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State puts tight limits on what cities like Jersey City and North Bergen can spend UEZ money on

by Melissa Hayes - Journal Staff Writer

Officials in Hudson County expected cuts in the state's popular Urban Enterprise Zone program, which kicks back sale tax money to the towns to spend.

But the local officials didn't know until recently that there would be stark restrictions on how they can spend the money.

As of June 30, sanitation joined police and fire as part of a cap that prohibits zones from spending more than 35 percent of their projected balance on municipal services.

Last year, Jersey City spent $2.9 million of its UEZ budget on police and $1 million on the Jersey City Incinerator Authority's Second Chances Liter Patrol program.

UEZ director Roberta Farber said based on the amount of money she has left over, she can only allocate $1.35 million for municipal services this year.

"If we were to use that $1 million for the clean team then we could not fund the police, so we had to make a decision," she said.

Last year, North Bergen spent $1.7 on police and sanitation. This year, the UEZ only has $1 million to spend.

"We're trying to find a way to cut our budget or find other revenue to make up the difference," said Township Administrator Christopher Pianese.

All expenditures must be approved by the state Department of Community Affairs.

DCA spokeswoman Lisa Ryan said only proposals that "promote private sector jobs and improve the economic climate" would be approved.

Businesses in a UEZ are permitted to charge half the state's 7 percent sales tax, or 3.5 percent. Traditionally the majority of taxes collected in UEZs - about $91 million - was sent straight back to the zones for programs and services.

But Gov. Chris Christie took half that money to offset the state budget deficit and the other half went into a pot that the programs must apply to for project funding.

Zones must spend down their reserves before they can apply for new funding.