PATERSON — The City Council gave preliminary approval Aug. 11 to a $357 million municipal budget for 2026 that includes a mandated 3.5% property tax increase, city officials said, a move officials say was necessary to secure a one-time infusion of state transitional aid and to avoid layoffs or cuts to municipal services.
State aid averts immediate cuts, but raises concerns
The budget — an 8% increase from the 2025 spending plan of $330 million — is financed in part by an unprecedented $46.5 million boost in transitional aid from Gov. Mikie Sherrill’s administration. City officials credit that aid with preventing reductions in staffing or services that otherwise might have been required this year.
- Total 2026 budget: $357 million
- Increase vs. 2025 budget: 8%
- Transitional aid from state: $46.5 million
- Required minimum property tax increase: 3.5%
Daniel Golabek, Mayor Andre Sayegh’s business administrator, urged caution as the council debated the plan. He warned of fiscal strain ahead.
"We need to prepare ourselves for tougher days," Golabek told the council prior to the budget vote.
Council members noted several drivers behind the increase. A $23 million spike in employee health insurance costs was identified as the largest single factor pushing up expenditures. The city left its self-insurance medical program about eight years ago and enrolled in the state benefits plan, a change that initially reduced costs but has since seen premiums rise sharply.
Other significant increases in the spending plan include a roughly $6 million increase for police salaries and an additional $6.8 million for firefighters’ pay. City officials said those increases include retroactive payments tied to recently settled labor contracts.
Revaluation amplifies tax impact for many homeowners
Although the municipal budget sets a uniform 3.5% tax increase, the actual impact on individual homeowners will vary widely because of a citywide property revaluation completed earlier this year. The revaluation increased assessments for more than 11,000 properties — more than 60% of parcels in Paterson — meaning many property owners will face tax bills that rise substantially more than 3.5% once the new assessments are applied.
Councilwoman Roby Cotton spoke about the unexpected trajectory of health benefits costs and their effect on the budget.
"At first, the health benefits were cheaper, but then it just skyrocketed," Cotton said.
Councilwoman Lilisa Mimms raised additional concerns about conditions tied to the state transitional aid. She said New Jersey has imposed new requirements on Paterson in exchange for the funding and warned that the city could face a significant shortfall if it fails to comply.
"The city faces a possible deficit of $19 million if it doesn’t comply with the state’s demands," Mimms said.
Next steps and final vote
The council scheduled the final vote on the 2026 spending plan for Sept. 15. City leaders must balance meeting the state-mandated conditions attached to transitional aid while addressing rising costs and the political sensitivity of higher property bills after the revaluation.
| Line item | Change / amount |
|---|---|
| Total budget (2026) | $357 million |
| Budget increase vs. 2025 | 8% |
| Transitional aid (state) | $46.5 million |
| Required municipal tax increase | 3.5% |
| Employee health insurance increase | $23 million |
| Police salaries increase | $6 million |
| Firefighters’ pay increase | $6.8 million |
With the preliminary vote completed, council members will return to the proposal before Sept. 15 to consider final adjustments and to weigh public input. For many Paterson residents, the combination of higher assessments from the revaluation and the mandated tax hike means property tax bills in the coming year will be closely scrutinized, and the city’s broader fiscal path will remain a central part of local political debate.
