The city’s revival hasn’t stopped. But during its run of breakneck growth, budget deficits have piled up, year after year, because spending kept climbing faster than its tax revenue.
It plugged the holes by selling city property, running up debt and drawing on the aid cranked out by Washington during the pandemic. Now, just six months into his tenure, Mayor James Solomon says the local government has finally run out of string, plunging New Jersey’s second-largest city into what he said is the worst fiscal crisis in its history.
Officials have been contending with a $255 million shortfall, equivalent to roughly a quarter of its operating budget. New Jersey stepped in with a $120 million rescue package, which included the biggest loan the state has ever extended to a city, and Solomon’s administration has made about $55 million of cuts. Even after that, the mayor is weighing a plan to increase property taxes sharply, threatening to add thousands of dollars to homeowners’ annual bills and hammer lower-income residents who were there before waves of well-heeled New York City professionals started flooding in.
“The effects we are seeing here are decisions that were driven by political forces that were not in the best long-term financial interest of the city,” said Marc Pfeiffer, associate director of Rutgers University’s Bloustein Local unit of the Center for Urban Policy Research, who also serves as chair of the city’s budget advisory committee. “Now they’re coming due.”