The most immediate advantage of the authority will be its ability to bond, earning the city $50 million this year, $40 million next year, $10 million in 2012, and roughly $5 million every year after. Without the revenue, Booker said he will be forced to institute major property tax increases to slash an estimated $180 million deficit. According to critics, the move is a quick fix fraught with potential for corruption and rate hikes for residents. Booker and city officials are bracing for a major public outcry as the idea is presented and voted on this summer. If history is any indicator, the fight will not be easy.
Booker said the alternative to the MUA is a 30 percent property tax hike as opposed to a 2.5 percent increase. Without knowing what the increase in water rates will be, the mayor said he is hopeful residents will take the gamble.
It’s unclear from Giambusso’s reporting here if the Mayor actually used the word “gamble.” To extend the analogy, this isn’t unlike putting the deed to your house on black to avoid bank foreclosure—doing nothing means you lose your house, winning means you get to keep it.
Losing, though, is where the analogy gets muddier. Booker seems to have been referring solely to an increase in water rates (a downside that may not outweigh the upside). But lending concerns and poor governance could make the downside an even costlier proposition for city residents.
Of course, none of this happens in a vacuum. If you believe that the city is on its way to a bright and prosperous future, perhaps even this worst case could be offset by future businesses and corporations taking up shop here in Newark. Staring down the barrel of a slow-moving economic recovery and double-digit unemployment makes that a pretty big “if.”
Adding transparency to the process of drafting an MUA plan could mitigate the risks of implementation. But, with a yawning budget gap despite year after year of cuts and layoffs at City Hall, is it a gamble the city can afford not to take?