Municipal Fiscal Mess...

"the problem is almost double what the administration previously shared, our Business Administrator has left, and the decisions around layoffs, tax increases and use of surplus to plug the gap are still in flux."

Where we last left off, our Business Administrator has left, the administration stated publicly we have a projected deficit of $7.4M and I felt the number was potentially much bigger as the administration was not including in its estimate the impact of city’s use of the surplus to balance the budget/keep taxes low over the last two years.  We had a Revenue, Finance and Infrastructure subcommittee meeting with the administration where we agreed that the starting point for the budget gap has to include the surplus impact on the budget and as such, the gap is in fact just under $14M. 

 

***Clarifying point - we have been using the phrase budget deficit when we should be using projected budget shortfall or gap.

 

This gap has now shrunk by approximately $1M to just under $13M with the inclusion of increased PILOT payments that the administration did not previously account for in its estimates, the majority which is from the recently opening of 770 Jackson.  To help give you a visual of what the budget gap looks like in the context of the overall municipal budget, below is a historical summary that I put together. 

 

 

As I have stated previously, every year I have asked the administration to prepare a five year forecast for the city and each year I was told that they couldn’t do this.  I learned last week that the administration has finally taken steps to prepare one although to do so, it has hired an outside consultant.  I personally am surprised that this is required and not something the administration can prepare on its own.  IMHO this analysis is something that we should always have as a tool that helps drive the policies of the city.  

 

 

As mentioned last time, filling any size budget gap can come from a variety of sources including reducing operating costs, layoffs, increasing revenues and increasing taxes.  All of the above is being considered.  We are also working with Freeholder Romano and the County to determine what, if any, support and/or sharing of services the County can provide to Hoboken given the high amount of County taxes we pay.   More to come…