Understanding Municipal Grants

An example of a typical grant is the one we recently applied for to build a parking garage. Clifton is estimating the cost of a new parking garage to be $6.0 million. We applied for a $5.0 million Federal grant endorsed by Congresswoman Nellie Pou and our Senators Cory Booker and Andy Kim that, if awarded, would require the city to bond for the $1.0 million balance.

We recently got an update that the award was already CUT to $1.8 million because our Democratic representatives are the minority in Congress, meaning we now must bond for the $4.2 million balance. The Federal government recently admitted in Court papers that they have been cutting or withholding funds from States that did not vote for President Trump in the last election.

Putting aside that politics should have no bearing on grant awards — Republicans and Democrats alike need a place to park their cars — grants tend to be a lot like a lottery ticket. It's good to win money to pay for something, but it's poor planning to only invest in Clifton's needs if we hit the jackpot.

Prior to switching to a more expensive grant writer, Clifton had received MILLIONS of dollars in the past four years from grants for typical applications including park improvements, road projects, and infrastructure improvements — all things associated with our capital budget, not our operating budget.

It's a MYTH that grants will suddenly flow freely to hold down taxes because 95% of our property taxes are for operating costs, not capital costs.

There are grants that help with operating costs but they are far less common and usually come with strings attached. A good example is our Health Department. Clifton has an award-winning Health Department providing services that range from public health outreach to senior citizen services.

The grants we receive to pay for salaries (and therefore reduce property taxes) are State-driven initiatives like lead inspections or homeless population outreach. We receive grants that other towns don't because some towns are unwilling to meet the conditions of the grant or share the State's priorities for specific services.

If the State changes priorities and cuts grant funding, we would need to decide whether to continue the services using property taxes or eliminate them. The State's strategy very often is to fund priorities through grants for a period of years, knowing that once a program is established and a community expects the service, towns will likely pick up the cost.

When it comes to public safety, there are grants available to hire new personnel — but those grants also come with strings attached. They typically last for 5 years, are capped at a specific dollar amount, and require that new hires must continue for a specific number of years after the grant term ends. Otherwise, we must return the grant funding.

The purpose of grants like this for operational costs is to smooth out a spike in property taxes. As an example, let's say the city is awarded a SAFER grant and hires 7 new firefighters. If we are fiscally responsible, in the first year, the city would budget 20% of salaries for the new hires and use 80% of the grant funding. In year two, that would shift to 40% paid by taxes and 60% paid by the grant.

Eventually the grant is fully spent and the salaries are 100% paid by property taxes. We are then obligated to maintain the new table of organization for the 7 new hires for the next five years without any grant money. If the city reduces the table of organization — even if we keep the new hires and the table is simply reduced by the number of people who retire — the city would need to return the grant money it already spent in one lump sum, raising the taxes we initially avoided.