The City Council met twice last week, on Sunday and Wednesday, and both times denied City Hall's attempt to raise spending in its 11-months-late budget - instead, forcing the state to come in and possibly solve the city's budget crisis by raising taxes.
The city is very late in passing its proposed budget for the previous 11 months of spending, and now needs more than $11 million to finish out the fiscal year. While the mayor would like the city to borrow money and try to pay it back in a future year, some believe it is only a temporary solution. They would rather force the state to take over, which will likely result in a big fourth-quarter tax increase.
Roberts criticized the council's recent 4-5 votes as political and dangerous to the taxpayers, while council members say that it was Roberts' spending and budgeting practices that put them in this last-minute mess.
The numbers
The votes were actually attempts to pass waivers to exceed the annual state-mandated 3.5 percent cap on spending and taxing.
The city is dealing with both $3.6 million dollar shortfall in revenue and $8.1 million in over-expenditures, making the total shortfall $11.7 million to be made up by June 30.
Michael Russo, the 3rd Ward councilman, had asked the administration at a meeting the previous week to sign affidavits - within the council's power - to attest that the numbers are correct, and no one was willing to do so.
"How long can this council take the embarrassment, take the insult?"
- Nino Giacchi
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The council also did not receive an accompanying resolution explaining the waiver in their council packets before the meetings to vote on the waiver Sunday night.
Council President Theresa Castellano, 2nd Ward Councilwoman Beth Mason, 4th Ward Councilwoman Dawn Zimmer, 5th Ward Councilman Peter Cunningham, and Russo all chose not to entertain the waiver request that would have given the council one last opportunity to work with the budget before ceding control to the state.
Many people believe that the resulting state control of the budget will carry over into next year's budget, and result in a virtual state takeover of city finances, but Cunningham said last week that is not the case.
"We're not going to be taken over by the state," Cunningham said in an interview after the meeting on Sunday, June 1.
The state will ask the administration to sign affidavits, just as the council did, and most likely will strike the tax rate to increase revenue to meet spending, officials said.
With only 12 days left in the fiscal year, cutting spending and increasing other revenue is almost impossible.
Will affect taxes - even if you rent
City officials say, at this point, taxpayers should expect a 50 percent increase in taxes in their next bill, as well as significant increases in the next two quarterly bills after that.
Those who rent apartments rather than owning may still be affected, as landlords can spread out tax increases among tenants by following a city procedure.
The council is currently reviewing their options for providing some relief to taxpayers as far as extending the grace period for paying the tax bill, lowering the interest rate on late taxes, and minimizing penalties for tax bills over $10,000 at the close of the fiscal year.
Out of England
In the wake of the budget crisis, city Business Administrator Richard England resigned his position on Thursday, June 5. However, England was holding dual positions in the city government - he was also the purchasing manager, a position he will retain.
England was the man who had been forced to answer many of the city's questions about the budget at recent meetings, when Roberts was not there.
England was accused of keeping information from to the council and using unhealthy budgeting practices by deferring four months' of health care payments from the last fiscal year into this one, without the council being aware. Coupled with rising insurance prices, this meant that city workers almost had their insurance suspended recently because the city did not pay the bills.
The price to solve the problem was steep: the city recently voted to spend $3.6 million more on employee health insurance.
According to Roberts, deferring payments for health care has gone on since Anthony Russo's administration, but the current administration had caught up on payments before slowly falling behind again in the past few years.
This was the first year that the health care provider sent a letter of cancellation, if the city didn't pay its bills.
'Tragedy' for taxpayers
Mayor David Roberts said in statement last week that he takes some of the blame for the budget crisis, but that the council is shirking its responsibility. He released a statement calling the waiver denial a "tragedy for the taxpayers."
He said the decision was made to "punish me politically," and that "we will all pay the price for their actions."
England is the third business administrator to leave during the Roberts administration. The city has also had two CFOs (and one period without a CFO where other personnel acted in place of a CFO) and three different city attorneys in Roberts' seven years in office. One former business administrator and one former CFO won lawsuits against the city after their termination.
