Hoboken, N.J., officials will learn today how much control the state intends to wield over the city's finances as the municipality faces a more than $10 million deficit.
Mayor David Roberts and his team will attend New Jersey's monthly Local Finance Board meeting today, with the panel addressing proposed supervision for Hoboken.
Issues at the top of the list include how the state will require the city to make up the shortfall, the supervisory time frame, and involvement by state officials in the running of Hoboken during the current 2009 fiscal year, according to Kathryn Kinney, a financing consultant at Donohue, Gironda and Doria, which advises the city on its finances.
Kinney now also serves as Hoboken's interim business administrator after Richard England left the position in early June and now works as the city's purchasing agent.
"While the city certainly welcomes the state's input and its resources to correct some of the issues that [Hoboken] has financially, as far as governing themselves, they feel they are certainly capable of doing that," Kinney said. "They are elected officials who know the city better than anyone, so they are hoping to continue to be able to perform in that capacity." The city's 2009 fiscal year began July 1.
Hoboken's City Council failed to pass a fiscal 2008 budget by the state-imposed deadline of June 6, prompting the Local Finance Board to step in and help the city sign off on a $92 million budget in early July, days after that fiscal year ended. Yet that action still left Hoboken with a $10 million deficit that the state will now determine how best to address. The LFB is a division of the state's Department of Community Affairs and authorizes local borrowing and municipal operating budgets.
Is the $10.3 million deferred deficit "going to be counted towards our spending cap or is it outside our spending cap, and how do you come up with the revenue to pay down that deficit?" asked councilman Peter Cammarano. "Are you raising it all in taxation in year one or are you spreading it all out? Those are some of the decisions that are going to have to be made by the DCA."
Hoboken officials are curious about the degree of state oversight as officials begin to work on the current fiscal 2009 budget. In July, Roberts submitted a $92 million spending plan to the City Council, the first step in Hoboken's budget process.
"I'm hoping it's going to be minimal. I'm hoping that it's going to be a monitoring status as opposed to a strict supervision," said council president Nino Giacchi. "I think the council has already been dealing with some of the issues, and they've been doing so in an effort not only to deal with the actual financial crisis, but also to demonstrate to the state that we are looking and working at resolving these issues."
Discord and conflict highlighted the fiscal 2008 budget process. City Council members say getting definite numbers from Roberts' office has been difficult and that they heard about the budget deficit for the first time in late May, only days before the state's June 6 deadline. Roberts is a second-term mayor, up for re-election next May.
Officials are hoping the current fiscal year will be less dramatic. Kinney said the mayor's $92 million spending plan for fiscal 2009 is the same size as last year's budget, but is a more fiscally responsible plan, free of one-time revenues and including a 1.5% property tax increase to generate an additional $412,000 of revenue for the city.
"The main difference between the two is that it removed all one-shot revenues," Kinney said. "Every revenue is a recurring revenue. It also called for a very minimal property-tax increase and $500 million in staff reductions."
The city has about $60 million of outstanding debt. Hoboken does not carry underlying ratings from any of the three rating agencies.