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NEWARK — The state is just about out of patience and has threatened to withhold $24 million in aid if the Newark City Council doesn't introduce a budget within two weeks.

Under a memorandum of understanding between the city and the state last year, Newark agreed to introduce its budget by Feb. 29. The state Department of Community Affairs has looked the other way in the intervening months.

That ended Thursday afternoon around 4 p.m.

"Newark City Council is now more than 4 months late introducing its budget and, as with last year, is on track for being the last municipal governing body out of more than 540 calendar-year municipalities to introduce its budget," Local Government Services Director Thomas Neff wrote to the city’s nine council members.

Mayor Cory Booker proposed the budget in late February, but the council held off the introduction largely because of a proposed municipal utilities authority. After today, council members may not have much choice.

The letter, obtained Thursday night by The Star-Ledger, reinforces tenets of the original agreement between the state and the city when Newark accepted a $32 million bailout last year.

If a budget is not introduced by July 19, the letter said, council members will be assessed a fee of $25 a day, each, and will jeopardize their chances of receiving another $24 million in aid.

Among the state’s requirements were ordinances banning longevity pay and tightening up pay-to-play restrictions, both of which the council has deferred several times.

But the state is upping the ante now, forcing the city to introduce a historically unpopular authority to run the city’s water.

The budget "must include certain revenues associated with the proposed creation of an authority to provide water and sewer services," Neff wrote.

The MUA, which takes over water operations from the embattled Newark Watershed and Conservation Development Corporation, would infuse $18 million into this year’s budget and $16 million annually for the next few years.

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But past attempts to introduce an authority have failed against withering opposition from residents — many of whom are unwilling to lose direct control of city water.

"I think the big sticking point is the MUA," said North Ward Councilman Anibal Ramos.

Even if the MUA is introduced, the city may not be required to adopt it — it is only required to make a "good faith" effort.

Also at issue is the mayor’s proposed $2 million cut apiece to the budgets of the city clerk and council, neither of which are very popular with council members.

Booker administration officials pointed out Thursday they proposed a budget in mid-February, but the council has yet to convene a budget hearing.

"We did what we were required to do," said Booker’s chief of staff, Modia Butler. "We were required to submit the budget in February and we did that. The council must now do their part. If they do not, the taxpayers are the sure losers as a result of their inaction."

Late passage means an approximately 4 percent increase in property taxes could be levied entirely in the fourth quarter rather than being spread out over the year.

Neff said late passage hurts Newarkers by damaging the city’s credit rating, which results in residents "needlessly wasting money on higher interest rates."

He added that "residents and other taxpayers are deprived of an opportunity to review a proposed budget and participate in the budget process."

Ramos has long been an advocate of early adoption for similar reasons.

"The introduction is just a suggestion," he said. "The problem is the later you introduce it in the year, the harder it is to suggest changes."

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