Having your nose rubbed in it
February 19th, 2010 | 
Author: It sounds official; Trenton is going to have to dramatically raise its property taxes by as much as $.80 per $100 to cover a giant $13,000,000 shortfall.
How did we accumulate such a big shortfall? This is a subject that doesn’t get enough attention.
The reality is that Trenton has been focusing on the wrong priorities for quite some time.
• We’ve given lip service to attracting high income and middle class residents.
• We’ve scared away business development by threatening to force investors to hire Trenton workers.
• And, we’ve embraced every program for the poor there is, thereby increasing our overall cost to serve.
We thought we could get away with all of this because we were pretty successful at begging the State for charity (Trenton pays only 12% of its municipal and school budget).
So now we have a $13M shortfall because the economy turned south and the State’s budget is taking its own hit. As Reinvent Trenton predicted almost two years ago, when the State coughs, Trenton will get pneumonia. See, Trenton’s budget is in worse shape than you think.
The Mayor wanted to put a band-aid on the problem by selling off an asset, The Water Works. But a group of citizens decided to challenge the tactic for a variety of reasons, some more sound than others. The net result is that the petitioners in their effort to block the sale are rubbing the Mayor’s nose in his budget failure. The Mayor can’t argue that it’s the petitioner’s fault. An ongoing concern should never have to sell off assets in order to balance an operational budget.
In a way, the petitioners are rubbing all of our noses in our failure to elect mayors and council members that understood how a city works well enough to avoid this budget disaster. If you look at it that way then they’re probably doing us a favor. We failed in our role as voters. We need to correct our error at the polls this May.
However, the petitioners are wrong in two major areas:
1) The Water Works outside of Trenton is NOT strategic to our city and therefore SHOULD be sold. If not now, then it should be sold sometime in the future.
2) The dramatic increase in taxes will accelerate Trenton’s demise by scaring away investment.
Cooler heads could have prevailed to work out a deal to force a constructive compromise. However, both sides were too stubborn to do what was best for Trenton. The administration could have agreed to aggressive tactics and citizen oversight to fix Trenton’s management issues. The petitioners could have realized that the sale was non-strategic and in the best interest of the city. They didn’t and now both the Mayor and the petitioners are likely to take the ship down with them.
We, the voters will get what we deserve.
Posted in Taxes and Budgets
As on of the key petitioners who is opposing the sale of the last of Trenton’s income producing assets, I have to dissagree with your assertion that the sale of “the water works outside Trenton is NOT strategic to our city”. In the same vein that you observe that “an ongoing concern should never sell off it’s assets in order to balance its operational budget”, I must point out that no business with common sense would allow itself to lose 60% of its customers that the water works outside Trenton represents. The remaining 40% of the customers inside Trenton could not support the entire operation of the TWW for long, it would lose money and we would end up selling it to at bargain basement prices to guess who? NJ American Water Company.
Don’t assume that the Mayor’s dire warnings of an 80 cent tax increase is “official” yet. Remember he predicted six months ago that he would have to raise taxes $1.29 we ended up with a 29 cent increase after he was forced to cut $21 million from his budget without the water sale. His figures. I assert that he can cut the budget again without the water sale and no such “catastrophic” tax increase will be necessary. I don’t know why you believe his exaggerated claims as if they come from the burning bush after already being burned once by the same overblown rhetoric just months ago?
As far as scaring business investment away is concerned, I suggest that a city that only has one source of income, property taxes, is a much scarier place to locate than one that has more alternatives than just taxes in order to operate.
Lastly apart from the water sale, something more fundamental is at stake here. The peoples’ right to petition their government for the redress of their grievances is under attack. That is what has taken us to the NJ Supreme Court apart from the merits of the water sale. We dare not relent on this fundamental constitutional issue or we really will have imperiled our democracy and the primacy of the peoples collective will. I am – Algernon Ward, Petitioner #5
Algie,
My main point here is that we, the voters, have let this happen. It’s a mess in many ways. The budget is under strain and the petitioners and much of the citizenry have had to spend time on this subject that could have been spent on other constructive pursuits.
Its almost pointless to make rational arguments now as this have become much bigger than a simple calculation of value and price, which is what it should have been.
I agree that this should have come to a vote due to the size of the deal, but not for any other reason.
Its all a very unfortunate situation and one that could have been avoided with some give from both sides.
Thank you for a more even tone regarding the obvious budget failures of the administration. Even if you and I had the budget last July (as the mayor promised) then we could have stopped the mayor from spending money that he never had. Personally I look at the Department of Community Affairs and their part in all of this. One of their responsibilities is to ensure that municipalities operate lawfully within a budget. This is now two years in a row that the DCA has allowed Palmer’s administration to rack up millions in OT and bad budgeting only to leave it at our feet.
As to the “Strategic” value of TWW, it has routinely made $3 million plus until the administration forund “religion” with a state law limiting proceeds to the city’s budget to about $2.5 milion, which they have successfully argued in the past does not apply when rates are equalized. Regardless, the 5% limit is arbitrary and can easily be doubled or tripled via an executive order or state legislation. Since no tax money would back it and it would save the state and Trenton millions, it would be fairly easy. This year the extra revenue without the sale would be at least $7 million, not counting many millions from the suburbs’ civic (fire hydrants and state building) use. Some estimates put the total value at around $14 million.
Furthermore, we are talking about the public service of providing cheap and clean water to the public. Going private would set rates at about double the rates everyone was paying before this sale. And believe me, the unstable ground that the utility would be left on could cause a collapse and forced sale of the system (following astronomical rate increases) in only a few years. Then who is on the hook for the roughly $100 million in debt left behind?
Believe me, the sale will cost us more than $8 million a year. We will lose the $3 million in revenue plus Trenton residents and businesses would make up the $5 million in extra rates just to break even. And that takes Dennis Gonzalez and his mysterious millions in efficiancy savings that he has yet to detail on his word. Then factor in the Trenton Water Works engineers (4 or 5) that will be added to our city’s payroll and the costs of repairs for seperation on the city’s side (I think that street paving equipment will be tied up for a while) plus other costs administratively of pushing the permits, street closings, etc. through.
How can you trust a deal when the city has not provided anyone with a simple cost analysis or a 5 year comparison plan? Believe me, this deal should be shot down and the administration that continues to run its departments at many times the rates of our neighbors should be run out of office.