A mayor puts empowerment to the test - Bret Schundler of Jersey City, NJ

0 Comments | Insight on the News, August 23, 1993 | by Kenneth Silber

Officially, mayoral elections in Jersey City are nonpartisan, to and there are no Republican or Democratic columns on the ballots. However, since Democrats outnumber Republicans 10-to-1 among Jersey City voters, the Manzo campaign sought to appeal to party loyalty, urging residents to "vote Democratic," and emphasizing that Schundler is a Republican. Schundler tried to blunt this effort by pointing out that his running mates for the City Council are Democrats.

The mayoral candidates competed for the votes of ethnic minorities in Jersey City, which is 30 percent black, 25 percent Hispanic and 10 percent Asian. The Manzo campaign tried to link the mayor to apartheid, on the grounds that a business run by Schundler's relatives imported vermiculite, a South African mineral. In a campaign rally, Jackson declared that Manzo stood for "the values of the U.S.A., the United States of America, not... the Union of South Africa."

Schundler's innovative plan to sell city tax liens became an important issue in the mayoral race. The mayor proposed that the city's claims upon properties for which taxes had not been paid be "bundled" and sold to institutional investors -- in much the same way that individual mortgages are combined into securities that are traded by financial institutions. A large new market thus would be created for the liens (which traditionally had been auctioned to a handful of individual investors).

Schundler asserted that revenues raised in this way would enable the city to lower its property taxes. Manzo denounced the plan as "fiscally irresponsible" and said it was" designed to benefit Schundler's "Wall Street buddies."

In the midst of the mayoral race, a bill authorizing Jersey City's tax lien sale was passed by the New Jersey Legislature and presented to Democratic Gov. Jim Florio. There were several delays, including a conditional veto by Florio, prompting Republican lawmakers to accuse the governor of trying to stall the legislation until after Jersey City's election in order to deprive Schundler of the political benefits of announcing a tax cut. The bill, which had gained bipartisan support among state legislators, finally was signed three days before the election.

Criticism of Schundler's proposals failed to convince Jersey City's electorate. Although many observers had expected a close outcome, Schundler won the May 11 election by a wide margin, grabbing 68 percent of the vote. Eight of his nine City Council running mates were victorious on the first ballot.

The election cleared the way for Schundler's tax relief plans to move forward. A budget adopted by the City Council in late May cut property taxes by more than 5 percent. (Schundler initially proposed a larger cut, but was deterred by constraints imposed by the state government.) The council also gave its approval for the city to receive bids from investors interested in buying bundled tax liens and authorized the formation of a nonprofit corporation to handle such transactions.

By enabling more people to pay their taxes, the tax cut may reverse the trend of rising tax delinquency that has plagued Jersey City in recent years. Schundler plans to slash tax rates further in future budgets. In addition, his method of selling liens may be emulated by other cities; New Jersey legislators are moving to authorize municipalities throughout the state to enter into such deals.