Council Decides to Zero Out Surplus

The City Council majority approved an amendment to the roughly $100 million 2011 budget on Wednesday night, which zeroed out the surplus, leaving the mayor angry and disappointed.

"Zeroing out the surplus," Mayor Dawn Zimmer said, "is completely irresponsible."

What "zeroing out the surplus" means: the city has no cash savings, which it can spend on unexpected events. Instead, the tax levy in the budget will be lowered by $4.1 million, and returned to the tax payer. It's unclear—and very difficult to calculate—what the reduction in taxes means for each individual household.

While Council President Beth Mason touts that she—and the other four council majority members—reduced taxes, the mayor said the city is headed toward future tax increases.

One of the expenses that the city will face in the near future, is retro payment to the fire department. The fire department has been without a contract for three years and is currently still in negotiations with the city. Once a settlement will be reached, a substantial sum of retro active pay will have to be paid to fire fighters.

"How are we going to pay the retro pay?" Zimmer asked on Thursday afternoon. "We're not going to have the money."

The city initially had a total reserve of roughly $25 million. Much of that money is already allocated, and can't be spent on unexpected costs. Originally, the mayor introduced a budget that left roughly $5 million in cash surplus. After many budget meetings, and a final resolution on Wednesday night, the council majority decided to return the cash surplus to the tax payers.

Before the budget was passed, Zimmer asked all council members what they thought would be a responsible cash surplus.

In a January e-mail to the mayor, Sixth Ward Councilman Nino Giacchi wrote, "I am in agreement that there should be cash surplus in the upcoming budget.  Although 5% to 10% would be a reasonable range, it is difficult to commit to a number without seeing the entire budget." Giacchi, to Zimmer's disappointment, voted to zero out the surplus on Wednesday.

A phone call to Giacchi was not returned on Thursday afternoon, but during Wednesday night's meeting he said he had his back against the wall. "I guess the cash surplus will be returned to the cash payer," he said.

On Wednesday night, Councilman-at-Large David Mello said he was against zeroing out the surplus.

"I just don’t understand this," Mello said. "I don’t feel comfortable with a lame duck city council doing this. Let’s move forward, save for our future and have a surplus."

Zimmer said she views the vote as a political move. "They're trying to hurt me," she said, "but they're really hurting Hoboken residents."

Zimmer said the cash surplus is needed for several expenses around town, including the need to go out to bond. She also said the lack of cash in the city's coffers could mean lay offs for city employees, if it means retro pay can't be paid. 

"They only think about themselves," Zimmer said, "they don't give a damn about Hoboken."

Mason, and the other members of the majority, promised to return the surplus to Hoboken's tax payers during their campaign for the May 10 municipal elections.

"I believe that giving money back to the taxpayer is what we need to do," Mason said. Third Ward Councilman Michael Russo agreed, voting "absolutely, yes" on the budget amendment.

The current council majority will be in charge for one more meeting. On July 1, Giacchi will be replaced by Councilwoman-elect Jennifer Giattino.

The approved budget and its amendment, will now be reviewed in Trenton. After state approval, there will be a public hearing and a final vote adopting the budget. It's likely that this hearing will happen during the scheduled council meeting on June 15.