Archive for the ‘Taxes and Budgets’ Category

TWW is NOT the Money-Maker Trentonian’s have been Led to Believe

The State of NJ has found that Trenton Water Works carries a $12M surplus but that it employs 1/3 of the staff needed to properly run the utility.   The Jackson administration’s own proposed but never passed budget for 2018 estimates a $3.15M surplus that they gleefully carry forward into the municipal budget as revenue.

So, what gives?

If you look at the proposed but not approved budget, you also find that in 2017, the city budgeted $9.3M for staff but spent only $6.3M in salaries.  Additionally, they underspent $221K on social security because they didn’t have the people for whom they budgeted.

So really, the $3.1M surplus is all because the city didn’t spend what even it thought it should on TWW.  And of course, we know how that turned out:  Brown water, pink water, low pressure, boiled water etc.

To figure out the rea situation we need to dig deeper.

The State says we have 1/3 the employees we need.  Let’s take that at face value because we really don’t have a more reliable source for needed staffing levels at this point.

In 2017 we spent $6.3M on salaries, ~$1.7M in statuary benefits expenditures (SSA, Pension, unemployment) and $1M in sick pay and vacation.  That’s a total of $9M in staffing costs.

If we need three times the workforce then we’ll spend three times the staffing costs, or $27M.

For 2018 the city proposes to budget a total of $13.5M (salary, statutory benefits + vacation/sick pay).   Therefore, if we had proper staffing levels we would need to spend $13.5M more ($27M – $13.5M = $13.5M).

That $3.1M surplus quickly turns into a $10.4M deficit.


But wait there’s more!


The FY 2018 proposed budget lists 38 projects that need to be done to make the water utility safe.  They total in value up to $98.9M.  I have no doubt that these are needed but included in the budget only after the State began to take a serious interest.   Nonetheless, this $98.9M represents a large capital exposure.

The city has $16.5M saved up towards the $98.9M, so that leaves an exposure of $82.4M.  That’s a lot of money that we don’t have.   The projects will have to be paid for with debt.   I don’t know the city’s borrowing rate, but let’s assume its 8%. If you work out the math, that comes to a debt service (interest + principal) on that $82.4M of $9.6 over the next 15 years.   That’s another $9.6M added to our deficit!

So now it’s not a $10.4M deficit, it’s a $20M deficit.

TWW isn’t a money maker for the city of Trenton.   It’s getting ready to be a big money loser.  And guess what, that means your rates are going up, a lot. Our current revenue for TWW is only $54M.   If we need to spend another $20M so our revenue will have to increase 40%.   That’s punishing.

To say we should sell the thing is a complex proposition.

The proposal on the table in 2007 was to sell off the distribution system in the suburbs for $100M.   That could have retired a lot of debt.  We’d have lost some revenue but would still be selling water to the buyer.   That was one option.

We could sell the whole thing.  Perhaps we’d get some money out of it but at least we wouldn’t be exposed to the predicted yearly deficits AND importantly we wouldn’t be exposed to the risk of things going wrong (i.e. a Flint situation).

There are lots of options to reduce our exposure to losses, bad service, contaminated water, bad management, corrupt employees and all the other things that have plagued us via TWW over the years.   But the first thing Trentonians need to put behind them is the notion that Trenton Water Works is a money maker and an asset worth having.

Running TWW well is NOT strategic for the city of Trenton.

A well-run water utility won’t attract new homeowners, it won’t improve school performance and it won’t stop crime.   Those are the activities on which our government needs to focus.

There are smart advisors who can work out a good deal for Trenton, but first voters need to at least entertain the notion that Trenton Water Works isn’t the key to Trenton’s future success.

Operating a city without a budget is irresponsible

Usually when families don’t have a lot of money, they get very good at budgeting.  It helps to plan spending so you don’t get surprised later in the month or year.

Organizations budget for that reason, but also to make sure they’ve allocated funding to important initiatives that advance the goals of the organization.   The budget is a central planning document that gets everyone in the organization aligned.   This true for companies, schools, non-profits and most governments.

