City and school budgets may both raise taxes
City must deal with $1.5M in legal payouts, while schools could see 54 layoffs
by Dean DeChiaro
Reporter staff writer
Mar 23, 2014 | 2698 views | 1 1 comments | 60 60 recommendations | email to a friend | print

The Hoboken City Council unanimously voted on Wednesday night to introduce a $107.6 million budget for calendar year 2014, a budget that may include a slight tax increase. Residents pay taxes to three entities: The city (determined by the municipal budget), the schools, and the county.

Mayor Dawn Zimmer described the budget as “fiscally disciplined” on Wednesday night, but signs of political divisiveness quickly began to show as one councilman challenged the pro-Zimmer council majority to cut spending in an effort to lessen the potential 1.87 percent tax increase.

Still, that tax hike, which is largely due to renegotiated salaries with the city’s municipal labor unions and payouts required due to lost lawsuits, will only result in a $46 dollar per year increase for the average Hoboken taxpayer, said the city’s finance director, Solomon Steplight.

But the $46 increase would not be the only increase contributing to overall taxes – there’s likely to be a tax increase from the city’s Board of Education as well.
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Hoboken taxpayers can expect a larger bill this year, from both the city and the board of education.
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The board on Thursday night released its $64.8 million 2014 preliminary budget at a special meeting, which contains a 3.9 percent tax rate increase and a levy (the amount that comes from taxes) of $39 million. The school board budget is significantly more cash-strapped than the city’s, and as many as 54 faculty and staff members could lose their jobs as a result, school officials said.

The board’s tax increase and spending cuts are largely due to a reduction of federal and state funding as well as a massive increase in charter school funding due to the Hoboken Dual-Language Charter School’s (HoLa) expansion to eighth grade, which is costing the district upwards of $575,000, according to documents provided by the board. In the last two weeks, Board of Education President Leon Gold has stirred some controversy by saying that charter schools were taking away too much funding from the other public schools in Hoboken.

School officials were reluctant to place a dollar amount on the increase an average Hoboken taxpayer might see, as the budget is preliminary. Additionally, Superintendent Mark Toback would not say whether the potential layoffs would affect exclusively teachers or staff, noting that it could be a mix. Subsequent Board of Education agendas are set to include budget discussions, school officials said, before the board holds a vote on a final budget by May 6.

City spending

The city budget, up nearly $3 million from last year, is being increased due to the series of successful contract settlements that the Zimmer administration reached with various municipal unions in 2013, said the mayor in a letter to the City Council early last week. Salaries are rising from $39.5 million to $40.7 million.

Zimmer also noted $1 million in anticipated tax appeals due to the ongoing property revaluation the city could be forced to pay this year, and $800,000 the city must pay former employees over an allegedly illegal retirement plan presented by a former administration.

But there are other major increases in the budget as well that Zimmer did not address in her letter to the council. The city will see a 400 percent increase in legal payouts due to court cases against it lost throughout last year. In 2013, Hoboken only owed successful plaintiffs $300,000 – this year it could pay out $1.5 million.

City spokesman Juan Melli was asked by The Reporter to provide a breakdown of cases associated with the $1.5 million judgment line item listed in the budget. He declined to provide one, citing ongoing litigation, but did say that the amount does not include $1 million awarded by a judge to former Director of Public Safety Angel Alicea, who filed a wrongful termination suit. The city is appealing that ruling. Should Alicea win, the city will owe him $625,000 in punitive damages and $440,000 in retroactive pay, or more than $1 million.

In her letter, Zimmer outlined possible spending cuts which she asked the city council to work together on, including a reduction of the city’s Open Space Tax, an overhaul of the Hoboken Fire Department’s overtime system, a “Shop Hoboken” property owner’s tax reward program, and reductions to the city’s sanitation budget.

“We hope to work with you on [these] measures that could result in cost savings and fairness to Hoboken taxpayers,” Zimmer wrote to the council. “Working with Finance Committee Chair Councilman [Ravi] Bhalla, we look forward to moving ahead with the budget hearings.”

Layoffs in the schools?

A presentation at Thursday night’s Board of Education meeting by Superintendent Mark Toback and Business Administrator William Moffitt portrayed the Hoboken public school district as having fallen on hard times due to funding cuts and new charter school costs. Though the budget doesn’t represent an overall increase from last year, the tax levy is $1.5 million higher than the 2013 tax levy of $37.9 million.

Toback described Hoboken’s situation as similar to the struggles facing districts statewide. State education policies are pushing more of the burden to taxpayers, he said. Specifically, the state’s school choice program, which pays districts to allow students from outside Hoboken to attend the city’s schools, is being curtailed this year at the behest of Gov. Christopher Christie. The result is a loss of $250,000 to the district, he said.

Additionally, Hoboken must deal with rising salaries, increases in health care, special education, and food service costs while still dealing with a 15 percent reduction in federal funding.

Finally, the district will pay the city’s three charter schools $8.3 million this year, up from $7.5 million last year. That number has doubled since 2010, when the district only awarded $4.1 million. Still, while school officials have recently said the charters are “bankrupting” the district, the board’s total budget in 2010 was $59.2 million, $5.6 million less than this year’s proposed $64.8 million.

Last week, after Gold’s comments that HoLa and other charters are bankrupting the public schools, a spokeswoman for HoLa said that placing the blame on charter schools is “harmful and irresponsible.”

“It's hard to imagine that HoLa's additional cost to educate children for one year –$475,000 – will hurt Hoboken's $64 million budget so much that they will have to lay off staff,” said Barbara Martinez, who also serves as the president of the school’s Board of Trustees. “The most important thing for people to understand here is that HoLa spends $11,000 per pupil and the district spends north of $24,000 per pupil.”

Cost-cutting

Though Toback and board members alike reluctantly acknowledged that the budget could necessitate layoffs, the superintendent listed a substantial number of spending cuts he’d designed to limit the damage.

Textbook purchases scheduled for this year, originally marked at $100,000, will be reduced by half, as will the large facilities management budget. Additionally, special education program spending will be reduced by $300,000. Paired with other cost-cutting strategies, Toback said, the preliminary budget was already down nearly $1 million prior to it ever being made public.

Dean DeChiaro may be reached at deand@hudsonreporter.com

Comments
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assilem
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April 04, 2014
With town that has been filthy for many many months and where the County has head to stop in to stop the further influx of rats, Zimmer wants to get Sanitation? This on the heels of not providing essential services due to earlier layoff of employees and the purchase of Big Belly garbage cans?

The Mayor and the budget does not reflect Essential Services that need to be provided in any city.

The initial budget intro should have been delayed until the public works works were placed in the budget. It was with a complete lack if fiscal responsibility that the Mayor gave large raises prior to the budget being set. I would say the claim of being disclipined is patently false in light of the facts just mentioned.