Thursday, September 2, 2010

Mayor's Office: Division of Authority on Police staffing

MAYOR ZIMMER’S  STATEMENT ON POLICE-RELATED ISSUES

The decision to lay off employees was the most difficult decision I have ever made since entering public office, and the personal accounts I heard at last night’s Council meeting reinforced this.

It was important for me to be there and listen.

The work that the Hoboken Police Department does is crucial to our community, and I, as well as all Hoboken residents, appreciate their dedication to the City. Public safety remains a very important priority, and I will not compromise the safety of our community.

As Mayor, I represent everyone in Hoboken – those who were in the room last night and those who were not, and I have made these difficult decisions with the best interests of all Hoboken residents in mind. Further, I think it is important for the Police Department, Hoboken residents, and the City Council to understand that while my office works closely with the City Council in a cooperative and collaborative way, issues related to layoffs and staffing levels are the decision of the Administration. 

Clarification of Executive Function

According to Corporation Counsel Michael Kates and Business Administrator Arch Liston, the Council has the right to disagree or “disapprove” and state their position, but they do not have the authority to overrule an Administration decision or direct the Administration to take action. 

This clarification needs to be made due to the misimpression that may have been created by the incorrect assertion by some Council members last night that the City Council has the authority to direct the Administration to follow their instructions on personnel matters.

Without advance notice to the City Council President or Council Vice President, the City Clerk or Corporation Counsel, a Member of the Council attempted at last night’s meeting to offer a resolution prepared in advance of the meeting, which was tabled to the next Council meeting on September 15.

The Resolution clearly crosses the line that separates the roles of the governing body and the Administration, and is a patent attempt to usurp the role of the Administration.  Under our form of government, there is a separation of functions between the Council, which is a legislative body, and the Administration, who performs the executive function.  The Council does not have the power to rescind an action of the Administration or to direct the Business Administrator or Mayor to do so.

The Faulkner Act form of government empowers the executive branch with broad powers and duties (N.J.S.A. 40:69A-40) including supervising, directing and controlling all departments (subsection c). Within the legislative power, the Council can express its disapproval of a plan to remove employees (N.J.S.A. 40:69A-36d).  But the Council cannot direct the rescission of actions taken within executive authority.

“I respect the views of the Council Members, and I invite them to share them with me publicly or privately,” added Mayor Zimmer. “I will continue to consider their views as I make the difficult decisions that lie ahead.”


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Police put a face on layoffs

Last night the City Council meeting was an orchestrated show of support against the layoffs and demotions announced at City Hall last June.  Emotions were high, some members speaking with pride of their service, some personally, others of their commitment and calling to duty.  Almost all were heartfelt and reflected sincere stories of why they serve Hoboken.


Police Chief Falco upholding professionalism in the ranks.  Mayor Zimmer rear stayed for the entire public discussion after introducing the transition budget to the City Council.


Police Chief Falco spoke and at times exceedingly well of seeking a dialogue, searching to minimize the fallout on his department and regain the morale he had brought in his lead role in the organization.  He insisted on professionalism from department members and their families and on the whole he got it.  He exhibited the leadership Hoboken has come to expect.


We'll have more on the meeting last night.  For now, we'll just note there's some honest disagreement among some on the police and the public.  But the challenges Hoboken faces should never be cast as the public vs. the police or vice versa.  Those extremes need to be moderated and quickly or the fallout will be far worse for everyone involved.


Here's an example of a gracious voice, and one her family must be proud: Lauren Mecka.  Just now beginning college, she spoke eloquently on behalf of her brother.  She was maybe the youngest person in attendance who spoke throughout the evening but she showed class far beyond her years.  


Lauren Mecka speaking on behalf of her brother who was ill 

 Full disclosure: Da Horsey knows and respects her father, Ed Mecka a proud retired Captain of the Hoboken Police Department and a founding member of POG, People for Open Government.  

Text of Mayor's remarks introducing the budget

The following is a complete text of the mayor's remarks made before the City Council Wednesday night introducing the budget.  The mayor stayed for the entire portion of public comments concerning the scheduled police layoffs.


Remarks of Mayor Dawn Zimmer – As Prepared for Delivery
Transition Year 2010 Budget Introduction


Mayor Zimmer in City Council last night
Good evening everyone. I'd like to thank Council President Marsh, Vice President Bhalla and all of the members of the City Council for giving my Administration the opportunity to present the Transition Year 2010 budget for introduction.