This should not be news to anyone in America.  Every literate America knows that organizations must have budgets.

And yet, the City of Trenton operates without a one and has done so for years.  It should be no mystery then that we have a sense of aimlessness in our effort to revitalize.

“What?”, you ask, “Trenton does have a budget, the Mayor submits one to Council every year”.

Fellow citizens, that is a charade.  Last year’s budget for fiscal year 2017 (that’s July 1, 2016 – June 30, 2017) was not approved by City Council until April 2017.   That’s 9 months into the fiscal year.  For 9 months, we had no budget.

The City Business Administrator is planning to draft a budget for 2018  in October.   That’s four months after the 2018 fiscal year has started.  It will be months before City Council approves it.   Who does that?

It’s not just bad business its in violation of our own City Code.  Our city code is clear: violation of it.

§ 2-78 Budget preparation.

A.  The budget shall be prepared by the Mayor with the assistance of the Business Administrator. During the month of November, the Mayor shall require all department heads to submit requests for appropriations for the ensuing budget year and to appear before the Mayor or the Business Administrator at public hearings which shall be held during that month on the various requests. On or before the 15th day of January, the Mayor shall submit to Council his/her recommended budget together with such explanatory comment or statement as (s)he may deem desirable.

B.  The Business Administrator, with the assistance of the Director of Finance, shall prepare all estimates of non-property tax revenues anticipated for the support of each annual budget.

The City Code, our law, says that the Mayor must submit a budget to Council by January 15 for the ensuing year.  The ensuing year begins July 1.

This timing makes sense.  It gives the Council and the public time to react and for the administration to make changes.

I’ve heard every excuse there is from our city leaders.   The most common one is “we don’t know what the state will give us.”   Do you suspect that any company in America knows its revenues for the upcoming year?  Of course not.  They must estimate.  If things go wrong, they adjust.   But no one wades into a fiscal year without a plan.  No one.

Unless you’re a city government like Trenton.  OR Minneapolis, which also didn’t submit a timely budget and is now being sued by its tax collector.  Is that what it’s going to take in Trenton? Are we going to have to sue ourselves to force our government to act responsibly?

We realistically can’t fix the 2018 fiscal year.  It will be as bad as all the previous Jackson years (though hopefully we won’t have another $5,000,000 stolen).   However, we can avoid re-electing the perpetrators of this debacle.  That includes the current Mayor and any sitting or past council member.   They are all complicit in the mismanagement of our city and our money.

I have written many times about the budget process in Trenton and its many failing and opportunities.  It’s a source of frustration for me that even after collaborating with some of Trenton’s most knowledgeable citizens to recommend improvements, our city leaders have roundly ignored us.  All we  want is well-run, transparent government that plans for improvement.

Here are a few of the previous Reinvent Trenton Articles on our Budget:

Trenton is adrift because it operates without a budget

Trentonians favor fewer services and lower taxes

Trenton’s Budget won’t fix itself

Trenton’s 2017 Report Card

Governor Christie is trying to throw a lot of money at Trenton.  Notably he wants to build an $18M pedestrian bridge from the Capitol building to the Delaware River.  This report highlights the city’s progress (or lack thereof) in 5 basic measurements.   One has to ask whether that kind of investment will move the needle in improving any of these important measures.

It’s not enough, to say we did something, or are working on something or want something to happen.  Rather, the results are what matter.

All five of the following are “lagging” indicators, meaning they represent the past, but they are objective and widely used measurements collected in a consistent way across the state and nation.   There’s no hand-waving with these numbers.

  • Crime levels as measured by the Uniform Crime Report
  • 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

Crime is up and so were murders

The 2016 Uniform Crime Report represents last year’s crime

  • Uniform Crime Reports for 2016 are 3313
  • This is an increase from 2015 of 8.7%
  • Murders were up from 17 in 2015 to 21 in 2016

Holding the rate steady would give the City a C, but since the both the murder rate and crime index increased I’m giving it a D.

Source: NJ State Police

Trenton is losing population

Trenton’s 2016 census estimate is 84,056 residents.  This is a 1% decrease from 2010’s population of 84,913.

