The public can comment Wednesday on the city’s plan to spend $54.8 million on services, salaries and supplies during the 2001 fiscal year, which began on July 1, 2000 and runs until June 30, 2001. The budget includes a municipal tax decrease of 3 cents per $1,000 of property owned.
Following a public comment period at this Wednesday’s city council meeting, the council can either make plans to revise the budget, or vote to adopt it.
This year’s budget calls for $54.8 million in spending, of which the bulk goes toward municipal salaries and benefits. This is up from last year’s projected $53.4 million budget. That budget turned out to be overly optimistic, as the city ended up spending just shy of $54.5 million. Officials said this was partially due to unforseen utility and Social Security expenses.
For the seventh year in a row, Mayor Anthony Russo and his team have put together a budget that does not raise taxes. This year’s budget provides a modest municipal tax decrease of $.03 per one thousand dollars of property. Thus, the owner of a $200,000 home will save $6.
The Russo administration has been pleased with its budget stabilization. But critics of the mayor have charged that the city should have cut taxes further.
The tax decrease is partially because there are more property owners chipping in tax money thanks to new development.
“In this past year alone, Hoboken has added over $230 million in new assessed property [to city tax rolls],” said Mayor Anthony Russo in remarks to the City Council when the budget was presented last month. “These new ratables are helping keep taxes low.”
The $230 million in new property translates into an additional $1.8 million in new municipal tax revenue per year. The city intends to collect $16.76 million in tax money this year, up from $16.3 million last year.
In addition to keeping the tax rate stable, the mayor said that the new revenue helps defer the costs of new city services included in this budget. Chief among them are the city’s plans to hire additional firefighters and continue adding to and maintaining city parks.
What’s inside
Also increasing this year were salary costs. Salaries account for almost 60 percent of the projected spending. In fiscal year 2001, the city expects to spend $30.44 million on its police officers, firefighters, municipal workers and sanitation workers. Benefits for municipal employees are expected to cost the city another $10 million.
Business Administrator George Crimmins said some of the increases in salary line items are due to the fact that the city will pay out so-called longevity payments to city employees.
“There was an increase due to longevity payments that accounted for $370,000 in the budget,” Crimmins said from his office Wednesday.
After an acrimonious debate last summer, the council voted to make large one-time payments to a number of municipal employees who had worked in public service prior to joining city government. An attorney determined that those years of service should count toward a longevity bonus.
Line items for some City Hall offices show increases for the 2001 fiscal year of more than 60 percent. In the mayor’s office, the salary amount has jumped from $202,000 last year to $256,900 this year. In the finance office the $88,000 salary line item from last year has climbed to $148,500. Similarly, the Human Services Department is being bumped up from $104,000 to $144,000. The Cultural Affairs Department is climbing from $53,000 to $75,000.
The city also expects to spend a lot more this year on operating streetlights. Last year’s budget called for $315,000 to be set aside to pay street lighting expenses, but the city overspent that by about $400,000. This year, officials say that at least $700,000 will be needed. The higher expenses are due to the new lights that have been placed on Washington Street and along the waterfront parks.
“Last year we got whacked with a really big bill,” said Crimmins. “The new lights use a lot more electricity. The old ones were much higher up so you needed fewer of them to light the same area. The old ones were also really unattractive. They were the sorts of lights that you would have at an airport or an industrial area.”
On the revenue side, a hodge-podge of moneymaking line items compliments the $16.76 million that the city brings in via taxes. Chief among them are almost $15 million in state aid. Also included are $8.34 million in so-called PILOT payments. PILOT payments are payments that are made directly to the city in lieu of a standard tax. Normally, a tax dollar would be split up among the city, the county and the school board, but some developers and organizations execute a deal with the city that allows them to pay a fixed payment directly to the city in lieu of the standard tax.
Among the PILOT payments is a $2.5 million payment from the Parking Authority. Crimmins said that the city and the Parking Authority are currently negotiating over establishing a fixed PILOT that would fall “somewhere between $1 and $3 million annually.”
Other revenue-producing items include $3.03 million in court fines, $2.63 million in grants and $1.81 million in permits, licenses and fees.
One-shots
Also included in this year’s budget is a handful of non-recurring revenue producing items. The city has been criticized in the past for using them, as there is no guarantee that they will be back the following year. However, they can sometimes be creative ways to keep taxes stable while hoping that new revenues come in some time in the future.
City officials have been saying that they need the one-shot deals in order to plug holes until new development comes in. In 1997, city officials said they’d prefer the term “interim” rather than “one-shot” revenue sources. The largest non-recurring item for 2001 is a $3 million payment the city expects to receive as a result of selling its sewer system.
“We sold our sewers to the North Hudson Sewage authority about two years ago,” explained Crimmins. “They then turned around and sold a depreciation on those sewers to an investment firm. They are taking that money and using it to give their customers a rate stabilization and they are also distributing it to the municipalities.”
Other non-recurring revenues include $100,000 from a lawsuit that was settled with a former municipal employee and $50,000 that was recouped from closing out old water and sewer accounts.
Crimmins said that it should not be too difficult to fill the budget holes that these one-shot revenue items leave next year. New developments properties, like the southern waterfront and the northwest redevelopment area, will be making PILOT payments to the city ought to help, he said.
