Jersey City Faces Massive $255M Budget Deficit, New Mayor Reveals

Outgoing mayor blamed for 'unsustainable financial house of cards' as city looks to state for help

Feb. 4, 2026 at 5:07pm

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According to a new report, Jersey City is facing a staggering $255 million budget deficit - nearly 30% of its annual budget. The city's new mayor, James Solomon, is blaming his predecessor, Steven Fulop, who recently left to lead a prominent New York business advocacy group, for building an 'unsustainable financial house of cards' through 'tricks and gimmicks' during his 12 years in office. The deficit is more than the city spends on police and fire services annually, and officials say they will need to work closely with the state to address the crisis.

Why it matters

The budget crisis in New Jersey's second-largest city is a major blow, as Jersey City has seen rapid commercial and residential growth in recent years, attracting many large corporations. The deficit threatens the city's financial stability and ability to provide core public services, and raises questions about the previous administration's fiscal management practices.

The details

The $255 million deficit was uncovered in an analysis done in consultation with the Institute for State and Local Governance at CUNY. It found the city had routinely underestimated employee health insurance costs, leading to $52 million in unpaid bills and late fees over the past two years. The report also said Fulop had used one-time measures and federal pandemic aid to subsidize a tax cut rather than address the underlying issues.

  • In December 2025, Moody's credit rating agency warned that 'a realistic path to substantial recovery remains unclear' and downgraded Jersey City's bond rating for the second time in three years.
  • In January 2026, James Solomon was sworn in as Jersey City's new mayor after winning a runoff election against former governor Jim McGreevey.
  • On February 4, 2026, Mayor Solomon released the report outlining the city's $255 million budget deficit.

The players

James Solomon

The new mayor of Jersey City who took office in January 2026 after winning a runoff election. As a city councilman, he was critical of the previous administration's spending and voted against the city's budget every year.

Steven Fulop

The former mayor of Jersey City who led the city for 12 years before leaving to become the head of the Partnership for New York City, a prominent business advocacy group. The report blamed him for building an 'unsustainable financial house of cards' through 'tricks and gimmicks'.

Mikie Sherrill

The newly elected governor of New Jersey, who defeated Fulop in the Democratic primary for governor before going on to win the general election.

Gerald McCann

A former mayor of Jersey City who left office in scandal, and had for years warned city leaders that they were improperly spending money reserved for capital improvements to cover basic costs while granting large tax abatements.

Raj Mukherji

A state senator who represents Jersey City and sponsored legislation that will give the city more tools to collect a tax that companies are supposed to pay for each employee who does not live in Jersey City.

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What they’re saying

“He relied on tricks and gimmicks to avoid having to make tough decisions when he was running for governor.”

— James Solomon, Mayor of Jersey City

“Had I chosen to run for re-election, we would have introduced another budget with no tax increase for Jersey City residents. It's also worth noting that James served on the City Council for eight years with full budget responsibilities. This is James playing politics.”

— Steven Fulop, Former Mayor of Jersey City

“I put it all in writing. They ignored me. Now, all of a sudden, it is what I said it was.”

— Gerald McCann, Former Mayor of Jersey City

What’s next

Mayor Solomon said he plans to meet with community groups and constituents to lay out the city's financial crisis and use their input to craft a five-year budget strategy. In the short term, he said the city will 'absolutely need to work with the state' on a solution.

The takeaway

The budget crisis in Jersey City highlights the challenges facing cities as they grapple with the long-term fiscal impacts of the pandemic, political infighting, and questionable financial management practices by previous administrations. The new mayor's transparency and willingness to work with the state and community will be crucial in restoring the city's financial stability.