You can’t revitalize a city by losing population.  It implies that our economy is shrinking, we’re not a desirable place to live and that our property values are going down.   New Jersey as a whole is gaining population at a 1.7% rate.

For continuing to lose population in growing state for the 4th year in a row (since I’ve been tracking), Trenton gets an F.

Source: US Census Bureau

Graduation rates have declined

The Trenton school district’s 2016 graduation rate was 66.55%.  This is a slide backwards over 2015’s rate of 68.63% which had been a big improvement over the year before.

Just about 2/3 of Trenton kids are graduating now.  But still 1/3 don’t graduate high school which is appalling and continues to explain the high level of lawlessness in the city.

The State of NJ is spending a fortune on a new school but I’ll guess it won’t fix our problems.   We also have a new superintendent but Trenton is a bit of a revolving door in that regard.     One of these days Trentonians will do the right thing and lobby for school choice, county-wide integration or both.

Because we slid backwards, Trenton gets an D.

Source:  NJ Dept. of Education

Incomes in Trenton are down yet again

Median Household Incomes in Trenton are down again to $34.257 (2015 numbers) from $35,647 (2014).  These are the latest numbers we have but represent a disturbing trend in Trenton.  Not only are we losing people, but evidently, we’re losing higher income people.    Furthermore, 28% of people in Trenton live in poverty.

New Jersey’s median household income is more than double Trenton’s at $72,093.

For having shrinking incomes, a 4th year in a row in a wealthy state, Trenton gets an F.

Source: U.S. Census Bureau

Tax Base is up a bit

Trenton doesn’t maintain a current publicly available tax list,  so I’ve to use the Dept. of Community Affairs web site.  It gives our tax base as $2,022,437,610 (just over$2B) for 2016.  This is up  from the $1,996,653,658 I reported last year.   The number includes properties with abatements and PILOTs so I think its likely indicative.

It’s tough to say whether this inconsistent reporting is really indicative of $22M in new investment.   However, I do know that $2B is enough of a tax base to support the city and we need something like four times the tax base to pay for our municipal and school budgets.   We have a long way to go and not too many projects in the pipeline.

As a comparison, Hamilton’s tax base is over $5B and tiny Princeton’s is over $6B.

For a tax base that at least isn’t shrinking but will nonetheless lead to higher taxes I give Trenton an D.

Source: Department of Community Affairs

Is the city turning around?  Not yet!

  • The numbers are about the same as last year
  • If you believe numbers don’t lie then we’re not really improving

If a Mayor and City Council really were interested in progress they would highlight these 5 numbers in every meeting, every State of the City and with the State.    Every dollar spent would be to improve the numbers year over year.   Instead, for the 17th year in a row (since I’ve lived in Trenton) all I get from our government is hand waving.

Link to the 2016 Report Card

Link to the 2015 Report Card

Link to the 2014 Report Card

How to Redevelop Trenton for Dummies

I really dislike those books.  The titles are demeaning to people who just want to learn something at a basic level.   But who am I to say; it’s a wildly popular series.   I suppose the title has a little empathy for the person who wants to learn “How to use a computer”, “How to Garden” or “How to do Arithmetic”.
So here I am in year 17 of the Trenton Revitalization Doug Palmer told me was underway.   It’s not! Trenton has steadily slid backwards (based on objective metrics).

And yet the State of NJ, Mercer County and occasionally the Feds continue to throw millions and millions of dollars at Trenton.   We got a hotel, a ballpark, an arena, a Rt 29 conversion, a Light Rail, a Train Station redo, a nursing school, a new Housing Project or two and what do we have to show for it?   Nothing!  We’re still losing population; our tax base and per capita income are still losing ground against the rest of the State.

So maybe we do need some condescending help with the problem.   Maybe the Mayor and Governor need a copy of “How to Redevelop Trenton for Dummies”.

