FUNDING THE CITY’S BUDGET SHORTFALL WITH DEBT
In case you weren’t aware, and I am 99% certain you weren’t, the mayor called a special City Council meeting for tonight (instructions to watch/join below) but didn’t inform the public in any of his many recent communications out of City Hall. Once again, I’ll leave with you to ask him why especially because the main topic being discussed is the 2020 Municipal Budget.
The agenda for the meeting only has the following three items:
- CY2020 Budget Discussion
- First reading of a $4.6M 20 year Bond ordinance to ultimately fund a portion of this year’s budget gap (although the ordinance only says it is to fund the library expansion).
- Presentation on the Utility Art Box Proposal from the Hoboken Arts Council (presented by Chris O’Connor)
As an update, the mayor still has not given his budget to the City Council other than high level summaries on screen on zoom calls. We’ve asked for it, and what we have been told is that the delay relates to our increased costs and reduced revenues relating to COVId. On a positive note, last week, our County Freeholder Anthony Romano announced he advocated for and was able to secure $1.4M of CARES Act funding to cover 100% of our Hoboken’s incremental costs (and then some…) incurred relating to COVId. This alone alone potentially reduces our municipal tax rate by about 2.5%.
But tonight, the mayor is asking the Council to blindly approve on first reading a bond ordinance for a $4.6M 20 yr bond to ultimately fund a one time plug to our budget gap which is estimated to be between $12M and $20M. It is being represented tonight that the bond is to fund the renovations of our municipal library, but this is only being done in exchange for the library providing us with $4.6M of their cash that the city can then use as a one-time miscellaneous revenue infusion into our municipal budget.
First and foremost, in this difficult fiscal time for the city, I am grateful that this has been raised by the library as a possible tool for us to use this year to help relieve some burden on our taxpayers and give us some time to fix needed structural issues in our city. We probably need it.
But this is a big deal and one that should not be taken lightly. Effectively this is financial engineering a way to take on debt to plug an operating budget gap which is otherwise not allowed. Very similar in fact to what has been described by our mayor and Mayor Zimmer as the terrible Suez contracts of our past - where the taxpayers at the time benefitted from three, one-time revenue infusions, at the expense of the taxpayers in the future. Taking on this $4.6M bond as proposed results in taxpayers paying back ~$6M over the next 20 years.
The administration is saying the Council has to approve the bond on first reading first in order for the administration to account for this in their proposed budget. But what they are not saying is that the budget can be amended by the Council for this bond during our review of the budget. Either way the tool can be used, the question is just what information should the Council get before it considers using an instrument like this.
Personally, I think this should not be considered until the budget is introduced to the City Council so we can better understand the true need as well as to keep pressure on the administration to make further cuts before this cash infusion is considered.
If you want to watch or call in to comment in the 7pm virtual meeting, here is how you can:
- Online through the Meeting Portal, available at the following link: http://hobokennj.iqm2.com/citizens/default.aspx
- Streamed on Facebook Live: https://www.facebook.com/pg/Hoboken/videos/
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Via Zoom meeting:
- Online: to make a comment or statement, testify, or pose a question during the meeting, please click zoom link at the following: https://us02web.zoom.us/j/86387085060?pwd=dTJtVVIrZWdKdXBZdUxBcjVmTHZiUT09
- By phone: Phone Number: 646-876-9923, Meeting ID: 863 8708 5060, Password: 153578
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