3/11/19 Caucus

Greg Fehrenbach

PERTH AMBOY – Before the Council had to decide on R-130-3/19 (Introduction of CY 2019 Budget), Former Business Administrator Greg Fehrenbach wanted to give an overview of what the Administration came up with the numbers that resulted in a tax increase. He informed the Council Members that the staff (of the different departments) made suggestions for the Budget. Fehrenbach went on to explain that the Mayor said operations staff was already reduced, and a tax increase was needed. “The City has $7.3 million in a structural debt deficit which includes employee insurance, pension expectations, and prior years bills. There is a shortfall of $2.2 million in revenue.” Fehrenbach explained that the Administration was able to get to that number was through reducing expenditures and employee’s revenues. “Some Department Heads had asked for increases in their budgets which we didn’t consider. Employee insurance increased. Under former Mayor Vas’s Administration, a $6 million debt was incurred.”

There were three meetings to discuss the Budget. CFO Jill Goldy, B.A. Frederick Carr, Former B.A. Greg Fehrenbach, and Mayor Wilda Diaz met to discuss the CY 2019 Budget. Councilwoman Milady Tejeda attended all three meetings. Councilman Joel Pabon attended the first two meetings and Councilman Fernando Irizarry attended the third. Mayor Diaz attended the first two.

Councilman Fernando Irizarry then questioned one of the items in R-130-3/19. He said that it seems as if it doesn’t include money for Code Enforcement.  We (the Council) will have to come with money for a new Code Enforcement Director if we don’t choose the Mayor’s pick (Lozada). I think I was set up at this meeting. Last year, after we introduced the Budget, changes were made. We were then told it was now the Council’s Budget, and we can make changes.” 

Irizarry continued, “Do not increase taxes. The Council will have to do the heavy lifting now and make tough decisions. This budget will increase a regular household taxes by $223.00 (a year). I know the Administration is at the Mayor’s calling, but they also work for the Council and Residents.” 

Councilwoman Milady Tejeda

Councilwoman Milady Tejeda spoke up next. “The Mayor wasn’t at the last (third) Meeting where the Council suggested ways keep down the Budget. Our input was not taken seriously.”

Fehrenbach replied, “Myself, B.A. Frederick Carr, CFO Jill Goldy, were not aware that the Mayor would not be at that Meeting (third Meeting). We knew it was vital for her to be there. She told us that she was ill that day.” He then stated, “We hope there is money for employee insurance. The State eliminated the employee salary guide. There is a $600,000 increase in steps for union contracts. This will be a $55 a quarter tax increase. The Police Department, Fire Department, Health and Human Services were all increased. 22 positions were lost in 2018 and more may come in 2019. Personnel are essential. When it comes to an increase or decrease for a line item on a budget, you need 3 Council Members to do a decrease. You must have public hearings. The introduction of the Budget must be in by the March 27, 2019 Meeting. You have to have a public hearing on any amendments. You can hold public hearings on April 10, 2019. A timely adoption will be on the Best Practices Checklist. If we (the City) don’t have this done by then, we (the City) will lose 3 points which will cost the City to lose money.”

Irizarry then questioned, “If we (the Council) introduce the CY 2019 Introductory Budget, it will then become the Council’s Budget. The taxpayers can’t afford a $223 a year increase.”

Fehrenbach then suggested it could be reduced by a very small amount and it had already been reduced by $1 million (off the total). “You’ll have to layoff more people. When $700,000 was used in last year’s surplus, it impacted this year’s budget. Surplus money encompasses many items. You have to look at it over a series of years. Lapse Reserves in 2021 will be even smaller. All you do is kick the can down the road or dig a deeper hole. The $7.3 million structural deficit is hard to overcome. We filled needed vacancies. The Police Department went from 137 members to 120. I thought it should have been 112 – maximum. When I left (the first time).”

Irizarry spoke again and said that we might have to look at another tax increase after this year. “The Board of Ed is increasing taxes.”

Council President Bill Petrick spoke next. He commented that we are a poor community. “A lot of residents are on a fixed income. A lot of Seniors stay here in their own homes. It doesn’t reflect on either of you (Fehrenbach and Carr) when the extra hiring’s took place.”

Fehrenbach then continued. “Reduction in services or staff will have to be made for lowering the tax increase.”

Tejeda spoke up again, “At one of the (earlier administrative) meetings we had (to discuss the budget), there were alternative discussions to have the increase to come below $200.” She then explained at a follow up meeting, there was no possibility of this.

Business Administrator Frederick Carr responded, “It’s a combination of math. We recommended layoffs. We went back to the staff (in different departments) for cuts again.”

Fehrenbach then added, “During the last administrative meeting, Jill Goldy left to see the numbers (to try to bring the Budget increase below $200).” He stated that at the last meeting that was held, it was possible to go to a $210 increase for the year.

Tejeda then reiterated, “We (the Council) had options before to get the (tax) increase under $200. But now, those options were taken off.”

Irizarry wanted to thank Greg Fehrenbach, B.A. Carr, and CFO Jill Goldy for helping out with this budget.