Over the years I’ve likely written enough essays to fill the book but perhaps I need a good outline.  Outlines help keep books simple and suitable for “Dummies”.    The book would have only four chapters and plenty of pictures and examples.  What it wouldn’t have are chapters on how to spend vast sums of taxpayer money on public venues that don’t impact the local economy.   An $18M bridge from the State Capitol into the Delaware River is a distraction just like the Ballpark and Arena were.

Chapter 1 -  CLEAN and NEAT

This chapter will cover:

Chapter 2 – It’s the Tax Base Dummy

In this chapter, we’ll cover some basic economics and math like:

Chapter 3 – Transparency and Accountability

In this chapter, we’ll cover basic public relations technique like:

  • Using the Internet as a communications tool
  • Getting voters bought into your plan, assuming you have one
  • Robo-calling, “Less is More”
  • Answering citizen concerns
  • Modern technology and how “trouble tickets” help organize citizen complaints
  • The connection between budgets, spending and priorities

Chapter 4 – Making Trenton a Living Hell for Criminals

This self-help chapter will cover:

  • Responding to citizens before it’s too late
  • Leveraging private surveillance
  • The Economics of Crime
  • Criminal databases for everybody

Trenton’s 2016 Report Card

Mayor Jackson gave his state of the city address last night.  He highlighted quite a few things the city is doing and congratulated his staff on their hard work.   What he did NOT do, nor has any Mayor of Trenton in the last 15 years done, is to give numbers that back up successful results.

Several years ago, the Fix Trenton’s Budget Committee which I led, agreed on 5 basic measures of goodness for a city.  Since then I have been reporting on these indicators as an objective way to gauge our progress in Trenton.  It’s not enough, to say we did something, or are working on something or want something to happen.  Rather, the results are what matter.

All five of the following are “lagging” indicators, meaning they represent the past, but they are objective and widely used measurements collected in a consistent way across the state and nation.   There’s no hand-waving with these numbers.

  • Crime levels as measured by the Uniform Crime Report
  • 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

Crime is slightly up but murders were down

The 2015Uniform Crime Report represents 18 months of Mayor Jackson’s tenure.

  • Uniform Crime Reports for 2015 are 3048
  • This is an increase from 2014 of 3%
  • Murders were down from 32 in 2014 to 17 in 2015

Holding the rate steady would give the City a C, but since the murder rate declined so drastically I’m giving it a B.

Source: NJ State Police

Trenton is losing population

Trenton’s 2015 census estimate is 84,225 residents.  This is a slight decline of from 2012’s estimate of 84,349.

Losing population is a crippling situation to be in.  It implies that our economy is shrinking, we’re not a desirable place to live and that our property values are going down.   Since 2010 Trenton’s population has decreased -.8% while New Jersey’s has increased 1.9%.   In a growing state, Trenton is shrinking.

For continuing to lose population in growing state, Trenton gets a D.

Source: US Census Bureau

Graduation rates have improved

The Trenton school district’s 2015 graduation rate was 68.63%.  This is an improvement over 2014’s dismal graduation rate of 52.95%

Just about 2/3 of Trenton kids are graduating now.  That sounds better but still 1/3 don’t graduate high school which is appalling and continues to explain the high level of lawlessness in the city.

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.

For a big jump in graduation rates though, Trenton gets an A.

Source:  NJ Dept. of Education

Incomes in Trenton are down again

Median Household Incomes in Trenton are down again to $35,647 (2014 numbers) from $36,662 (2013).  These are the latest numbers we have but represent a disturbing trend in Trenton.  Not only are we losing people, but evidently we’re losing higher income people.  This is disastrous for an economy that is largely based on retail spending.  Furthermore, 28% of people in Trenton live in poverty.

New Jersey’s median household income is more than double Trenton’s at $72,062.

For having shrinking incomes, a 3rd year in a row in a wealthy state, Trenton gets an F.

Source: U.S. Census Bureau

Tax Base is down

Trenton gets an “incomplete” on this grade as it no longer bothers to publish its tax base information on the city web site.  The version published there is almost 2 years old.   So I went digging for another source and found our tax base (for 2015) published on the Dept. of Community Affairs web site.  It gives our tax base as $1,996,653,658 (just under $2B).  This would be down from the $ 2,036,287,800 I reported last year based on the January 1, 2015 City Tax list.

