Jersey City—Deliberations between the Mayor and opposition City Council members on the City’s refinance package drag out. As those deliberations turn into political negotiations, possible savings slip away and interest rates ratchet silently upward at taxpayer expense. Ongoing negotiations between the administration and council members continue as we go to press.

Incredibly, William Gaughan, Council opposition leader told city finance officials that his bloc of council votes would favor a tax increase. Meeting with city finance officials together with other council finance committee members Jeremiah Healey and Mariano Vega, Gaughan told city officials Chief of Staff Bill Ayala and Business Administrator Carlton McGee that the Mayor could get enough votes on the council if two conditions were met.

He laid out those conditions in that meeting to exchange the needed six council votes backing the finance plan for a tax rate increase of One Dollar per $100,000 of assessed valuation. Currently that rate is $19.35 per $100,000, so according to Gaughan’s demand, the rate would go to $20.35. City finance officials say that would be inadequate to resolve the problems the city is having meeting its debts service requirement and the city would only face another crisis a few months later. Besides, said one city official, “If we do the transaction as proposed, no tax increase will be necessary at all for a long time.” Mayor Glenn Cunningham said, “ The residents of this city are already carrying an unfair burden of taxes needlessly. It would be unconscionable to ask them to pay one penny more, especially when it is completely avoidable and unnecessary. Why would any reasonable person do that?”

In that same meeting Gaughan presented Ayala and McGee with a second condition to secure the council votes needed to pass the finance package presented by the administration. That condition would be impossible for the City to meet, even if those city officials had wanted to comply. Namely, led by Gaughan, council opposition members demanded that the Urban Times News cease publication. Urban Times News has frequently been a thorn in the side of the Council members opposed to the Cunningham administration, but is in no way connected to the administration and is privately owned. The publisher of the Urban Times News joked when told of the terroristic demand and said “Have Menendez call me if he wants to put in a bid for the paper.”

The publisher was referring to Congressman Robert Menendez, who is also a ranking Democratic Party leader nationally and who dominates the local Democratic Party, the Hudson County Democratic Organization, to which the majority of Jersey City Councilmen owe their loyalty. The Urban Times News has a habit of referring to HCDO as “Organized Crime” as many HCDO members come under investigation, get indicted and convicted in an ongoing federal investigation of corruption in Hudson County. The Cunningham Administration has split from the HCDO in a feud between Cunningham and Menendez.

But political maneuvering has pushed back the bond restructuring. The State’s Local Finance Board approved the proposed plan overwhelmingly by a 7 to 1 vote of that board. Meanwhile, the savings available by doing the transaction are decreasing as time passes.

In a later conversation that day, Gaughan told the local daily newspaper that the council block of votes he represents, needed for passage of the refinance, would rather see a modified transaction, rather than the one proposed by the administration and approved by the Local Finance Board. Gaughan also told the newspaper that his council opposition block would also favor a tax increase, very different than what he told city officials in the earlier meeting with them.

Gaughan also told the newspaper that the debt service requirements of the proposed refinance would “skyrocket” in later years. The charts show clearly that debt service goes down, and certainly does not “skyrocket.” In any year, now or later. See chart accompanying “Jersey City Existing Debt Service versus Restructured Debt Service or the entire presentation as shown to council members by clicking on http://www.getnj.com/refi/ in Charts, available there.

Gaughan also told the newspaper that the proposed financing would “stretch the payments over 30 years.” The proposal clearly shows (again, please see the chart) that the final maturity of all currently existing obligations of the city would remain at 2034, as it is currently. All outstanding obligations of the city fall due currently in the year 2034. After the proposed financing all obligations would come due in the year 2034.

Gaughan also told the newspaper that the plan would add to the city’s debt load. In fact, administration officials offered documentation that per capital debt remains constant at current levels. All of the extensive documentation pertaining to the transactions referred to in this account can be seen at http://www.getnj.com/refi/

Follow Ups:

• Council says NO ? Chakotay 22:46:21 12/03/03 (0)