That was then…this is now
Fulop and council do complete 180 and approve $9.5 million retirement bond
by E. Assata Wright
Reporter staff writer
Nov 17, 2013 | 2604 views | 0 0 comments | 69 69 recommendations | email to a friend | print
Angry residents said the $9.5 million bond to cover retirement benefits for city workers should have been included in the city budget, not set apart and borrowed with interest.
Angry residents said the $9.5 million bond to cover retirement benefits for city workers should have been included in the city budget, not set apart and borrowed with interest.
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The e-mail was very brief, just one sentence in length, and was sent to taxpayer advocate Yvonne Balcer in December 2012 from then-City Councilman Steven Fulop: “Yvonne, can you come and speak against the $9.5 million bond [for] retirements?”

Fulop was at the time trying to build pressure from Jersey City residents to quash a proposed measure introduced by the administration of then-Mayor Jerramiah T. Healy to bond for $9.5 million to cover retirement benefits for city employees.

The move was successful. Balcer and several other residents descended on City Hall last December to voice their opposition to the bond proposal and the City Council narrowly defeated the measure by a vote of 4 to 5.

But that was then, and this is now.

Now, Healy is gone, Fulop is mayor, and the city is still facing $9.5 million in retirement obligations to its retirees. Thus, the bond ordinance resurfaced last Wednesday, only this time it was advanced by the administration of Mayor Fulop and unanimously approved by the Fulop-allied City Council.
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‘I trust this administration more.’ – Rolando Lavarro Jr.
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State law allows municipalities to sell bonds to fund retirement benefits as an alternative to raising taxes, and to pay off the bonds over five years. But interest payments on the bonds actually cost the taxpayers more in the long run.

By a vote of 8 to 0 the City Council approved a measure to borrow money to cover terminal leave benefits owed to retiring city workers. The debt will be paid off over five years.

Fulop’s allies on the council – Frank Gajewski (Ward A), Khemraj “Chico” Ramchal (Ward B), Diane Coleman (Ward F), Joyce Watterman (at-large), Daniel Rivera (at-large), and Rolando Lavarro Jr. (at-large) – all voted in favor of the bond measure. The council’s two independents, Richard Boggiano (Ward C) and Michael Yun (Ward D) also supported the ordinance.

Ward E City Councilwoman Candice Osborne did not attend the Nov. 13 City Council meeting and did not participate in the vote.

Coleman and Lavarro were among the City Council members who voted against the $9.5 million bond measure last December when it was proposed by the Healy administration.

Coleman explained her change of heart by stating that last year the bond measure came up when she was a newly-elected councilwoman and her questions regarding the bond had not been answered by the time she had to vote on it.

Lavarro last week said he “unapologetically” supported the Fulop bond proposal because, “I trust this administration more.”

Bond a ‘double tax’?

Despite the flip-flop, residents were no more enthusiastic in their support of the measure than they were nearly a year ago.

“Do I understand that we have an obligation? Yes I do,” Balcer told the council last Wednesday. “But we tend to ignore this when we hire new people. We tend to ignore this when we promise developers [tax breaks through abatement agreements]. Last year, Councilman Fulop understood that bonding adds on to the city’s debt and makes my taxes go up and makes everyone else’s taxes go up. So, while we’re bonding for this and bonding for that, you can cut all the salaries you want. You can’t cut bonding debt. Do not float notes. Do not float bonds. That’s what I would say.”

Another council meeting regular, Riaz Wahid, said, “I am not against this bond. What I am against is that we are being double taxed. This should have been part of the [2013] budget. You already taxed us. And now you are taxing us again through this five-year bond. It is not fair. You could have put this as part of the one-time tax increase for the taxpayer.”

In July, the council approved a 2013 city budget of $515.9 million that included a municipal tax increase of 7.6 percent.

Changes in terminal leave

Former Business Administrator Jack Kelly told the Reporter last year that until 2009, the city had been spending about $4.5 million annually on terminal leave benefits for its retirees. Beginning in 2009, however, the amount ballooned to $9.5 million. To address the problem, the city has, since 2010, chosen to borrow money rather than levy taxes to meet its terminal leave commitments. But residents argued last week that the city must begin to budget for terminal leave expenses and stop bonding ,which only adds money to Jersey City’ debt burden, which has to be paid off by taxpayers.

Like most municipalities throughout the state of New Jersey, Jersey City has already begun to phase out terminal leave benefits so that such payments will not burden taxpayers in the years to come.

According to Acting Business Administrator Robert Kakoleski, terminal leave payouts for civilian employees of the city are capped at $15,000, as is common in other municipalities.

The city is also working to eliminate terminal leave from new collective bargaining agreements for uniform personnel, specifically police and firefighters.

For example, under the firefighters’ contract agreed to earlier this year, city firefighters who were hired after May 1, 2011 will no longer be eligible for terminal leave days. Such benefits have also been eliminated for superior officers and members of the Police Officers Benevolent Association who were hired after Jan. 1, 2013. Officers and firefighters who were hired before these dates will have their terminal leave days reduced under the new contracts.

However, Kakoleski pointed out that it will take years for the city to realize this cost savings, since new hires are decades away from retirement. In the meantime, many older officers and firefighters who are retiring now, or who will be in the next few years, will still be owed terminal leave payments. Covering these payouts will continue to be a challenge for the city over the next several years.

Kakoleski said the city tries to renegotiate these payments owed to older uniform personnel each time police and fire contracts come up for renewal. But, he said, securing givebacks requires the approval of the unions, which are loathe to give up a benefit that was promised by the city decades ago under previous contracts.

E-mail E. Assata Wright at awright@hudsonreporter.com.

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