Jersey City News
Hudson loses $10M in UEZ $$$
By CHARLES HACK JERSEY JOURNAL STAFF WRITERThursday May 21, 2009
To help fill New Jersey's yawning $1.2 billion gap, state officials have commandeered nearly $10 million from a fund that was supposed to be for beautification and other projects in several Hudson County municipalities.
The fund concerns the state Urban Enterprise Zones that are areas in which businesses are allowed to charge customers half of the state's sales tax, currently 7 percent. The 3.5 percent sales tax collected is returned to the localities for facade improvements, road repaving, and a variety of other projects.
The problem for these zones however - which include parts of Jersey City, North Bergen, Bayonne, Kearny, West New York, Union City and Guttenberg - is that when the sales tax was upped from 6 percent to 7 percent in 2006, 0.5 percent of the tax was legislatively earmarked for property tax relief.
But until the state's budget crisis became acute, the state hadn't taken this 0.5 percent from the UEZ accounts, which adds up to $40.27 million statewide and $9.5 million for the seven UEZ zones in Hudson County.
State auditors discovered the error and the state Department of Treasury made the corrections in the budget introduced in March, officials said.
"Half a penny of the revenue collected by the Urban Enterprise Zones should have gone to property tax relief fund," said Treasury spokesman Tom Vincz. "This is to recoup what was lost and to help balance the budget."
There are 37 UEZ zones in the state.
Jersey City officials said the city's UEZ account plummeted by $4.9 million at the end of March as a result of the adjustment, leaving a balance of $12.6 million.
The city has $10 million worth of UEZ projects on tap, including the installation of more CCTV surveillance cameras.
"We don't know if it (the state taking back the money) is allowed, but on first blush we're against this because these are UEZ moneys that are supposed to be coming to Jersey City," said Mayor Jerramiah Healy. "UEZ funds should remain in the city where they are generated."
Bayonne Mayor Mark A. Smith, whose city's UEZ was docked $1.1 million, leaving it with $4 million, was more understanding of the state's predicament.
"I recognize that the State of New Jersey is in a difficult financial situation, and that the recession caused the state to take this action," Smith said. "As the economy recovers, I am hopeful that sales tax revenues will improve for both the UEZs and the state."
Smith said a new mall planned for Hook Road off Route 440 and other commercial developments will generate additional UEZ sales tax dollars.
Christian Bollwage, mayor of Elizabeth and chairman of the UEZ Mayors' Council, said his group is investigating the legality of the state taking the money.
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