Jersey City facing 20% tax increase. Should the rest of NJ bail them out?

⚠️ Jersey City is seeking state help as officials work to close a $255 million budget deficit.

➡️ Assemblywoman Katie Brennan argued the city cannot solve the crisis alone.

💰 Republicans say suburban taxpayers should not be forced to rescue Jersey City.

Should New Jersey's struggling taxpayers bail out the state's second-largest city?

A Jersey City lawmaker's call for state assistance to help close the city's massive budget deficit is drawing fierce opposition from Republicans and taxpayers in New Jersey's suburbs, where residents already face some of the nation's highest property tax bills.

Jersey City is facing a fiscal crisis that local officials say was inherited from previous administrations. Mayor James Solomon, a progressive Democrat who ran against former Gov. Jim McGreevey for control of City Hall, has been blaming the mismanagement on former Mayor Steven Fulop, who lost his bid for the Democratic nomination for governor and now heads Partnership for New York City, which advocates for private-sector interests across the Hudson.

Solomon last week announced a proposed 20% increase in the city's tax rate as part of a plan to close what he described as an inherited $255 million structural deficit, equal to roughly 28% of the city's operating budget. City officials say they are pursuing spending cuts, new revenue sources and state assistance as part of the recovery effort.

The controversy intensified after Assemblywoman Katie Brennan, D-Hudson, publicly argued that state leaders should help Jersey City address the financial crisis, saying the city plays a critical role in New Jersey's economy and housing market.

SEE ALSO: Property taxes soar by double the legal limit to a new all-time high

Suburban Republicans say taxpayers shouldn't rescue Jersey City

Republican critics quickly seized on Brennan's comments, arguing that homeowners in communities already struggling with high taxes should not be asked to subsidize what they describe as years of fiscal mismanagement in Jersey City.

"THE AUDACITY," Assemblywoman Dawn Fantasia, a Republican representing rural northwestern New Jersey said in response. "This is a case study in what happens when Socialists run out of other people's money & expect a gargantuan bailout."

Assemblyman Paul Kanitra, a Republican from the Jersey Shore, referenced the state aid cuts that suburban school districts are struggling to overcome.

"Is this how it works? If we just ask, they’ll give us $120 million for our districts?" Kanitra replied on X. "Last time I checked, Brick and Toms River were in worse shape than Jersey City."

SEE ALSO: Crisis for these NJ school districts: Layoffs, closures despite rising taxes

New Jersey's crushing property tax burden

New Jersey property taxes are among the highest in the nation — and the state has one of the highest costs of living. The average property tax bill is now $10,570.

New Jersey's property tax system relies heavily on local taxpayers to fund schools and local government services. For years, meanwhile, the state's poorest school districts received massive amounts of state aid, creating funding inequities with middle-class and working-class districts.

In Jersey City, the average property tax bill last year was $11,249 (a 6% increase from the previous year), with 45% going to schools and 37% going to the municipality. In recent years, city property owners have been paying mounting tax bills as the state has been scaling back millions upon millions in state aid that the city once received as one of the 31 poorest "Abbott districts."

Jersey City says the deficit threatens services and stability

Solomon's administration argues the situation is extraordinary and requires outside assistance.

According to the city, the current administration inherited roughly $255 million in deficits, unpaid bills and other obligations that accumulated over several years. City officials contend the shortfall is unlike anything recently experienced by a New Jersey municipality and have warned that relying solely on tax increases would place an enormous burden on residents.

"I know this tax increase is painful, especially for people on fixed-incomes and the working families of Jersey City," Mayor James Solomon said. "We did not create this hole; it was created during good economic times through years of one-time gimmicks, hidden bills, and deferred costs, but it is our job to climb out of it responsibly.

"Alongside reductions in government spending and pursuit of non-tax revenue, a tax increase is part of that solution. What I can promise is that we have fought to make it as small as it can responsibly be, and that we will keep fighting to stabilize our budget next year and the years after."

The city has already sought substantial state assistance through New Jersey's Transitional Aid program and has argued that Jersey City's economic health affects the broader state economy. Earlier this year, officials sought as much as $150 million in state aid, a request that would have been unprecedented in size.

Supporters of state assistance argue that Jersey City's role as a major employment center and housing market means the consequences of a fiscal crisis would extend beyond city limits.

A political test for Gov. Mikie Sherrill?

The growing debate could create a difficult political challenge for Gov. Mikie Sherrill, who is set to sign her first budget.

Sherrill on Tuesday announced that she and Democratic leaders in the Legislature had reached a deal on $60.7 billion state budget that would take effect next month.

"It offers the most property tax relief in the state's history, ensuring StayNJ is a sustainable benefit retirees can count on," Sherrill said in a joint statement with Senate President Nick Scutari, D-Union, and Assembly Speaker Coughlin, D-Middlesex.

“At the same time, this budget cuts the state's structural deficit in half, continues to fully fund pensions, and increases the budget surplus we need to fight the Trump Administration's unprecedented attacks on Medicaid, food assistance, affordable health care, and jobs – all of which are increasing costs for New Jerseyans."