As we can see the numbers are inconsistent, but since they’re all that are available, I surmise that our tax base has in fact shrunk.   To fix Trenton’s budget we need to be adding roughly $100M a year in taxable properties instead we lost $40M in value.

As a comparison, Hamilton’s tax base is over $5B and tiny Princeton’s is over $6B.

For a shrinking tax base that will lead to higher taxes I give Trenton an F.

Source: Department of Community Affairs

Is the city turning around?  Nope!

  • We’re in pretty much the same situation we were in last year
  • There are some development projects but they aren’t paying taxes yet
  • People are still moving away.

That’s not progress.

Link to the 2015 Report Card

Trenton’s 15% raise for the City’s top brass is a bad idea

Let’s imagine the City of Trenton was managed like a company.   Many have pondered this notion including a few of our Council members.

Of course no one really thinks cities and companies are the same thing.   I certainly don’t.  But I do know that a few basic business principles apply to any organization.

At the top of the list of basic tools is “managing by objective (MBO)”.

Managing by objective is when you give your employees targets to hit and compensate them with a bonus or raise for reaching or exceeding them.    Sounds pretty basic doesn’t it.  Many, if not most management level employees in this country work under some form of MBO plan.

Not in Trenton city government.

We not only do not have objectives; our administration has proposed a 15% raise for the city’s top brass in the face of management failure after failure.  Some of the most egregious of those are listed below.

  • Trenton’s tax base has been stagnant and our tax rate has gone up not down.
  • Was asleep at the wheel while payroll taxes were stolen – ~$5M hit to the budget.
  • Operated without an approved budget for both of its fiscal years.
  • Hired an incompetent IT firm.
  • Messed up the swimming pool contract and wasted money to hire a new contractor.
  • Stole a Christmas Tree from a city park.
  • Set a new record in spending on lawsuits
  • Oversaw a downgrade of the city’s credit rating.
  • Epically failed to plow the streets during our one snow storm in 2016.

The Business Administrator made the pitch for his and the Mayor’s raise by suggesting that it would otherwise be tough to attract talent.   City Council is being asked to consider ONLY this pay hike as a solution.

But consider the argument.

Our Mayor spent $100s of thousands of dollars to get the job he’s got and he knew the salary going in.    All of the employees knew their salaries.  It’s as if a salary pay hike were the only possible improvement the administration could think of to make Trenton a great place to work.

I can think of plenty of ways to make working in Trenton City government attractive.

How about setting objectives for the city and its departments?

People love having clear goals in their job.   Great companies are great because their employees are fixated on common measures of success.  For instance, should top city execs be working towards objectives for increasing our tax base, lowering crime rate, increasing the population, improving our per capita income, increasing the graduation rate and lowering taxes?

What if we gave bonuses tied to meeting or exceeding those objectives?

If I’m an aspiring economic development director, I’d love a chance to put my plans in to place and profiting from my effort.   I’m sure most citizens wouldn’t mind at all if a Department Head made a big bonus based on our property tax rate going down.

What if we got rid of our residency requirement?

It’s just common sense that a high performing local employee from a neighboring city would be wary of uprooting her family to move from East Windsor or Princeton just to take a job 7 miles away in Trenton.  What company forces their employees to move 7 miles in order to take a job?

What if we improved working conditions?

This is a broad category but do we really think Trenton is the best organization on the planet to work for?   Does it provide a transparent management environment?   Are goals clearly communicated?   Do customers (i.e. citizens) respect the organization?   Do we provide employees modern tools like E-Government?  Do departments have ways of measuring success, for instance citizen satisfaction?

Handing out raises beyond the 1-2% Cost of Living Adjustment (COLA) is just throwing money away.   We need to be smarter than that.   Trenton does need to attract top performers, but they need to be the kind of people that are OK with tying rewards to success.

What can you do?

Trenton’s leaders are immune to this kind of thinking as is evidenced by City Council’s positive vote on an ordinance to grant the administration’s salary increase request.   Every member of the pubic that spoke at the meeting was against it, yet our Council voted for it anyway.

