PATERSON, NJ - During a raucous meeting that ran for more than five hours, a splintered City Council on March 17 never voted on the mayor’s proposed budget changes despite a state warning that inaction could cost Paterson $14 million and possibly trigger a takeover by the Christie administration.

Amid shouting matches and impassioned speeches, council members could not reach an agreement on whether a last-minute state offer of $6 million in unexpected aid would bring taxes down low enough.

Four members – Vera Ames-Garnes, Anthony Davis, William McKoy and Benjie Wimberly – favored Mayor Jeffery Jones’ plan to amend the budget so that the May tax bills would be the same as the ones in February that included a 29-percent increase.

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But four others – Aslon Goow, Rigo Rodriguez, Andre Sayegh and Julio Tavarez – insisted that Jones had not done enough to cut the budget and they demanded the mayor get rid of controversial appointees, including his chief of staff and information technology director, and trim his three-detective security team.

Councilman Kenneth Morris was on vacation, but participated in the meeting through speaker phone and sided with those who wanted additional reductions in the budget.

At 15 minutes before midnight, the deadline under city rules for taking action at public meetings, Council President Goow ordered police officers who were on duty at the meeting to remove City Budget Director Russell Forenza from the chambers after the two of them had a heated exchange. Goow then reprimanded the police officers for not removing Forenza fast enough.

The council’s inability to come to a consensus leaves the city and its taxpayers in uncertain financial waters, complicating an already turbulent budget crisis that people predict will cause of a wave of foreclosures to hit Paterson.

“We could put ourselves in danger by not adopting a budget,’’ said Wimberly, arguing that the state would take over city government and impose an even larger tax increase in the May bills. “This is nothing to play with.’’

“It’s not about liking the mayor, it’s not about liking the council president,’’ Wimberly added. “It’s about doing what’s smart and wise for the city of Paterson.’’

But Goow insisted Paterson should not cave in to what he called a “threatening letter” from the state. “This is Governor Christie forcing us to do something very, very drastic that we cannot afford and you will suffer if we do this,’’ Goow said

Goow said the state was “threw us a bone” by offering the extra $6 million in aid. “It’s not significant, it’s not even remotely close,’’ Goow said.

About 120 people jammed the council chambers when the meeting began 20 minutes late at 7:20 pm, with many of them standing in the aisles. But less than a third of them remained at 10:50 pm, when members of the public were allowed to speak.

 “These people left discouraged,’’ said Tom Fuscaldo, a resident who criticized the council for waiting so long before taking public comments. “They wanted to be heard and they left discouraged.’’

Residents weren’t the only one discouraged. After seeming relieved that the state’s sudden offer of another $6 million would allow them to avoid compounding the February tax increase in the next bills, Jones and his staff were shaking their heads when midnight passed and the council had not acted.

“We’re going to lose $14 million and that’s irresponsible,’’ barked Business Administrator Charles Thomas, in a departure from his normally low-key tone.

When asked for comment after the council's inaction, Jones said, "I didn't expect anything else.''

In a letter dated March 17, Thomas Neff, the director of the state’s Division of Local Government Services, said Paterson would risk losing $8 million in revenue on its annual sale of tax liens if the council did not approve budget amendments that same night.

“This will obviously necessitate the City either raising taxes by an additional $8 million or implementing a massive additional layoff plan to allow for a balanced budget,’’ Neff said.

Moreover, he said, the state would “view inaction as bad faith.’’

“Not acting when being fully aware that the result will worsen the structural budget problem due to the missed opportunity to gain revenue from an accelerated tax sale would be so irresponsible that the state will consider withdrawing the additional $6 million loan as we will not be so willing to subsidize irresponsible inaction,’’ Neff said.

 The letter reiterated the threat of a state takeover. “It will cause investors to lose confidence in the City, worsen the City’s relationship with investors and destroy the progress we have made together over the past three months to address an incredibly difficult financial problem.’’

