Palisades Park Crisis: State Rejects Emergency Budget, Layoffs and Service Cuts Loom
the staff of the Ridgewood blog
PALISADES PARK, NJ — The Borough of Palisades Park is facing a potential fiscal “death spiral” after the New Jersey Department of Community Affairs (DCA) twice rejected an emergency plan to plug a $775,000 budget hole.
The state’s firm denial has left Mayor Chong “Paul” Kim’s administration with few options, raising the immediate threat of municipal layoffs and drastic reductions in essential town services for 2026.
Why the State Said “No”
The borough attempted to pass an emergency appropriation to cover 2025 over-expenditures. However, the New Jersey Division of Local Government Services cited critical procedural and legal failures:
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Timing Issues: The borough passed the “emergency” resolution on January 5, 2026. The state ruled it invalid because it was approved after the close of the 2025 fiscal year.
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Voting Failures: An initial attempt on December 15, 2025, failed to secure the legally required two-thirds majority.
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Budget Caps: The state mandated that these costs must now be raised within the 2026 tax cap, meaning the money must be found by cutting current spending or raising taxes.
The $775,000 Question: Where Did the Money Go?
Local officials attribute the shortfall to “unforeseen” costs, though critics point to long-standing administrative friction. The deficit is broken down into three major categories:
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$275,000 in Legal Expenses: Driven by a surge in litigation.
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$250,000 in Legal Judgments: Settlements from various lawsuits against the borough.
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$250,000 in Trash Removal: Costs that exceeded the “artificially low” budget set by the Finance Committee.
“In 2026, service reductions, budget cuts, and potential layoffs could become a reality,” Mayor Kim warned residents via social media. “The authority to approve the budget lies with the council… they must prevent harm to residents.”
The “Old Guard” vs. Reform: A Legal Battlefield
The budget crisis is inseparable from the political warfare inside Borough Hall. Much of the legal drain stems from a bitter feud with former Business Administrator David Lorenzo, who was fired in 2024.
The administration claims Lorenzo has filed over a dozen lawsuits against the borough, including defamation claims and land-use challenges. Meanwhile, the borough is counter-suing Lorenzo to recoup $300,000 in unused sick and vacation payouts.
Other Costly Scandals Include:
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The $1 Million “Ghost” Trailer: The borough spent over $37,000 on special counsel to investigate a police trailer that sat empty for two years at a cost of $1 million before being returned unused.
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Police Settlements: Retaliation and hostile work environment lawsuits from officers resulted in settlements totaling over $575,000 in the past year alone.
What’s Next for Residents?
With the state refusing to allow the “emergency” fix, the Borough Council must now find $775,000 within the 2026 operating budget. This likely means:
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Staff Reductions: Potential layoffs across various municipal departments.
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Service Cuts: Delays or reductions in trash collection, maintenance, and public programs.
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Tax Implications: A potential struggle to keep property taxes stable while absorbing last year’s debt.
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Cut expenses. Done.