Councilman-at-Large Peter Cammarano, who voted in favor of applying for the budget waiver, said in an interview last week that if the city had tried to keep the budget in their hands, there were more chances to solve budget problems.
He said the city could have deferred half of the health insurance payments into next year to spread out the cost, made attempts to secure a loan for short-term relief in this fiscal year, or make a general plea to the state for relief.
Cammarano said that he wasn't sure if he was in favor of these strategies, but he would have rather made the decision himself, as opposed to the state making the decision for him.
Mason called such possible tactics "budget gimmicks" in a press release last week, saying that they will only delay the problem or increase debt service for the city.
Layoffs coming?
Roberts said in a press release last week that "a general notice of layoff or demotion be served upon all City personnel" in their June 18 paychecks.
Some members of the council are calling this a scare tactic, since none of the layoffs or demotions would apply to the current fiscal year and thus would not solve the budget problem.
For suggestions or comments on this story, e-mail editorial@hudsonreporter.com.
The City Council reached a boiling point on Wednesday concerning the administration's confidential report on the Police Department SWAT team and the actions of Chief Dr. Carmen LaBruno.
Several council members asked Public Safety Director Bill Bergin and Corporation Counsel Steven Kleinman if they could give the council - in confidentiality - the report, should the council need to make a decision on the personnel involved.
The report pertains to allegations made by five police officers against the chief of police and the former commander of the city's SWAT team.
Nino Giacchi, the 6th Ward councilman, who is normally very subdued, was noticeably upset at Wednesday's council meeting. He said that regarding the SWAT report, he had to tell his constituents, just like with the budget numbers, that he doesn't know what the information is.
"How long can this council take the embarrassment, take the insult? How long can we say we just don't know?" Giacchi said.
Kleinman said that he was advised by the state Department of Community Affairs not to make the report available, so as to not compromise the investigation, but that ultimately his decision.
However, recently, copies of the report were leaked on the internet. A copy of the report, with names redacted throughout, has been made available at www.internalaffairsnj.com.
Public Safety Director Bill Bergin, the only other person in the administration cleared to see the report, said that the council "will never get the report out of me."
Kleinman made copies available the council on Thursday "under conditions designed to preserve the security of the reports," he said on Friday. - TJC
Many Hoboken residents have been up in arms about the overspending by the city and the apparent misinformation given out during the budget process. At the council meeting on Sunday, June 1, several residents asked for explanations and accountability from the city's leaders.
Helen Hirsch said that if Roberts was concerned about taxpayers, that he wouldn't have "added to the payroll another publicist to tell the world what a great job he is doing and to suggest ever-more ribbon cuttings."
She, and many other residents and council members, called for a forensic audit of the city's financial situation.
"I hope I can live long enough to see sense happen in this city," she concluded.
Frequent meeting attendee Maurice "Mo" DeGennaro said that everyone - administration and council members - are to blame for the budget crisis.
"Isn't there something illegal here? Didn't we exceed the cap?" he said. "Well if we exceeded the cap, why didn't you guys stop it?"
Former city CFO Michael Lenz said that Mayor David Roberts owed the city an apology for allowing his administration to over-spend and misinform the council of the actual budget numbers.
"With all due respect to Mr. England ... [England] has not been giving you the truth, the whole truth, and nothing but the truth," Lenz said. "The mayor is a coward. Mayor Roberts is not here tonight. Mayor Roberts leaves Mr. England, who is in an impossible position, to defend him."
Resident Charles Mancini said that if this administration was operating in the private sector, people would have been fired already, and the shareholders would receive answers.
"Cost control and fiscal prudence are the foundation that successful businesses are built upon," he said. "Here such disciplines are afforded little consideration. After all, you're spending other people's money. Well, I'm the other people, and I'm outraged."
Resident Edward Levin said, "We have a corporation. We have a CEO of the corporation and a CFO of the corporation ... who completely failed in their job. The board of the company would ask for their resignation on the spot."
"In the real world the mayor, who is the CEO, would not have a job," he added. - TJC
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