A Closer Look At The Budget

It's been about a week since Hoboken City Council passed the fiscal year 2010 budget. The budget is $99.8 million, is flat (no tax increase, no real cut either) and fully funds all the city's operations. But what does that really mean? 

Here are some key numbers any Hoboken taxpayer should know. 

One important figure in the budget is $60,024,966. This is the total amount Hoboken taxpayers pay in municipal taxes. This is down about $400,000 from last year, when the amount of taxes raised was roughly $60,442,000. 

Council members said they would have liked to have seen a larger tax cut than the 0.6 percent relief this budget offers.

But, said Fourth Ward Councilman and Finance Committee member Michael Lenz, at least now the budget is fully funded, and covers the city's cost of the entire fiscal year. There is also an overall sense in the administration that these numbers are an accurate reflection of what it costs to run Hoboken for a year. 

"We could have put something on a piece of paper that looked like a 15 percent tax cut," Lenz said. "The only way to reduce tax burden is to spend less."

What it means for you? You pay about $96 less in taxes. 

Because the tax rate is determined by a calendar year, and the budget covers a fiscal year (from July 1 to June 30), Hoboken taxpayers pay two different rates during any given fiscal year. 

This budget—which runs until the end of the fiscal year on June 30, 2010—pays for roughly $6 million in costs that are liabilities from prior administrations. Those costs are made up of a $4.2 million penalty to be paid to the state for illegally enrolling in an early retirement plan in 2008; a total of $600,000 in incentive payments to those city employees who retired early (this amount is to be paid annually for five years, the city is currently in its third year), and $1.6 million in deferred charges for prior years' deficits (the total amount to be paid by the city is $11 million over seven years).

Now that the budget is passed, it's important that the city doesn't overspend, which calls for close monitoring of the budget. Mayor Dawn Zimmer already ceased all non-emergency spending, according to Daniel Bryan, the mayor's special aide. All acquisitions have to be approved by State Fiscal Monitor Judy Tripodi, who was appointed in 2008 after Hoboken officials were unable to pass a budget.

Proposed Budget vs. Passed Budget

The $99.8 million budget was passed on Wednesday after City Council amended it. The proposed budget—which was compiled by Tripodi and Finance Director Nick Trasente—originally had a lower tax levy in it. In the proposed budget the amount to be raised by taxes was $54,611,214. 

What changed?

Tripodi originally put in $1 million in revenue for the sale of the municipal garage (a so-called "one-shot revenue" which only occurs once, and doesn't come back in recurring years). City Council didn't agree, because the money for the sale hasn't been received yet (the total revenue from the sale will be more than $1 million). But, when that money comes in, the city will still need to build a new municipal garage, which will likely cost more than the city will receive in revenue, Lenz said. 

The original proposed budget didn't include the entire $4.2 million the city owes the state. During last week's meeting, Sixth Ward Councilman Nino Giacchi said he would have liked to see that payment spread out over several years. 

"The next best option would have been to bond for it," said Councilman-at-Large Ravinder Bhalla. But, he added, "we're trying to be honest."

Giacchi said that without the $4.2 million in the 2010 budget, Hoboken taxpayers would have seen a couple of hundred dollars in tax relief. 

The third major number City Council put into the final budget, that wasn't in the proposed budget, is $1.9 million in increased health care costs for city employees. 

Cutting a municipal budget can be difficult, because it's mostly made up of personnel costs. Salaries and wages make up roughly $40 million of the 2010 budget, health care costs are roughly $15 million and pension payments eat up $5 million. 

According to the city's Web site, Hoboken employs 401 municipal employees. 

Now that the 2010 budget has been passed, the city can start thinking about the Fiscal Year 2011 budget. Gov. Chris Christie already announced that state aid will be $11.1 million (down roughly $3 million from this year's $14 million). 

Hoboken has been under state control since 2008. One of the deals struck was that the city could ask for its power back after successfully passing a budget. Another one was to hire a business administrator. The city has been advertising for the Business Administrator position. 

The city's web site states that Hoboken "is nearing the end of a period of state monitoring and seeks a dynamic leader for this high visibility opportunity." The new—yet to be hired—business administrator will play a large part in drafting the 2011 budget.  

And the city has quite the challenge ahead. 

"Next year is going to be worse," Councilman Giacchi said during last week's meeting. "It's going to be much worse."