Saturday, August 21, 2010
The above financial documentation is now available on the City of Hoboken website. It was submitted with notations along with this special guest piece by Hoboken 2nd ward resident Scott Siegel.
Beth Mason: Fiscally Irresponsible or Pandering?
Despite my differences with my Councilwoman, Beth Mason I never thought I would write a letter questioning her fiscal responsibility. When the $100mm 2009 budget was adopted this spring, Councilwoman Mason wanted a $90mm budget. I specifically asked for details, stating if her cuts were responsible, I would support them. She declined to name any. Afterwards, she detailed savings focusing on a city wage freeze, saving taxpayers millions of dollars. She should have known as an experienced Council member that neither the Council nor the Mayor can do so unilaterally. If enacted, the unions would go to court, correctly charging that this violated the collective bargaining agreement governing municipal employment. Her suggestion would have cost taxpayers unnecessary legal fees on a losing case. Was Councilwoman Mason fiscally irresponsible, or just pandering?
At Governor Christie’s Hoboken town hall meeting and at the council she complained about rising NJ Transit fares. Unlike me, she must never ride the train. If so, she would have noticed at the Hoboken Terminal the new double decker trains purchased by Governor Corzine. Although expensive they added additional capacity coinciding with increased transit usage (due to $4 gasoline). Similar to Mayor Roberts, Governor Corzine never paid the bills, kicked the can down the road, saddling NJ taxpayers with an increased bill that Governor Christie was forced to pay. Does Councilwoman Mason want to join this fiscally irresponsible group or is she just pandering?
Last week Beth Mason demanded that our “$20mm surplus” be returned to taxpayers. Sounds great doesn’t it? However, this includes nearly $8mm in restricted funds, relating primarily to Mayor Roberts infamous underfunded budget that led to the state takeover. By NJ state law we must reserve that balance which is being paid off over the next several years. Does Beth Mason wish to violate state law and ensure that Hoboken does not pay our bills, risking another round of state takeover or is she just pandering?
What about the remaining $12mm? Hoboken’s bond rating is one step from junk, impeding our ability to prudently finance our debt. Councilwoman Mason apparently wishes to repeat the same mistake made by homeowners who financed a long term asset with a short term adjustable mortgage (ARM). When the ARM came due many homeowners had their homes foreclosed due to the same asset/liability mismatch we employ. Only by having a solid bond rating of at least “A” can we properly finance Hoboken’s debt without County support. Key to obtaining this rating is a surplus equaling 5-10% of budget. That surplus should be enhanced with additional liquidity for repairing piers that collapsed in the Hudson, for example. We can fund emergencies with cash rather than debt which includes interest and fees, paid by taxpayers. Why does Councilwoman Mason want to irresponsibly roll the dice with taxpayer funds? Is she fiscally irresponsible or just pandering? With personnel costs equaling 75% of our budget, that is the only way we can effectively reduce taxes, not through budget gimmickry. All 6 Wards deserve fiscally responsible officials who will tell the truth and not pander. Next May I hope that’s who voters elect.
Scott also notes:
Enclosed you will find 2 pages from the FY 2010 annual financial statement and 1 page from 2010 adopted budget, as well as my article which is on Hoboken journal and should be in the Hoboken reporter this weekend. Expecting to see it on MSV by tomorrow.
From 2010 Annual Financial Statement (AFS):
On very bottom you wil see a current fund balance of $33,175,185.31. This represents the ficticious $33mm surplus. The actual surplus is just above the total and is stated as "fund balance". The actual surplus is $19,975,580.49 (my $20mm figure).
Here you can see the "cash surplus" of $11,833215.28. This represents the free cash less deferred reserves (my $12mm figure).
You can also see just below the "deferred Charges" the $8,096,962.86 number (my $8mm figure).
From Adopted 2010 budget, Sheet 38:
You can see "deferred charges" of $9,716,355.43. This is mostly from the deferred pay down of Mayor Roberts underfunded budget (+$40m in Senior payments). We pay down approximately $1.7mm per year, hence the $8mm figure above.
From Adopted 2010 budget, Sheet 38:
Just below you can see a surplus figure of $14,009,359.66. This includes approximately $2mm in restricted funds (deferred reserves), which is how we get to the $12mm figure.