Jersey City is seeking a record-breaking $150 million cash injection from New Jersey’s state government to fill its budget deficit, even as a new governor tries to rein in spending and address a $3 billion shortfall of her own.
The leaders of the state’s second-largest city say they’re grappling with a $255 million deficit and are warning that local tax increases and cuts to city government may be inevitable. Jersey City’s new mayor, James Solomon, blamed his three-term predecessor Steve Fulop — who currently helms the Partnership for New York City — and said Fulop relied on accounting tricks and one-time revenue sources for years.
The gap amounts to 28% of the city’s $922 million budget. In public meetings, the Solomon administration has compared it to historic budget deficits in other cities, like Detroit, which became the largest city in U.S. history to file for bankruptcy in 2013, and Atlantic City, which was hobbled by multiple casino closures in 2015 and ultimately put under a state takeover that is still ongoing.
Audits are underway and city contracts are being reconsidered as officials search for savings and new revenues. The Pompidou art museum that had been Fulop’s pet project has been scrapped, Solomon has pledged to take a $1 salary for his first year in office and — even if he gets the $150 million he’s seeking from Gov. Mikie Sherrill — he’ll have to raise taxes on a city that’s seen overall property taxes rise roughly 45% over the last five years.
The request comes as Sherrill enters negotiations with legislators over her own cost-cutting spending plan that could see some businesses and seniors lose out on tax breaks. Jersey City’s requested $150 million — which would likely come through the Department of Community Affairs Transitional Aid program — would be the largest such award that program has ever funded, far surpassing the previous record of $69 million to Camden in 2010. For 2025, DCA awarded roughly $164 million total in transitional funding, divided among 11 different cities and towns.
But Solomon insists the city just needs help over the next several years.
“The promise that we’re making is we can get back to self-sufficiency and fiscal sustainability much sooner than anyone might think if we get the aid we need,” Solomon told Gothamist. “This isn’t the type of thing where we need their aid for 10 years, as long as we get what we need in years one and possibly two.”
Will the state come to the rescue?
A transitional aid award requires the benefitting municipality to sign a memorandum of understanding with the state. Part of that agreement includes the appointment of a state fiscal monitor, who is given authority to approve or reject local spending decisions during the year the aid is needed.
“Governor Sherrill understands that municipalities face real challenges right now, from budget constraints to attacks from Washington,” said Sean Higgins, a spokesperson for the governor. “Her administration will work with [Solomon] and mayors across the state to navigate these concerns.”
State Sen. Raj Mukherji, one of the two Democrats representing Jersey City in that chamber, called the city the state’s economic engine and described the aid request as a “rounding error” compared to Sherrill’s own proposed $60.7 billion state budget. He pushed back on characterizing the aid request as a bailout, arguing the money Jersey City is asking for is pennies compared to the revenue the city generates for the state.
“Jersey City is the largest single source of income and sales tax in the entire state. We generate $1.5 billion in revenue for the treasury’s coffers, 110,000 private-sector jobs,” Mukherji said. “If that engine sputters, the whole state is going to feel it.”
Mukherji said the state shoulders some blame for the city’s mess after recent cuts to aid for Jersey City Public Schools. That’s been compounded by past mayors’ reliance on payment in lieu of taxes, or PILOT, agreements for major developments which lets developers pay money to the city but less to the school district. Jersey City’s schools have been responsible for some of the substantial property tax hikes under Fulop.
Jersey City Mayor James Solomon discussing the budget at a meeting earlier this week.
Michael Sol Warren / Gothamist
Fulop, who has spent the last two months criticizing New York City Mayor Zohran Mamdani’s proposed tax hikes, did not comment on the steep hikes exacted under his watch or Solomon’s claims that he grossly mismanaged the city’s finances.
“ The residents of Jersey City can’t afford to bear any more of this burden, which by the way, the state is partly responsible for,” Mukherji said. The $150 million Solomon is requesting does not include school aid, which would come from another tranche of state funding.
Sen. Mike Testa, a South Jersey Republican published an open letter criticizing Jersey City’s request and the transitional aid program, which has traditionally benefitted about a small number of disadvantaged communities. He urged mayors to join him in advocating for a system where each town should get a share of aid based on the size of its population. Sherrill’s budget proposal would give an additional $95 million to the transitional aid program, which would raise the program’s total funding to about $256 million, but it’s unclear still where that money is headed.
“Enough is enough. The state shouldn’t treat most of New Jersey’s more than 550 municipalities as less deserving of aid adjustments than Newark and Jersey City, which wrecked their own finances while spending recklessly. It’s time to demand that every community receives fair treatment,” Testa wrote.
Mukherji said he’s willing to make his case to anyone who doubts the value of Jersey City’s request.
“ I think that they will see that that aid number could be $300 million in a single year, and they’re still getting the far better end of a bargain as it relates to what Jersey City contributes toward the state,” Mukherji said.
“This isn’t the type of thing where we need their aid for 10 years, as long as we get what we need in years one and possibly two.”
Mayor James Solomon, about asking the state for $150 million in aid.
The city’s budget process is on hold as it waits for the state aid decision, which is expected to come in May or June. State leaders must finalize their own budget by June 30 to avoid a government shutdown, but negotiations often come down to the wire.
Scrambling for savings
Solomon warned in his campaign last year that Jersey City was facing budget troubles. At the time, he said the incoming mayor would have to tackle a roughly $150 million deficit. After he won the election, he said, he learned it was closer to $250 million.
Solomon said he’s trying to build and maximize smaller revenue items such as a stormwater utility that could tax property owners for impervious land. He said increased enforcement of local laws should start bringing in more money in the form of fees for businesses and traffic enforcement.
The mayor has ordered audits of the city’s PILOT agreements with developers to look for any missed revenue, and an audit of health care claims filed to Horizon Blue Cross Blue Shield, which Solomon says could turn up money owed to the city.
Jersey City has switched its health insurance provider from Horizon to Aetna, effective this year. Solomon said that switch will save the city about $30 million annually. The credit rating agency Moody’s, which downgraded Jersey City in December, has praised the early actions of Solomon’s administration.
But cuts to city government appear inevitable. City Hall officials warn of possible layoffs and scaled-back services if cutting vendors and negotiating new union contracts don’t deliver enough savings.
Solomon has embarked on a string of community meetings meant to inform the public about the city’s budget crisis and to solicit feedback. A meeting at Hudson County Community College in Journal Square on Monday drew a crowd of about 50 people. Tom Zuppa, the city councilmember representing the neighborhood, said he appreciated the mayor’s efforts, and he is bracing to fight for his constituents.
“ I’m a lawyer by trade. I’m bringing my former prosecutorial and cross-examination skills to the [city department] directors and if they don’t find the cuts that are necessary and cut the waste, I think we’re going to have an issue with that,” Zuppa said.
Rosalyn Gibbs, a city employee who works on food aid programs in the health department, said she came to the meeting because she’s nervous for her job. But she came away with some optimism that there’s a plan to get the city’s finances in order.
“ The things that the mayor’s saying, I’m hoping that he can fulfill the majority of them. Maybe not all of them, but the majority of them,” Gibbs said. “We’ll see what happens.”