Frustrated with the unwillingness of two council members to move ahead with a critical $23 million bond, Mayor Joseph Doria made a rare appearance at the Bayonne City Council meeting on April 25.
Doria blasted Councilmen Anthony Chiappone and Gary La Pelusa for “holding hostage” a bond necessary to balance the 2007 fiscal year budget, saying that taxpayers and city workers would suffer because of the delay.
Chiappone and La Pelusa voted down the bond, saying that too little progress has been made toward cutting city expenses.
Although the City Council came up with a compromise in March that would trim the annual bonding from $25 million to $23 million – raising taxes moderately this year with the promise that expenses would be cut next year – Chiappone said signs of progress toward implementing cuts for next year have only started.
La Pelusa said he wants to see more progress toward next year’s promised cuts before he will vote to approve this year’s $23 million bond.
Although Councilman Ted Connolly asked La Pelusa and Chiappone to have “some faith in the system,” Chiappone and La Pelusa said they fear that if they give in now without concrete signs that cuts will be made next year, the city will be in the same position next year as it is this year.
Chiappone said he and La Pelusa have pushed for cuts to the budget since the budget was introduced last fall, and that no cuts were made.
“I want to see more progress before I vote on this bond,” La Pelusa said.
An intricate fiscal deal
The bonding is part of a legal loophole that allows city access to funds generated from future sales of land at the soon-to-be-developed former Military Ocean Terminal (MOTBY).
Each year the Bayonne Local Redevelopment Authority (BLRA) – which oversees the development of MOTBY – had been borrowing as much as $25 million against future land sales, then turning over the money to the city to balance the municipal budget. The city then borrows a similar amount so that the BLRA has cash to do work on the MOTBY in preparation for development.
In March, the council – at the insistence of Chiappone and La Pelusa – agreed to cut this year’s bond from $25 million to $23 million, contingent on making cuts after July 1 that would result in a lower bond for next year’s budget.
Terrace Malloy, chief financial officer for the city, said that if the council fails to pass the $23 million bond soon, the BLRA cannot legally turn over the money it has borrowed. This means the state will force the city to raise taxes.
$1,400 more in taxes
Because the city has already spent 10 months’ worth of the $135 million budget, the gap in revenue would result in a $1,400 increase in the May tax bill on the average home assessed at $133,000.
City Council President Vincent Lo Re said this means that the tax bill on his house in the next quarter will jump from slightly over $3,000 to more than $6,000.
Chiappone, in his public statements, blamed Doria for the impasse.
Doria, who routinely watches the council meetings on television from his office, appeared a few moments later, taking Chiappone to task. Doria said the budget he had presented to the council in January required the passing of a $25 million bond that called for no tax increase and no layoffs.
Councilman John Halecky said he only reluctantly supported the $23 million compromise because he opposed tax increases.
Lo Re said he would have preferred passing a $25 million bond this year with no tax increases and start off the new budget year focusing on cuts, but went along with the compromise in order to get this year’s budget passed.
“I thought we had this whole thing settled, but now we don’t,” he said.
Malloy said the indecision by the council has left taxpayers and municipal workers under a cloud of fear, since no one knows if taxes will jump dramatically or if numerous workers will be laid off.
Chiappone said the layoffs aren’t the only answer. He claimed the municipal workforce could be trimmed by encouraging eligible workers to retire.
“If we can make cuts that way, I would be happy,” Chiappone said.
‘Playing politics’?
Doria accused Chiappone of “playing politics” with the budget and using it to somehow benefit his campaign for the state Assembly. Chiappone, who is seeking the Democratic nomination for the 31st District this June, said the budget and the campaign are not connected.
La Pelusa said he fears that continued bonding will put the city deeper in debt, merely postponing the moment when taxpayers will get hit.
“You tell me you don’t want to increase the taxes, but by bonding, we are increasing the taxes – if not for today’s taxpayers, then for taxpayers of the future,” he said. “Eventually, we’re going to have to pay the bonds back and the interest.”
Although Malloy said the city would use the sale of land from the MOTBY to pay off new and old debt, La Pelusa said a downturn in the real estate market could delay development – or, perhaps worse, the city may run out of land to sell and still be deeply in debt at the end.
“We have to cut back on our spending,” he said. “While we have made progress, I want to see a little more before I cast my vote in favor of this $23 million bond.”