The budget we are presenting today accomplishes three very important things.

1. First, it provides a 5 percent reduction in the Municipal Tax Levy -- the maximum amount permitted without State approval during a transition year, and an amount we can sustain with cost reductions currently in process.
2.  Second, and most importantly, this fully-funded, and gimmick-free budget puts us on sound financial footing that – combined with further savings opportunities being developed – will enable us to reduce taxes further in 2011.
3. Third, by establishing a responsible surplus, it prepares us for the rainy days ahead, ensures cash flow, helps improve our bond rating, and allows us to address our desperate infrastructure needs.

To understand where we are today and to avoid making the same mistakes of the past, we need to consider how we got here.

Over the last several years Hoboken has endured a fiscal crisis so serious that we could not even pay our health care bills on time. Budgets were overspent by millions of dollars.

Much has changed in Hoboken since I sat up on this podium as a member of the City Council to consider the 2008 Fiscal year budget. That year, the Administration presented the City Council with a budget for introduction that we later discovered was underfunded by almost $12 million.  I am proud to have been one of five members of that City Council who had the courage to say NO to continuing the fiscal mismanagement that had become Hoboken's normal way of doing business. That difficult decision began the painful but necessary process of facing up to our problems and turning our City's finances around.  

Hoboken was placed under State Supervision, and our State Fiscal Monitor determined that a nearly 80 percent Municipal tax increase was necessary to fully fund the actual cost of the City's operations.  The news was painful, but it was better to know the truth about our financial position than to continue to make matters worse by sticking our heads in the sand.

That tax increase addressed our immediate problem, but it highlighted an even bigger problem.  Simply put, we were spending more than we could afford, leaving us with a tax burden that is unacceptably high.

The budget we present to you today illustrates that we are addressing our fiscal crisis, but our tax crisis remains.  We have severely high taxes that must continue to be reduced on a sustainable long-term basis.  

As I stated, my Administration is committed to making the difficult decisions that will enable us to deliver significant and sustainable tax relief. The Transition Year 2010 budget that is being presented today for introduction includes a 5% reduction in the Municipal Tax Levy, the maximum amount permitted to reduce taxes without State approval in a transition year.

More importantly, this budget puts our City on the kind of sound financial footing that will enable us to reduce taxes further in 2011, while helping us to qualify for a bond rating that will reduce our borrowing costs for years to come. This is an honest, fiscally smart budget that is fully-funded, and not reliant on one-shot revenues to pay operating expenses.

Tonight, I’d like to focus on talking about the surplus. A sufficient surplus is imperative for four important reasons:

1.   Building a Rainy Day Fund
2.   Maintaining an adequate cash flow without borrowing
3.   Improving our Bond Rating
4.   Providing for an ability to address our desperate infrastructure needs  

The rule of thumb for financially sound towns is to maintain a surplus of between 5 and 10 percent of the annual budget, and given our recent history, there is every reason to aim for the higher end of that range. Based on these four factors and current operating costs, my Administration believes that the City of Hoboken needs to maintain a $10 million surplus at this time. The budget presented to you today anticipates using $1.9 million of our $11.9 million surplus, reducing our cash surplus to approximately $10 million.

As I said, there are four important reasons why this is needed.

First and foremost a Rainy Day Fund will enable our City to address the expected and unexpected costs that are out of our control, but which we face nevertheless.  These costs include our potential litigation exposure of well over $3 million based on an analysis of our current legal cases.  It will plan for possible increases in labor costs and deferred pension costs.  Without an adequate surplus, an expensive emergency or unanticipated cost could result in a sharp tax increase for Hoboken taxpayers as we experienced two years ago. We need to learn from the mistakes of the past and ensure an adequate surplus to protect us from the rainy days that may lie ahead.

Second, maintaining a proper level of cash flow is an essential component of being a fiscally responsible municipality.  Simply put, Hoboken must be able to pay its bills as they come due.  Whereas in the past we couldn’t even pay our health care bills on time, we must ensure that we have enough funds on hand to meet our financial obligations on a timely basis.