One revenue source that is way down is the amount the city expects to collect from delinquent taxes. However, this is actually a credit to the city, which has become extremely diligent in collecting taxes on time. Thus, on the revenue side, the city has had to squirrel away only $390,000 in a reserve for uncollected taxes, while in past year the number was in the millions.
But there is another revenue source the city won’t be able to tap. The city has only $321,000 in its surplus reserves, where it once had more than $3 million. The state does not require cities to keep any amount in their reserves, but recommend that they hold on to an amount equivalent to 3 percent of their budget if they can. That way, the money can be used in emergencies. In Hoboken’s case, that would be approximately $1.6 million.
“I’d love to have $3 million again, but we don’t,” said Crimmins. “Most of the surplus that we do have is going to have to be used to deal with the snowstorm we just had. But look, that number always fluctuates. This is nothing new.”
Russo friends and foes split over budget
When the City Council meets Wednesday night to debate Mayor Anthony Russo’s proposed $54.8 million budget for fiscal year 2001, the evening is likely to start with six city council people smiling broadly and three frowning.
On the one hand, Michael Cricco, the finance committee chairman, is likely to laud the mayor for his efforts to keep taxes down. While he does this, the other five council people who tend to support the mayor and his policies are likely to nod in agreement.
“The taxpayers want us to use their money wisely, and that’s what we are doing,” Cricco said Thursday of the budget, which offers taxpayers a very modest tax decrease of $.03 cents per $1,000 of property they own. “I made a commitment that as a councilperson I would never vote for a tax increase, and I am pleased to be working with an administration that makes that possible.”
On the other side of the dais sit councilmen Dave Roberts, Tony Soares and Ruben Ramos Jr. The three councilmen have not been shy at jabbing at policies of the mayor’s that they don’t like over the last year.
The verbal thrusts and parries are likely to be so heated over the budget that Roberts suggested jokingly last week that the meeting ought to be held at Medieval Times in Lyndhurst – an interactive dinner theater – so that “we could have some real jousting.”
Roberts and his allies say that given all of the new development in town, there ought to be even more city services and even lower taxes.
“People in Hoboken should be paying 10 percent less today in property taxes than they were in 1993,” said Roberts Wednesday. “Due to all of the development, traffic is at a standstill in some neighborhoods, parking is non-existent, and yet we are paying more in taxes today than we were when the mayor took office. You have to remember that when he came in he raised taxes dramatically and he has been chipping away at it ever since.”
Like the Pledge of Allegiance that is recited at the beginning of every council meeting, it seems that a fight over what happened during the mayor’s first year in office is a standard feature of every budget hearing. In these debates, Russo says that he had to raise taxes when he took office in 1993 since his predecessor, Mayor Pat Pasculli, left a gaping budget deficit. State-approved audits of spending from those years do indicate that the city underestimated its spending by several million dollars. And Pasculli administration officials said as they left office that the city would be in for a sticky financial situation the following year.
It may never be conclusively determined whether those overexpenditures were high enough to have made it necessary for Russo to nearly double the city’s tax levy from $8.47 million to $16.2 million. Blaming problems on a previous administration is a popular tactic in politics.
When Roberts argues about Russo’s first year in office, Russo typically shoots back that Roberts was a close ally to Pasculli.
Then, Roberts invariably points out that Russo was the finance committee chairman of the City Council during Pasculli’s tenure, and was therefore in some way responsible for whatever fiscal disorder he faced when he took office.
In the seven years following the mayor’s first year in office, Russo and his team have steadily either reduced the tax rate or kept it stable.
Still, Roberts and his allies are unimpressed.
“This is nothing to be proud of,” said Councilman Tony Soares last week. “Stabilizing taxes is like saying ‘Gee, I don’t cheat on my wife.’ You have to do better than that. It is mediocrity. Anybody can stabilize taxes after a large increase and then throw on $230 million in new ratables.”
Roberts and his allies are particularly peeved that so many city resources go towards paying the salaries of some city workers. They point out that the budget has jumped from $42 million in 1993 when Russo took office (although this turned out to be a low estimate) to $54 million. They argue that most of the increases paid the salaries of a handful of workers who regularly get overtime and a select few lawyers who work for the city. “It is nothing but a vicious circle of cronyism, and patronage,” said Soares.
City administrators scoff at the charges.
“Basically there is no other way to cut the budget,” said Business Administrator George Crimmins. “The city operates with a small complement of employees, a very small complement. The only place that there is a large number of employees is in the police department and that is what the people have wanted. President Clinton’s crime bill helps us defer some of those costs, but the rest of it, what can you cut? When you have 14 people in the parks department, who can you cut?”
Crimmins challenged Roberts and his allies to come up with concrete suggestions of places that can be cut instead of “empty rhetoric.”
“[Roberts] said during a budget meeting two years ago that he would come up with proposals about where we could save money, and we are still waiting,” said Crimmins.
Cricco was equally frustrated with his colleagues’ efforts to cast doubt upon the integrity of the budget. “Here we go again,” he said. “They want it both ways: more services and a bigger tax decrease. That’s like an oxymoron. It’s just not real.”