Towns delay projects, consider layoffs

In Uncategorized on October 6, 2008 at 3:06 am

THE RECORD, Sunday, October 5, 2008

North Jersey towns are finding it nearly impossible to borrow money because of the credit crisis — and officials fear a wave of property tax appeals and delinquencies could follow if the economic outlook doesn’t improve soon.

Cities and towns across the region are putting major projects and big-ticket purchases on hold, betting the crisis will ease in a matter of weeks or months. Still, many finance directors aren’t taking chances, telling department heads not to expect any spending increases next year.

Municipalities were already reeling from a 7.2 percent cut in state aid, announced in July, when the bottom fell out of the credit market in mid-September.

Since then, hiring freezes have been imposed or extended, and some city officials have warned that they may be forced to cut services or lay off employees to keep their budgets balanced. All of it is happening in the face of state-mandated increases to employee pension funds and contractual pay hikes that are beyond the control of municipal officials.

Bill Dressel, executive director of the New Jersey League of Municipalities, called it “the perfect storm for economic doldrums,” adding that the current climate is the worst he’s seen in his 34 years with the league.

In Wanaque, Borough Administrator Tom Carroll has told department heads to put off equipment purchases until next year.
“We’re making do with what we have,” Carroll said. “We’re going to fix the leaf blower machine because it’s fall and we need it. But we’re going to put off buying any new computers. We’ll do computer maintenance and use the machines we have.”

Housing fears
Few towns have seen a significant increase in property tax delinquencies, though the outlook won’t be fully clear until January. Standard & Poor’s reported last week that New York City-area home prices fell 7.4 percent from July 2007 to July 2008, raising fears that residents may seek to have their property taxes lowered next year.

There are other signs that the economic downturn is beginning to have a real impact on municipal budgets. In Leonia, for instance, residents owed about $227,000 in delinquent property taxes for 2007, more than double the $101,000 in delinquent property taxes for 2006, said Myrna Becker, the borough’s chief financial officer. Becker said the borough briefly delayed payments on some bills this summer.

“We simply didn’t have the funds to pay for them,” she said. “When you’re dealing with tax money that’s not coming in on a steady basis, it has an impact.”

The bleak economic outlook for towns and cities took a sharp turn for the worse on Sept. 17, when the market for government-backed bonds, traditionally considered among the safest of investments, dried up virtually overnight. Suddenly, cities found they could no longer tap their cheapest and most reliable source of borrowed money, bringing municipal cash flow to a standstill.

The problem started, bonding experts said, when institutional and individual investors panicked and began pulling their money from money market accounts that had invested heavily in tax-free municipal bonds and the short-term notes that cities issue as a way of ensuring stable cash flow.

Market collapse
Interest rates on municipal bonds and notes increased to more than 3 percent by last week, significantly higher than the 2 percent or so that municipal officials were accustomed to paying, said Ed McManimon, a Newark attorney whose firm specializes in municipal finance law. Municipal Market Advisors, a Massachusetts consulting firm, reported that the yields on some 30-year municipal bonds rose as high as 5.24 percent in September.

“Essentially, the note market collapsed,” McManimon said. “There were no bidders. In the 36 years I’ve been doing this, that’s never happened.”

In Rutherford, Chief Financial Officer Edward Cortright said he would decide in April whether to go ahead with a planned $9.1 million bond issue to finance capital projects.

“At that time, we may very well be affected by the market,” he said.

The borough would use the bonds to pay off four loans, called bond anticipation notes, that the borough took out over the last three years to finance road maintenance and other projects, Cortright said.

Leonia is already feeling the pain of a sluggish bond market. Borough Administrator Jack Terhune said fewer banks are competing to buy the borough’s debt.

“Now, when we go out for tax anticipation notes or bond anticipation notes, we get two [banks] who would respond,” he said. “A few years ago, we’d get eight or nine.”

The new climate is forcing cities and school districts to be creative.

For instance, when one of McManimon’s clients, the Bergen County Technical Schools and Special Services District, had trouble finding bidders for a new short-term note recently, McManimon prevailed on another client, Bergen County, to buy it. The note, which matures in December, has an interest rate of 3.1 percent.

“So [Bergen County] gets a legitimate return and the vocational schools pay an interest rate that’s commensurate with the market,” McManimon said. “But that’s only a stopgap, not a long-term solution. We’re trying to find stopgaps until the market shakes out.”

Credit remains tight
The $700 billion rescue package for the financial system that President Bush signed into law Friday is not likely to immediately loosen credit for towns and cities, because so much of the money that had been invested in municipal bonds now locked up in treasury bonds.

“The spigot will turn back on, but it’ll be a progressive thing where it might take two or three weeks,” said Tom Hastie, a partner in McManimon’s firm.

