Tuesday, June 3, 2008

hoboken new jersey's cash crisis

from councilman cunningham:

Friends and Neighbors,

Last night's (special council) meeting was historical - again. The majority of council (5-4) voted to block an application (Cap Waivers) to Trenton that would have legitimized excessive spending this Administration has amassed in this Fiscal Year 2008. We think the number is $11.7 million. There was a second part of the application which would have provided for an increase in the tax levy to cover the over spending.

So what happens now? The answer is that the State will set the tax levy. No State control, but that story is for another day.

The numbers have been questionable from this Administration and Mayor, which was confirmed two weeks ago when revealed the Administration was introducing creative financing to leverage more funds from the municipal garage to cover operating expenses. That number was $3.7 million. That same evening we learned the short fall was not 3.7, but higher in millions of unpaid healthcare cost and public safety not appropriated.

So the council demanded that the true numbers be presented last Wednesday May 28th. Still no number, but plenty of excuses. So it was demanded again that the number be certified at the special meeting last night. No certification, thus no confidence and we voted no again.

The Administration's contention was with the city council passing these cap waivers (which were not guaranteed to be approved by Trenton), we will set the levy and we will be in control to negotiate with the State on how the tax increase will be applied. Corporation Counsel said, "maybe we can pull a rabbit out of a hat. The State can consider actions like bonding and/or deferring portions of the tax liabilities into future years." My response...that's precisely what we are trying to avoid.

This increase will hurt everyone. I am cautiously confident we have sent a message that we are not kidding about cutting expenses like head count and salaries. Now the Administration will need to certify the expenses and revenues to the State. The increase will be applied in the fourth quarter at around 50% increase of your current tax. Example...If your fourth quarter tax is 3,000, it will be 4,500 this quarter and will carry through the second quarter of fiscal year 2009.

I am sorry that our fiscal situation is much worse than I could imagine. I have spoken with respected CFOs and BAs in NJ regarding our situation, and they have concurred it's bad. At least our fiscal problems have been revealed, and we can start correcting the wrong doings of years past.

In conclusion, please see the attached press release Dawn and I issued today.

Thanks for listening, and please reach out with any question or concerns you have. I am open to all comments and suggestions.


June 2, 2008. Yesterday's special meeting of the Hoboken City Council marked a turning point in managing Hoboken's City finances. The Council finally took a stand against the on-going financial deception by the Roberts' Administration by voting NO on a cap waiver for spending. As a result of this vote:

• Mayor Roberts and his directors will be required to provide accurate financial records to the State, under penalty of perjury.

• The Healthcare of City employees will be protected by removing the incentive to delay payment for healthcare costs from one year to the next.

• The City of Hoboken moves itself on track for fiscal responsibility by requiring that this year's obligations be paid from this year's budget.

Unfortunately, due to poor management and outright deception by the Roberts Administration, the reality of City overspending and the need for a substantial tax increase is only now being discovered, in the last month of the year. This will place a severe and totally unexpected burden on Hoboken's most vulnerable residents.

To address this tax hardship, Councilman Peter Cunningham, and Councilwoman Dawn Zimmer are recommending to their Council colleagues that the interest rate on late payments of 4th quarter taxes be sharply reduced from the current 18 percent.

They propose changing the rate to nearly zero on the additional amount only, or if that is not possible, to 6 percent for the entire 4th quarter payment.

"We hope to keep the rate on these payments reduced through the end of 2008 in order to provide time for hard hit residents to make the required payments," Councilman Cunningham explained. "We ask that our council colleagues join with us in this effort."

"By taking this strong action now, we will finally start to get spending and taxes under control for the future," Zimmer said.

Taxpayers should know that the taxes they will have to pay in the 4th quarter this fiscal year are substantially higher than what their taxes should be on an on-going basis after the second quarter of the next fiscal year.

Although the 2008/2009 fiscal year will be a difficult one, they are both committed to fighting for outside review of the Administration's handling of the books. "A third-party review of our City's financials is critical to ensure strong fiscal controls, streamline administrative functions, reduce waste, maintain important City services and reduce the tax burden for Hoboken residents," Councilman Cunningham said.

No comments: