NEWARK - Mayor Cory Booker yesterday pledged to end Newark's $85 million structural budget imbalance and announced furloughs and a 2% pay cut for top-earning city employees as officials work on an estimated $650 million fiscal 2009 budget.

Booker announced that Newark will be solvent by 2012 and will wean itself off of special municipal aid funds from the state and yearly payments from the Port Authority of New York and New Jersey that will end in 2012.

"It's going to necessitate a tremendous amount of difficult decisions between now and 2012," Booker said in a news conference from his office with City Council members in attendance. "But understand this: my goal is nothing less than a balanced budget in 2012 and a non-reliance on non-recurring revenue. 2012 will be the year of liberation, the last year that Newark, N.J., will rely on any of the gimmicks that have been going on for the last decade or more to balance the budgets."

Newark is running on an interim budget while the nine-member City Council hammers out its operating budget for fiscal 2009, which began Jan. 1 Booker said it may take more than a month to finalize the plan as the state requested that Newark hold off on drafting a fiscal 2009 budget until Gov. Jon Corzine released his state budget proposal for fiscal 2010, which begins July 1. Corzine released his budget on March 10.

"I still think it's going to be another month at least before the budget goes to vote, and frankly, we're still scrubbing the numbers," Booker said. "We're cutting everything that can be cut and we're still making a lot of very difficult decisions moving forward."

The hard choices include furloughing non-police employees for six days this year and another 12 days in 2010, affecting roughly 2,700 workers. Most of those unpaid leaves will occur in conjunction with state and federal holidays and the first furlough will take place in early July. In addition, non-police employees that earn $100,000 or more, which is 61 employees, will take a 2% cut in pay to help the city reduce payroll expenditures. The two initiatives will generate almost $6 million of savings for Newark.

Implementing unpaid leave and cutting salaries will help the city retain essential services and avoid layoffs as it had to do in the past. Newark's unemployment rate is above 10%.

"We basically drew a line and said we were not going to have layoffs of permanent employees this year," the mayor said. "It's something we were not going to consider. I'm not saying that that's something that won't be a possibility in the future, but the council behind me have been through this once and they want to make sure that we take every other measure possible before we lay somebody off in this economy."

During the press conference, Booker stressed that Newark and other municipalities in New Jersey need to alter the way they do business and consolidate public services to deal with increasing pension and health-care costs.

"The expanding costs very clearly for every government in the state of New Jersey from the [New Jersey Transit Authority] to all the way up to the state of New Jersey are personnel costs," the mayor said. "They are skyrocketing out of control."

Booker's goal is to transform Newark from a city that requested $45 million in special municipal aid in fiscal 2008 to a revenue-generator for the state, through its growing tax base. One idea is to potentially sell some of the city's water production to gain more revenue for its coffers, and improve tax collections even more.

Meanwhile, the mayor and city council members are conscious of maintaining the city's debt levels. Newark has $271.5 million of outstanding general obligation debt.

"We don't want to increase our bonding, our borrowing at all," Booker said. "Number one, the bond markets are a disaster, we all know that. And number two, the last thing the city needs is more debt. So, we're not looking to increase that. We're just looking to more strategically use the dollars that we have right now."

Moody's Investors Service rates the city Baa2.

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