Proposed city budget soars to $87M
Expect 2.49 percent property tax increase; public hearings Wed, Thur

11/25/2007 Hoboken Reporter
 
HERE’S THE BUDGET – Mayor David Roberts introduced the city’s proposed 2007-2008 Fiscal Year budget of $87 million to the council this past Wednesday, the largest spending increase in many years. The city plans to hold two public meetings about the budget in the coming week.

Prepare for one of the biggest city spending hikes in 14 years - with a tax increase as a result. At this past Wednesday's council meeting, Mayor David Roberts introduced the proposed city budget for July 1, 2007 through June 30, 2008. If approved at a future meeting, it will see a spending increase of $8 million from last year, to $87 million.

Included in the budget is a 2.49 percent tax increase, which for the average homeowner is an increase of $221 per year for every $250,000 of assessed property, according to Roberts.

That $221 amount only goes for the municipal portion of a resident's overall quarterly tax bill, which will also include school taxes and county taxes. The school budget is decided each April, and the county budget is approved every June.

City officials said that the increases came from various costs: city pensions, health insurance, city debt, and increases in police and fire costs. The police are still negotiating their contract with the city, having been without one for the past three years.

The budget was introduced unanimously on Wednesday. All nine council members were present.

There will be two public hearings this week, so the council and members of the public can make comments and suggestions.

Some concern was expressed by 2nd Ward Councilwoman Elizabeth Mason over whether members of the public will have enough time to view the budget document prior to the meetings. According to Roberts, the budget will be posted on the city's website early this week, prior to the scheduled meetings.

According to 3rd Ward Councilman Michael Russo, who chairs the council's Finance Committee, the meetings will take place in the Municipal Court Room at City Hall on 94 Washington St. on Wednesday, Nov. 28 and Thursday, Nov. 29, both at 7 p.m.

How did it get so big?

Politically, Mayor David Roberts may not have to answer for the tax increase, as he has already stated that he does not intend to run for a second term in 2009.

The spending increase will be the biggest since Mayor Anthony Russo doubled municipal taxes after coming into office in 1993. At that time, Russo said that his predecessor, Mayor Pat Pasculli, had deferred costs in his own budgets after losing major revenue deals with the Port Authority to erect buildings on Hoboken's south waterfront. Those deals fell through because the public had decided that the buildings were too big, and voted down the proposals in referenda.

Over Russo's next two terms, his administration promised that the new south waterfront plan and all of the city's other development would contribute to the city's tax base, easing the burden on the local taxpayer. So, even if spending might rise to accommodate the new services, the number of taxable property should theoretically rise as well.

So why a tax increase this year?

Officials simply blamed rising costs, including insurance and debt service on money borrowed for special projects.

In Roberts' budgetary introduction to the council, he said, "During my almost seven-year tenure as mayor, Hoboken has experienced tremendous growth. Our property values have increased by over 100 percent. Our city's borrowing power, a major index of financial well-being, has increased since I have come into office from approximately $69 million seven years ago to over $200 million today," added the mayor.

That also means that the city has been borrowing more money for projects, increasing its debt service.

Like past city officials, Roberts complained that the city does not get enough services from the county, for what the residents pay in taxes.

"Hudson County's unhealthy reliance on Hoboken is the single most expensive portion of our tax levy," Roberts said in his budget message. "We must begin to see more services provided by the county to warrant the heavy burden Hoboken pays in carrying the county's costs."

Roberts said that he plans to reduce the city's percentage of county taxes by offering developers Payments in Lieu of Taxes (PILOTs) so that they pay a previously specified tax amount to the city each year, rather than paying regular fluctuating property taxes to the city, county and schools.

While this may aid the city budget, the money does not go to those other two entities. Jersey City has been relying on such tax deals for years, causing some controversy among activists who believe they only hurt taxpayers in the long run.

According to Roberts, through new PILOT payments, the city is planning to add $2 million to its revenues for the 2009 fiscal year.

Layoffs?

Along with introducing the proposed budget, the mayor discussed several initiatives he plans to use in the coming year to decrease future spending.

One of those involves an early retirement incentive for city employees. According to the mayor, this could have a net savings of $1 million in the first year alone, with an estimated savings of between $3.5 million and $6 million in subsequent years.

According to a published report, the city expects to slash its workforce from 540 employees to approximately 450 through the package. The city has already given layoff notices in order to meet state labor requirements, but it is unknown how many people will actually be laid off.

At a recent council meeting, Councilman Russo pledged that no city workers who live in town would be laid off before workers who have moved out of Hoboken.

The specifics of the early retirement package were not disclosed at the meeting.

Paying into their health benefits

The city also plans to reduce future spending by cutting healthcare costs by eliminating the duplication of coverage which occurs when a wife and husband are both city employees, and each has personal insurance rather than sharing one insurance package.

The city also plans to negotiate new health care benefits with its employees, which could result in city employees paying a share of the coverage for their family members.

Other budget cutting ideas suggested by city officials included: selling off $1 million worth of new taxi licenses for environmental-friendly gas and electric hybrid vehicles, increasing the number of parking meters in the city, and upping the daily city parking garage rates, according to another published report.