situation can’t change quickly. Our public schools can’t change quickly. Our taxes are chronically high because our tax base funds only 1/3 of our budget. Therefore we can’t afford to invest much more money into police, schools or infrastructure.
So what can we do?
I suggest that we create a Downtown Investment program that seeks to increase our tax base to a point where it can once again fund city services. It has three key elements:
1) Fund an investment subsidy of 10% on any rehab investment of over $100,000. Because our tax rate is currently 4% well will recoup this investment in under 3 years, a 33% ROI. This will be available only to market rate, residential development not seeking abatements or PILOTs. Residential investment needs to come first and will eventually drive retail and commercial investment.
2) Target millennials and professionals with no kids. Over 1,000,000 people like this live within 30 minutes of Trenton. This is mostly who’s bought in Trenton over the last 10 years and it squarely fits the broader demographic trend towards America’s urbanization. A marketing program (web site, newsletter, some advertising, open houses, Realtor and developer organization) will embody this targeting.
3) Start small and offer the program (for now) only in Downtown Trenton. Scholars and Trenton activists have long pointed out that revitalization efforts need to be focused and start at the center. Trenton has had problems with execution in the past, starting small will let us see whether this works, and fix it if if it needs fixing. Downtown is the place to start as it allows us to spread outwards from there. If it’s successful downtown we’ll expand the program, one neighborhood at a time.
With modest investments funded just out of our budget, we can hope to increase our tax base from just under $2B to over $2.4B in 10 years. State participation in the program will help and other policies could also speed up the process. This will stop our vicious cycle of decline and start a virtuous circle of revitalization.