The Jersey City Council voted unanimously to enter into a memorandum of understanding (MOU) that they must pass a 15% tax increase in order to receive a $105 million loan from the state of New Jersey to go toward their $250 million budget deficit.

The Council couldn’t introduce a budget that isn’t balanced. In order to have a balanced budget, they needed to have the $120 million in aid, $105 million of which is a loan. Once they passed the MOU, they met the state’s terms for the loans and could vote to introduce the budget as is. That also passed.

Now, a budget that currently contains a 15% tax increase as well as the full state aid has been formally introduced and will be voted on next session.

The Council did clarify that state legislators are still trying to negotiate for better terms that would give them more flexibility with the percentage of the increase. If the state agrees to different terms before the budget is finalized, it can go back and amend the tax rate.

Over 100 people packed the Jersey City Hall on Wednesday night to weigh in on a proposed tax hike aimed at addressing the city's budget crisis.

The meeting came two weeks after the city council postponed an initial vote on the proposal in an effort to identify additional spending cuts and lower the size of the tax hike.

However, with the city budget due and the tax rate needing to be set, council members face a looming decision.

Jersey City is grappling with a reported $250 million budget shortfall that Mayor James Solomon claims was caused by the previous administration.

Early this month, he said the tax increase is necessary to avoid deeper cuts and additional layoffs across city departments. Thirty-one provisional city employees have already been laid off, according to the mayor's office.

Homeowners argued the increase would place an unfair burden on taxpayers.

"You're putting homeowners at risk now, and that is what I consider unconscionable," said one resident during public comment.

However, city workers and union representatives urged officials to protect municipal jobs.

"We are your community. Every day, we answer the call to serve the city, and yet today people are being positioned against taxpayers. Neighbors against neighbors, unions against unions," said a city union representative.

The debate comes as Jersey City awaits state financial assistance.

The New Jersey Legislature approved $120 million in aid for the city, $105 million in the form of a loan.

Solomon has warned that rejecting the tax increase could put that funding at risk

The council is expected to vote Wednesday night on whether to introduce the 15% tax increase ordinance.

A final vote on whether to adopt the measure is scheduled for a future meeting.