The City Council introduced Mayor David Roberts' 2003 fiscal year budget at a special meeting of the City Council Thursday night. According to city Business Administrator Robert Drasheff, the new budget is still a work in progress and could change before it is adopted.
The tentative spending plan covers expenditures from July 1, 2002 through June 30, 2003. The city is on a fiscal, rather than calendar, year. Many government entities are like Hoboken and run on fiscal years, although locally, the town of Secaucus runs its budget from January through December.
The City Council has scheduled a public hearing on the budget for Oct. 2 at 7 p.m. Copies of the preliminary budget are available at the City Clerk's office in City Hall.
The proposed $59.6 million budget is $4.7 million more than last year's $54.9 budget.
According to Drasheff, last year's budget needed $16.6 million to be raised by local property taxes. The budget that was introduced Thursday calls for $17.4 million to be raised in municipal property taxes. According to Drasheff, that increase of nearly $800,000 should be offset by new ratables that come on line, meaning that there will be more taxable property in the city, therefore each property owner pays a smaller percentage of the $17.4 million.
The budget introduced Thursday, according to Drasheff, constitutes a stable municipal portion of the tax rate of $7.84 per $1,000 assessed property value.
But there is a big question mark in this budget. It anticipates $4 million in "extraordinary state aid" that has not yet been approved. Extraordinary state aid goes to municipalities that demonstrate that, despite their efforts to provide property tax savings for current and future budget years, they have experienced circumstances that are beyond their control and warrant aid.
This year, the state budgeted $30.5 million in extraordinary state aid for the state. According to E.J. Miranda, of the Department of Community Affairs, the state has already doled out over $17 million of those dollars to over 50 cities whose budgets run an a calendar year and not a fiscal year. That leaves only approximately $13 million for the rest of the state.
In fact, according to DCA records, the most any city has received this year is $1 million in extra ordinary state aid. Bound Brook Borough, Manville Borough, and West Milford Township each received $1 million. The vast majority of awards are between $25,000 and $300,000.
What complicates that situation even further is that Newark has asked for $30 million, according to DCA officials. Even Drasheff concedes that Newark has more "political clout" and could cut into Hoboken's take.
But Drasheff did say that state Sen. Bernard Kenny (D-Hoboken) will be persistent in lobbing for state aid. "We are going to continue to fight for as much state aid as we can possibly get," said Drasheff. According to him, it will be three to five weeks before the DCA announces who will receive the state aid.
Councilman Tony Soares questioned the reliance on extraordinary state aid Thursday afternoon.
"It's hard to believe that with so many distressed cities statewide [that Hoboken] would even qualify for this aid," said Soares. "These funds should be used in emergency situations, not to just fill a budget gap."
Why spending's up
In his message included in the budget, Roberts claimed that city is experiencing uncontrollable hardships.
"This year, we were burdened with substantial increases in health care costs and municipal debt service, as well as the burden of overexpenditures from previous years," he said. "We will attempt to maximize revenue sources to offset these increases which are largely beyond the scope of our ability to control."
It is not contested that there is an approximately a $1 million hike in health care costs in the budget, or that municipal debt service is up $900,000. But what is contested is the accusation that former Mayor Anthony Russo overspent during his last two years in office.
Drasheff claimed last week that the city has allocated $4.1 million in the past two years to make up of over expenditures in 2000 and 2001. Drasheff said Thursday that state statute dictates that the money "must" be made up two years after the overexpenditures.
However, Drasheff himself was a top member of the Russo administration.
"Roberts is trying to spin [the current situation] and blame the Russo administration and the county," said Russo recently. "It's incredible that he would even attempt to do this because [the overexpenditures] would have shown up in his first budget. This is now his second budget."
Russo claims that he left the city in "good shape" with more than a $2 million surplus.
Drasheff also said that the city expects increases in salaries because the city's six labor unions are negotiating new contracts that might call for retroactive raises.
More cuts could be coming
The big question then is, what happens if the city does not receive all $4 million in state aid? In his budget statement, Roberts said he is ready to make more cuts.
"Many residents of Hoboken are facing concern and hardship," Roberts said. "Private sector employees face reduced job security caused by the near-collapse of the financial services industry, and landlords, both big and small, and homeowners all face uncertainty today. In the event that the state provides a reduced aid request, I am prepared to cut expenditures accordingly in order avoid any increase in taxes."
Drasheff said the city is ready to take the steps necessary if the aid does not come in. "We are prepared to make further cuts and find other sources of revenue if necessary," said Drasheff. "This is very much still a work in progress and it is our goal to keep the [municipal] tax rate stable."
Soares said that he anticipates that the council will have "to get out its carving knife" to avoid raising taxes.
If this state aid does not come in, he said, the budget must be "sliced, diced and julienned."