By ANDREW JACOBS
Shortly before leaving City Hall after two decades in office, Mayor Sharpe
James merrily announced a $30 million surplus last spring, promising residents of
this struggling city a 5 percent cut in property taxes. Two months later, state
auditors declared the black ink a mirage, leaving Mr. James's successor, Cory
A. Booker, with what turned out to be a $44 million hole.
''It's really a cruel joke,'' Mr. Booker said recently in an interview.
''You win an election, come into office and you're left to clean up the
previous administration's mess.''
So as Mr. Booker ends his third month as mayor, his grand dreams for a
safer, cleaner and more prosperous Newark are colliding with the reality of the
city's troubled finances. Having won the election on a platform of fine
promises, Mr. Booker is instead being forced to reduce services and raise
taxes. In the $697 million budget he presented late last month for the current
fiscal year, which ends on Dec. 31, the mayor proposed an 8.3 percent rise in
property taxes, an average of $322 for every homeowner.
''We're three-fourths through the year, so there's no way to make smart cuts
for 2006,'' explained Bo Kemp, the city's business administrator. Sitting in
his City Hall office as water dripped from the ceiling into a trash can, Mr.
Kemp said that the administration expected to introduce the 2007 budget -- one
the administration has vowed will have no tax increases -- toward the end of
the year. ''That's when the real cuts begin,'' he said.
Mr. Booker, a former member of the Municipal Council -- which must approve
the mayor's budgets -- said that he knew the city's finances were less than
stellar, but Mr. James's talk of a surplus made him think he would have more of
a cushion.
Instead, the state Department of Community Affairs, which reviews and
approves municipal budgets, ruled that the James administration's accounting
was full of inconsistencies and questionable math. In early July, a few days
after Mr. Booker celebrated his inauguration, the state ordered the city to
scrap the 2006 budget and start again.
To state officials, the most worrisome figure was $80 million that Mr. James
had slated for a pair of private organizations he would have controlled after
leaving office. Gov. Jon S. Corzine was so alarmed that he summoned Mr. James
and the then-council members to
Mr. James, who declined to run for a sixth term, did not return calls made
to his home and his office at
City Hall's new occupants say they have had a hard time figuring out exactly
how the city balanced its books all these years.
In recent weeks, employees have discovered unpaid invoices from as far back
as 2001, unsent water bills and welfare recipients who turned out to be dead.
Dan O'Flaherty, the city's acting finance director,
said the previous administration had more than 4,000 employees and millions of
dollars in outside contracts but only one internal auditor. Mr. Booker has
added four auditors and hired a small army of forensic accountants.
''We're still learning every day what perils lie around the corner,'' said
Mr. O'Flaherty, an economics professor at
Mr. Booker has characterized some of his predecessor's actions as
gluttonous, or worse.
In the waning days of his administration, Mr. James and a score of his
employees took more than $650,000 in compensation for unused vacation and sick
time, according to council records. Shortly before he left office, the mayor
and council -- all but two of whom were voted out -- handed out millions of
dollars to people whom Mr. Booker describes as their friends and political
allies. And two weeks ago, federal and state authorities began investigating at
least $80,000 in purchases that the former mayor charged to municipal credit
cards for trips to
Asked about the travel expenses during a public event last week, Mr. James
defended the trips -- along with city-funded meals and concerts closer to home
-- as mayoral expenses.
In the meantime, Mr. Booker and his staff have been left to explain to a
wary public how a putative surplus turned into a yawning deficit.
The main culprit, the new mayor contends, is the previous administration's
use of $400 million bestowed upon it four years ago by the Port Authority of
New York and
When the money runs out three years from now, around the time Mr. Booker is
up for re-election, the city could find itself more than $200 million in the
hole. ''If we continue to look at our budgets in one-year isolation, we're
going to find ourselves in a financial freefall,'' Mr. Booker said.
Susan Bass Levin, the state Department of Consumer Affairs commissioner,
said municipalities were not required to take a multiyear approach to budgeting,
but that it was encouraged. ''I think it's fair to say that the new mayor and
council have a lot of painful decisions to make,'' she said, ''but they seem
committed to getting the city on the right track.''
Keenly aware of his post-election honeymoon, Mr. Booker is choosing to
impose the pain early in his tenure and hoping his ambitious plans for the city
will bear fruit before voters return to the polls in 2010.
At this point,
Even if the city manages to scrimp and wring out waste, it can expect a $30
million increase each year in mandated health insurance and pension costs. And
with the state's finances in disarray, the city can no longer rely on the $20
million or so infusion it has traditionally received each year from
''All across
Homeowners are predictably infuriated by the prospect of writing ever-larger
checks to City Hall, especially since many are still digesting a 15 percent tax
increase imposed in 2003 that came atop a citywide revaluation of property a
year earlier. While the revaluation cut taxes for some, it doubled the burden
for others.
For property owners, many of whom live paycheck to paycheck, talk of multiyear
budgeting and fiscal responsibility is cold comfort. Standing on a sidewalk
flecked with blowing trash, Valentine Garcia, 76, said the proposed increase
seemed nonsensical, given the poor level of services in his East Ward
neighborhood.
''All the politicians are the same, before and now,'' said Mr.Garcia, a 40-year