The city announced Tuesday that it has suspended its Chief Financial Officer, George DeStefano, and charged that he mishandled city funds over the past three years.
DeStefano has responded by saying that he has been harassed ever since the new administration took office in July of 2001. DeStefano is the brother-in-law of former Mayor Anthony Russo and the brother of Parking Authority Commissioner and Board of Education member Michele Russo.
According to a statement released by City Hall Tuesday, the New Jersey Division of Local Government Services, under the auspice of the Department of Community Affairs, initiated an investigation into DeStefano earlier this summer. The investigation was not requested by the city.
The state’s investigation concluded with the DCA serving DeStefano with charges that could result in the suspension of his Certified Municipal Finance Officer (CMFO) certification. He immediately and voluntarily left City Hall last week after being served, according to city officials, and has 10 days to respond to the charges.
DeStefano has requested a hearing to determine whether his license will be revoked. The CMFO certification is a requirement for permanent appointment as the city’s CFO, unless special permission is granted by the state, according to city officials.
According to E. J. Miranda, a spokesman for the Division of Local Government Services, the investigation was started after irregularities were discovered when the DCA was reviewing the city’s application for $4 million in "extraordinary" state aid. The city’s 2002-2003 fiscal year budget, which has not yet been approved, currently anticipates that amount. As of yet, the DCA has not determined how much Hoboken will receive.
According to Miranda, the charges against DeStefano include "failure to adequately monitor the city budget" over the past three years. He added that this alleged inadequacy led to over-expenditures of $5.4 million in 1999, $1.1 million in 2000, and $2.1 million in 2001, for a total of over $8 million in the three-year period.
Other charges against him include failure to maintain an adequate general ledger and to correct "repeated deficiencies" in annual independent audits of the city’s finances.
According to Miranda, the DCA has only revoked the certification of four certified financial officers in the past 10 years, and an investigation leading in that direction is a relatively rare occurrence.
Roberts released a statement regarding DeStefano Tuesday.
"There are now indications that significant financial irregularities may have occurred for which Mr. DeStefano would have been responsible," he said. "Hoboken is working closely with the Division of Local Government Services to understand what happened and ensure the integrity of the city’s Department of Finance in the future."
Because it is a personnel matter, Roberts said that he would not comment any further at this time.
Tuesday DeStefano also released a statement declaring his innocence.
"I have been harassed by this administration since my brother-in-law left the office," said DeStefano. "I have everything documented with my attorney in anticipation of this fiasco happening. I am very confident that the professionals who worked with me in the years of these allegations will attest to my performance, and each task this administration alleges was not performed by me. I’m not going to be responsible for their mismanagement."
According to Roberts’ spokesperson, Bill Campbell, DeStefano has been the city’s CFO since 1996 at an annual salary of $87,000. Before being hired as CFO, he was the city’s comptroller for two years. He was hired a year into Russo’s administration.
Campbell added that now that DeStefano has been suspended, Tax Collector Louis Picardo, who is also licensed as a CFO, will perform DeStefano’s duties.
Wednesday former Mayor Russo said that Roberts is just looking for someone to blame. "Dave Roberts and his administration have to have an out for outlandishly spending taxpayer money," said Russo. "They are trying to pin blame on anyone and everyone since their revelation about how bad their financial situation is."
Russo said that he left that he left the city in good shape and said that there is no way that his administration had $8 million in overexpenditures. He said that even if there were overexpenditures, they would have had to be made up the in the budget year following the overexpenditures. Now that it’s Roberts’ second budget, he says, supposed cost overruns wouldn’t come into play two years later.
When the city introduced its budget last month, Business Administrator Robert Drasheff, who was the director of human services under Russo, said the city has allocated millions of dollars in this year’s budget to make up for over expenditures in 2000 and 2001.
Drasheff also claimed that state statute dictates that the money "must" be made up two years after the overrun.
City explains increased tax bill; blames county
Within the last two weeks, most Hoboken taxpayers have received their third and fourth quarter tax bills. Some were surprised to find that their bill was higher than it was for the same period last year.
Mayor David Roberts has announced that the city has maintained a stable tax rate, which has left some people scratching their heads.
City Business Administrator Robert Drasheff said Thursday that the municipal portion of the tax rate has remained stable but it is the county and school portion that has increased.
Property tax is composed of three components: the municipal, school, and county portion of the tax bill. According to figures supplied by the Hudson County Board of Taxation Thursday, the Hoboken certified tax rate went up 5.26 percent from $30.98 per $1,000 of assessed value in 2001 to $32.61 in 2002.
According to Drasheff the municipal portion of the bill has remained stable at $7.84 per $1,000 of assessed value in the third quarter of both 2001 and 2002.
He added that the largest increase is the county tax, which went from $11.39 to $12.76 per $1,000 assessed value. Also, according to Drasheff, the city’s school taxes went from $11.75 to $12.01 per $1,000.
"I don’t think the county has its spending under control," said Drasheff Thursday. "It really needs to be more frugal and cost effective."
Drasheff also said that anyone who questions his numbers can call the Hudson County Board of Taxation (201-795-6588) to confirm the tax rate. "The tax rate is certified by the county’s Board of Taxation," said Drasheff. "It is a politically neutral board that sets the tax rate around the county."
But critics say that a level tax rate does not mean that city taxpayers are paying the same amount of taxes. According to the city’s budget that was introduced late last month, last year’s budget needed $16.6 million to be raised by local property taxes. This year’s newly introduced budget calls for $17.4 million to be raised in municipal property taxes. According to Drasheff, that increase of nearly $800,000 should be offset by new ratables that come on line, meaning that there will be more taxable property in the city, therefore each property owner pays a smaller percentage of the $17.4 million.
Critics charge that with so many new ratables coming on line, the tax rate should go down and not remain stable. – Tom Jennemann