TRENTON — The words “bridge loan” don’t really mean “bridge loan” in the capital city.
Just tell that to the legislative body, which got into it with members of the administration this week at the council meeting about accepting $10 million from the state as part of the Capital City Aid program that Gov. Phil Murphy signed into law last month.
The program provides the city with at least $10 million in financial aid each fiscal year starting in fiscal year 2020.
A provision in the law requires the state to allocate $10 million from the Property Tax Relief Fund to the Department of Community Affairs for fiscal year 2019 to cover a bridge loan the DCA only made "in theory" to the city, the mayor said.
The shifting of money from one pot to another led to a lot of confusion and consternation with members of the legislative body.
In the end, the legislative body enacted two resolutions accepting more than $15.7 million in state aid, but not before council members peppered business administrator Adam Cruz with questions about whether the city was on the hook for repaying the bridge loan.
West Ward councilwoman Robin Vaughn was convinced the Capital City Aid program was a “net zero” gain for the city because it still owed DCA $10 million for the bridge loan.
The bridge loan was part of a $16 million compensation package the city was set to receive from the state Department of Community Affairs for fiscal year 2019.
Six of the $16 million was in the form of transitional aid, an award that was ultimately reduced to $5.7 million due to a $260,000 fine incurred by the city due to violations of the Memorandum of Understanding.
Those violations included Gusciora’s decision to increase city directors’ annual salaries to $131,000.
City law director John Morelli likened the $10 million bridge loan to a non-interest “payday loan,” in which the state agreed to advance Trenton the financial aid anticipating the Capital City Aid program would get passed into law.
Gov. Murphy signed the bill June 26, paving the way for Trenton to gets its payday.
Morelli insisted the city doesn’t have to repay the state any of the $10 million bridge loan, at one point telling the councilwoman he didn't follow her “logic.”
Vaughn wasn’t the only one fixated with a so-called $10 million bridge loan.
Council president Kathy McBride said many members of the administration don’t live in the city and aren’t impacted by decisions made on behalf of the residents. She said she was duty-bound to protect Trentonians.
At-large councilman Jerell Blakeley became increasingly frustrated with his colleagues during the meeting. At one point, he walked off the dais and uttered, “Just so ignorant” to someone on the peanut gallery.
Mayor Reed Gusciora on Monday testified before the state Assembly Appropriations committee in favor of restoring the capital city aid line item into the state budget. Submitted Photo
Later in the meeting, McBride scolded Blakeley for making a motion from the council chambers floor, rather than his seat on dais, saying it was inappropriate.
In a phone interview Thursday, Mayor Reed Gusciora forcefully pushed back against what he claimed was council’s misinformed understanding of the bridge loan.
“Council also believes we have to put the water department up for sale,” he said.
The mayor’s explanation of the exchange of monies, however, was muddled.
In essence, he said, the state never transferred the $10 million bridge loan to the city; it was earmarked as available if the city needed it until the legislature acted.
And now that the Capital City Aid program has been signed, the bridge loan is “moot,” and the city will soon get the $10 million award under the newly signed law.
“We’re getting $10 million this year, $10 million next year, and we are not going to have a net gain of zero but a net gain of $10 million,” he said. “It’s not a loan, although it’s labeled as such. The loan is moot because we got capital city aid. … We may not be getting the loan, actually. The loan was there because we wouldn’t get $10 million in capital city aid until it was passed. So the intention was we needed the $10 million [upfront]. Now we had no idea when the legislature, in theory, would pass capital city aid.”
The bill appears to make clear the convoluted shuffling of money.
The state will make “an appropriation of $10 million from the Property Tax Relief Fund to the Department of Community Affairs for State Fiscal Year 2019 for the Trenton Capital City Aid Program.”
That means the DCA, a state-run agency, advanced Trenton $10 million – but really only on paper, according to the mayor – and under this provision in the bill, the state must make DCA whole.
New Jersey Gov. Phil Murphy speaks during a news conference announcing a budget deal between him and Democratic legislative leaders, Saturday in Trenton, N.J. Julio Cortez — The Associated Press
However, since the $10 million bridge loan was never actually transferred, as Gusciora said, the state will now just deposit the $10 million in capital city aid in Trenton’s piggy bank.
The payout is expected to take effect in the coming weeks now that council passed both measures accepting the state aid awards. Vaughn voted no on both resolutions.