By STEVE LENOX
August 2, 2020 at 11:58 AM
PATERSON, NJ – A proposal by Mayor Andre Sayegh’s Administration, and backed by a vote of the Paterson City Council, to revert to a calendar year for budget purposes won the support of the Local Finance Board on Thursday. With the approval of the state body responsible for overseeing the fiscal condition of New Jersey municipalities Paterson’s budget will now run from January through December.
Previously Paterson had stood as one of only eight cities in New Jersey that operated on the state’s fiscal year, which begins on July 1 and ends on June 30 of the following calendar year.
The change was an objective identified in Sayegh’s transition report, a list of priorities put together as he took office two years ago. Doing so, the report said, will “make budgeting easier” and align Paterson with how most other municipalities and counties in the state operate.
“I have advocated for this since I was a councilman because I believe it will give us some budgetary breathing room,” Sayegh said. “Moreover, it may even create a surplus for our cash-strapped coffers.”
With the change, the city will operate under a transition period to close out 2020 before establishing a new calendar year, and annual budget, to go into effect in January 2021.
According to Administration officials the switch will provide residents and local taxpayers clarity on their annual tax bills, and make it easier to compare them year-to-year instead of some quarters within the same fiscal year being different.
The change will also potentially provide an economic boost as the city is expected to receive its standard “state aid” totaling about $30 million through a combination of funds for the first six months of the transition period. During this time, officials said, the city does not incur its largest expense, contributions to the state pension fund, which means the city’s revenue is expected to exceed expenses.
“This will help the city manage potential decreases in tax revenue, and in the best case scenario will lead to the creation of a surplus for a reserve fund in the calendar year,” Paterson’s Business Administrator Kathleen Long told TAPinto Paterson previously. “Paterson would still also be able to apply for transitional aid from the state during the calendar year.”
That additional aid, officials hope will be approximately $20 million, and used to cover all the expected annual expenses, such as retirement payouts, that would have normally been absorbed in the operating budget, allowing efforts to ultimately reduce Paterson’s reliance on transitional aid and return to full local control of the city’s finances to continue.
Kimberly Redmond contributed to this report.