Thursday, January 20, 2011

Scott Siegel on Beth Mason's $20 million Surplus Lie - Editorial

Frequent City Council meeting speaker Scott Siegel submitted this op-ed to me yesterday on the $20 million budget surplus lie that is a center piece of Beth Mason's campaign. Last week Mayor Dawn Zimmer Sent a letter to the Beth Mason, Mike Russo and the City Council as a whole asking what the new majority would want for a surplus figure. Both Beth Mason and Mike Russo demurred and stated they will wait for the budget to be released before they commit to an amount or percentage. When Scott Siegel spoke at the City Council meeting last night in reference to his op-ed piece, mentioning both the Hoboken Journal and MSV, he referred to those in the "new majority" (Beth Mason, Mike Russo, et al.)  as "Chicken Hawks" as opposed to "Budget Hawks" since Russo and Mason in particular seem to focus on the minutia instead of the big ticket items like Labor agreements to bring fiscal relief to this city. Here is his op-ed......

Beth Mason Lies Again About The “$20mm Surplus”

“Finally, as you may be aware, at the February 16th City Council meeting Mayor Zimmer will introduce her 2011 Municipal Budget. Many residents are wondering what will become of Hoboken’s approximately $20 million (and still growing) surplus. From the very day the surplus was uncovered I have been an advocate of using it to provide property tax relief”.  - Beth Mason email to constituents

At last Monday’s Emergency Council meeting I confronted Beth Mason and Tim Occhipinti over their usage of the $20mm surplus lie. Neither was willing to admit their error. Now, Beth kicks off her campaign with this bold face lie front and center. Its one thing to lie to your constituents, but it is even more insidious because Ed Drishti, a police union head repeated this $20mm fable at a recent council meeting. He obviously believes there is a $20mm pot of gold at the end of Beth Mason’s rainbow. How do you think this will affect his bargaining position? Whatever the police end up with they will feel disappointed and demoralized believing in Beth Mason’s phantom pot of gold. This is unfair to our safety personnel.

The real surplus is approximately $10mm based on last summer’s Annual Financial Statement (AFS). The $20mm lie is derived from adding $8mm to the factual cash surplus of $11.83mm. The $8mm is the remnant of Dave Robert’s infamous $10mm underfunded budget. It will be reduced by approximately $1.7mm each year over 7 years, per an agreement with the State of NJ DLGS (Division of Local Government Services from whence Judy Tripodi arrived). Our vendors were paid off 2 years ago. There is no money there to return to taxpayers. If we wrote it all off in one year Hoboken would have violated various fiscal covenants, so the state allowed us to use an accounting gimmick. Let me repeat this- there no $20mm pot of gold, the pot is empty. In the 4th quarter of 2010 $1.83mm of the factual, real cash surplus was returned to taxpayers. This left a balance of $10mm as Michael Lenz stated at Monday’s meeting.

The reason we need the $10mm surplus is dual fold. Currently Hoboken has an “investment grade” rating of “BAA1” by Moody’s. This not high enough to finance our debt on our own. We are forced to utilize the Hudson County Note Pool program (one year debt instrument). This is not a prudent way for Hoboken to finance. It is equivalent to a homeowner having a one year ARM (adjustable mortgage. You should never finance a long term asset one year at time as many foreclosed homeowners found out. For example if Hudson County paves a 2nd Ward road (see Beth’s “accomplishments” for that lie) it should last for 7 years on average. Therefore you should finance (via a tax free General Obligation bond backed by “ad volorem” property taxes) this cost over 7 years. By having all our debt short term, the Hoboken taxpayer is playing Russian Roulette with their property taxes. Currently the US government is running a massive budget deficit. This is leading to inflation. Gas prices are over $3 a gallon in some places and global food riots are occurring. As Mayor Zimmer said we should attempt to achieve a high grade “AA” rating. This would allow us to sell our debt ourselves at a lower interest rate, saving taxpayers hundreds of thousands of dollars annually and eliminate the imprudent structural fiscal imbalance we currently maintain.

Secondly, we need funds to repair our decrepit infrastructure and acquire much needed open space. Under Beth Mason’s plan taxpayers will have to foot most if not all the cost on our backs. We need surplus dollars so we can get matching grants possibly halving the cost. Moody’s recommends a 5-10% surplus just for the bond rating.

In Beth Mason’s world we will also have little to no funds to deal with health care increases, potential lawsuits losses, the state mandated 22% increase in pension payments, union retro pay, tax appeals, cuts from Trenton and unforeseen contingencies. This outright lie must end. Please review the attached documents and spread the word. This fiscally irresponsible monster must be stopped.

Below are snap shots of the documents from the AFS. The first is titled “Trial Balance”. This is the reconciliation page that appeared on the pro Beth Mason website At the bottom of the page you will find a line item named “Fund Balance”. This is Beth Mason’s phantom $20mm figure. Notice that it does not say surplus. This is Beth Mason’s big lie. A Fund Balance is not a surplus Beth.

At bottom of page the fund balance is not the surplus. Surplus is hand written and incorrect.

The second page is entitled “Surplus Current Fund”. Beth Mason and her operatives never bothered to look at this data. That is how fiscally irresponsible elected officials operate. Under “Analysis of Balance” circled and notated are the magic words: “Cash Surplus”. This is the first mention of the word “Surplus”. The circled number totals $11,833,216.28. $11.83mm is not and will never be $20mm. Additionally you can see Dave Roberts deferred charges of $8,096,962.86 below. Above “Cash Surplus” you will see a line titled “Deduct Cash Liabilities Marked as “C” on the Trial Balance”. This totals $8,522,126.10. Please refer back to the Trial Balance and two rows above “Fund Balance” you will see”C” and this figure. This includes a few miscellaneous charges ($500m) in addition to Dave Roberts deferred, non cash charges cited above.

The actual cash balance is $11.83 million and not the reported $20 million reported by Beth Mason