Finance board approves bonds; Money is less than what city expected to fill budget gap
It's been like pulling teeth from the city's fiscal mouth. And much like the tooth fairy who never seems to leave enough dough to make you sing, the state finance board recently accepted a proposal that allows the Hudson County Improvement Authority to lend money to Union City to help fill a budget gap- but it's not the kind of money the city expected. The bonds that the finance board allowed to be issued are $4.5 million shy of the $13 million the city had first banked on. The city needs the money to help cement a $7 million hole in its 1999-2000 budget, which still has not been passed. Mayor Rudy Garcia hardly seemed distraught last week after learning that the committee rejected a revised proposal for $10.8 million. Instead, the HCIA will distribute to the city just $8.5 million in bonds. Of that amount, only $4.5 million can go toward the construction of a new Department of Public Works garage. The city has been seeking to sell its old garage to a developer. Al Steinberg, director of the state Division of Local Government Services, said last week that the finance board refused to grant the city either the $13 or the $10.8 million it had requested because appraisals of the garage's value were placed between $2.1 million and $4.2 million. He said the board had problems with the city's request for $10.8 million because it "contained some inflated numbers both on the value of the garage and also for the amount to be raised for the construction of the new public works garage. The amount of $3.5 million which was approved by the board is a realistic value." Under the board's approval, $4.5 million is set aside for the construction of a new DPW garage and $500,000 for issuance cost. The finance board, said Steinberg, will allow the $3.5 million to be used in the city's budget "on the condition that the remaining revenue shortfall would be addressed by budget cuts or an increase in taxes." The reason for this, said Steinberg, is to safeguard against anymore one-shot revenue that avoid the responsibility of addressing long-term needs of the city. Steinberg said that while one shot revenues allow for the passage of the budget for the operating year, it fails to provide a foundation for future municipal needs. May be no choice
Garcia has said before that there were no intentions to raise taxes, but for the budget to work, loss of funds will have to be made up from an increase in taxes or cutbacks in city expenses. Attempts at cutting back city expenses have already materialized with the board of commissioners' recent adoption of a spending, hiring and promotion freeze effective until Jan. 1, 2001 or when the next fiscal year budget is adopted. Garcia does not believe his critics are correct when they blame him for the city's budget dilemma. Instead he blames commissioners Michael Leggiero and Rafael Fraguela for their role in opposing and blocking the sale of Roosevelt Stadium to the Board of Education. That sale would have generated at least $3.32 million to be used towards the budget, but is now being challenged in court by a local restaurant owner whom Garcia believes has been influenced by Fraguela. "I wanted [sale of Roosevelt Stadium] so there could be no tax increases," said Garcia last Wednesday. "I had the entire budget covered. Maybe commissioners Fraguela and Leggiero can come up with the remainder of the money." Garcia said he hopes that taxes do not increase, but hinted that the state could stage a takeover of the city's budget when he said that if the budget were taken over, "[The state] will set the rate and raise taxes." Fraguela has been pushing all along for a state takeover because he said the city was in dire need of help and unsuccessfully tried for the third time at the last commissioners' meeting to bring in the state. Leggiero initially supported Garcia and his sale of Roosevelt Stadium but has opposed him on the issuing of bonds for the sale of the garage. At the most recent Board of Commissioners meeting before the finance board gave its approval, Leggiero questioned the sale of the garage. "I don't quite feel how we can fill the budget gap if we've only received an appraisal for$4.1 million." "[Fraguela and Leggiero] might get their wish and have the state come in," said Garcia who maintains that the sale of the DPW garage is "self-containing" because it will generate over $5 million in taxes over the next 10 years and $800,000 in Urban Enterprise Zone funds per year.