Monday, August 16, 2010

Guest of the Stable: Councilman Michael Lenz on handling the surplus


Where Do We Go from Here?

Is the $12 million surplus that we have too much for Hoboken? Maybe, maybe not. Ten percent is what you would shoot for in a typical municipality, and all the more so with our recent fiscal history. That would mean that the “right” surplus for Hoboken is just over $10 million dollars, if we had nothing special to worry about. But we still do have special things to worry about – lots of them. Things like tax appeals, crumbling parks and infrastructure, deferred pension costs, cost of settling union contracts, and potential exposure from litigation.
As we put the final budget together we will look closely at those risks and at surplus. If we have appropriate reserves in the budget for those risks, I’d support reducing unrestricted surplus to $10 million, possibly allowing almost $2 million to be used in the budget. But I wouldn’t support draining surplus below $10 million as a one-shot revenue to lower taxes in the short term like Councilwoman Mason is advocating – that is how we got in this mess in the first place.
So how do we cut taxes?
We cut taxes the only way you ever really can; we must spend less. And everyone in the Zimmer administration and those council persons who support them, are working to do just that. Sadly, spending less often has a human face in layoffs, demotions, and contract concessions. But we just can’t go on the way we’ve been going. We’ve run out of things to sell, and the taxpayer’s are more than tapped out.
People have made fun of me for saying it was more important to tell the truth than to cut taxes, and I deserve the jibe. My politically inept remark made it sound like I think you have to choose: “tell the truth” or “cut taxes”. I don’t believe that. If you work at it you can both tell the truth and cut taxes. You can even maintain essential city services, like maintaining or even increasing officers on patrol. But I do think when you stop telling the truth you are sunk.
This administration’s critics have stopped telling the truth. They make wild, bold, false assertions about the surplus and everything else to create the illusion we can have our cake and eat it too. We can’t. There is no magic bullet. Want to cut taxes? Then cuts must be made. There just is no other way. You just can’t demand a massive tax cut one day and bemoan layoffs and user fees the next and maintain your integrity – so the critics have given up trying.
Sure we can spend our reserves – one time – but we’ve seen where that gets us. Mayor Zimmer and her team – of which I am proudly a part – are working overtime to cut taxes while maintaining and even expanding services. But we are doing it honestly, without gimmicks, without wild claims, without false numbers. I’m proud of that too.

Councilman Michael Lenz is a candidate for the November special election in the fourth ward.  His earlier post on the surplus is available two posts down and also on his website:

Who's lease on what where for the temporary garage?

Today in New Jersey Superior Court in Jersey City, the owners of a doggy day care business called Hoboken Unleashed, the City of Hoboken and the property owner of 1714 Willow Ave. are going to sort out what's what on who has a lease, when and how as a sidebar battle to the Municipal Garage saga.

Mike Stigiliano, currently running his dogy care business on Clinton St. says he is making monthly payments on the property and has the rights not to see anyone on the property before he moves in.  The City lawyer, Corporation Counsel Michael Kates said conversations were underway with the leaseholder and resolution could be expected favorable to the city at the last City Council meeting.

What's gone amiss?  A reported conference Friday call did not go well between the dog day care business and the city so the owner of Hoboken Unleashed filed against the City in court.  Today all three will get together to sort out what's what and who has a lease for the property when.  Lots of questions and way too much speculation.

If you thought it was odd to already hear people speaking on behalf of a small business owner who they don't represent, manage, or even have copies of the respective leases, then you just don't understand how things work in Hoboken politics.  Michael Stigliano is already discovering  many new found friends and not just the little furry kind either.

Mike Novak, a backer of some well known candidates in Hoboken elections in recent years has already written a letter supporting Mr. Staglione with more qualifying contradictory assertions than any letter to the editor in memory.  It's apparently this, and apparently that where nothing apparent is even available for examination to the public.  Here's his opener in the Hudson Reporter:

"At last night's Council meeting, it was revealed that the city of Hoboken has apparently strong-armed a Hoboken small business out of its lease at 17th and Willow. The small business apparently commenced its lease earlier this year, and is waiting for minor variances from the Hoboken Zoning Board to start operating at the property."

Someone forgot to tell Mr. Novak, there are no "minor variances" anymore in Hoboken and his guy Peter Cammarano ain't running the Zoning Board either.  It's nice to hear Mr. Novak is out and about with his head up as he is still being hammered for the number of local small businesses still holding the bag in unpaid bills from Peter Cammarano's last campaign.  He's moved on though as a behind the scenes player for fourth ward candidate Tim Occhipinti and also for former municipal judge Kim Glatt in the last mayoral campaign.

