New math
City budget projected to have $16M shortfall; may increase taxes
by E. Assata Wright
Reporter staff writer
Jun 02, 2013 | 3876 views | 0 0 comments | 108 108 recommendations | email to a friend | print
City Budget Director Robert Kakoleski’s reexamination of the as-yet unadopted city budget at the May 29 council meeting disclosed a $16 million revenue shortfall.
City Budget Director Robert Kakoleski’s reexamination of the as-yet unadopted city budget at the May 29 council meeting disclosed a $16 million revenue shortfall.
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Is outgoing Mayor Jerramiah Healy leaving his successor, Mayor-Elect Steven Fulop, an inaugural “gift” in the form of a $16 million shortfall in the $486 million budget?

A re-working of the proposed 2013 municipal budget indicates that may be the case, according to Budget Director and Assistant Business Administrator Robert Kakoleski.

At Fulop’s request, Kakoleski recently reexamined certain projected expenditures and revenues and concluded that the city will have a $16 million gap that will have to be covered either through spending cuts, a tax increase, or a combination of both.

The expected shortfall contradicts claims made earlier this year by Healy and others in his administration that the 2013 budget of $486 million did not include a tax increase. Fulop had predicted there would be a tax increase after the May 14 municipal election.

Although the municipal budget was introduced in February, it has yet to be adopted by the City Council. With only one regularly scheduled council meeting planned before Fulop’s inauguration on July 1, it is likely that the new administration will inherit this budget deficit.

The $16 million shortfall outlined by Kakoleski at the City Council meeting on May 29 is in addition to $5 million the Fulop administration will have to find to cover benefits owed to about 27 senior Jersey City Police Department personnel who will retire between June and December.
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“What they’re trying to do is run for the door and say [to me], ‘Here you go!’ ” – Mayor-Elect Steven Fulop
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”It’s not great for me,” Fulop said in an assessment of the overall budget situation. “And it’s not great for the city.”

Budget director: 4.6 percent increase

The expected budget shortfall came to light last Wednesday when Kakoleski, at Fulop’s urging, tried unsuccessfully to add a resolution to the May 29 City Council meeting to amend the 2013 municipal budget.

Property owners in Jersey City pay a tax rate determined by a combination of three budgets: The city budget, the school budget (determined every April) and the county budget (usually struck in June).

Blindsided

Fulop’s allies on the council had been briefed on the resolution by the mayor-elect. But the move clearly blindsided Healy’s allies, who questioned why the budget matter was not discussed at the City Council caucus meeting on May 28, the day before. The move appeared to be an attempt to publicly expose the $16 million shortfall during Healy’s tenure, perhaps so that the Fulop administration won’t be blamed for any fiscal pain that might result from the deficit.

“We have been requested by members of the City Council to prepare an amendment to the introduced budget,” Kakoleski told the council members last week. Kakoleski then detailed what he called “some of the significant changes to the budget.”

For example, the hoped-for sale of a 2.5-acre plot of municipal land next to Jersey City Medical Center is unlikely to happen this year. The city had hoped to raise $12 million from the sale of that land.

The city initially expected to generate another $1.2 million from legal settlements and judgments, but is now on track to raise a slightly lower figure of $1 million.

The city also had a budget surplus of $2 million, which Kakoleski said has been used up. While this surplus may be restored by the state, at present it no longer exists.

While these anticipated revenues have gone down, a few city expenses have increased, Kakoleski stated.

For instance, the city will have to pay an additional $250,000 for the recent municipal election, for which there will be several runoffs. About five-eighths of this amount will be reimbursed by the state.

The city’s debt service (interest) was also affected by the federal sequester in Washington, D.C. earlier this year to the tune of $500,000. Most of this is for Gold America Bonds that are being used to help build the new Department of Public Works complex, Kakoleski said.

The city will also have to pay $275,000 in matching grants that it has received since the budget was first introduced.

Finally, Jersey City’s emergency authorization budget line item had to be increased by an additional $1.1 million.

“If you add up all those changes, and some other little things within the budget, we have a $16 million [increase] in the amount to be raised by taxation,” Kakoleski told the council members. “That…will change the overall city tax rate by about 4.6 percent…You’re looking at about a $258 increase in [annual] taxes to a property assessed at $93,500.”

Total taxes – including taxes from the city, county, and local school system – would go up by about $310, Kakoleski said.

The proposed amendment did not propose remedies to cover the shortfall; it merely changed line items in the budget to reflect reality.

Fulop: Original budget ‘faulty’

An angry Councilwoman Viola Richardson said, “I want to have a budget hearing before I address anything of this magnitude. I’m not going to sit here [now] and try to process all of this. This is not what this is for. We had a budget hearing on the proposed budget and I’m not going to approve–”

“This is not to approve anything,” Fulop responded to Richardson. “The budget that was introduced in [February] was faulty. It was an unrealistic budget.”

The council initially agreed, by a unanimous vote, to add the revised budget resolution to the agenda. But when it became clear that Fulop would have the five votes needed to actually pass the resolution, four members of the council – Richardson, Michael Sottolano, Peter Brennan, and William Gaughan – changed their “yes” votes to “no.”

Six affirmative votes were needed to add the resolution to the agenda.

“They introduced in [February] a budget, a budget which I said was an election year budget, and it was predicated on a lot of one-time revenue items which could have come to fruition, depending on how things played out,” Fulop told the Reporter after the meeting. “My position to the administration is…if it was an actual budget, adopt it. It’s your budget. Adopt it. If you’re going to stand by it, own it. They’re unwilling to adopt it because it comes out to a 4.6 percent tax increase, [because] there are things that are in there that they have literally done nothing on…Instead what they’re trying to do is run for the door and say [to me], ‘Here you go!’”

City spokeswoman Jennifer Morrill did not respond to an e-mail seeking comment from the Healy administration. (She has requested that all media inquiries be sent by e-mail.)

At-large City Councilman Rolando Lavarro Jr. echoed Fulop’s remarks the day after the council meeting.

“Councilwoman Richardson’s actions on her hidden tax increase are the exact reason that the voters rejected her in the last election,” Lavarro said in a press statement. “If the budget she introduced in [February] was accurate, I am calling on her to stand by it and adopt it now. She is unwilling to do that because she, Healy, and their allies, know they mislead the taxpayers because of the election.”

Lavarro, who is allied with Fulop, and Richardson are among a pool of five candidates competing in the June 11 runoff elections.

Shortfall comes on top of JCPD retirement costs

The $16 million budget shortfall disclosed last week comes just days after it was announced that the city will need to find $4.5 million to $5.4 million to cover terminal leave benefits owed to at least 27 Jersey City Police Department (JCPD) top brass who plan to retire between June 1 and the end of the year.

Several senior members of the JCPD plan to retire from the force before Mayor-Elect Fulop takes the helm on July 1, and several more plan to retire before the end of the summer. Two others plan to leave by the end of the year.

In total, 27 deputy chiefs, captains, sergeants, detectives, and police officers have filed paperwork to retire. This number also includes Police Chief Thomas Comey, who plans to retire this month.

E-mail E. Assata Wright at awright@hudsonreporter.com.

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