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Newark to receive $32 million short-term loan

Oct 05, 2011 Todd Milner

The city of Newark, New Jersey, will receive a $32 million short-term loan from state agencies to help plug a $57 million budget shortfall caused in large part by rising healthcare and pension costs. The spending gap also reflects ongoing fiscal crises on the state and federal level that threaten to scale back credit ratings and prolong the economic recovery. According to Bloomberg, the state Department of Community Affairs will assign a full-time fiscal oversight officer to the city government. As part of the agreement, Newark budget officials will be mandated to halt new spending and identify new revenues streams in order to plug the remaining $25 million budget gap. "Our city, as well as the nation, continues to endure the worst economy experienced in decades," Julien Neals, the city’s business administrator, told the source. "We have partnered with the state and will accept transitional aid as a bridge that will ultimately contribute to the restoration of our city's fiscal integrity and prosperity." Last year, credit rating firm Moody's cited Newark's weakened fiscal stance in lowering its rating of $500 million or more in outstanding debt.