Newark Feels the Pinch

Tuesday, 31 March 2009

From the Mayor’s office today. Anyone whose company has had to implement pay cuts, layoffs and other firm cost-cutting measures recently can relate to this news.

CITY OF NEWARK PROPOSES PAY CUTS AND FURLOUGHS TO HELP BALANCE BUDGET AMID NATIONAL ECONOMIC CRISIS

Non-uniformed City workers will take one-day furloughs each month starting July; Employees making $100,000 will receive 2 percent pay cuts as well as furloughs

Newark, NJ – March 31, 2009 – Mayor Cory A. Booker, Acting Business Administrator Michelle Thomas, and members of the Newark Municipal Council announced in a City Hall press conference this morning that the City of Newark would impose mandatory one-day-a-month furloughs for all non-uniformed employees, beginning in July, and continuing through December 2010, as well as two-percent pay cuts for all unrepresented managers and directors earning more than $100,000 a year.

The measures were in line with similar furloughs announced last week for state employees by Governor Jon Corzine. The municipal measure is anticipated to affect approximately 2,500 employees and save the City about $6 million, as it works to find ways to close by 2012 the $180 million budget deficit that was inherited by the administration upon taking office in 2006. The proposed furloughs must be approved by the state Civil Service Commission.

“In 2006, we took over a city in financial crisis. We have made significant steps to address our financial future and decided that we would not balance the budget on the backs of our residents,” Mayor Booker said. “We have taken drastic and innovative measures toward closing our structural budget deficit of $180 million. The City must work off its dependence on non-recurring payments and state aid in order to balance its budgets within the next three years. We can no longer rely on gimmicks. We must make difficult decisions now, but 2012 will be the year of liberation.”

The planned furloughs will begin in July, and all non-uniformed City agencies will shut down for one day a month every month through December 2010. All non-uniformed municipal workers will be unpaid for that day. The Mayor will propose that the days be connected to municipal holidays. The 18 furlough days amount to an approximate 5 percent salary cut for all employees. Police officers and firefighters are exempt from the furloughs and salary reductions.

Some 61 municipal employees, including Mayor Booker, are impacted by the 2 percent pay cut, which comes on top of the furloughs. He and his senior staff face a total 7 percent salary reduction. The Mayor noted that since taking office, neither he nor any senior manager has received a pay raise or cost-of-living increase. He voluntarily reduced his salary by 8 percent early in his administration. The 2 percent reductions do not affect uniformed personnel, i.e., fire and police.

The City will ensure that there are no dramatic reductions in municipal services during furlough periods.

The Mayor noted that the City was using the money saved wisely, and major projects that will improve the quality of life in Newark are continuing, including the renovations of City parks and the opening of two new police precincts.

“My number one priority upon taking office was public safety. While we have seen dramatic reductions in violent crime, that priority has not changed. We are not laying off police officers or permanent workers, we intend to put a new class of police recruits through the academy this year and to continue our summer youth employment programs. We are using these furloughs to maintain city services and city functions,” Mayor Booker said.

The City is anticipating $436 million in revenues to fund a 2009 municipal budget of $659 million, Mayor Booker said. Filling the budget gap will require additional cost-cutting measures, he said.

The Mayor was joined at the conference by Council President Mildred Crump, Council Vice President Luis Quintana, and Council Members Oscar James, Carlos Gonzalez, Donald Payne, Jr., and Anibal Ramos, Jr.

The Mayor also noted that the City must end its dependence on non-recurring payments, like state aid funds, and pointed out that in 2011, Newark will receive the last $40 million payment from the Port Authority of New York and New Jersey in the settlement for the airport and seaport land reached under the Sharpe James administration. This, he said, added to the global economic crisis, is placing an increased burden on municipal resources.

Mayor Booker also pointed out that while stern measures are needed to address the present crisis, Newark has taken great strides to address a budget shortfall that has existed for years. The City’s dependence on state payments has dropped from $115 million to $40 million, and a balanced budget is in reach within three years.

Mayor Booker’s administration has been “thinking outside of the box.” “We created a Newark Parking Authority, which is extremely efficient. Other ideas on the table include creating an independent authority for our water assets, so we can sell water on the open market to other communities. Finally, I will reach out to other Mayors in Essex County to hold a summit to find ways to create savings,” the Mayor said.

He also pointed out that while other cities and municipalities around the country are experiencing economic contraction and downturns, Newark continues to develop. “We are seeing more businesses opening each day in Newark, or moving here, new warehouses opening, a new hotel, and we are fighting to bring a professional basketball franchise here. These will bring us jobs, revenue, and visitors, which will help to grow our tax base. We will be able to enjoy the collective benefit that comes from three years of sacrifice.”

This is the first time the City of Newark has ordered furloughs for its employees.