City Council 5/22/2008
Below is the “public notice” that was created as a result of last weeks council meeting. Be sure to swing by City Hall on Wednesday, May 28, 2008 at 7pm. Read what led to this special meeting after the break.
City Council to Roberts: NO MAS!
Fed up with 7 years of back-door borrowing schemes, one-shot revenue shams, misinformation and manipulation, the Hoboken City Council finally popped Mayor David Roberts’ ballooning budget.
In another marathon meeting that lasted nearly five hours, the council said no to the the Mayor’s latest plan after learning the numbers they’d been receiving from the administration had been false all year. It turns out the spending plan offered by Roberts to the council for review had been underfunded since Day 1, and the budget gap was even larger than the council thought when they first began their meeting. Numbers of anywhere between $4.5 and $9.5 million dollars were discussed, with the council quickly coming to the conclusion that they could not trust Roberts’ numbers.
SEE THE REST OF THE LUNACY AFTER THE JUMP…
(city council, continued…)
Insurance Snafu is the Last Straw
The straw that broke the camel’s back seemed to be the revelation that Roberts was underfunding the employee health care plan in a desperate effort to defer costs as his budget gap opened ever wider.
In response, the council:
- Tabled the $19 refinancing of the Municipal Garage Certificates of Participation
- Defeated the effort to borrow $3.7 million dollars to plug his latest budget gap.
(Only Terry LaBruno voted yes while Ruben Ramos abstained, all others voted no)
- Defeated the administration’s request for a state budget and tax levee cap wavers
The last vote was the most important as the council essentially took the budget out of Roberts’ hands and made it impossible for the city to pass a legal budget. This automatically brings the state in to take a full look at the spending plan and plot a course of action to clean up the Roberts Mess. The key vote was 5-4, with council members Peter Cammarano, Nino Giacchi, Terry LaBruno and Ruben Ramos voting yes, and Peter Cunningham, Beth Mason, Michael Russo and Dawn Zimmer voting no. The final and deciding vote came from Council President Theresa Castellano, who voted no. A resolution sponsored by Mason to hold an emergency budget meeting was approved, along with a hiring freeze introduced by Cammarano.
Roberts races back from the shore
Upon hearing how he was being thrown under the bus, the Mayor raced up from the shore to defend himself and scapegoat his finance department. He showed up briefly to make his case, citing his “credibility”, but nobody was buying it, and the buck – literally – stopped with him.
What’s next? There will be no city shutdown, and workers will continue to be paid as the council approved spending that would keep the city running and avoid the kind of circus seen in 2005. There will be a tax increase (about $31 per $300k in property val), thanks to a Mayor who spent the last 7 years asking what he could spend instead of what he could save, growing his budget from $52 million to nearly $100 million thinking he could get away with it. This year, he didn’t. More developments from the meeting to come later…
City Council Preview
Seven years of David Roberts’ budget tricks may finally come home to roost at the City Council meeting tonight. Roberts likes to brag that he has kept taxes “stable” since he took the Mayor’s office in 2001. What he doesn’t like is when people remind him about the many schemes he used in the march to grow his budget from $52 million in 2001 to nearly $100 million today. A budget doesn’t nearly double in 7 years with no significant tax hikes without tricks. There’s been no shortage of them, which year after year have lulled the taxpaying public into a gentle slumber as their tax bills remained “stable”. No tax hikes, no reason for alarm, right?
Guess what? The alarm is going off.
How did we get in this mess?
Roberts has used many maneuvers to cover his spending sprees. First there was the takeover of the Parking Authority’s multi-million dollar cash surplus and annual revenue stream. Then there was the refinancing of the city’s borrowing which led to lower payments in the short term, at the expense of millions more tax dollars in interest over the long term. The law says cities are not supposed to borrow money to pay for ongoing expenses, so in 2005 Roberts transferred title of the Municipal Garage to Hudson County in exchange for $7.9 million to fill his budget gap in an election year. The title was transferred again a year later when the County wanted out of the deal because Roberts needed another $5 million to fill another budget gap.
Of course, we should also note the millions in pre-paid Payments in Lieu of Taxes borrowing against the future, and the ever-popular “delay of payments” pushing expenditures into the following budget year (or even beyond). Add to all that the revelation that the city has been delaying and underpaying it’s health insurance premiums in a desperate attempt to keep the “stable taxes” myth alive ahead of the next Mayoral election. The icing on the cake? A financial maneuver that the administration is trying to sell as imaginative, but others say could be illegal.
Refinancing the Muni Garage AGAIN
Tonight the council will be asked to borrow more money to secure a renewal and expansion of the existing borrowing. NW Financial holds a $13,480,000 note (described as “Certificates of Participation”) on the Muni Garage that matures July 1, 2008. This money was borrowed to fill two years of budget gaps to keep taxes “stable” and the public in the dark about the true state of Roberts’ spending spree.
With that note coming due, and Roberts’ failure (after over 5 years of talking about it) to relocate the Municipal Garage, the city is looking to re-finance. With Roberts dealing with yet another budget hole this year, he is looking to borrow an amount “not to exceed” $19 million to pay off the note and use the rest to fill this year’s budget gap. That means he could use up to $5.5 million to plug his budget with the proceeds of this back-door borrowing scheme.
The problem? Two years ago credit was flowing like the Hudson. Today still reeling from the credit crunch the banks want more before the lend…
…which leads us to the Bond Ordinance
In order to get a bank to go along with this third mortgage on the Muni Garage they want to see some money up front. That comes in the form of a bond ordinance borrowing $3.7 million dollars “For the acquisition of “ the existing Municipal Garage. Not the new one Roberts still hasn’t gotten around to building, but the existing one taxpayers of Hoboken have been paying $100,000 a month (pure interest) to lease back. Keep in mind before Roberts started playing budget games Hoboken owned this property free and clear and paid no one to use it. We’ve been paying a million bucks a year in interest to cover up mismanagement.
Click here for the Bond Ordinance courtesy again of WeThePeopleReports.com.
So what happens now?
With the legality of this borrowing scheme in question, it will be very difficult for the Mayor to get a super-majority of 6 votes necessary to approve the bonding. Roberts learned the hard way during his attempt to pass a silence Beth Mason resolution that he can only reliably count on the two at-large council members who have apparently agreed to run with him again next year: Terry LaBruno and Ruben Ramos. Finance Committee chairman Michael Russo has expressed doubts about the legality, as has fourth ward councilwoman Dawn Zimmer.
What about the sale of the garage?
Don’t let anyone tell you the latest effort to sell the Municipal Garage had anything to do with the financial mess the city is in now. Some will try to scapegoat the open bidding process. Hogwash. Under the city’s Request For Proposals for the sale of the property any successful bidder would not have had to pay the purchase price until such time as the city could transfer the property to the developer. That was never going to happen by July 1 when the $13,480,000 note comes due. The only way it could have happened is if the city had bought land and built a replacement Municipal Garage on it before it went out for bids to sell the garage. Roberts had several years to do just that, but didn’t. The recent sour grapes lawsuit from a rival developer of the winning bidder has no material impact on this situation.
No new garage, no transfer of deed. Simple as that.
Watch for the usual scapegoating and divide-and-conquer tactics from the Roberts administration. The Mayor will probably use scare tactics to rile up a big crowd of city employees to pressure the council tonight. Others who have watched Roberts play this game for far too long will also be there, determined to make sure 2008 (and ’09) does not turn out to be like 2005 all over again.
The City Council meets at 7pm tonight at City Hall.