Where is the problem?

Jersey City officials see the operational audit report released by the state as a “political assault,” and Tom Gallagher, Schundler’s chief of staff, called it unrealistic. Perhaps, for the sake of their constituents, they should take a second look. Implementing these recommendations could save this city at least $5,000,000 per year.

Then too, because required financial information could not be provided by the city, some recommendations did not include a saving calculation. This mens that if the recommendation is implemented, the savings would exceed the state’s $5mm estimate. Among those that caught my eye were:

Tax Abatements — While this administration argues that these abatements are necessary to compensate for high tax rates, this report points out the reasons they are no longer necessary. The report also documents the problems they have created for the incoming administration. There is a concern that recent agreements under the Pilot Program (payments in lieu of taxes) are front loaded. This means that after this administration leaves office. The payments under the program will decrease. The report makes two recommendations to address these issues. Where is the problem?

JCPA (Jersey City Parking Authority) — The report states that the JCPA has an operating budget of approximately $5,000,000. It is losing substantial sums of money and covering those losses with sales of assets. The department is not even able to track the amount of revenue being generated by its officers. Tickets are usually a source of funds for a municipality. Apparently in Jersey City, it is a “use” of funds. The report makes four recommendations, which would cut costs by approximately $850,000, increase revenues by approximately $515,000 and reduce staffing by approximately 33 employees. This totals to a combined financial benefit of approximately $1.4MM. Where is the problem?

Reduce surplus properties withheld from sale — The report says that the assessed value of the properties currently being withheld is approximately $53MM — based on a 1988 assessment. The report recommends increasing accountability and selling these properties in a more timely fashion. Not only would this enable us to realize the one time revenue, it would increase annual property tax collections. Where is the problem?

I tried to raise these issues with Tom DeGise at the mayoral debate in the Heights but he was not responsive. For example, when I asked about the recommendations within the Arthur Anderson report, he answered “I don’t know who Arthur Andersen is.” (Arthur Andersen is one of the five largest accounting and consulting firms in the world!) If Mr. DeGise does not know that, how did he expect us to put him in charge of the financial management of this city?

Then I raised questions about the internal financial controls at, and the allocation of funds by, the Jersey City Parking Authority. His answer was that if I had a complaint, I should “Go to the Prosecutor.” Again, someone should explain to Mr. DeGise that the prosecutor is responsible for crime, not resolving city financial management.

Then Mr. DeGise’s campaign issues director, Jim Kennelly, went to his defense. He asked why I was even bringing up the Arthur Andersen report. He said, “After all, the recommended savings only represent 1.6 percent of the city’s budget. That made me wonder, “what percentage of our budget does Mr.DeGise’s team consider worth saving? 16 percent, 60 percent? How much will it take to get their attention!

I could continue, but I believe I have made my point. Instead of focusing on semantics; i.e., “$5.3 Million in proposed cuts versus ($3.8 million in cuts + $1.5 million in revenue increases = $5.3M), I encourage this administration to read this report again. Maybe they would learn something.

Shelley A. Brown, CPA, CVA, MBA