While many Hoboken families were loading their coolers and packing their SUVs for a weekend trip to the New Jersey Shore a week ago Friday, five members of the Hoboken City Council met at 5:45 p.m. on Aug. 9 to introduce a last-minute ordinance.
At the "special" meeting, the members voted unanimously to introduce an ordinance that asks the state to allow the city to increase spending to up to 5 percent in next year’s budget.
The state has mandated that municipalities are only allowed to increase spending by 1 percent in the 2003 fiscal year budget, with certain exceptions. Such exceptions include capital improvements, debt service, health insurance increases, and the cost for operating the Municipal Court.
For Hoboken to increase spending by more than 1 percent, the city had to ask the state for special permission. The deadline for that request was midnight, Aug. 10.
Katia Stack, the city’s finance director, said during the meeting that this ordinance gives the municipal government much needed flexibility when crafting the 2003 budget. She added that the city is in no way obligated to spend any extra funds and could possibly create a budget with under a 1 percent increase in spending.
"This doesn’t bind us to spending more than 1 percent," said Stack.
But Stack said that the 1 percent cap is "cumbersome" on "some municipalities" and that this measure would be that last opportunity the city will get to request possible relief. "If we don’t do this now, we will not get a second chance," she said.
Last year’s budget was $54.9 million dollars. If the city did not request the flexibility, it would only be allowed to increase spending by approximately $549,000. If approved the city is allowed, but not obligated, to increase spending by up to approximately $2.74 million.
According to Mayoral Spokesperson Bill Campbell, the ordinance is a necessary precaution should the city’s ongoing labor negotiations with labors unions call for raises that would need to be paid out retroactively to January 2002.
The dreaded "T" word
Because it was not a regularly scheduled meeting and it started almost 45 minutes late on a Friday evening in the middle of summer, only six members of the public were present to comment.
The public and several members of the council had concerns that such an ordinance could be a precursor to higher property taxes.
"My constituents would not like to see an increase in property taxes," said 6th Ward Councilman A. Nino Giacchi to Business Administrator Robert Drasheff.
"Our goal is to maintain a stable tax rate, and we are prodigiously to make that happen," replied Drasheff. "You will see a budget that keeps taxes stable."
He added that even if spending does escalate, it is possible to use new "offsetting" revenues to maintain level taxes.
Some examples of offsetting revenues are new ratables, grants, non-recurring "one shot" revenues, and payments-in-lieu-of taxes (PILOT).
Several of the members of the public questioned whether it was a good idea to give the council extra flexibility to spend more money.
Hoboken resident Helen Hirsch said she had concerns that that council would not be able to resist the urge to spend more now that they have permission.
Fifth Ward Councilman Michael Cricco responded emphatically to Hirsch’s assertions. "Just because we can raise [spending] 5 percent, doesn’t mean we are going to," he said. He was so assured that he bet Hirsch a dinner that taxes will remain stable.
Local accountant and former Hoboken Parking Authority Commissioner Alan Cohen launched harsh criticism toward the council.
"[The cap] is a great way to control out-of-control spending," said Cohen. "For one, you would actually be forced to act with fiscal responsibility."
Then Hoboken Housing Authority Commissioner Lynda Walker, a critic of Mayor David Roberts’ administration, compared the ordinance to a parent taking a child into Toys-R-Us.
She said that if you give a child a hand full of money in a toy store, they are going to undoubtedly spend all of it, even if they are told that they don’t have to.