Newark Council to Decide Fate of Tens of Millions in Funding Wednesday

The Newark Municipal Council votes Wednesday on two issues that could have major fiscal consequences for the cash-strapped city.

The first is whether to grant an easement for the construction of underground power lines running to a proposed power plant in the East Ward. The second is whether to send an application to state officials for the creation of a municipal utility authority that would operate Newark’s water and sewer system.

The council meets at 12:30 pm at Newark City Hall.

At stake in the easement issue is $11 million in funding plus another $12 million for projects benefiting Newark residents. The council’s failure to approve the MUA application, meanwhile, would open up an $18 million hole in the city’s proposed budget and could also jeopardize $24 million in state aid.

During the council’s conference meeting Tuesday, the governing body met with Thomas Neff, the director of the state Division of Local Government Services, which is charged with approving municipal budgets throughout New Jersey. Neff spoke to the council about the utility authority, which, if ultimately approved by the council, would add an $18 million “concession fee” that is already reflected in Mayor Cory Booker’s $592 million proposed budget.

Neff stressed Tuesday that the council was not being asked to approve the creation of an MUA -- often confused among many members of the public with “privatization” of the city’s water and sewer system -- only to approve sending an application to the state for review. The council would still retain the right to reject an MUA, Neff said.

South Ward Councilman Ras Baraka asked whether the city’s pending application for $24 million in state aid would be denied if the council voted against sending the application. Neff, saying he would “hate to prejudge it,” added that the aid request was still being reviewed, but failing to okay the MUA application would be a violation of a prior agreement Newark struck with the state last year.

That agreement states Newark must take a variety of measures,including passing an ordinance limiting longevity pay for public workers as well as sending an MUA application to the state.

But Neff also said failing to forward the MUA application would automatically put the city budget in a deficit of $18 million, the amount in the Booker spending plan tied to the MUA.

“What’s more of a pressing concern to the governing body and to the city itself is if there is a slamming of the door on the MUA it’s very clear the $18 million that is part of the MUA concession fee will not be available,” Neff said. “It would lead you to revisit what would immediately become an $18 million hole.”

Following more questions from Baraka, however, Neff admitted that if the city could come up with another revenue source to replace the concession fee Newark’s budget would pass muster. Central Ward Councilman Darrin Sharif argued that “more research to vet options” should be done to see if additional funds can be obtained from the Port Authority of New York and New Jersey, which leases space in the city for Newark LIberty International Airport and also operates Port Newark. 

“One dollar, five dollars for every container that comes into the port. One dollar, five dollars for every head that goes through the airport,” said Council President Donald Payne. “If we could do that, we wouldn’t be coming to you for transitional aid. You’d be coming to us.” 

Also Wednesday, the council takes a final vote on the easement, which would allow the construction of the power lines below Delancy and other nearby streets to the site where Hess Corp plans to build a 655-megawatt natural gas power plant.

Hess has promised to give the city $11 million in cash in exchange for the easement, as well as to build a $5 million stadium in the East Ward and to provide $7 million in other spending, including for environmental remediation of Newark homes. Previously, the council balked at granting the easement, citing environmental concerns and a desire to strike a better deal with the company.

If Newark fails to grant the easement, it will have no effect on whether the plant is built, but the city would lose out on the funding, the company and city officials have said.