"If the city does not take action, we will face budget gaps that start at $40 million for 2004 and grow by about $20 million per year thereafter. But we are taking action, and this budget represents the first year in a five-year plan to achieve and maintain that structural balance," James said.
The proposed budget also raises water rates by 14 percent and sewer rates by 17 percent, to meet increased costs passed on by the Passaic Valley Sewage Commission, which rose by $1.2 million last year, and the North Jersey District Water Supply Commission, which went up $1 million.
The water hikes raise the water rate from $13.43 per 1,000 cubic feet to $15.31 per 1,000 cubic feet. Sewer rates would rise from $14.40 per 1,000 cubic feet to $17.14 per 1,000 cubic feet. James noted that these increases still make Newark's water rate the second lowest in Essex County, and 30 percent lower than current rates in Jersey City and Elizabeth.
All landowners in Newark, including non-profits, must pay water and sewer rates, so the water rates remain equitable.
To control costs and avoid future deficits, the city is undertaking a variety of initiatives, including eliminating 169 vacant positions. This measure will save $7 million in salaries and $2 million in fringe benefits. The city will also introduce managed health care to its employees to control spiraling health-care costs.
Newark is also moving to enhance its collection of municipal revenues and expand its tax base. One such method will be by asking the state to grant Newark the power to levy a tax on the storage of shipping containers. This initiative will not only provide the city with vital revenue, but also pressure landowners to remove these eyesores and open hundreds of acres of land for development.
The city is also moving to deepen the channels in Newark Seaport, which will enable Newark to attract more business and increase its ratable base.
Newark is also structuring its payments from the settlement with the Port Authority of New York and New Jersey concerning Newark Liberty International Airport and its seaport so that these payments are spread over time, to be used to bridge the gap from the city's present status to one in which it can meet future financial goals.
Other savings have been achieved through an 18-percent reduction in bills carried over from prior years, and a 15-percent cut in school debt service, as some other bonds have been retired.
The 2004 management plan will appropriate, as required by law, an estimated $85 million for the Newark Public Schools and $50 million for Essex County. The city expects to received $111 million, the same as last year, from state sources.
The budget gaps are expected because revenues exhibit little growth and remain essentially flat from year to year. Special taxes charged on payroll, parking, and hotels are expected to grow and contribute about $3 million, or 6.5 percent in additional revenue. The city is moving to increase collections on these special taxes.
City department operating costs are expected to rise by $7.7 million this year, a 2.35-percent increase.
As a result of these economies, Newark expects to show a budget surplus of $11 million.
"Like a good mason, our city has continued to labor at a steady pace, putting the bricks in place that will make Newark strong for the long haul. Just as a good wall needs a solid foundation, our bricks require a solid financial foundation, and the 2004 budget provides that stable base. There are no shocks or surprises in this budget, just the kind of solid management decisions that are necessary to maintain our fiscal health and allow our progress to continue," James said.
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