Below is communication from Mayor Ravi S. Bhalla to the Hoboken public regarding the municipal budget:
As Mayor, I take my responsibility to oversee the financial operations of the City very seriously. In my first year in office, we produced a budget that was passed by the City Council with no municipal tax increase, and last year we once again held the line on taxes with a 1.7% increase, below the cost of living adjustment. To be upfront with you - while we’ve made progress in rightsizing government and reducing spending over the past two years, the unfortunate reality is that projected fixed costs impacting the 2020 fiscal year have produced some substantial challenges.
This year, we are projecting major increases in healthcare costs for City employees. The premium healthcare plan the majority of City employees utilize faces an increase of approximately $1.5 million from last year. In addition, State pension costs have also increased by approximately $600,000, and previously negotiated union contracts have added another $3.5 million to the projected budget. Combined with a loss of revenue from municipal court, parking, and more, the City is facing a substantial shortfall in 2020.
To be clear, the majority of the increases stem from fixed costs that do not involve discretionary spending by my administration. In fact, since I came into office, I’ve made an effort to reduce spending in departments like Corporation Counsel by reducing the hiring of outside law firms. We’ve conducted more legal work in house, which has resulted in a net reduction in the legal budget by nearly $500,000 in just a two-year span. We also hired an engineer in-house for work that was previously conducted by outside engineering firms, which has resulted in six figure savings for the City. And, we’ve reduced the Mayor’s office to two full-time employees, the same staffing level as during Mayor Zimmer’s administration. In short, where we’ve had the ability to reduce spending, the large majority of the time, we’ve done so.
One way we can overcome some of the rising fixed costs beyond the control of the City, is engaging in concessionary bargaining with the six municipal labor unions that encompass a majority of City employees. We’ve been conducting good faith negotiations with the leaders of the unions to potentially negotiate contracts and health care plans that provide the necessary benefits that City employees deserve, while also being mindful to the taxpayer going forward. I’m appreciative to the majority of union leaders for being open and willing engage in these difficult discussion, especially the Fire Officers Local 1076 who just agreed to a cost saving measure when it comes to their overtime allocation. I am encouraged by the ongoing dialogue and believe that if the administration and the unions can make reasonable concessions, we will find substantial cost-savings.
An important point of clarification – a false rumor has been disseminated is that there is a so-called “gag-order” or non-disclosure agreement that is in effect for municipal employees and unions. To be clear – no such clause exists in union contracts. As has been the policy during my administration, any employee is welcome to speak out on any issue of importance, without restriction. Any directive that may indicate otherwise from previous administrations has not been, and will not be in effect. It’s unfortunate that this rumor would be spread without first checking with my office, which unnecessarily spreads misinformation to the public.
I want to also stress to residents, that for a number of our major initiatives and projects, we’ve utilized as much grant money and independent funding as possible that has little, or no impact on the municipal budget. Most notably, our Northwest Resilience Park is under construction, which utilizes dedicated Open Space Trust Fund that is independent from, and has no impact on the municipal budget. The construction of the park is projected to be funded utilizing the City’s Open Space Trust Fund, as well as $10 million of the $14 million FEMA grant we applied for and received, and other grants including the Hudson County Open Space Trust Fund. Other major park projects, including the potential acquisition of Union Dry Dock, also currently utilizes or is projected to utilize the funding from the Open Space Trust Fund that has no impact on this year’s municipal budget. Our water main replacement project, another important initiative this year, also has no impact on the municipal budget as the upgrades are funded through independent funds including our $33 million contract with SUEZ.
My highest priority is to the taxpayers of Hoboken, and I will continue to explore each and every measure to produce a balanced budget that does not jeopardize the fiscal health of the City. Unfortunately, that may involve some difficult decisions, including the possibility of layoffs. Know that I fully value the contributions of each and every employee in City Hall, and I don’t take this potential outcome, which is a worst-case scenario, lightly. But by working together and finding concessions with our unions, exploring additional cost-saving measures within City Hall, and more, I hope we can produce a budget that minimizes this potential while preventing a large tax increase. Our ultimate goal is to balance the budget this year, and ensure that the City is on sound financial footing for years to come.
I thank the members of the City-Council Finance sub-committee, including Councilmembers Tiffanie Fisher, Phil Cohen and Emily Jabbour for working with my team in City Hall and coming together to help solve the budget issues we see for this year and beyond. Please stay tuned to further updates on the budget, including the introduction of the budget to the City Council in the coming weeks.
Thank you,
Ravi S. Bhalla
Mayor
