The Hoboken City Council moved forward a proposed $107 million budget, which is up $4.2 million in spending from last year – mainly due to healthcare costs for city employees and capital improvements for the city.
Hoboken Business Administrator Quentin Wiest and Hoboken Finance Director Linda Landolfi presented the proposed budget, which is an increase of 3.5 percent from 2015.
One of the most major cost drivers is the city employees’ health benefits, which netted a $1.8 million increase from 2015.
Although according Wiest, there should have been an increase of $2.7 million in 2016, but due to employee contributions by Chapter 78 deductions, the increase was lessened by almost $1 million.
In 2015, there was cost avoidance by moving to a direct access health plan which saved the city about $1 million.
“In the tail end of 2015, we moved over from a premium based medical plan to a self-insured medical plan. Just so you know, had we gone for renewals on our medical premium plan – the renewal was going to be released to us at an increase of 24 percent,” stated Wiest.
“So those two elements together, moving to self-insurance and also the change in the coverage, moving everybody over to direct access, actually combines this year to have a saved the community $2.5 million.”
Aside from healthcare benefits, other major cost drivers including:
A Reserve for Tax Appeals is up to $500,000 because Hoboken is expecting appeals of up to $2 million in 2016. Although they have $700,000 brought over from reserves last year, they have expended $300 million of that money already.
Debt Service is at $300 million because in March, the city financed a bond of $7.9 million to increase the principal payment. The bond was to pay for a 2005 project regarding land acquisition and some improvements to various municipal buildings.
The Fire Department salary and wages are also going up due to the expiration of the Sacred Grant at the end of March.
Social Security and Medicare is also up at $245,000 to cover union negotiations with most municipal unions. If the city settles their contracts, there will be retro payments to employees and matching social security and Medicare payouts.
There is a total of $950,000 in capital improvements funds, mainly due to the proposed Washington Street Redesign Plan.
The proposed project is $12 million, with a capital improvement fund requirement of $600,000.
According to Landolfi, the Municipal Purpose Tax seems to be stabilizing although county taxes are going up.
Currently the municipal purpose tax is at $2,429, ranking the 2nd lowest in Hudson County.
“Our taxes have been going down and kind of been stabilizing at around the $2,400 to $2,500 level and the county tax has, in fact, been doing the opposite.”
As projected, the 2016 Municipal Purposes tax increase is $13 per $100,000 of asset value.
Before deliberating, Councilman-at-Large Ravi Bhalla reminded everyone this was just the first step and they are not approving the budget tonight.
“The administration is introducing the budget, kind off passing the ball to city council and city council rolls up its sleeves to go through the budget workshop process, through the budget workshop days , what each department’s individual budgets are, what their cost drivers are and try to identify areas where there might be savings,” stated Bhalla.
“We are not passing the budget today, we are just taking the first step.”
The vote was 7-0, with Councilman-at-Large David Mello and 1st Ward Councilman Mike DeFusco absent.
Special budget workshops will be held at City Hall on the dates below:
• Monday March 21, 2016 – 6:30 p.m.
o Community Development
o Department of Health and Human Services
o Department of Environmental Services
• Monday April 4, 2016- 6:30 p.m.
o Department of Public Safety (police)
o Department of Public Safety (fire)
o Department of Administration
• Monday April 11, 2016: 630 p.m.
o Office of Corporation Counsel
o Department of Transportation