Jersey City’s 15% Tax Hike Firm, State Says

It was a quiet moment in a long budget season, but it landed like a thud. A Jersey City councilman, Rolando Lavarro, had spent weeks telling anyone who’d listen that the city could trim that proposed 15.5% tax hike down to something more bearable. Then, on a Saturday, he had to admit he was wrong.

“I misunderstood what DLGS communicated to me,” he wrote in a message to colleagues, his words carrying the weight of a promise he couldn’t keep.

The story begins with a $120 million lifeline the state threw Jersey City at the end of June. The city was in a fiscal bind, and the state Legislature approved the aid — $105 million as a loan, $15 million as a grant. In exchange, the city signed a memorandum of understanding (MOU) with the state’s Department of Local Government Services (DLGS), agreeing to pay back the loan over ten years at 2.75% interest. The City Council approved that deal 9-0 on July 15.

But the deal came with a catch. To secure the loan, the state required the city to raise its local purpose tax levy to $457,972,500 — a 15% jump over the current year. That levy, in turn, drives the 15.5% tax rate increase residents would see on their 2026 tax bills.

Now, in an email obtained by Hudson County View, DLGS Deputy Director Kathleen Long made it crystal clear: that increase is non-negotiable. “We will not approve a local purpose tax levy lower than $457,972,500,” she wrote, adding that any attempt to amend the budget to lower it would be “a waste of time and resources.”

The background: How did we get here?

Jersey City’s budget problems didn’t happen overnight. The city has been grappling with rising costs for years — salaries, pensions, insurance — while also dealing with the fallout of pandemic-era revenue swings. When the state stepped in with the loan, it wasn’t just a handout; it was a rescue with strings attached.

The MOU is the key document. It’s essentially a contract between the city and the state, and it spells out the terms of the loan. One of those terms is the levy floor. By voting 9-0 to approve the MOU, the city council locked itself into that 15% levy increase. The question now is whether the council can — or should — try to wriggle out of it.

What this means for Jersey City residents

For the average homeowner, this is about numbers on a tax bill. If you own a home assessed at $150,000, a 15.5% rate increase could mean roughly $300 to $400 more a year. For many families, that’s a few grocery trips, a utility bill, maybe a month of school supplies.

But it’s also about trust. Residents watch their council members promise to fight for lower taxes, only to hit a brick wall in Trenton. The fear is that the city is circling the drain — that no matter who sits in the mayor’s office, the bills keep piling up.

At the same time, the state’s position makes a certain kind of sense. If Jersey City could reduce the levy after getting the loan, what’s to stop other cities from doing the same? The state needs to protect its own fiscal credibility.

What people are saying

Councilman Lavarro, who initially suggested the levy could be reduced, has now shifted his stance. “As the email from Kathleen Long clearly asserts, reducing the levy below the MOU threshold and 15% tax increase is not possible,” he wrote. He called DLGS “a partner” in addressing the city’s challenges and said he’d work on budget amendments that don’t touch the levy.

DLGS Deputy Director Long didn’t mince words in her email to the council. She said she was responding after watching the Finance Department’s budget hearing and hearing talk of efforts to reduce the rate. Her message was firm, almost exasperated. “I would ask that you refrain from submitting any draft amendments in contravention of the loan agreement,” she wrote, “as it would be a waste of time and resources to review.”

What happens next

The City Council is scheduled to vote on the final budget on August 19. That’s when the tax rate gets locked in — or not. If the budget passes as introduced, residents will see the 15.5% increase on their next tax bills. If it fails, the city could face delays in getting the loan money, which could make things worse.

Some council members may still push for symbolic amendments — cutting spending in other areas, for example — but the levy itself is off the table. The real decision is whether the council accepts the state’s terms or tries to reopen the MOU, a move that would likely fail.

For residents, the takeaway is simple: this tax increase isn’t a product of city mismanagement alone. It’s the price of a bailout. The question now is whether the city can use the next few years to stabilize its finances, so this kind of choice doesn’t come up again.