Gov. Phil Murphy’s budget doesn’t increase state aid for municipalities, which would help offset property taxes, and it continues to raid funds that are earmarked for affordable housing. But Lt. Gov. Sheila Oliver told lawmakers yesterday the Murphy administration will look for other ways to help local leaders, including by doing more to encourage shared services and smart planning.
Oliver, who is leading the state’s Department of Community Affairs along with serving as lieutenant governor, suggested fiscal challenges inherited by the Murphy administration are so steep that there’s simply not enough money left over to boost municipal aid during the 2019 fiscal year.
She also cited budget problems while defending Murphy’s decision to raid nearly $80 million that’s supposed to go to specific affordable-housing programs and to use it for other purposes. The diversion, which contradicts a campaign promise Murphy made last year, was first reported by NJ Spotlight last week.
“That is what our budget constraint is this year,” Oliver told members of the Assembly Budget Committee, suggesting the raids could cease in the future. “I don’t think he’s walking away from the commitment.”
Oliver, a former lawmaker of long standing, also highlighted several changes the Murphy administration is making as proof of its commitment to help local leaders navigate a shifting economic landscape in New Jersey. They include the recent appointment of two former mayors as the administration’s “shared-services czars”; the expectation that the governor will soon sign a law to reinstate tax breaks in five former Urban Enterprise Zone communities; and the restoration of funding for two other local-planning assistance programs.
In all, Murphy’s $37.4 billion spending plan for fiscal 2019 includes about $1.4 billion to fund municipal aid programs, which is roughly the same amount budgeted by former Gov. Chris Christie for the current fiscal year. If lawmakers decide not to change that allocation in the run up to the June 30 deadline for a new budget, it will mark the eighth straight year of flat funding for municipal aid, even as inflation has gone up 15 percent during the same period.
“We have some really serious, significant fiscal issues in our state government,” Oliver said. “We are challenged at nearly every turn in terms of prioritization of resources that we do have.”
Murphy’s budget plan would also divert $59.3 million from the state Affordable Housing Trust Fund — which is supposed to be dedicated to building homes for low- and moderate-income residents — to pay for housing-related programs that typically are funded through general revenues. He is also planning to take $18.5 million from the state Housing and Mortgage Financing Agency, which helps provide financing for affordable developments, for general housing programs. Both raids have upset affordable-housing advocates who expected Murphy to heed a campaign promise to stop the diversions.
Murphy ‘probably had no idea…’
Pressed on the issue yesterday by Assemblywoman Nancy Munoz (R-Union), Oliver said Murphy “probably had no idea” as a candidate last year just how bad the state’s budget problems really are.
“I think there are challenges of how we satisfy all of the commitments we have,” Oliver said.
She highlighted Murphy’s selection earlier this month of former Summit Mayor Jordan Glatt, a Democrat, and former Harding Mayor Nicolas Platt, a Republican, to serve as his administration’s top advisers on local-consolidation issues, calling them shared-services “czars.” Oliver said they will be coordinating with her department’s Division of Local Government Services to interact with local leaders in both municipalities and school districts.
“They represent a bipartisan point of view . . . understanding the challenges that towns face in being fiscally responsible,” Oliver said.
The lieutenant governor also gave a strong indication that Murphy, a Democrat, is preparing to sign legislation that would reinstate five communities that were longtime members of the state’s Urban Enterprise Zone economic-development program before being removed early last year. The UEZ program has for decades attempted to boost New Jersey’s struggling cities and downtowns using a series of tax and hiring incentives, including allowing their businesses to levy a reduced sales-tax rate. The five communities that would be granted a five-year extension are Bridgeton, Camden, Newark, Plainfield and Trenton.
“We in DCA feel UEZ is a very valuable initiative,” Oliver said.
The bill that lawmakers sent to Murphy’s desk last month would also require the administration to coordinate a study of the UEZ program, and for a report to be issued within 12 months that discusses whether it should be renewed, reconstituted, or allowed to expire.
UEZs give ‘competitive advantage’
While some Republicans questioned the effectiveness of the program during yesterday’s hearing, Chair Eliana Pintor Marin (D-Essex) said it has been an invaluable economic-development tool in Newark as local small businesses have fought to compete with big-box retailers.
“It really incentivizes people to stay within their district,” Pintor Marin said. “It really gives us that competitive advantage.”
Oliver also highlighted the Murphy administration’s plan to revive two other programs that help New Jersey municipalities through improved planning. They are the Neighborhood Preservation Program, which will receive $2.5 million in fiscal 2019, and the Main Street New Jersey Program, which will receive $500,000.
The Neighborhood Preservation Program is aimed at helping New Jersey’s “threatened, but viable” communities by providing grants that help with community planning, administration, housing rehabilitation, demolition and education. The Main Street New Jersey Program offers municipalities both on- and off-site technical assistance and training to help local officials revitalize downtown historic districts and commercial zones.
“Everyone is wondering how to revitalize their areas,” Oliver said, pointing to changing demographics and the rise of the millennial generation as a key issue. “I think that’s where our local-planning services come in,” she said.