On June 15th, Jersey City released introduced its 2022 budget. This is a part of a series about that budget. In this post I’m using two public datasets:
A: Jersey City’s 2022 Municipal Budget (Introduced) with proposed 2022 revenue and expense, located on the city website here.
B: Jersey City’s 2015-2021 Municipal Budget summaries compiled in NJ’s User Friendly Budget Database (Excel file downloadable here).
Jersey City’s 2022 budget, as introduced in June, increased by $43 million over 2021’s final approved budget. As we dive into the budget details, we see nuance emerge that points to two major trends:
- Structural expense, mostly in the form of salaries and benefits, continues to increase.
- The pressure to fund that structural expense is falling increasingly on the city tax levy, aka city property tax.
Let’s take a look at some bigger picture visuals to get started. I’ll have additional posts in this series that dive into the detailed nuance. And, I do have some details for the wonks at the bottom of this post that speaks to how this data was compiled and arranged to make it as legible as possible for CivicParent readers.
Expense Highlights – what are we investing in?
Revenue Highlights – how do we fund the investments?
Two observations are worth pointing out here. First, city property tax is the largest source of funding in 2022, at $324 million. However, the city does also rely on abatement PILOT fees ($101 million), federal COVID-19 aid ($70 million) to fund 25% of the budget. We’ll come back to the PILOT fees and federal COVID-19 aid in a moment.
Change from 2021 to 2022
Now let’s see how these major items of revenue and expense have changed from 2021 to 2022.
We can see from the graph above that:
- City property tax (the city tax levy) is up by $101 million – a 45% jump from 2021.
- COVID-19 aid is also up, by $41 million – a 144% jump from 2021.
- Abatement PILOT fees are down $11 million – a 10% decline from 2021.
With these three data points in mind, let’s touch on the idea of sustainability.
City property tax is “recurring,” sustainable revenue because it is derived from the tax base and thus it doesn’t expire. The city can, each year, apply a tax rate and collect tax to fund the city.
However, PILOT fees and federal COVID-19 aid do eventually expire. They are, by definition, not sustainable in perpetuity. I’ve noted this before on CivicParent, as recently as last year when I wrote about the way Jersey City was funding structural expense with one-time revenues like COVID-19 aid and abatement PILOT fees that expire. These revenue sources are currently like legs on a table helping support the structural “people cost” expense on the city’s books. However, as these items expire, those legs will go away, and the expense will need to be supported increasingly by a larger city tax levy.
In fact, the city is required to highlight this issue which is why these two revenues show up as “revenues at risk” in the 2021 User Friendly Budget, Sheet UFB-4 “Structural Budget Imbalances.” The state defines revenues at risk as “anticipated revenues that will not recur in the next budget year, or that are known to be declining over time.”
This year’s $11 million PILOT fee decrease is an example of the “decline over time.” Importantly, when an abatement does expire, the property starts paying regular property tax that gets split between the city, county, and schools. So, the value of that property as a funding vehicle for the city does not go away entirely; but the PILOT (the exclusive payment to the city) does. I’ll dive into more of this detail in a separate revenues-related post.
On the expense side of the budget, we can see that employee group health insurance and and the Department of Public Safety are driving the biggest upticks in expenses; once again, “people cost.”
The big picture with all of this is:
1–we have a city budget laden with people cost and the cost is going up.
2–that increasing structural “people cost” expense must be paid for, but the city is currently using a significant amount of non-sustainable revenue – COVID-19 aid and PILOT fees – to help fund that expense.
3–as the non-sustainable revenues expire, the city will increasingly need to rely on city property tax.
Here is the full dataset with filterable views.
In the remaining posts, I’m going to explore the nuance within this bigger picture. I will take a detailed dive into revenues, expense, and also the tax bill impact.
Check out my other posts in this series:
And, check out my series from prior years:
Wonk Detail–Starting point: the standard budget file.
The standard budget file contains a lot of detail, but two summary pages are helpful as a starting point:
- “Sheet 11” contains summarized revenues
- “Sheet 30” contains summarized expense
I referred to the “Sheet” nomenclature in my first post in the series which you can check out here for reference. What I did was put that data into Tableau and I’m re-summarizing it below with some color coding layered in to highlight the larger balances (which is where most of the focus in this series will be):
Making the “standard” budget more user-friendly
In writing about this budget in prior years, I have received valid feedback from readers that the budget categories as presented in the budget can be confusing and overly wordy. I agree, so I worked on creating a more user-friendly set of category names that will make the detail more accessible to readers. That set of category names is below, and I’ve made two basic changes:
- On the revenue side, I stripped out unnecessary parlance…for example: an item like “3. Miscellaneous Revenues Section A: Local Revenues” has been shortened to just “3A: Local Revenues”
- On the expense side, I dove into the “Within CAPS” category and instead used the more descriptive departmental detail as the category name so that we could get a better handle on that big bucket of expense “within CAPS.”
Here is how the new data looks, and I should note: I’ll be using this categorization throughout the series. For those interested, my entire mapping is viewable here.