The State’s Role in Fixing Trenton (Part 1): “What a Good Community Partner Should Do”

Gov. Christie’s “money with strings” approach to giving charity to NJ cities (and Trenton in particular) is to be applauded.  Our democratic form of government requires clear distinction between the roles of government at each level (city, county, state and national).   When funds are intermingled and distributed between levels as they have been in NJ, voters no longer have direct control or responsibility over their government and we get NJ politics.  NJ’s urban centers are almost totally dependent on state aid and for that reason we have no real responsibility for the actions of our elected officials.  The state always bails out Trenton and the others.

Gov. Christie and the Dept. of Community Affairs have spelled out several conditions for giving one year’s worth of transitional aid to cities that have otherwise been cut off from state welfare.  These conditions include: enacting anti pay-to-play ordinances, submitting a plan, seeking approval before hiring,  not increasing salaries for elected officials, freezing promotions, not hiring consultants,  getting approval for PILOTs and watching  entertainment expenses. 

These measures are all cost control and conflict of interest based but don’t help address revitalization.  Furthermore, none of these actions will do much to decrease costs (e.g. salaries for elected officials in Trenton amounts to less than $270,000).   The State asks cities to submit a plan to reform but there is no reason to believe any city government has any idea of how to do this or else wouldn’t they have already done it.

Nonetheless the Governor’s plan is a great start but it lacks two fundamental characteristics.

1)      It doesn’t address the State’s role as landowner , and

2)      It doesn’t help fix the problem

I respectfully recommend to the Governor and Dept. of Community Affairs that they work with Trentonians to address these shortcomings in the 2012 budget.

The State has an obligation as a land owner

Cities do not have the legal right to tax states.  However, this fact does not absolve a state government from the moral obligation to contribute to the fabric of the communities in which it operates.   A community is made of citizens, business owners and institutions working together for their common benefit.  We obligate those community members by law to foster the goal of the city’s sustenance and betterment.  That is the price of taking part in the common good.

Those that foreswear their obligation are cast out from the community if they fail to provide the agreed level of support. In a community we agree, democratically, on both the level of support and on what it will be spent.

As a member of the community state and federal governments are special.  Though they can’t be legally obligated to provide any support, it follows that if they don’t, they are saying to the cities who host them that they do not wish to be community members.

The state is saying to its employees who might live in the city that their workplace is hostile to their living environment.  It is saying that unlike any commercial enterprise which pays its taxes, the fabric of community is unimportant to it.

If community is unimportant to the state, then it should choose to no longer reside in that city or town.

In Trenton, we don’t want that to happen.  We prefer that the State of NJ remain a full member of our community and support Trenton at a level similar to that of its other members.  They should do this because it’s the morally correct thing, not because the city’s laws require it. 

All similar state capitols receive some level of funding.  The question remaining between Trenton and the State of New Jersey should not be whether the state should be a member of the community but what should the state’s PILOT (Payment in Lieu of Taxes) be. 

In 2009 we received $88M from the State.  Our previous Mayor thought the State “owed” us $155M.  The Capital Cites Aid program established by the legistlature appropriated $34M but included no formulaic method for calculating that number.  I submit that none of these answers were based on any fact or analysis.  So let’s start over.

The Governor and legistlature should establish a formula for a State PILOT based on its property value in each municipality. 

Trenton’s current sustainable municipal budget (we’ll worry about schools later) is about $200M a year.  We can argue about that number but it doesn’t change how we think about a PILOT formula.  Of that amount about $20M is funded by sources other than state funds and local property taxes.  This leaves $180M to be funded.

In Trenton, State property is valued through assessment at $1.2B.  This number is submitted by the City to the State as is maintained by DCA and the Treasury Dept. as the official measure of relative land values.  Our taxable (i.e. private) property amounts to $1.9B.  Both amounts together are $3.1B.   

If we use property value as the only factor in determining share of taxation (as we currently do) then the State should provide $1.2B / $3.1B = 38.7% of our property tax funding.  This equates to 38.7% X $180M = $70M. 

Using property value as the determinant of State funding is a simple and well understood method.  It allows the State to provide a level of support commensurate with its footprint in the city.  The important part of this simple formula is that it’s based on an analysis of facts. 

I submit that this simple plan be a starting point for real negotiation between Trenton’s Mayor and New Jersey’s Governor.

More to come on what the State can do in The State’s Role in Fixing Trenton (Part 2):  Using the State’s Power to Reinvent Trenton

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3 Responses to “The State’s Role in Fixing Trenton (Part 1): “What a Good Community Partner Should Do””

  • patricia stewart:

    Dan – There is a question, I feel, about how much land the state actually owns; the state rents @ Riverview Plaza and a few other places. No one has ever, to my knowledge, pointed out the land owned by the county or the federal government. Trenton created much of this problem – when you were VERY young, urban renewal was the big thing. The state agreed to a PILOT which Trenton accepted. There was no clause reading, “If the municipality screws up the public finances, the legislature will plug any and all budgetary holes.” The city council(s) and the public have been ignoring the municipal budget for years; Doug Palmer governed on a credit card. Art Holland made some mistakes, too. Take care. PHS

  • There is a list of all properties in Trenton and their value. I’ve seen it.

    My numbers are for State “owned” property, not rented.

    The Fed and County and non-profit land value is big but dwarfed by the State ownership.

  • [...]   In Part 1 of “The State’s Role in Fixing Trenton” I argued that New Jersey should fund a portion of Trenton’s revenue and I presented a simple calculation for a fair funding level, $70M.  However, there are several big changes that only the state can make that will truly re-invent Trenton’s economy and potentially all of New Jersey’s urban centers.  [...]

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