A group of petitioners has set in motion an effort to overturn the measure should it succeed on its second reading in two weeks on September 15 (all ordinances in Trenton need two successful votes).    The petitioners are asking citizens to sign an e-petition in advance of the vote to provide an indication to Council on the likelihood of a petition fight.  If the ordinance passes, the petitioners will have 20 days to collect just over 800 signatures.  The e-petition will make that task easier.

Link to Petition to oppose Trenton’s 15% salary increase for top management

We’ve become numb to “Losing”

Living in Trenton its easy to understand the appeal of Donald Trump’s message.

As a city, we’re losers so often that it just feels normal. So when we hear a guy talk about turning that around and being winners again, or just doing things well (as a government) it’s attractive. You wonder, what would that feel like?

What would it be like if we didn’t have our money stolen, if we could hire a real IT firm, if we could enforce our laws (big ones and small ones), if we had a tax policy that didn’t punish new investment?  What would it be like if we could communicate and enforce trash disposal policies instead of seeing it thrown all over our streets?

What would it be like if we didn’t get confused by letters saying our buildings were vacant, our water bills were past due and our taxes weren’t paid when they really were?  What would it be like if our water department weren’t running one illegal scheme after another out of their building?

What would it be like if our leaders could be transparent about the city’s issues? What if they didn’t brawl at public meetings?  What would it be like if we didn’t have to file Open Records Act forms to get information from the city, what if they just posted it online?  What if our Mayors didn’t get sent to Federal prison?

What would it be like if our snow was plowed, our potholes were fixed and our broken sidewalks and streetlamps were restored to their original state?

What would it be like if the only hotel in town weren’t about to close and taxpayers hadn’t spent $65M to build it?  What if hockey teams and arena football teams didn’t fail in Trenton?  What if we didn’t give away prime real estate to “connected” non-profits that don’t pay property taxes?  What if we could have a budget passed before the fiscal year starts?  What if we could pay for our own schools?  What if they actually graduated most of the kids?

What if the contaminated dirt at MLK school had been dealt with honestly?  What if we didn’t invite corrupt developer Robert Kahan in to Trenton? What if we didn’t fall for the Manex ponzi scheme? What if we hadn’t turned the historic Douglass House in Mill Hill Park into a drug den? What if we hadn’t forced the Broad Street Bank to be rent controlled? What if we hadn’t ignored Chambersburg’s concerns before the restaurants left?

What if simple building inspections only took 4 hours (like in Philadelphia) instead of 3 weeks?   What if you could communicate with the city through its web site and via email?

What if our property tax rate wasn’t the highest in New Jersey (the state with the highest property taxes in the nation)?  What if drunks and drug dealers didn’t infest our streets?   What if thieves were actually afraid of being caught?

What would it be like if we could recommend that a friend move to Trenton?

What would it feel like to live in a city of winners?


Trenton’s 2015 Report Card

Mayor Jackson has been in office for a full year and the results for Trenton over that time period are promising.   Yes, that’s right, I said promising.

The Mayor has been helped by a generally improving economy and a corresponding drop in crime.   That said, just like we blamed Mayor Mack for the city’s decline we have to give Mayor Jackson credit for the positive shift in most of our numbers

There are five key indicators of Trenton’s health on which thoughtful people have agreed over the years.   Five measurable and mostly 3rd party numbers, 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 Uniform Crime Report
    • Latest data is for 2014 and include 6 months of the administrations term
  • Population growth as measured by the U.S. Census Bureau (in the case of Trenton, every year)
    • Latest estimate is for 2013 and therefore predates the current administration
  • Graduation rate as measured by the NJ Department of Education
    • Latest data is for the 2014 academic year and predates the current administration
  • Median Household Income as measured by the U.S. Census, and
    • Latest estimate is for 2013 and therefore predates the current administration
  • Economic success as measured by our Tax Base
    • Data is up to date as of mid-year 2015

The following is the 2015 Report Card:

Our economy is gaining 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. In the last year our tax base has rebounded to $ 2,036,287,800 for 2015.   This ~$40,000,000 in new or revalued ratables is a healthy 2% increase in one year.

