Paterson Council Rescinds Budget, Approves New Plan
The city council voted to replace its preliminary budget while authorizing a 17% increase in local sewer fees.
Updated on Oct. 15, 2026 in Financial Aid
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Paterson City Council members rescinded a $357 million preliminary budget on October 13, 2026, granting initial approval to a revised spending plan. The move follows state requirements to address spending cap violations and unrealized revenue from the previous year.
Why it matters
The adjustments are necessary after the city exceeded state-imposed 2% spending caps and previously lost $7.4 million in transition aid due to past resistance to fee increases. State oversight aims to stabilize city finances as officials attempt to cover prior overspending through emergency appropriations.
Paterson secured $76.2 million in state aid to address a budget gap while sewer rates will rise by 17%, marking the first increase since 2021. The city previously lost $7.4 million in 2025 state transition aid.
The players
Paterson City Council
This is the primary legislative body responsible for overseeing the municipal budget and setting local tax and utility rates in Paterson.
Division of Local Government Services
This state agency oversees municipal fiscal compliance and requires cities to adhere to state-imposed budget spending caps.
The details
The city administration plans to utilize state emergency appropriation laws to reconcile over-expenditures made in 2024. These measures are expected to increase the city's structural deficit in 2027.
Timeline
Sewer rates were last increased in 2021.
The city recorded over-expenditures during 2024.
Paterson lost $7.4 million in state aid in 2025.
The City Council originally approved a $357 million budget on August 11, 2026.
The Council rescinded the budget and approved a new plan on October 13, 2026.
Culture Shift
The city's reliance on the New Jersey state emergency appropriation law reflects a broader trend of municipal budget management under state fiscal oversight. This approach prioritizes immediate solvency over long-term structural debt reduction as cities navigate strict spending caps.
Residents will face an average 17% increase in sewer fees following the approval of the revised budget. This adjustment directly affects household utility costs as the city works to comply with state financial requirements.
The takeaway
The recent budget revision highlights the ongoing fiscal challenges Paterson faces following state aid reductions and years of stagnant utility rates. Property owners and tenants should prepare for higher utility expenses as the city implements these necessary financial reforms.
Further reading
For more on how local government fiscal policies impact residents, visit Financial Aid.
Source note: This article includes information reported by North Jersey.
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