What's the predicament?
Hoboken is already almost seven months into the 2005-2006 fiscal year and still hasn't approved a budget for the year.
Holding things up is the proposed sale of the city's municipal garage to the Hudson County Improvement Authority. Mayor David Roberts wants to use $7.9 million from the sale to plug a budget shortfall.
After the city sells the garage, the HCIA would lease it back to the city. If the HCIA in the future sells the garage to a third party, the city would get the proceeds above the original sale price.
But the City Council minority is strongly opposed to the sale, and because it needs a two-thirds vote, Roberts doesn't have the votes to make it happen.
If the measure does not pass, the city will have to either drastically slash spending and jobs (a bit difficult to do this late into the fiscal year), or raise taxes. The latter is also unpopular because the mayor and three councilpeople are up for re-election in May.
Complicating the issue is the fact that the tax collector has already sent out the tax bills for the third and fourth quarters. The tax bills were struck with the assumption that the sale would go through. The council minority has said until the final budget is approved, it was illegal to send out the fourth quarter tax bill.
At the last City Council meeting, to force the mayor's hand on the tax bills, the four-member minority voted down a temporary budget, which also needed a two-thirds majority and would have paid the city's bills and salaries through March.
Without another temporary budget, the city will theoretically shut down March 3, the day after the next City Council meeting.
The state weighs in
Susan Jacobucci, the director of the state's Division of Local Government Services, which is part of the Department of Community Affairs, in a Feb. 22 letter, ordered the council to approve its temporary budgets. "The city will not be able to continue delivery of essential services for health, safety and public welfare of its residents," Jacobucci. "Additionally, the city will not be able to fulfill its contractual agreements, resulting in a loss of services and potential litigations."
Furthermore, she said in the letter that every council member that "willfully fails or refuses" to comply with her order will be fined $25 a day. The council minority has until March 4 to appeal the order.
Also on the garage
Jacobucci also said the city should pass the sale of the municipal garage, or risk the fiscal stability of the city. "In failing to adopt the ordinance, the council has effectively brought the city's budget adoption process to a standstill," Jacobucci's letter read. "The action not only violates the provision of the local budget law, but severely threatens the fiscal integrity of the municipality and jeopardizes its ability to collect property taxes in both a timely manner and at an appropriate level."
Good news for Roberts
The comments from the state clearly favored Roberts' position, on both the budget and the garage sale. "The state is taking extraordinary steps to weigh in on the City Council's inaction," Roberts said Wednesday. The mayor added that by not approving temporary budgets and the garage sale, the council minority is only grandstanding. Roberts said that if they pass the sale of the garage, a balanced budget could be approved - without a tax increase for the 11th consecutive year.
"They are playing around with the fiscal integrity of the city for their own political reasons during an election season," Roberts said. "They like to rock the boat while warning everyone that there is a storm ahead."
Roberts added that while he would rather not use non-recurring revenues, sometimes that is necessary to maintain a stable tax rate.
"This is certainly a practice I would like to get away from in the future, but in this case the good overrides the one-time use of revenue [budgetary relief.]," Roberts said.
Roberts also said that he has short-term and long-term goals as relates to the garage.
For the short term, he said, he absolutely wants to use $7.9 million to plug the city's deficit. But, he said, he also has long-term plans. Right now the garage is only worth around $10- to $11 million as it is currently zoned. If the council were to "up-zone" the property for high-rise residential development, it could be worth between $20- to $30 million.
Roberts said if the HCIA re-sells the garage, the city could use that money for open space acquisition.
Councilman Michael Russo, who is a likely mayoral opponent of Roberts in May, said Thursday that he still believes that the sale of the garage is illegal, and will not vote for it. In New Jersey it's against the law to take out a loan to pay for operational expenses. But, Russo said, that is what is happening here. The city would be, in essence, getting a loan from the HCIA, with the garage as collateral.
Russo added that that he is not afraid of being fined. "I dare them to fine me," Russo said Thursday. "I'll be in court the very next day."
He also said that Jacobucci's letter is not going to sway him to vote for the temporary budgets or sale of the garage.
"I will never vote to sell this garage [to plug a budget gap]," he said. "I will not give this administration a green light to spend whatever it wants."
Russo said that he has asked the state to come to Hoboken multiple times, in writing, to look at the city's books, but his offers have been rebuffed.
"The state is being a puppet for Mayor Roberts at this point," Russo said. "I think we all know that this is going to wind up in court."
Councilwoman Carol Marsh, who is also running for mayor, said Thursday that it is nobody's intention to shut down the city, and that the DCA is acting on false facts that they are receiving from the administration. She reiterated that the city has sent out illegal tax bills, with no budget, and that needs to be resolved immediately.
She also stated the DCA's letter has not persuaded her to vote for the garage. Marsh said that she would vote for the sale of the garage only if all of the money from the sale were used to purchase land for open space or a new municipal garage. She has called Roberts' spending "out of control."
As a result, this Wednesday's City Council meeting, scheduled for 7 p.m., could see some very loud fireworks.