Jersey City officials plan to offer voluntary buyouts to more than 400 longtime public employees, amid a $70 million hole in its budget as the COVID-19 pandemic decimates state and local tax revenue.
The move could shave off $22.7 million in expenses for New Jersey’s second-largest city, meaning that local officials would still need to come up with the other $47 million in savings.
Under the plan, the 400-plus city workers will receive a payout of up to $20,000, or 25 percent of their salary, whichever is the higher number. Employees would have until April 20 to respond, with the separations given out on May 1. The city also plans to enact both salary and hiring freezes.
The city has lost $50 million in revenue, and had to shell out an additional $20 million to cover the expenses of its COVID-19 response.
The reality is, the economic instability local governments nationwide are all facing will come with some really tough decisions.
When faced with budget shortfalls, municipalities typically issue bonds – that is, borrow money – or cut expenses to come up with extra cash.
“The reality is, the economic instability local governments nationwide are all facing will come with some really tough decisions,” Kimberly Wallace-Scalcione, a spokesperson for the city, told NJBIZ.
Statewide, New Jersey has been faced with the same dilemma; the COVID-19 outbreak has ravaged state tax revenue leading to a hole as large as $20 billion.
The state’s social distancing restrictions and mass closures have ground commerce to a halt and led to money drying up for the state’s main source of funding: the sales, income, corporate business, casino and gas taxes. And, the Murphy administration has spent tens of millions of dollars on its COVID-19 testing and response.
That has prompted lawmakers and Gov. Phil Murphy to push back the state budget deadline from June 30 to Sept. 30, which will require legislative approval.
The $2.2 trillion federal COVID-19 relief bill, known as the CARES Act, includes $3.3 billion in aid for New Jersey, and federal dollars in community development block grants to municipalities, which grant local officials broad leeway with how to use that money.
Last week’s round of funding from the U.S. Department of Housing and Urban Development clocked in at $82 million. That includes $15 million for New Jersey, which it could send to local municipalities in need of the funds.
Out of that batch, Jersey City received $3.4 million in block grants; $1.6 million from the federal Emergency Solutions Grants program to fund rental assistance, eviction prevention and anti-homelessness programs; and $347,820 from the Housing Opportunities for Persons with AIDS program, to help lower-income residents with HIV and AIDS.