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Christie Orders Newark Budget Cuts as Price of State Aid

New Jersey to Order Spending Cuts in Newark, Christie Says
Chris Christie, governor of New Jersey, told reporters today that it is “ridiculous” that the city of about 277,000 people, 12 miles (19 kilometers) west of Manhattan, hasn’t approved a plan for the year that began Jan. 1. Photographer: Daniel Acker/Bloomberg

Oct. 2 (Bloomberg) -- New Jersey Governor Chris Christie said his administration will order spending cuts in Newark as the state’s largest city starts its 10th month without a budget.

Christie told reporters today that it is “ridiculous” that the city of about 277,000 people, 12 miles (19 kilometers) west of Manhattan, hasn’t approved a plan for the year that began Jan. 1. Newark will have to agree to unspecified cuts if it wants state aid to balance its budget, Christie said.

Newark Mayor Cory Booker, 43, proposed a spending plan in February. The City Council hasn’t approved it.

“Saying they’re late is like being kind,” Christie, a 50-year-old Republican, said after touring a hospital in Flemington. “We are looking very carefully at this budget and I’m unsatisfied with the efforts of this administration and the city council to cut back that budget.”

Newark has been in decline for decades. In 1967, 26 people were killed and 725 injured during six days of race riots. The city, which has lost more than a third of its population since the 1930s, has the 10th-highest poverty rate among major U.S. municipalities. It also suffers from persistent crime. Rape has soared 29 percent this year through Sept. 2, even as murders fell 17 percent.

‘Step Forward’

Business Administrator Julien Neals in a statement said the city has reduced its workforce and is looking to end its reliance on state aid. He called the mayor’s spending plan a “step forward” and said Booker has cut 1,000 workers and trimmed department spending by more than $70 million since taking office.

“Newark is confronting growing financial obligations in the face of a serious and persistent economic downturn,” Neals said. “We will continue to work with the state and Municipal Council to end our reliance on transitional aid.”

The state gave Newark a $32 million loan last year and the city ended the year with an $18 million surplus, Christie said. Newark has again asked for $24 million, and Christie said he doubts it needs that much. The governor said he expects to reach an agreement with city leaders on a financial-aid package.

“Last year I stepped up, the state did, and gave them a $32 million loan,” he said. “What did I find this year? They had an $18 million surplus from last year on my $32 million loan, OK? Fool me once, shame on you. Fool me twice, shame on me.”

Tweets Galore

Booker, a Rhodes Scholar and Yale University-educated lawyer, became mayor in July 2006 and is midway through his second four-year term. He has pledged to turn Newark around by luring investment and reducing crime. The Prudential Center arena opened in downtown Newark in 2007, and Panasonic Corp. of North America broke ground on headquarters in May.

A frequent Twitter user with 1.2 million followers, Booker has sent more than 19,000 messages about everything from responding to city residents’ complaints about garbage to sending inspirational quotes about being a leader or getting an education.

In 2010, Booker faced an $83 million deficit in a $605 million budget as the recession cut revenue and Christie reduced aid to towns and cities. Booker raised property taxes 16 percent, sold 16 city-owned buildings and eliminated about 800 jobs, including 167 police officers.

Newark’s 2012 application for transitional aid, which helps cities in financial distress, cited a structural deficit, increased pension and health-care costs and a reliance on non-recurring revenue from a settlement with the Port Authority of New York and New Jersey. Booker’s spending plan called for a $10 million cut in departmental expenses, to $327 million.

Budget Hole

This year’s budget had a projected $75 million gap that was reduced to $25 million partly as a result of a tax-lien sale, fines related to red-light traffic cameras and sales of taxi medallions, according to the aid request.

State Senator Ronald L. Rice, a Democrat from Newark, said the City Council is working on a budget and doesn’t need Christie’s threats. The city’s financial woes are partly because Booker isn’t being an effective leader, said Rice, whom Booker defeated for mayor in 2006.

“You have a mayor who, to be quite frank about it, all he does is run around the country and tweet folks,” Rice said by telephone. “Nobody’s really in charge of city hall. He acts like the city hall isn’t an equal branch of government.”

To contact the reporters on this story: Terrence Dopp in Trenton at tdopp@bloomberg.net; Elise Young in Trenton at eyoung30@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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