The state of Newark is better than expected two years since the onset of COVID-19

Newark Mayor Alan Nagy gives the State of the City address. (Credit: YouTube screenshot)

The city of Newark, like other municipalities across the country and world, was deeply impacted by the COVID-19 pandemic and the stay-at-home orders, business closures and high unemployment rates that followed. Two years later, Newark Mayor Alan Nagy says the city is still feeling the impacts, but it’s doing better than expected.

“Although we’re in a better financial position than previously anticipated, we know from experience how quickly the economy can turn,” Nagy said. “We must be prepared and ready for any unexpected dips in the economy. That’s why we’ll continue to plan well, remain fiscally conservative, continue to build our reserves and monitor our budget to ensure we are able successfully serve our citizens and the business community.”

Nagy was speaking at the city’s State of the City event Thursday night, where he shared the challenges the city has faced since the onset of the COVID-19 pandemic as well as some of its successes despite the pandemic, like opening a new civic center that houses the city hall, library and police station.

The city budget is doing better than expected thanks in large part to property and sales tax revenues that have been tracking higher than initially forecast, Nagy said. That increase is driven primarily by new housing development and a strong housing market.

Property tax revenue has doubled over the past decade from $11.8 million in 2012 to $25.9 million during the past fiscal year. The city projects that will increase to $34.5 million by fiscal year 2027.

Other revenue streams haven’t quite recovered. Revenue from the transient occupancy tax, which people pay when staying overnight at hotels and other lodging in the city, are still down. Before the pandemic, the city was expecting to receive $7 million in TOT revenue by the end of the 2020 fiscal year. It received $2.9 million in fiscal year 2021 and it’s expecting to receive $3.7 million this fiscal year.

There are fewer people taking advantage of the city’s recreation programs and services, which is resulting in less revenue from recreation charges, too, though Nagy said the city doesn’t expect that to last.

The city received $11.8 million in American Rescue Plan Act funding, 40% of which went to covering salaries and other budget expenses. The other 60% is expected to go toward funding various projects and programs, ranging from $1.5 million in small business grants to $1 million for a potential broadband infrastructure project.

Nagy shared some of the measures the city took to protect its businesses and residents, such as implementing a temporary eviction and moratorium and a temporary 15% service fee cap on delivery service apps like GrubHub, UberEats and DoorDash.

About 82 businesses received an average of $17,611, totaling about $1.4 million, in small business grants. Of those recipients, 83% were shut down for six months or longer, 89% lost more than half their revenue after the onset of the pandemic, 85% used their own money to pay their business expenses, and 48% owed an average back rent of $16,270.

Nineteen small businesses closed for good at the end of the year, Nagy said.

“We’ll continue to advise, hold workshops, provide referrals and extend our support to our business community so our businesses can keep their doors open,” Nagy said.

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