Councilman Lenz: schooling Hoboken411 on the surplus
“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.