It’s no secret that Trenton has a ratable problem.
Over 50 percent of properties in the city are tax-exempt, mainly from the conglomeration of government buildings that come with Trenton’s existence as both the state and Mercer County capital.
The city has tried to tie in efforts to reduce that percentage to the Trenton Water Works deal, as evidence that the city is working on other ways of generating additional tax revenues so Trenton doesn’t continually find itself facing $20 million to $30 million budget shortfalls that require the sell-off of cash generators like the water utility.
But this water deal and the city’s efforts in growing the tax base and developing additional city ratables reveal a highly contradictory set of initiatives.
Selling off the suburban water utility system and its $25 million in annual revenue will surely result in the loss of the $3 million or so that the Trenton Water Works provides for the city’s general fund each year.
That much is shown clearly on city utility projections, which use a variety of mathematical tricks and bizarre accounting practices to hide the fact that we are trading a revenue-generating utility for one that will struggle just to break even in the years following the sale.
Losing $3 million a year from our general fund will be a catastrophic event for a city that struggles to raise local tax money. It amounts to razing a large neighborhood – say Hillcrest – while continuing to supply the costly services needed to support the area.
If the last few decades are any indication, it will take many a year before Trentonians can ever dream of recouping that $3 million through the growth of ratables.
At that point, city residents might also be paying more for their water.
The utility might very well end up becoming the property of New Jersey American Water Co., if city utility projections hold true and the utility can’t break even. We’ll be out $3 million in local revenues, and a whole lot more for expensive, privately owned water.