Despite the state’s urging, the Hoboken City Council did not have the votes to approve $1.69 million in emergency appropriations and budget transfers at a raucous special council meeting Wednesday night.
The debate highlights the fissure that continues to grow between the council minority and the administration of Mayor David Roberts. It also raised the question of accountability for the city’s budgeting and spending habits.
Is the City Council responsible for the budget, or the administration that writes it and presents it to them? And after it is approved, who determines the distribution of funds?
The situation
On Friday, May 14, it was announced that the Roberts administration would ask the council for an emergency appropriation in the amount of $1.69 million. This would cover a $1.64 million increase in group health insurance and $50,000 to pay for lawyers to defend the city against a suit filed by former Chief Financial Officer Michael Lenz, whose employment was terminated last year.
There was so little support of the item, even among the mayor’s own allies, that it was removed from the agenda from the council meeting held May 19. Two days later, the state Department of Community Affairs, the agency that monitors local municipal budgets, sent a strongly worded letter to Roberts saying that it’s against the state statute to overspend the city’s budget without approving emergency appropriations.
“Your failure to act on the transfers and the emergency appropriation resolutions place the municipality in jeopardy of violating statutory law,” reads the letter from Susan Jaccobucci, the acting director of the Division of Local Government Services. “I urge you to fulfill your fiduciary responsibilities and convene a special meeting.”
Sometimes there are unforeseen circumstances that cause the city to overspend the budget. When that happens, the City Council must approve an emergency appropriation for what is needed. Emergency appropriations are permitted under the New Jersey Local Budget Law after the budget has been adopted, to provide for emergencies that were not foreseen at the time of the budget adoption.
If an emergency appropriation is approved, a short-term bond, which is to be paid back by the end of the next fiscal year, is obtained.
Based on the state’s letter, Roberts called a special meeting for last Wednesday. It is his position that the city has sufficient surplus to cover the bills, and will be able to strike a stable tax rate next year. He also said that the passage of this resolution is still necessary to avoid overspending on group health insurance and special legal counsel. Only the City Council can approve an emergency appropriation.
Need six votes in this case
Rarely does the four-member minority on the nine-member City Council have as much leverage as it did at this meeting.
Normally, no matter how vocal the criticism of the minority, the five-member majority who normally supports Roberts has enough votes to pass legislation. But the emergency appropriations and budget transfers are among the few exceptions. A two-thirds voting majority is needed. Both the emergency appropriations and the budget transfers failed by a 5-4 vote.
Leading to the meeting
It was abundantly clear that the minority members of the council did not support this measure, especially considering they never voted in favor of the approximately $60 million budget in the first place.
The minority, made up of council members Carol Marsh, Anthony Soares, Michael Russo and Theresa Castellano sent off their own letter to the state saying that they should not be held accountable for the overspending habits of the administration.
“During the budget process, we repeatedly expressed the concern that the administration was systematically underbudgeting rather than acknowledging the true state of Hoboken finances,” read the letter signed by the four councilpersons. “None of us voted for the budget that was adopted, for reasons that included the conviction that it did not fully fund city operations.”
They also questioned how this could be an “emergency” when the same items, particularly group health insurance, has been grossly underbudgeted the past several years. It is their assertion that underbudgeting has been a tool to shoehorn more spending into a smaller tax rate.
In fact, multiple council members, for the past eight months, have questioned city Business Administrator Robert Drasheff especially about group health and legal bills, and they have been told repeatedly that the city would have enough money to pay its bills.
They have asked multiple times for documentation from the health care providers or from the city business administrator and current CFO that proves the overspending was due to unforeseen circumstances.
According to the proposed resolution, the reason for the increase in group health insurance was that there was a “significant increase in client experience.”
“At this point we have found no credible source of accurate information on Hoboken finances willing to advise the council on the full picture of Hoboken’s finances,” said the council minority in their letter. “Not the business administrator, not the CFO, not the auditor. Even if we were prepared to approve an emergency appropriation, we would be in the dark as to how much was required.”
Marsh later added that, “[the administration has] refused to give me information to prove it’s an emergency; therefore I have to believe this is deliberate underbudgeting.” The obvious drawback with underbudgeting is that the City Council loses some of its authority when the administration overspends, and all the money that is overspent has to be made up in future years, creating future deficits.
Wednesday night meeting
At the beginning of meeting on Wednesday night, Roberts said it was “unfortunate” that he had to come before the council to ask for this emergency appropriation and budget transfers. But he added they are “necessary and are not something that we anticipated.”
In a speech that was a essentially a “state of the city” address, the mayor said that since 2001 the city has only increased total spending by “approximately $5 million,” which considering that the budget is only approximately $60 million is not an unreasonable increase in spending.
He added that the biggest increase in spending has come from group health insurance, with an increase of about $2.2 million, and new contracts with the police and fire unions. “Hoboken is one of the safest cities in New Jersey,” lauded Roberts.
He added that the administration has generated additional revenue of $600,000 through the sale of taxi medallions this year, a $100,000 lawsuit settlement, increased intake in the municipal courts of around $1 million, and nearly $100,000 in extra revenue a month from the Hoboken Parking Utility.
“I’m not happy that we are asking $1.9 million in emergency appropriations,” said Roberts. “I wish that we had included it in the original budget.”
Roberts added that the city’s costs “are not spiraling out-of-control, even with the most conservative estimate of cash on hand surpassing $5 million.”
Public comments
After Roberts’ speech, the public was given an opportunity to comment. Resident Jon Gordon, a former school board president, said that the mayor’s speech was “completely irrelevant” to the issue at hand, and what is important is whether this emergency appropriation meets the statute criteria for approval. “Could this have been reasonably foreseen,” he said, “or is this deliberate underbudgeting to strike a stable tax rate?”
After the public comment portion, the council engaged in a heated, if short, debate. Michael Russo said he finds it hard to believe that this is truly an emergency that came out of nowhere to surprise the administration. “I have been talking about this since the first day I was elected,” said Russo. He was elected in special election last November and was not able to vote on the budget because he was a councilman-elect at the time.
The minority council members blamed the administration vigorously for overspending the budget and not being forthcoming with documentation that was requested. “You have been spending, spending, spending,” said Castellano.
Marsh said she had to submit an Open Public Records request for several budget-related documents, which is rare for a City Council member to do.
“As I councilperson who is voting to approve $1.69 million extra spending, I should not have to make an Open Public Record Requests to get the documents I need to make an informed decision,” said Marsh. When she asked about the status of the request, Drasheff told her that the city has seven days to reply, and it hasn’t been seven days yet.
She would later add that if the administration believed that these emergency appropriations were truly an emergency, they would more than willing to hand over everything they have.
Cut short
After only a few minutes of questioning, Council President Ruben Ramos called a vote on the issue before several members got to voice their opinions. Ramos’ decision to cut the discussion short raised the ire of the administration’s critics.
“How can you sit there and force a vote when I haven’t even been able to ask a single question?” said an angry Soares.
Roberts said Thursday that he supported Ramos’ decision to call a vote. He said the quality of the discussion had deteriorated to the point where there was no longer any decorum. “They just want to turn this into a political circus with name calling, accusations and all kinds of fiery insults,” said Roberts. “None of this type of behavior serves the community.”
Now what? The mayor was very clear Thursday that even if the emergency appropriations do not go through, city workers will not be without health insurance. According to Drasheff, the administration will now consult the state again, and in the worst case scenario will run a deficit that will have to be made up next year.