Council sitting on Hoboken's budget

May 24, 2008 Jersey Journal

Faced with the choice between a tax hike or de facto borrowing to bridge a several-million-dollar budget gap, the City Council Thursday night voted to do neither, opening the door for the state to take over the city's finances.

Officials have described the budget gap as between $3.5 million and at least $8 million, and several council members said they couldn't vote on a fix for it until they had clearer numbers to work with. Others said they did not trust the administration's budget numbers and would welcome state intervention, accusing Mayor David Roberts of hiding overspending, a charge he denied.

The administration proposed to increase a loan that would use the municipal garage as collateral from $13.9 million to up to $19 million. That loan would also need to be secured with a $3.7 million bond sale.

It is illegal to borrow money to pay for operating expenses, but the city has gotten around that law since 2005 by using legal maneuvers that have been approved by the state. The bond would be an expansion of those maneuvers.

The council tabled an ordinance to approve the $19 million loan by a 5-4 vote, with Peter Cammarano, Terry LaBruno, Ruben Ramos and Nino Giacchi dissenting. The council then voted down the $3.7 million bond 7-1-1, with LaBruno voting yes and Ramos abstaining.

Since the loan is not possible without the bond, the administration wants the state to approve a property tax increase higher than what is allowed under the state cap. But the council voted down that resolution 5-4, with those opposed saying they couldn't ask for a tax hike until they knew the true extent of the deficit.

Theresa Castellano, Beth Mason, Michael Russo, Dawn Zimmer and Peter Cunningham voted no. As Castellano cast the deciding vote, the audience gasped.

"At this point, without City Council approving an application for a cap on the levy waiver, I do not see any way for the city to adopt a legal budget," said Corporation Counsel Steve Kleinman.

Council members could still approve the measure at its June 4 meeting.

Michael Lenz, a former chief financial officer for the city and a frequent critic of the city's budget process, praised the council's decision.

Lenz, who is also a state certified municipal finance officer, said bridging a gap of $4 million would mean an increase of about $250 for the fourth-quarter tax bill on a home valued at $100,000.

Roberts said that number sound high to him, but added: "Certainly the approach that we had presented would have allowed for a much lower increase in taxes - and it would not have all been in one quarter."