The state of New Jersey is going to take control of Hoboken’s botched budgeting process, but the extent of their control has yet to be decided.
“The [state] will decide over the coming days the proper course of action needed to establish a budget for the city,” said a press release issued by the Department of Community Affairs on Thursday.
Possible courses of action range from forcing a tax increase to meet expenses, to awarding state control over the future finances of Hoboken for an indefinite period of time.
No matter what the state chooses to do, tax bills for residents are already late, and must be sent out, by law, before July 1.
The 2007-2008 city budget is now 11 months late and $11.7 million dollars short. And it covers spending for a fiscal year that ends in just 15 days.
Asking for help
Two weeks ago, a faction of the City Council denied the mayor’s request to ask the state for a waiver to increase the size of the budget. If the city had gotten the waiver, they could have passed the budget and figured out how to fund it.
With the state taking control, the state may simply raise taxes.
However, there wouldn’t have been that many other options anyway to raise the $11.7 million needed in just a few weeks.
Five members of the City Council voted against asking the state for a waiver, hoping to send a message against City Hall’s overspending. They only recently got certain information about the budget numbers.
Now, the proposed budget is up to $102 million, when it was only $74.9 million last year.
Last Wednesday, the five members of the council faction that voted against the spending waiver went to a meeting at the state Department of Community Affairs to appeal for guidance. The meeting had been called to see if the city could get an extension to pass the budget.
It is the DCA’s Local Finance Board who works with cities on their budgets.
However, the DCA did not offer the council members much help. They also did not give the city an extension to pass the budget.
“These five council members have painted us into a corner.”
– Peter Cammarano
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Members of the council responded Wednesday, saying that they were looking for guidance as to what they could do if they had an extension.
“We were appealing for more than just an extension,” said 3rd Ward Councilman Michael Russo, who said the council was also looking for help.
Second Ward Councilwoman Beth Mason said that she was hoping for direction on how to proceed in the next fiscal year, 2009, given the last-minute problem with this year’s budget.
She said the Local Finance Board was not interested in discussing the future until the current situation was resolved.
According to the DCA press release, “The Hoboken City Council received a budget from the Mayor in November of 2007. Since that time, however, the majority of the council failed to take the necessary actions to adopt their budget.”
Council president Theresa Castellano, 4th Ward Councilwoman Dawn Zimmer, and 5th Ward Councilman Peter Cunningham were the other members of the council to appear before the LFB.
Richard Turner, the vice chairman of the LFB, who also happens to be the mayor of Weehawken, said last week that if the council had done their due diligence and asked for verification from the city’s CFO and other financial specialists, the budget could have been adopted earlier and these last-minute changes could have been dealt with sooner.
“If those projections were off, it’s not the legislature’s fault,” Turner said in an interview on Friday. “Budgets are living, moving documents.”
He said the LFB was concerned with the council’s recent decision not to bond for $3.6 million on the municipal garage, which resulted in a shortfall in revenue.
“The council knew that was part of the plan since March,” Turner said.
Deal with it by this Monday
The DCA is allowing the council until this Monday, June 16 to deal with their problems, but according to council members, there is very little that the council can do in that time.
Councilman-at-Large Peter Cammarano, who voted in favor of the waiver so the city could pass an increased budget, did not make the trip to Trenton, but blamed the five-member council who opposed the waiver.
“These five council members have painted us into a corner,” he said.
He said that their appeal is proof that they acknowledge their mistake in not passing the cap waivers in the first place.
Meanwhile, the state’s press release also stated, “For failing to perform their fiduciary responsibilities to the residents of Hoboken, the members of the City Council will be fined $25 a day, beginning today [June 12], until a budget is adopted.”
One more chance to lessen tax hike
A city spokesperson said last week, “This administration has sought on multiple occasions to have the council come up with a viable solution, but it appears that all they want to do is complain to the Local Finance Board and never provide a solution.”
City financial specialist Katherine Kinney said last week that the total shortfall in the budget still stands at $11.7 million, and that taxpayers should still expect roughly a 50 percent increase in fourth quarter taxes.
The council has one more chance to minimize that number, though.
The council can pass a Certificate of Participation for the municipal garage at their next meeting, effectively adding $1.2 million in revenue in the 2008 fiscal year budget.
Council members are still working with the administration to provide some sort of relief for residents who cannot pay their tax bills on time.
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