With nine months of the current $106 municipal budget already passed, the city council apparently has run out of options and must either pass a $25 bond that would bridge the budget shortfall or raise taxes.
The city could face a financial and legal crisis if the stand off between council members continues until the end of the fiscal year on June 30. Without a budget in place, the city could face action from the state that could include a mandated tax increase.
Jay Coffey, director of the city’s Law Department, said layoffs and other cuts to the city spending would make no dent in the amount needed.
The $25 million bond is part of a complex “money swapping” procedure that will allow the city to make use of down payments from developers for land at the former Military Ocean Terminal.
Since the federal mandates on the MOTBY require the city to use revenues from the land for redevelopment of the former base until at least July 1, 2008 – at which point the matter would be reviewed and the revenues from the base could be freed for general municipal use.
Developers seeking to purchase property for development give the funds to the Bayonne Local Development Authority (BLRA) which then transfers the money to the city. In order to meet the stipulations of the law, however, the city passes a bond the same amount to cover the needed infrastructure improvements at the MOTBY.
While the city council can pass the budget with three of five votes, to pass a bond the council must have what is called a super majority, or four of the five votes. But Councilmen Anthony Chiappone and Gary LaPelusa said the city has not done enough to trim costs, demanding that Mayor Joseph Doria do more to cut costs and reduce the bond.
Council President Vincent Lo Re, who supports the bond to avoid a tax increase, said cuts to this year’s budget would have no affect.
“If this next year’s budget, cuts would make a difference,” Lo Re said. “No cuts we can make are going to give us what we need to make up the difference. We’ve already appropriated the money.”
Coffey said this means that taxpayers will have to pay the total cost of the $25 million shortfall in one tax quarter. This means that the average Bayonne home assessed at $135,700 would have to pay an additional $57 for every $1 million of the bond in the May tax bill for about $1,425 above the $1,057 that home would pay if the bond is passed.
Terrance Malloy, the city’s Chief Financial officer, said layoffs would not make up the $25 million at this late date. He said a majority of the employees require by contract a 30-layoff notice and have another 30 days in which to appeal the layoffs, leaving less than two months of salary savings from whatever layoffs took place.
Malloy said that the city would have to lay off about 50 employees to affect $500,000 in reductions from this year’s budget. He said part time employees throughout the city could be laid off without notice, but these layoffs would generate only about $300,000 in savings.
Chiappone said he wanted to negotiate with Mayor Doria to find appropriate places to make cuts so that the bond could be reduced. But Coffey said Doria clearly does not wish to negotiate, and has left the choice in the hands of the council.
“This is your budget now,” he said. “If you want to reduce the bond, then you’re going to have to raise taxes. It’s that simple.”
Lo Re, along with Councilmen John Hallecky and Ted Connolly are supporting the bond, but need the fourth vote of the bond to be passed. Although Coffey tried to move agenda, Lo Re was forced to postpone the vote for the third week in a row, and the council will consider the matter again at the March 14 meeting.
Chiappone and La Pelusa held out against passing the bond because they claim Mayor Doria will not take cuts seriously next year and will put the council in the same position in next year’s budget unless cuts are made now that will carry over into next year.
LaPelusa and Chiappone claim that unless they act now, Mayor Doria will never make the necessary cuts, but will continue this pattern of bonding year after year. “Even before he introduced the budget last year, Mayor Doria had already hired new people, knowing that we wanted a hiring freeze,” Chiappone said.
But Doria disputed Chiappone’s claim saying that the number of city employees has remained the same or may be less than when he took office in 1998.
Chiappone and LaPelusa, however, said the city has brought on people despite the budget crisis and their request for a hiring freeze, including jobs to the mayor’s political supporters.
LaPelusa said that cuts in this year’s budget might not have a great impact this year, but would carry over into next year’s budget.
LaPelusa said that while he had respect for the police and fire departments, he represented the interests of the taxpayers as well, and that he had a lot about the impact of ever increasing taxes on those least able to afford the increases such as senior citizens. He said the pattern of borrowing has to stop.
“This is a very bad pattern that is going to destroy our town,” he said. “We’re mortgaging our future. I’m not happy with the way the city is spending my tax dollars. The administration has been hiring as if it is the employment agency for the last resort. The mayor hires employees and pads the payroll and puts the blame on the council, then threatens the same workers he’s hired with pink slips.”
A divided public opinion
Of about 200 people who attended the public hearing on Feb. 14, about 35 spoke, some in favor of the bond, nearly as many against.
David Toby, representing one of the police unions said the department has made concessions in the past to help alleviate budget issues.
Resident Jonathan Baar asked Chiappone and LaPelusa where the city will get the money if the bond is not passed.
Retired Municipal Judge Patrick Conaghan said the city has an offer to put a container port on the site that would provide the city with the needed $25 million a year in rental. This view was supported by several Longshoremen, who supported the container port concept.
David Solari – often critical of the administration – defended the passing on the bond. Washington Flores said the city should not be going so deep into debt and depending on the base. Mike Ransom questioned the efforts by Chiappone and LaPelusa to trim the budget, asking for details of what they could propose instead that would make up the difference in spending.
Leonard Kantor, a frequently outspoken critic, asked why the city was continually short $25 million every year.
“There is a gap every year,” he said, suggesting the city needed to dump unessential employees, and other means to start bringing the taxes down.
Former Jersey City Mayor Gerald McCann claims the bonding process is illegal, although Coffey disputed this saying that the matter has been reviewed by the state’s Local Finance Board and approved.