It was a long haul, but when it was all over, the city may have avoided a complete takeover by the Municipal Accountability Review Board. At least, that is the hope of Mayor Nancy Rossi and other city officials. A revised budget was passed by the council, 11-0.
Subject to the MARB’s June meeting this week where it will review what the City Council passed, Wets Haven can find itself at status quo, or moved to the position of having all its financial decisions made by the state panel. The board will make that determination in a meeting conducted after press time.
At issue is whether the moves made by the city will mean status as a Tier III or Tier IV stressed municipality. The city entered Tier III status last year when it approved the $25 million bond issue that eradicated the then-existing $16.7 million operating deficit that had dogged the city for more than a decade.
Under a 2017 state law, municipalities that bonded for debt relief were put under the eye of the MARB, headed by OPM chairman Benjamin Barnes. Rossi was greeted with that reality the day after she took office in December.
Under the terms of Tier III, the city must have balanced budgets for three straight years, all new contracts are under the scrutiny of MARB, and the panel will give guidance as to issues in the future. It already flexed its muscle earlier this year, rejecting a negotiated contract.
Tier IV status means the city’s entire financial structure would be under the control of the panel, similar to the years 1991-94, when the state bailed the city out of bankruptcy. All contracts could be reopened, the board would set mill rates, and have veto power over any and all financial moves by the City Council.
Last week’s meeting had all that on the line when it met to review a revised budget cobbled together by Rossi, City Council Chairman Ron Quagliani, Finance Committee Chairman Louise Martone, and City Treasurer Michael Last.
The new budget had to pare $3 million from the $162.86 million plan in order to be in balance. Mayor Rossi was hoping for a state-infused cash flow of $9 million from MARB when she made the budget. Earlier this spring, MARB officials voted to give the city $3 million, while using the balance for administrative and other costs. That meant the council had to find $3 million in cuts.
During its six-week review, the nine-vote supermajority necessary to pass alterations to the budget was a hurdle too high. The budget was rejected, 8-5, following the review, setting up a June 7 deadline imposed by MARB to get the budget cuts and necessary balance.
Barnes and two other members of MARB were in attendance prior to last week’s vote, and Barnes briefed the council on what was expected.
Prior to the vote, Rossi was confident the council would be persuaded to make the alterations needed.
“The city and the council understand the importance and urgency of meeting the deadline imposed by the MARB to pass a responsible budget. Chairman Quagliani and Finance Chairman Louise Martone have worked with Treasurer Michael Last, and me to create a compromise budget that will be in the best interest of the city and our taxpayers,” she said.
In discussing the plan, Rossi said it makes the changes the MARB sought.
“The budget makes additional expenditure cuts and raises the tax rate by one mill to 36.26. The budget, if passed, will erase the budget deficit left by the past administration for fiscal year 2017 of approximately $1.5 million, provides realistic revenues, reduces positions and costs on the city side and properly funds the Board of Education. This recommended budget is honest and balanced and contains the structural changes required to begin our fiscal recovery while providing necessary services,” she said.
Under the revisions, taxpayers will see the city’s tax rate go to 36.26 mills for Fiscal Year 2019. That is not including fire district taxes. The city’s Motor Vehicle Tax Rate will be 37, once again utilizing a General Assembly revision. Allingtown residents, who put their fire district under city control eight years ago, will see the Fire Dept. tax go to 13.06 mills, while the fire Motor Vehicle Tax will be 8. The Sewer use Fee will be $462 per unit.
While this may forestall MARB from moving the city to Tier IV status, city officials will not be sure until the meeting this week.