The implications of this increase are large.  At a 4.8% tax rate, that increase in ratables translates into an extra $2M for our city budget or roughly 1% of the total.

We can never have a lower tax rate or afford to spend more money on parks, police and streets unless our ratables keep going up.

Because the direction changed I give Trenton a “B” for its much needed increase in ratables.  A $100M increase (the rate needed for our economy to reach escape velocity) would garner an “A”.

Our crime rate came down!

The 2014 Uniform Crime Report represents 6 months of Mayor Jackson’s tenure and the leadership of a new Police Director.  It’s fair to assume that that change has helped stimulate the 14% decrease in crimes from 2013.

Uniform Crime Reports for 2014 are 2960

  • This is a decrease from 2013 of 14% which shows we’re moving in the right direction,
  • This is in addition to a 14% decrease from 2012 to 2013.
  • Our murder rate was also down a bit from 37 to 32 last year.

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.

If our crime rate can continue to decline and other positive stimulants are put into play, there may be hope for us yet.

Crime reduction is the 2nd bright spot in this report card and deserves an “A”.


Our people are still leaving the city

Trenton’s 2013 census estimate is 84,349 residents. This is a slight decline of from 2012’s estimate of 84,447.

  • Since 2010 our population has declined by 0.7%
  • Meanwhile New Jersey’s population has grown 1.4% in the same period

Relative to our neighbors, Trenton has become a less desirable place to live.

Give ourselves a C.  The exodus has slowed.

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 incomes are still relatively low

Trenton’s Median Household Income is $36,662 (2013).  This is slightly lower than the 2012 estimate of $36,727

  • This is in stark contrast to NJ’s 2013 median household income of $71,629, which is almost double that of Trenton’s.
  • Hamilton’s median household income is $71,724 for 2013.

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.  As it stands, Trenton is a relative “non-entity” when it comes to retail spending.

Because we’re grading on a curve and Camden and Passaic are even worse off than we are, Trenton gets a “D.

Our children are still dropping out of school

The Trenton school district’s 2014 graduation rate was 52.9%.

  • This is an improvement over 2013’s dismal graduation rate of 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.

There’s no other grade for a city that graduates barely over 50% of its students than “F”.


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.

Is the city turning around?

We’ve been in a vicious cycle

  • High crime led to depopulation and greater expense in policing
  • Depopulation led 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 inability to fund discretionary budget items such as city services is limited
  • Lack of services drives people away even faster thus creating a vicious cycle.

The data shows some promise!

A bump in our tax base, a decrease in crime and a slight increase graduation are all great.   It’s been a long time since 3 of these five important indicators have actually improved.

There is also some promise in the Jackson administration.

The Jackson administration has recently released a strategic plan of sorts that highlights some areas of focus.  I’ve not seen details but mostly like what I do see ( 5 things Trenton is focusing on to foster economic development).

The plan includes focus on

  • Density, with good words about market rate housing and transparency for developers and some good stories about some upcoming “big” developments.
  • Diversity, but what they are really talking about are small business loans for the Hispanic community,
  • Quality of Life, what they’re talking about is Homesteading and getting rid of vacant properties, which is great.
  • Retail, I don’t know what this focus might turn in to practically but they’re talking S. Broad St., which is great.
  • Industry, is the puzzling piece.  It flies in the face of reason that light industrial development makes real sense (without big subsidies) in Trenton.

All in all this is a decent report card.  My prescription for Trenton after the 2014 election was to get basic government operation in order and make the 2nd year the one were big policy initiatives were unveiled.  We started out rocky by operating without a budget for 9 of 12 months.   Hopefully that won’t happen again and we see some meat on the bones of the above focus areas.

The 2014 Report Card: We all know Trenton is in Rough Shape

Trenton is adrift because it operates without a budget

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.

Priority Based Budgeting Process (from 2012)

Trenton’s taxes are higher than Princeton’s. You’re kidding right?

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.