Botched budget finally approved

Now Hoboken knows what to spend... for last year

 
07/06/08 Hoboken Reporter
 

FINANCIAL WOES – The City Council passed a budget this week after a rocky end to the fiscal year. The budget went from $87 million to more than $100 million during the course of the fiscal year. See timeline below.  
SIDEBARS BELOW

This past Monday, the city of Hoboken passed a budget for the fiscal year that actually ended on the very same day.

The 2007-2008 fiscal year budget is far from perfect; it is short $3.6 million in revenue, and it excludes $8.1 million in expenses that will be paid for next year instead. That makes the total shortfall $11.7 million. It also includes more than half a million dollars in unpaid bills. But it has the state's blessing nonetheless.

The approved budget is $92.6 million, but the actual total expected spending from the previous fiscal year is $100.7 million, which does not include a separate budget for the $13.4 million operations of the Parking Utility.

The $3.6 million shortfall and the $8.1 difference in spending will have to be made up in the new fiscal year budget, possibly with a tax increase. Mayor David Roberts downplayed that possibility last week.

For a timeline of how this year's budget became so big and so late, see sidebar below.

The budget that was just passed represented spending from last July 1 through June 30, 2008. The city says it has already started working on a new budget for July, 2008 through next June of 2009.

The 2007 fiscal year budget was $74.9 million, representing an increase this year of 34 percent.

The vote

Council members Ruben Ramos, Terry LaBruno, Peter Cammarano, Dawn Zimmer, and Peter Cunningham voted in favor of the document on Monday.

Council President Theresa Castellano and Councilmembers Michael Russo and Beth Mason voted against the adoption, based on concerns over whether it was legal to do so, knowing that the budget was under-funded.

The nine-member council was under pressure from the state to pass the budget before the end of the fiscal year. It had been stalled recently because of council members' concerns that it was under-funded.

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"This council has never been presented with a budget that was approved by the state."

- Peter Cunningham
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On Monday, LaBruno said she was willing to take the chance on voting for it, and asked the council to do the same. Ramos and others were not as willing to do so. But they did take a risk in the end.

At the end of the meeting, City Councilman Peter Cunningham introduced a resolution to call for Roberts' resignation and the resignation of city Purchasing Agent Dick England. (See sidebar below)

State responds to questions

A representative from the state's division of Local Government Services, Assistant Director Judy Tripoli, responded briefly to some questions asked of her at the meeting.

She said that if the council did not approve the budget, the state would do so. She also said that the state was not requesting that the council pass the budget, just giving them a chance to do so.

Councilman Peter Cammarano warned his colleagues at the meeting that the state would not be as willing to work with the council going forward if they didn't pass the budget in front of them.

"If you want a better demonstration of our irrelevancy and impotence, vote it down and have the state pass the budget anyway," Cammarano said. "Test them again."

Tripoli, when asked whether it would be legal for the council to pass an under-funded budget, said that she was not in the position to give legal advice to the council.

Councilman Nino Giacchi was on vacation last week and not present for the Monday meeting.

Never had the chance

State officials declared in previous weeks that the City Council was derelict in its duty to pass the budget, but did not address the council's complaints that the administration overspent, deferred bills, or withheld information.

Councilman Cunningham pointed out Monday that the state never actually approved the previous budgets that were proposed by the city and sent to the state.

"I think it needs to be made perfectly clear here that this council has never been presented with a budget that was approved by the state," Cunningham said. "Nothing had ever been presented to this council to pass [until now]."

FIRST SIDEBAR

Council asks mayor to resign

Last week, five members of the City Council called for the resignation of Mayor David Roberts and Purchasing Agent Richard England, who had recently resigned as business administrator.

Following their passage of a budget that covered less than 90 percent of the year's spending, 5th Ward Councilman Peter Cunningham hand-drafted the resolution.

"I'd like to make a motion to call for the resignation of Mayor Roberts and Dick England," Cunningham said at the meeting on Monday.

The resolution said that the two administrators had knowledge that the budget was under-funded and gave it to the council to be passed anyway, which would be in violation of state law.

Council members Ruben Ramos, Dawn Zimmer, Michael Russo, and Council President Theresa Castellano voted for the resolution.

Ramos voted for it to some laughter, since he has recently been the mayor's greatest proponent.

Castellano made it clear how much she liked the resolution.

"Aye, aye, aye, aye, aye, aye," she said.

