Struggling N.J. Towns Face Cuts In State Aid

TRENTON, N.J. (CBSNewYork/AP) -- New Jersey's struggling cities and towns are out $139 million in state aid that was presumed before Governor Chris Christie scrubbed the appropriation in a series of 11th-hour vetoes from this year's state budget.

The cuts are so severe that many don't expect them to stand. But if they do, towns will be hit hard: Trenton, which was counting on $24 million, will see its budget deficit nearly quadruple. Camden was anticipating $69 million, nearly 40 percent of the city budget being drafted. And Asbury Park, already awarded $10.4 million, will be unable to balance its $42 million budget -- unless it raised the local tax levy by 101 percent.

"They know the consequences -- they know the Camdens, the Newarks, the Trentons, the Asbury Parks, the Patersons of the world can't operate without this money," said David Rousseau, a former state Treasurer under Gov. Jon Corzine who is now the chief financial consultant for Trenton. "At some point, there will be a $300 million to $325 million supplemental appropriation bill that fixes some of the things that he needed fixed from the line-item veto."

Christie unexpectedly wiped out all but $10 million from the program that helps cities and towns through extraordinary financial hardships like increased foreclosures, plummeting real estate values and a high number of successful property tax appeals. That's after reducing $30 million from the program the prior year.

If the massive cut stands, the consequences will include layoffs and reductions in essential services to communities least able to withstand another hit, said Bill Dressel, executive director of the League of Municipalities, which represents the interests of the state's 566 cities and towns.

The League has written letters to Christie and the Legislature urging the restoration of the aid.

"This funding program isn't just a give-away program," Dressel said. "This program is discretionary and it's a needs-based formula that you've got to be able to demonstrate that you have a recovery plan in place, that you're going to be able to use these monies to provide essential services within a finite period."

Asbury Park's application, for example, includes detailed explanations of the city's circumstances including plans to reduce the need for future aid, such as through plans to share more services with nearby towns and reducing staff.

The six municipalities already granted a combined $13.2 million will be allowed to keep the money, Community Affairs spokeswoman Lisa Ryan said Wednesday.

Christie proposed $149 million for transitional aid to municipalities, when he proposed his budget in February, and everyone pretty much assumed since the governor suggested it and Democrats didn't object to it, the aid was a lock. But Christie surprised nearly everyone on June 30 by slashing $1.3 billion in spending -- $900 million Democrats had added to his original budget as well as items he originally supported.

"It's widely recognized by both political sides that there are some municipalities in our state that are needy because of circumstances beyond their own making, that they need extraordinary financial assistance," Dressel said.

Democrats claimed a furious Christie was being vindictive to Democrats who defied him. The administration said the governor made fiscally prudent decisions. The administration also objected to language removing a 1 percent administrative fee from the aid program, saying the reduction amounted to an elimination of oversight. Democrats disagree, saying they only meant for Community Affairs to have to pay for oversight out of the department's budget.

If the cut was made for political retribution, Dressel said the municipalities that stand to benefit "are being held hostage to political shenanigans."

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