Christie Agrees to Restore Aid to Cash-Strapped N.J. Cities

Monday, 18 Jul 2011 05:26 PM

 

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(Updates with comment from Senate president starting in sixth paragraph, Assembly speaker in 10th.)

July 18 (Bloomberg) -- New Jersey Governor Chris Christie said he will restore his $139 million cut in aid to cash- strapped cities as long as lawmakers agree to more oversight of the program.

Christie, a first-term Republican, slashed so-called transitional aid to $10 million from $149 million in the budget he signed for the fiscal year that began July 1. The move led Moody’s Investors Service to put under review the credit rating of six cities that relied on the money to balance their budgets.

The governor, during his first press conference since returning from a two-week vacation, said he will sign a measure restoring the funding only if the state Department of Community Affairs gets more power over it. The money would come from the state’s rainy-day account, and would be granted in a supplemental funding measure, Christie said.

“I think that what the people of New Jersey expect is that we’re going to help struggling cities during struggling times like the ones we’re in,” Christie said in Trenton today. “But we have to do it in a way that is responsible.”

Democrats, who control the Legislature, failed on July 12 to muster enough votes to reverse Christie’s aid cut to distressed cities including Camden and Newark.

“He made a major mistake, and I’m glad he’s willing to fix this one; he’s got a lot more to do,” Senate President Stephen Sweeney told reporters in Trenton. “You can’t take any more money away from those communities the way he has.”

‘Oversight Mechanism’

Christie initially included the money in the $29.4 billion budget he proposed in February. He said he struck it from the spending measure lawmakers sent to him last month after Democrats struck some language, which he said reduced oversight.

“I always wanted to give this money to the cities that need it, that’s why I put it in my budget in the first place,” Christie said. “But I am not going to give this money away without the appropriate funding and oversight mechanism.”

Sweeney, from West Deptford, said he hasn’t polled the 24 members of his party in the Senate to gauge support for Christie’s plan, though he said he’s willing to negotiate over restoration of that money. The lawmaker said he won’t support the plan if any funding for oversight comes out of the $149 million in aid and said he’s open to increasing it if needed to fund any new expenses.

Willing to Review

“Assembly leadership is of course willing to review the governor’s proposal, but we also will want to see the money go directly to cities, not into building a new layer of bureaucracy that obliterates local autonomy,” Speaker Sheila Oliver, a Democrat from East Orange, said in a statement.

Christie and Democrats during the budget fight had debated how much cash New Jersey had in its rainy-day fund. Sweeney had said the state had $640 million, while Treasurer Andrew Sidamon- Eristoff said it was $365 million and was too low to draw down.

Christie said the reserve will be about $225 million after the urban aid is restored. He said his administration will hold monthly budget meetings and correct spending as needed to keep the budget balanced and prevent any further drawing of the fund.

Rainy Day

“I’m not thrilled about the number, but we had to do the things we did,” he said. “All this stuff from Democrats about how we had all this money lying around simply isn’t true.”

The state’s budget for fiscal year 2011 included an opening fund of $501 million. Andrew Pratt, a spokesman for Sidamon- Eristoff, declined to provide prior rainy-day fund levels.

The governor, 48, cut almost $1 billion in additional spending that lawmakers added to his original budget plan when he signed it June 30 and pared it to $29.7 billion. He also took out $50 million in additional funding for police in high-crime communities, after-school programs and welfare.

The state will begin accepting applications from cities seeking the transitional aid even before the state has a law in place outlining the procedures, Christie said.

William Dressel, executive director of the New Jersey League of Municipalities, said “ fast action is needed” on the restoration to help cities struggling to craft balanced budgets.

“Massive municipal program and personnel cutbacks could deny our fellow citizens access to vital life-sustaining and life-enhancing services,” he said in a statement.

--Editors: Stacie Servetah, Mark Schoifet

To contact the reporter on this story: Terrence Dopp in Trenton Statehouse at tdopp@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

© Copyright 2014 Bloomberg News. All rights reserved.

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