Two West Hudson communities currently receiving transitional state to help offset property tax impact are looking to get out from under the aid’s ties to Big Brother watching.
To get the cash, Kearny and Harrison must agree to submit every significant municipal expenditure, whether for issuing bonds, investing in new capital improvements or hiring new employees, to the oversight of state fiscal monitor Don Huber.
If the monitor does not approve, he can block the municipality’s proposed action.
One example occurred last year when Kearny looked to float a bond to cover part of the cost for a dog park partly subsidized by a grant from the Hudson County Open Space Trust Fund but, according to town officials, the monitor vetoed it.
The town then cobbled together the funds needed by tapping unexpended balances from two previously issued bonds, to which the monitor consented, officials said.
Typically, the aid is awarded to economically-distressed communities.
In 2015, Kearny received $1.5 million in transitional aid and Harrison got $1.6 million. In 2014, Kearny pocketed $2.5 million; Harrison, $1.95 million. Harrison has been collecting since 2010, when it started off with $1.5 million. It got the same amount in 2011, then $1.95 million in 2012 and 2013.
Until the past couple of years, when development projects began coming on line, Harrison had gone through a particularly difficult period, having lost a total of 84 municipal employees through layoffs and/ or attrition and seeing its public safety forces dramatically reduced over a longer time.
Kearny, which has also seen a drop-off in employees and overall land evaluation, is also beginning to see a breakthrough on the development front.
Both towns are hoping that existing and anticipated revenues from those projects will put them on a more solid fiscal footing and will offer a justification to the state for shifting the special assistance to part of their regular state aid.
“I don’t think Kearny wants to continue to receive transitional aid,” Mayor Alberto Santos told The Observer recently, especially if the town can get its fair share of energy tax receipts, a part of which that, according to Santos, “have been taken away” by the state to balance its budget.
Asked why the town has yet to litigate the issue with the state, the mayor said: “I think it’s a viable case, although our [town] counsel disagrees with me.”
Another area of concern is the water utility account which the town has been partly subsidizing because it has been in deficit for the past few years. Santos expects to see “another water rate increase in 2016, regardless of the outcome of negotiations with United [now known as Suez] Water” on management of the system.
“The wholesale cost of water has gone up and there have been substantial improvements to our water infrastructure,” Santos said. “We are exploring the sale of our surplus water and if it does not occur, then we will likely finish 2015 with a utility deficit.” The projected rate hike, he said, will probably be “consistent with historic increases of 3 to 5%.”
Kearny is continuing to negotiate new labor contracts with the unions representing police rank-and-file and superiors, fire superiors, Civil Service employees and exempt employees, all of which expired Dec. 31, 2015. Civil Service, Council 11 is seeking mediation.
In Harrison, meanwhile, Mayor James Fife said: “Hopefully, we’re going to get our transitional aid turned into regular state aid.” The town was expecting to file papers in support of that proposition shortly after New Year’s, he added.
Since the state has been overseeing Harrison’s fiscal operations, “we’ve complied with everything they came up with,” Fife said. “We have a barebones police and fire department, and minimal DPW, we had no municipal or school tax increase in 2015 – in fact we had a small municipal decrease – and our bond rating has improved [to Baa2, the ninth highest Moody’s rating, subject to moderate risk.]”
On the development front, a new 330-unit apartment complex along Cifelli Drive opened in 2015, with several ground-floor retail shops expected this year, there could be a groundbreaking for a new hotel on the east side of Frank E. Rodgers Blvd. by March and A&J Seabra plans to open a new upscale food market next to the Wendy’s on Bergen St. around Easter, Fife said.
One big fear, however, is what the state Supreme Court will decide on a tax appeal case involving the Red Bull Arena, the soccer stadium on the east side of Frank E. Rodgers Blvd. Harrison, through its tax attorney Steve Pearlman, has sought to negotiate a settlement but, so far, has been unsuccessful.
Fife said the Red Bull organization has paid the taxes on the land and the stadium since its opening in March 2010, averaging approximately between $2 million and $2,250,000 a year but, at the same time, continuing to challenge the legal basis for being taxed at all. A state tax court ruled in the town’s favor but the owners appealed.
If Harrison loses the case, it would be a crippling blow to lose those tax revenues.
Harrison must also renegotiate contracts with its Civil Service employees, police and fire unions, department heads and police chief. All ran out Dec. 31, 2015.