However, the resolution had no teeth because the council can't force Roberts to resign, and England already had resigned his post as business administrator.

The only recourse the city would have to remove Roberts from his post is a residents' petition calling for a recall, which would necessitate a citywide vote.

Councilmembers Beth Mason, Peter Cammarano, and Terry LaBruno voted present on the resolution, meaning neither no or yes.

Mason said after the meeting that as far as she knew, the council had not given any notice to any City Hall employee whose job was under review, so she didn't feel this particular route was the proper one to take at the time.

Cammarano said last week that he wasn't sure that removing Roberts at this time was the best thing to do.

He also noted that England had already resigned from his business administrator position.

Ramos said his vote was just out of frustration; he said in an interview that the vote wasn't personal and he and Roberts remain friends outside of the political realm.

Roberts released a press statement last week responding to the resignation resolution.

"The Hoboken City Council seems better equipped to handle political grandstanding than understanding their responsibilities within the law," said the release. "I suggest that before they put their collective feet in their mouths, they should consider what they say."

Councilman Nino Giacchi was not present at the meeting. - TJC

SECOND SIDEBAR

Follow the budget

Below is a timeline about how the city's budget got bigger and later until the very end of the fiscal year.

July 1, 2007 - The city's 2007-2008 fiscal year begins.

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Nov. 21 - Mayor David Roberts presents the budget to the council. Originally $87 million, it is already up $8 million from the 2007 fiscal year, including a proposed 2.49 percent tax increase in total taxes for residents.

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Nov. 28 & 29 - The Council's Finance Committee holds two public hearings, in which council members and residents can ask questions and make suggestions on the budget. The tax increase is re-classified as a 5.2 percent municipal tax increase. The council holds more budget meetings, sometimes a few meetings per week.

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Jan. 16, 2008 - The council proposed $2.45 million dollars in cuts; they also consider enacting a spending freeze. Finance Committee Chairman Michael Russo stresses eliminating the tax increase. The council submits the budget back to the administration, who questioned the feasibility of the proposed cuts.

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March 5 - Business Administrator Richard England returns the budget to the council, with the tax levy reduced by $1 million, in preparation of sending it to the state. England reports a slight reduction in taxes in the fourth quarter. The council is frustrated by the slowness of the process and says they will pay for employees' salaries and wages, but not operations and expenditures for that period.

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March 19 - England reports that the state sent the budget back because it was on the wrong size paper. The council enacts a full-fledged spending freeze, excluding salaries and wages, and requests Roberts appear before them at the next meeting to answer questions.

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April 4 - Roberts attends the meeting to defend his budget, which has now increased to $93.7 million. He says that the increase is because of grants. The council votes to not pay any bills, but Russo reconsiders his vote.

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May 8 - England reports that the budget is still in state hands awaiting approval. The council almost shuts down the city by voting not to pay salaries and wages, before Mason reconsiders. The council notes that City Hall has hired two new employees, and they consider that to be in violation of the spending freeze. A hiring freeze follows.

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May 22 - England admits at a meeting that the budget was under-funded and that four months of healthcare payments were held over from the previous year. The council says they had no idea that this year's budget was paying for some of last year's health care spending. In addition, the city has gotten word that employees' health care coverage may be cut off because of unpaid bills. Roberts comes back from the shore and appears mid-meeting. He says he did not know that the budget was underfunded. England says he "might have" told Roberts. No one can give exact budget figures at the meeting, although the budget is considered upwards of $96 million. That amount is above the state-mandated caps on spending and tax levy. Financial specialist Fred Tompkins admits he knew of the budget problems, but leaves the meeting before Roberts arrives. He has not been seen at a meeting since. The council asks for a special meeting where they can get the actual numbers.

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May 28 - A special meeting ends without final numbers. The council learns the next day that the budget totals more than $100 million, and that the budget shortage is $11.7 million.

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June 1 - Five members of the council vote down waivers from the state to exceed a cap on spending and taxation. Fourth quarter taxes are poised to have a 50 percent increase.

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June 4 - The council again votes down waiver requests, forcing the state to enter into the situation. England resigns as business administrator, but retains his position as purchasing agent.

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June 12 - Five council members appeal to the state for an extension, but are turned away due to lack of evidence that they have a plan to pass a budget at all. In the following week, a state representative blames the council for not passing the budget and encourages them to do so.

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June 30 - Council passes the 2008 budget on the last day of the 2007-2008 fiscal year.