$10 million gone State approves some, not all bond money for city

Upgrades on some city parks, libraries and roads are likely to be stalled for now as a result of a state board’s refusal to approve all of the $22 million worth of bonds the city hoped to issue.

Jersey City is crying politics, while the state says their concern for the city’s taxpayers is what drove their decision.

The state’s Local Finance Board on Tuesday approved $12 million in city bonds, $4 million of which will go directly to water system improvements. That leaves $8 million with which the city can work. This came after more than a year of wrangling with the state board over the money.

“Jersey City is in a situation where they should be spending on items they have to have,” said Local Finance Board director Ulrich Steinberg, “not they would like to have.”

Steinberg said that the board could entertain another application from the city for the remaining $10 million after the city’s budget is passed.

Steinberg said that city spending comes down to priorities.

“The council has a number of initiatives they’re looking at here,” Steinberg said. “Some, in our eyes, are priority. Some are not.”

Priority items for Steinberg are things like street paving.

“I think that’s important,” he said. But, he added, “Are we paving the streets on the roads the councilmen live on? Or is it roads that people travel down?”

The city is not pleased.

“If Steinberg comes up to Jersey City, I hope his car hits a pothole and he breaks an axle,” grumbled Council President Tom DeGise, on learning about the decision.

Where it will go

The city will have to scuttle some projects, DeGise said. And according to Mayor Bret Schundler’s chief of staff, Tom Gallagher, improvements to the main library on Jersey Avenue, as well as branches like Five Corners, Greenville, West Bergen, Marion, Pearsall, Lafayette and Miller will have to wait. The Hudson City branch, on Zabriskie Street, which is in the midst of refurbishing, will be completed.

Parks will also feel the ax, as $5.5 million worth of improvements will be trimmed to $1.15 million. Reservoir No. 3 Park, in the Heights, and the Lafayette Pool will not be getting anticipated funding. And J. Owen Grundy Pier, at Exchange Place, will be receiving funding.

Fixing potholes and resurfacing streets will stay at the same level, $850,000. The realignment of a road for a proposed golf course has been removed, but may get municipal funding (see related story). New fire stations at Ocean Avenue in Greenville and Congress Street in the Heights will continue to be funded.

Loads of debt

The city has an accumulated debt of $310 million, and will be paying $32.6 million worth of that in this year’s budget, about 10 percent of its $321 million budget. It was the city’s enormous debt that concerned Steinberg.

“When you’re looking at the finances of the city,” he said, “my concern was for the residents of the city, and what impact does the borrowing of $22 million have down the road?”

Steinberg said Jersey City is relying too much on one-time up front payments from tax abated projects. He wondered where the city would get revenue in the years following.

“There’s a good number of PILOTs [payments in lieu of taxes] that are advanced payments,” he said. “That’s fine this year. But the debt’s going to hit years down the road. I equate this to going out and maxing out your credit card.”

The city contends that revenue for the next year will not be a concern.

The state is also reviewing the city’s financial practices, and last year took $450,000 out of $16 million in city aid in order to perform an independent audit. The city also performs its own audit, according to Chief of Staff Gallagher. Former mayor Gerald McCann, he said, amassed piles of debt that the city is still paying for. “Bad fiscal policies existed in the past,” agreed Steinberg. “But the residents are picking up the tab now.”

All politics, all the time

City officials charged last week that the board’s actions are politically motivated.

“I think it’s all politics,” said DeGise, “I have no doubt.”

Stated Steinberg, “There’s nothing political here.”

Maybe it’s the appearance of being political. Three major Republican players in the state have indicated their interest in running for next year’s governor’s race. Mayor Schundler is one of them. Then, there’s Assembly Speaker Jack Collins of Woodstown and Senate President Donald DiFrancesco from Scotch Plains.

The governor appoints the board. It’s no secret that Whitman has been backing DiFrancesco. And Schundler and Whitman’s relationship has been strained, most recently in the public feuding over the state’s funding for the city.

“We didn’t have a problem until Bret Schundler decided he wanted to run for governor,” lamented DeGise, a Schundler supporter and potential mayoral candidate. “For somebody from Cape May to decide we can’t build a firehouse on Congress Street, that’s ludicrous.”

The City Council on Wednesday approved a first reading of the ordinance for the $8 million in bonding. It’s unclear when the projects will begin.


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