HOBOKEN — In a memorandum circulated today by Director of Operations Jason Freeman, the City of Hoboken looks to implement at 5% tax levy for the 3rd Quarter in an effort to cover budget shortfalls.
"Estimated tax billing for the third quarter of this year has been discussed and agreed to over several meetings with the Finance Subcommittee. A recent Local Finance Board Notice from the
Division of Local Government Services (DLGS) of the Department of Community Affairs supports the consensus of the Finance subcommittee to issue estimated tax bills for the third quarter of this year."
Per New Jersey tax code, Section 54:4-66.3, estimated tax billing is a municipal finance tool to help defray spikes in costs to the taxpayer.
Freeman claims, "DLGS recommends that Estimated Tax bills be issued this year for the third quarter due to the delay in adopting a municipal budget in 2020. This delay is due to the financial and economic uncertainties resulting from the COVID-19 pandemic."
Hoboken's financial woes were apparent well before the COVID outbreak, as a memo in December outlined $7 million shortfall in operational costs. That figure was met by a massive increase in the City surplus, which will now be compounded by the impact of the pandemic.
Says Freeman, "The Administration recommends that the City Council approve an increased estimated third quarter tax bill based on a 5% increase in the total levy to mitigate the possibility of an outsized bill for taxpayers in November 2020. By passing this resolution, the City Council allows for flexibility and less pressure to be put on the taxpayer come November 2020."
According to Councilwoman Tiffanie Fisher, "Our gap right now is close to $20M in my estimation excluding steps the city has already taken and any further funding for lost revenues."
Fisher maintains, "If we use ALL of our surplus, that would only be about $9M. A 5% tax increase would fund only about another $2.8M. We are not at all confident that we will get more federal funding, but will know more over the ensuing couple of months. Regardless, even if this was the $5M equal to our revenue loss, and although we will still try to find additional cost savings, especially in unnecessary overhead, I am confident that the tax increase for this year will be much greater than 5%. So the question is do we take this 5% increase now to lessen the pain later in the year, or kick this one more quarter with the potential for a greater impact later."
Hoboken is still working to present its budget, despite having already terminated the employment of over two-dozen workers.
"We are continuing to work on the Introduced Budget and plan to have a draft to the Council in
June, but there still remains a great deal of uncertainty surrounding the different decision points to be able to present as accurate as possible budget at this meeting," says Freeman. "We have been working on this and discussing many of these decision points with the Finance Subcommittee. Our goal is to introduce a budget that is not only based in sound financial principles, but also to have as much accurate and up-to-date information as possible."
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