Jersey City Councilwoman Viola Richardson voices support for a payroll tax to help solve city's financial "crisis," but Mayor Healy is dubious

Wednesday, September 29, 2010

Jersey City Councilwoman Viola Richardson says she would support instituting a payroll tax to help the city close its massive budget deficit.

"We're in a financial crisis," Richardson said at Monday's caucus.

The council will hold a public hearing and is expected to vote on a $97.15 million six-month budget tonight. The budget will serve as a transition from a July 1, 2010 fiscal year to a 2011 calendar year budget cycle.

"This transition year budget is by no means a solution to the city's problems," said Assistant Business Administrator Robert Kakoleski. "We are simply deferring."

City officials have said they are facing an $80 million budget deficit due to contractual raises, health care and pension increases, and cuts in state aid.

Richardson, who represents Ward F, suggested the city consider instituting a payroll tax to help close that deficit. The concept isn't new to the city.

Former Mayor Bret Schundler raised the idea in 1996 and gained legislative approval, but it was abandoned after the Hudson County Chamber of Commerce challenged it in court.

It resurfaced again in 2007 when the Legislature was drafting bills to allow the city to institute a hotel tax, but Mayor Jerramiah T. Healy said he didn't support the idea.

If the city wants to pursue the issue again, it would need state legislation to do so. Newark has a 1 percent tax on companies' payrolls. Newark anticipated collecting over $35 million in payroll taxes this year.

In a statement yesterday, Healy said it would be difficult to get state legislative approval.

"This would also be a significant disincentive to future investment in our city, which today is still extremely competitive relative to the New York metropolitan region," Healy said.

"It might also cause our major private employers to consider relocating their firms and their jobs to other areas of the state or the region where there is no payroll tax."

Healy said the administration is working to reduce the size of government and is considering other ways to generate revenue.

Ward D Councilman Bill Gaughan said if the city considers a payroll tax, there should be a minimum starting point, so it doesn't impact small "mom and pop" businesses.

City Council members say Newark is the only city in the state with a payroll tax.

MELISSA HAYES