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Update: Council Rejects Administration's Budget for September; City Has Enough Money For One More Payroll

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PATERSON, NJ – The City Council on Tuesday night refused to approve a temporary municipal budget for September, a move that could put Paterson in danger of not paying its bills and making its payroll next month.

But city officials acknowledged that a solution likely will be reached in the next several weeks before Paterson reaches the point of defaulting on any fiscal obligations.

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[Editor's note: The bottom of the this story contains comments from council members Andre Sayegh and Julio Tavarez that were not in the original version.]

In essence, the rejection of the temporary budget represents the latest volley in the ongoing battle over municipal finances between the city council and Mayor Jeffrey Jones administration.

The council says the administration has been dragging its feet on crafting an annual budget and is using the month-by-month temporary budgets to buy time. Council Finance Chairman Kenneth Morris says the delays are the administration’s “back-handed way of getting what it wants.’’

“This whole notion of ‘This is the way we’ve always done it’ - I don’t accept that,’’ Morris said.

The administration has based its monthly temporary budgets on a tax levy that would be two-percent higher than last year’s figure. But council members have asserted that they want the city to cut the tax levy as a way to start offsetting the devastating impact of the 29-percent hike that came in 2011.

City Budget Director Russell Forenza said it was premature to put together a permanent budget because some key revenue information was not available yet.

The council’s vote Tuesday night on the proposed $15.5 million temporary budget for September was 5-3 in favor of it. But budget resolutions need six affirmative votes, so it failed to pass.

Voting in favor were Council President Anthony Davis and members Mohammed Akhtaruzzaman, Kenneth McDaniel, William McKoy and Andre Sayegh. Voting against were Morris, Rigo Rodriguez and Julio Tavarez. Councilwoman Ruby Cotton was away and getting approval for the budget could prove as simple as having her return.

Forenza said the city has enough money from the $38.4 million approved in the July and August temporary budgets to meet its August 31 payroll. Each payroll amounts to about $4 million, he said, and Paterson likely won’t have enough money to make the September 14 payroll.

The city council’s next regular business meeting is scheduled for September 11 and that would provide enough time to issue the September 14 checks, according to Forenza.

Forenza said he has not received any specific instructions from the council on what it wants changed in the September budget. As a result, he said, he’s not planning on making any changes.

Under state law, the city cannot spend money that has not been approved in a permanent or temporary budget, officials said.

In an interview on Wednesday, Morris said he questioned some of the salary line items included in the temporary budget. He also said the budget should include additional information on insurance, legal expenses and utility costs.

Administration officials say they are planning to hold hearings to review spending proposals for various municipal government departments in September and October. But, Forenza said, there’s no telling how long it will take to adopt a budget. That may take until March or April, he said.

In the past two years, the city has allowed so much of the fiscal year to pass before it started reducing the budget that the cuts had little impact because most of the money in line items already had been spent.

The fiscal year started on July 1.

Sayegh said on Wednesday that his support for the temporary budget was, well, temporary. "I'm giving the administration the benefit of the doubt because they made a committment to me that they would have a preliminary budget by September,'' Sayegh said.

If the preliminary budget is not ready by September, Sayegh said, he will no longer vote to approve a month-to-month spending plan.

Tavarez said it was unacceptable for the administration to allow the budget process to drag into next year. "We're looking for them to make a change in the budget process,'' Tavarez said. "How can we see any savings if we don;t make any cuts until there are two months left in the year?''

 

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