Hoboken Patch shone some light on this murky lease matter, well what light is available.

Sometimes if you close your eyes and really hate strong enough and long enough, all your dreams of power can come true.  Okay, maybe not all of them, but some are still going to search for a way.  This is Hoboken.  Bow wow wow yippee yay.

Talking Ed Note: MSV got a phone call Friday about the owner's legal complaint against the city.  City Council elections are still a ways off although the special election for the fourth ward is in November with others to follow in the spring.  For most of NJ, it's just a slow summer in August but not in Hoboken.

Councilman Lenz: schooling Hoboken411 on the surplus

The $19,975,580.49 Million Lie

“Of the over $33 million “left over” from the year that ended June 30, $19,975,580.49 is money that is earmarked to NOTHING.Some Zimmer fans will …claim 8 or 9 million is actually designed to pay off Dave Roberts’ overspending. That isn’t true because the city – including Zimmer – agreed to a 7-year plan to pay that off at $1.7 million per year. That money has its own line item. It’s not part of the Fund Balance.” – Hoboken 411

$33 million “left over”? Well no. $19,975,580.49 “earmarked to NOTHING”? Not that either. 8 or 9 million reserved to pay for past overspending is “not part of the Fund Balance”? Sorry, no. Mayor Dawn Zimmer and her team are righting our financial ship, and some folks can’t stand it, so they just make stuff up. It does get confusing though, so I’ll start at the beginning.

A fiscal crisis becomes a tax crisis
In June of 2008 Hoboken faced a fiscal crisis. We had overspent our budget by more than $10 million.Our BA had quit and no one had been appointed in his place. Our council could not adopt a legal budget. State takeover was the result and by the end of that summer a Fiscal Monitor was running the show.
Fiscal Monitor Tripodi’s job – as she saw it –was to end the fiscal crisis, and she did. She hired capable financial managers and got the financial records in order. She insisted we follow the law. So far, so good. But she didn’t meaningfully cut costs. She “balanced” the budget— if that is what you want to call it – by raising taxes. In so doing we replaced a fiscal crisis with a tax crisis that continues to this day.
What about the “$20 million” surplus?
A surplus is to a city as savings are to a family – a protection against a rainy day. We didn’t have much of a surplus in 2008 and it cost us. And just like saving, when combined with sound financial habits, surplus/savings can lead to a better bond rating/credit score for the city/family. In either case family, or city, putting money aside for a rainy day has short term financial benefits as well. Most important is a lower cost of borrowing. Two years ago – because we lacked surplus, we spent about $800,000 in interest just to finance the city until taxes came in. With an adequate surplus that won’t happen. And surplus can help improve our bond rating which will lower our cost of capital for decades to come and save us many millions of dollars.
Because of Judy Tripodi’s new taxes and the Zimmer Administration’s careful management and unwillingness to increase spending, Hoboken increased our unrestricted surplus this year by $6,364,756.83 to $11,833,215.28. Not $19,975,580.49 as some falsely claim (which is the surplus plusthe reserve for past overspending). Not $33,175,185.31 (which isn’t surplus at all – just a check total at the bottom of sheet 3A in the city’s Annual Financial Statement). So, cutting through the misleading claims, our surplus is actually just under $12 million.
Is $12 million still too much for Hoboken? Maybe, maybe not. I’ll offer my thoughts tomorrow.
Councilman Mike Lenz in City Council
Talking Ed Note:  On this issue, no one walks taller or carries a bigger stick.  Michael Lenz has staked out a clear territory here on the budget and is clearly willing to engage with the forces of misinformation, the Mason-Hoboken411 complex.
MSV believes in a fair discussion of the issues before Hoboken.  We'll be following up on this as required.  Councilman Mike Lenz is a candidate for 4th ward council in November.  As a result, his opponent, Timothy Occhipinti is invited to present his thoughts on this matter.
This is not the first time Councilman Lenz has tried to set the record straight.  In a head to head challenge earlier with Councilwoman Beth Mason, she refused to even acknowledge Councilman Lenz's invitation to reality on her citing financial inaccuracies.
MSV is willing to stake a friendly bet with Hoboken411 it's paymaster Beth Mason will stick to her $20 million surplus back to the taxpayer meme in all its demagoguery right into Labor Day.