Program Has Had Little Oversight and Has Become an Annual Slush Fund for a Handful of Municipalities
State Senator Phil Haines, Assemblywoman Dawn Marie Addiego and Assemblyman Scott Rudder today introduced legislation requiring municipalities who receive aid under the state’s distressed cities program to file detailed reports about how that money will be spent and cutting off the special aid to those towns after three years – barring extraordinary circumstances.
“The state needs to do a better job of tracking how this money is being spent so that we can ensure tax dollars are not being wasted,” said Haines, R-Burlington. “This bill will ensure that this program is a short-term fix for towns that truly need the aid – not an annual hand-out to just a few politically connected municipalities.”
“From the inception of this program it was intended to be nothing more than a temporary source of aid for towns with severe financial difficulties,” said Addiego, R-Burlington. “At some point this aid needs to be phased-out and these towns need to have a plan in place to stabilize their own finances without this additional state assistance.”
“At a time when the Governor is proposing cutting aid to all municipalities, there is no excuse for the state to continue handing out tax dollars to these eight towns with little or no oversight of how the money is being spent,” said Rudder, R-Burlington. “There needs to be accountability for how this money is spent and this aid should be cut off after a limited number of years so this aid doesn’t become a reward for municipalities that fail year after year to fix their fiscal problems.”
The Special Municipal Aid Act, also referred to as the “distressed cities program,” was enacted in 1987 to provide “short-term,” and “temporary” state assistance to municipalities with special budgetary difficulties in order to help them regain financial stability.
The program has provided aid primarily to just a handful of cities, including Camden, Patterson, Harrison, Jersey City, Union City, Bridgeton, Asbury Park, and Newark. In the current year that aid totaled $153 million, although it may exceed that total by year’s end. There is $145 million budgeted for the program in the proposed Fiscal Year 2009 budget.
The legislation being introduced by Haines, Addiego and Rudder would place a three-year limit on the number of consecutive years a municipality can receive aid from the program. Towns could get a maximum two-year extension only in extraordinary circumstances as determined by the Director of the Division of Local Government Services in the Treasury Department.
The bill also would require that the cities receiving distressed cities aid file a detailed financial plan for how the money will be spent, and how the municipality intends to phase-out its need for the special funding.
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March 27, 2008
