Jersey City payroll tax to provide millions to school district

$86 million will go to school district facing cuts to state aid

Jersey City's payroll tax yielded over $86 million this year.
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Jersey City's payroll tax yielded over $86 million this year.

Over $86 million will go to the Jersey City School District collected through the city’s new payroll tax.

According to an announcement form the city, the payroll tax, instituted in 2018, will generate $86,010,956 to put forward to the 2020-21 school year, over $50 million more than yielded a year ago.

State Sen. Sandra Cunningham introduced legislation last year, which was signed into law by Gov. Phil Murphy, allowing Jersey City to implement a payroll tax to help offset the cost of cuts in school funding.

The payroll tax ordinance, which was approved by the council in November 2018 and went into effect in January 2019, imposes a 1 percent payroll tax on an employer’s gross payroll to benefit Jersey City public schools. Employers are required to file and pay the new tax on a quarterly basis. Employees of the municipality, school district, and those who live in Jersey City are exempt from the tax, but not subcontractors for the city or schools.

“We believe the $86 million, which represents more than twice the amount the payroll tax raised for the schools a year ago, will go a significant way in solving part of the crisis created when the state began making cuts to schools across New Jersey with its reconfiguration of formulas,” said Mayor Fulop. “However, there is still a lot of hard work to do on our end, and the Board of Ed, when it comes to budget management and dealing with this real crisis now and into the future.”

The school district faces a loss of over $175 million in state aid over the next five years due to changes in the state’s school funding formula. The district, which educates more than 30,000 students in over 40 schools, lost $27 million in state aid last year alone. The cuts have continued to increase with the recent announcement of an adjusted state aid formula where Jersey City saw more funding cut than any other school district two years in a row.

Since 2018, the district will have lost $120 million by the close of the 2020-21 school year.

Last month, Mayor Fulop and Ward D Councilman Michael Yun unveiled a $250 million dollar Jersey City School Funding Action Plan that will provide a steady revenue stream to the school district, without raising taxes.

The School Funding Action Plan outlines proposed revenue sources for the district, including $40 million in abatement revenues $10 million of which would be in 2020, $20 million in 2021, and $10 million in 2022.

The plan also recommends that the school district sell the Board of Education’s District Headquarters on Claremont Avenue to the city for $15 million, which the city would then lease back to the district for $1.

Under the plan, the city and the Jersey City Municipal Utilities Authority (JCMUA) would do lead remediation of the schools for $13 million this year.

In addition the plan states the district must also make budget cuts amounting to $45 million over the next three years, calling it “an operational efficiency corrective action” and increase the school tax levy by $25 million in 2020, 2021, and 2022 for a net of $75 million.

“Since the city adopted the payroll tax in the fall of 2018, our tax department has made an extraordinary effort to collect close to $90 million dollars designated specifically for the school district,” said Councilman Yun. “As they continue to collect these funds on behalf of our children’s education, the Jersey City Municipal Council is continuing our examination of the city budget, seeking areas where there are potential dollar cuts that won’t mean service cuts for our community or to our city workforce. These are merely the first of many steps that the City of Jersey City is taking to gain the trust of the Trustees at the Board of Education so that we can meet the needs of our children’s future.”

“We rolled up our sleeves to take on this crisis, and we’ve shown we can and are more than willing to do our part to protect our children’s education and their futures,” said Mayor Fulop.

In January the Jersey City Council adopted resolution, supported by Mayor Fulop, that places a referendum on the November ballot asking voters to decide if school board trustees should continue to be elected by the people, or appointed by the mayor and approved by the city council.

The resolution came under fire in an eight page lawsuit, filed on Feb. 24 on behalf of Jersey City resident and retired schoolteacher Andrea Pastore. It seeks to have the resolution approving the referendum question revoked.

If put on the ballot and the people decide to have an appointed board, the current board trustees would be required to leave office on June 30, 2021, and a newly appointed board would take office on July 1, 2021.

Of the more than 600 school boards across the state, only 14 have appointed members.

For updates on this and other stories check www.hudsonreporter.com and follow us on Twitter @hudson_reporter. Marilyn Baer can be reached at Marilynb@hudsonreporter.com.