4th Ward Councilman Mike Lenz issued this statement on his website (http://www.lenzforcouncil.com/) and gave the Hoboken Journal permission to print in this website in response to the false information published on Hoboken 411 about the $33 million dollars left over or the $20 million dollar surplus:
The $19,975,580.49 Million Lie
“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
Editor's reference: For reference and to help a flailing blog with some traffic it desperately needs to keep what little advertisers it has left go to this link on Hoboken 411...
http://hoboken411.com/archives/48342
$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 witha 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 plus the 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.
- Mike Lenz
Editor's Note: Do you feel that $12 million dollars is the appropriate amount of for the surplus? Should it stay at that level or be less? Is there anyone who thinks that the $12 million dollar surplus should not exist and instead be zero dollars? Share your thoughts below. ◦
