New Jersey's Local Finance Board yesterday in Trenton denied the city of Hoboken an extension to work on its $102 million fiscal 2008 budget and close a current $10.1 million shortfall.

Hoboken City Council members say they do not trust Mayor David Roberts' budget numbers and are reluctant to sign off on the fiscal plan, yet state officials refused to grant the council more time to get the budget figures in place.

The LFB did not give specifics on how it would proceed, but said the state would begin "a process" with Hoboken on Monday, according to councilman Michael Russo, who was at the meeting.

"Without the mayor signing a sworn document that these are in fact the exact numbers that we are looking at and that these are in fact the problems that we have in the city of Hoboken and taking responsibility for the budget that he presented to us, the majority of the City Council will not act on a falsified budget," Russo said. "And the state, to my surprise, asked us to do exactly that, when in fact it's illegal for a council member to vote on a budget that [he or she] knows is underfunded, so it baffled me today."

LFB spokesman Chris Donnelly confirmed that the state will work on how to move forward with the city.

"Hoboken is still under order to adopt a budget and the Division of Local Government services will decide the proper course of action within the next few days," Donnelly said via e-mail.

The request for extra time is a shift in strategy. Earlier this month, the council favored state officials coming in to help balance Hoboken's books. On June 1, the panel rejected, in a 5-to-4 vote, a plan to ask the Local Finance Board to allow the city to raise property taxes beyond the 4% cap imposed on municipalities, a move that hindered Hoboken's ability to wrap up the current budget on its own by the state-imposed June 6 deadline.

Council members Peter Cammarano and Ruben Ramos have warned that the state would not put Hoboken taxpayers' interests first and instead could impose greater property tax hikes than what local officials would approve.

"The state is going to come in and ask for one number and one number only," Cammarano said. "They don't care how we got from A to B to C, they don't care whether there's chicanery or not, they don't care how the City Council has been treated or mistreated by the [Roberts] administration. All the state cares about is, 'What is your shortfall? Give me that number.' "

Hoboken's budget process has been anything but smooth. The city's business administrator, Richard England, resigned last week in the midst of the budget fiasco and council members say finalizing the budget has been difficult as Roberts' office has been slow in releasing revenue and expenditure figures. The council first heard of an approximate budget shortfall figure, $11.7 million, at a May 28 meeting.

To address the budget gap, the council last week voted to extend and increase by $1.7 million a loan from its municipal garage to help decrease the $11.7 million to $10.1 million and cover financing fees on the transaction. Cutting into the deficit could enable the city to increase fourth-quarter property taxes at a lower rate and save taxpayers money in the short term.

Hoboken has roughly $60 million of outstanding debt, according to Kathryn Kinney, a financing consultant at Donohue, Gironda and Doria, which advises the city on its finances. Hoboken does not carry underlying ratings from any of the three rating agencies. The city has an estimated 2006 population of 39,853, according to U.S. census data, and is located directly across from Manhattan, over the Hudson River. Gov. Jon Corzine is a resident of the city.

The LFB is a division of the Department of Community Affairs and authorizes local borrowing and municipal operating budgets.

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