Third, a sufficient surplus is needed to improve our bond rating and reduce our borrowing costs. UnfortunatelyHoboken currently has a near junk bond rating.  This means we do not currently have the ability to borrow at reasonable rates. While we have benefitted greatly from the County’s bonding program through the HCIA, this is not a sustainable course for long-term financing, and I believe it is critical that our City stand on its own.  This means having a bond rating of at least “Aa” that will enable us to borrow at reasonable rates so our City can properly address its needs.

Finally, during my short time in office, I have discovered many unexpected fiscal challenges, but none worse than the fact that our infrastructure is worse than I could have imagined, and we cannot fail to address these growing problems any longer. A surplus can be used to help address these unexpected infrastructure crises, such as the collapse of Sinatra Park.  Hoboken needs an adequate surplus so we have the highest bond rating possible and therefore can borrow at the lowest interest rate as we address our infrastructure needs.

For all these reasons, the bottom line is that maintaining a proper surplus will repay taxpayers many times over because it will reduce the cost of running the City every year.

Just last week, the Christie Administration issued a “Best Practice” checklist to every municipality which, depending on how many of those practices we follow, will directly determine how much State Aid we will receive. Three of those questions are about our City’s surplus level.

Some have said that the existence of this surplus means that there is no reason to cut spending. If we felt that our taxes were not too high, then I would agree with them. Our budget is fully funded and we no longer face a fiscal crisis. The backbreaking municipal tax increase of two years ago “paid the bill” for years of irresponsible “credit card” spending, but it replaced our fiscal crisis with a tax crisis. The only way to reduce taxes in a sustainable way is to reduce the amount that it costs to run our City each year, and maintaining a responsible surplus level is an integral part of stabilizing costs.

Some have asserted that the mere existence of this surplus is a bad thing -- a sign that the taxpayers of Hobokenwere somehow "overcharged." Nothing could be further from the truth. Families that live paycheck to paycheck instead of saving for a rainy day fund live in constant fear of an illness or accident that could plunge them into crisis, and our City is no different. We’ve been down that road before, and it led to a huge tax hike.

The taxpayers of Hoboken are entitled to a City that is fiscally strong, not a City that barely makes ends meet. They are entitled to a City that doesn't have to spend millions of dollars in unnecessary borrowing costs to make sure it can pay its bills on time. They are entitled to a City that won't face a financial crisis every time it is hit with a big bill for a one-shot cost. And they are entitled to a City with a bond rating of at least “Aa”, so that we can reduce our borrowing costs and lower taxes. 

Through fiscal prudence and various cost-cutting measures, Hoboken has moved through its fiscal crisis and now must focus on its tax crisis.   My Administration has and will continue to make the difficult but necessary decisions needed to cut costs and ultimately reduce the strenuous tax burden for Hoboken residents.  We are not there yet, but through hard work and perseverance, I believe we can reach a goal of significantly reducing our City’s tax burden.

The budget we have prepared is an important step in that direction. It provides a 5 percent reduction in the Municipal Tax Levy -- the maximum amount permitted without State approval during a transition year. It is fully-funded, gimmick-free, does not rely on one-shot revenue sources, and puts us on sound financial footing for further tax cuts in 2011. Finally, through the establishment of a responsible surplus, it prepares us for the rainy days ahead, ensures cash flow, helps improve our bond rating, and allows us to address our desperate infrastructure needs.

During the budget workshops, my directors and the Police and Fire Chiefs will be providing detailed analyses of their budgets, comparisons to previous years, and, as requested by the Finance committee, additional recommendations on strategies to reduce costs further going forward.

This budget introduction is the beginning of a process, and I respectfully request that the Council vote to introduce this budget as presented and take on its responsibility of reviewing, amending as needed, and ultimately adopting a budget.   A vote for this budget introduction is not an expression of support, but simply a vote to begin the Council’s job of reviewing the budget.   My Administration is open to your suggestions, and looks forward to working with the Council as you complete your obligations.

Now I am going to turn everything over to Finance Director Nick Trasente, who will provide a brief explanation of the budget. Before I do that, I want to publicly thank him. Despite moving to a new position several months ago, he has and will continue to help the City of Hoboken on a transitional basis until a new Finance Director is retained.

In closing, I pledge that I, my Directors and Chiefs, and our professionals will work hand-in-hand with the Council and its Revenue and Finance Committee, now and into the future, to create a budget that serves our residents, and which is deserving of their support.

Thank you.