The state had set a March 30 deadline for the city to adopt its budget. By not approving the amendments on March 17, the city does not have enough time to meet that deadline because state law requires the changes to be advertised in a newspaper at least 10 days before the final vote.

Council members who opposed approving the mayor’s budget amendments indicated they thought Neff’s threats were hollow.

“I find it extremely hard to believe the state would put money on the table and then take money off the table,’’ said Morris.

City Finance Director Anthony Zambrano said the May tax bills would have been the same as the ones sent out in February if the council had agreed to the mayor’s plan to set the tax levy at $132.1 million. “The bills will not increase at all, what they were is what they’re going to be,’’ Zambrano said.

Under the $132.1 million levy, Zambrano said the tax bills issued later this year – as part of the fiscal 2012 budget - also would be lower than the February and May ones because the extra burden would be spread out over four quarters' payments  instead of just two as is happening now.

At $132.1 million, Zambrano said, the total annual tax bill for a house assessed at $350,000 would be $8,412, including the county and school taxes. The annual city tax increase on a house valued at $350,000 would be $1,131 he said.

But a majority of the city council wanted the Jones administration to cut the budget some more.

Morris proposed trimming an extra $900,000, largely by eliminating some of the mayor’s controversial appointments and by rolling back the salaries of the mayor, his staff and some council members. “These savings are there,’’ Morris said.

Goow said the mayor should take a pay cut down to $96,000, the bottom of the salary range for his job, rather than the $114,000 he now gets, which is the top of the range.

Other council members also targeted the mayor’s appointees - chief of staff Charles Pettiford who makes $105,000 and technology director Kenneth Sumter who makes $50,000 while also working for the school district - both of whom sat the administration's team during the meeting and his $270,000 security detail, two members of which remained in the audience for more than five hours during the meeting. They argued that eliminated those jobs would allow the city to retain people making far less in more vital positions, like school crossing guards and emergency medical technicians.

“In my estimation, we’re making the wrong layoffs,’’ said Sayegh.

The mayor said the council was trying to “make sure I get crippled a little bit” by focusing on his appointees.

At one point during the council’s discussion, Jones indicated he would be making changes in his three-man security detail. But he declined to discuss details of what those changes would be.

Council members who supported the mayor’s budget acknowledged that the tax increase was troubling, but they said they saw no other recourse.

“There aren’t a lot of good choices here tonight,’’ McKoy said.

Ames-Garnes said it was “convenient” for residents and elected officials to applaud budgets in the past that came with no tax increase, but pushed fiscal obligations into the future and created the historic deficit that hammered the city this year.

 “Everybody was clapping and smiling,’’ she said. “Ain’t nobody clapping and smiling now because all of us got tears in our eyes.’’

The specter of state-imposed supervision hung heavy over the debate.

“We can stop telling people we want the state to come in and take over,’’ said Davis. “We do not want the state to take over.’’

But Tavarez said some some warnings about a state takeover were misleading. “Let’s not fool the folks that it’s going to be all bad,’’ Tavarez said. “Camden is not going to get the tax increase that Paterson is getting,’’ he added, referring to the South Jersey city that’s under state control.

Early in the meeting, Jones said offered hope to homeowners struggling to pay their taxes.

The mayor said the Paterson Restoration Corporation, which normally provides loans to city businesses, would set aside about $1 million for loans of $2,500 for homeowners who can’t pay their taxes. Jones said the interest would be two-percent, or just $50. “You don’t have to agree that it’s the right thing or the best thing,’’ Jones said. “It’s the only thing.’’

Jones also outlined some ways the city’s fiscal situation would improve in future years:

*getting more revenue from the Municipal Utilities Authority’s hydroelectric plant.

*savings through shared services agreements with the school district, parking authority and housing authority on things like garbage collection.

*revenue from the creation of a national park at the Great Falls.

“Is our future brighter? Absolutely. Absolutely. Tomorrow? No. This is about the plan,’’ Jones said.

But the mayor’s comments about a brighter future for Paterson came several hours before midnight had passed without the council taking action on the budget.