Dressel, of the municipal league, said he is cautiously optimistic that experts are correct when they say the congressional bailout will help to create a better climate for New Jersey’s towns — and their residents.

“There’s no way of sugarcoating what’s happened in recent days,” he said. “But every expectation is that this thing is going to turn around as fast as it went on the downward spiral, that it’s going to come back just as fast as it went down. I hope they’re right, but time will tell.”

Staff Writers Stephanie Akin, Joseph Ax, Nick Clunn, Evonne Coutros, Richard Cowen, Jennifer H. Cunningham, John A. Gavin, Ashley Kindergan, Maya Kremen, Matthew Van Dusen, Barbara Williams and James Yoo contributed to this article. E-mail: lamb@northjersey.com

  1. The party is over. The reality has set in. New Jersey has a very high cost of doing business. Notice that our major industry, the drug industry is laying off THOUSANDS. Of course that is already happenning in the financial industry. Expect more of your neighbors to be looking for work. When the economic conditions become more favorable (hopefully sooner than later) these large employers will hire again, but not here. This state has become socialist under our last few democratic governors and and your state senators and congress. Trenton couldnt stop spending. You reap what you sow. If Trenton doesnt chop employees and wasteful spending, this state is history.

  2. Yet in Ridgewood, taxpayers will soon be asked to fund the following capital projects:

    1) A $300k rest room facility in Vets Field
    2) Purchase of the Schedler property on West Saddle River Road, estimated at $4 million
    3) An unnecessary parking garage on North Walnut Street for $20 million

    Is the Village Council clueless or what??????????

  3. No worries…we live in Bolgerville…!

  4. 6:22 – don’t forget the upcoming BOE bond referendum…

  5. 6:22 AM –

    RE: “Is the Village Council clueless or what??????????

    Is this what they mean by a rhetorical question?

  6. This is serious.

    The Ridgewood council must just STOP. Show leadership. Don’t cave to local groups who lobby for their favorite cause.

    Momentum is a tough thing to stop, but we need to realize that ALL discrentionary spending AND borrowing has to STOP.

  7. Re:
    The Ridgewood council must just STOP. Show leadership.

    I got a good laugh out of that one!

  8. Ridgewood is NOT the real world. In Ridgewood, the stock market is not tanking, the economy is roaring forward, the schools are better than they’ve ever been, our leadership is smarter than ever, all bond referendums will succeed, banks will return to their rightful place as owning all real estate in our downtown, and people are spending like there’s no tomorrow.

    In Ridgewood, no one has to worry about tomorrow. That’s our motto and we’re sticking to it. We’re a town on VIAGRA and loving it.

  9. they are talking about all this,do they have money some place we dont no about,hummm.we can keep spending money on the b.o.ed.all of the taxes go to them.they dont put any money into the town site,s they are all falling down.and they dont replace any one that leaves,thats not good I been in for 32,years.what the hell is going on.we need workers to do the job.dont cry to the press when it will not get done.thanks miss skowughest.

  10. And Ridgewood blunders on. Sure, let’s buy the Schroeder property. It’s only another $4 mil..

  11. Can we start with laying off all the “friends and family” employees?

  12. we dont have anymore workers to lay off we are down at the bottom now.we cant get the work done now.so many workers left and they only hired a few to save money,we can understand that but now we need workers what should the town do.in the police and fire depts when some one go,es they hire they just hired in both depts this year .may be we can get some off them to help with garbage pick up.and cut grass and tree work.they keep saying they dont have the money but thats a load of bull shit they have money to plant shit on the hill,that is crest rd so all the shit heads will be happy.but so much for that no water on the hill and all the deer eat all the flowers huhhh.yea real good move bety.thats why you are out and bubbles is in huhh.yea and old manfrench boy.your frind the gost of rw,

  13. from the meeting the other day and thats behind door # 5 the fire dept is the first to go.too much money.and then the county is going to help with the police.we cant keep paying vey high pay to police come on over a hundred grand after 5,years its killing the tax paying people 1 is bord of ed out off controllllllllllll.and the fire and police.the poor garbage man is only makeing40 grand and look what he or she will do.now they work hard.

  14. thats so true the three need to be cap,ed its a must we all can go and buy gun,s and bats we dont need so many cops look at nite they at times are hideing i see when iam going to work at 2am.iam a driver for the ny times and i see some sleping .

  15. What is Ridgewood waiting for ? We have people like the dog catcher who spends more time at the coffee shops than working ! ELIMINATE THESE USELESS JOBS! Run this town like a business and cut 20% of the entire staff!

  16. to 703 you dont no to much about ridgewood if we lay off friends and family do you no how manny workers in the police and fire depts that are family,a lot but they would not go after them,they would go after the little guy.they need to cut in town hall they add,ed they put on a few more in that pool.they keep puting on people in police and fire and town hall but in depts that need halp they dont hire.some depts are down to a bare bones no good.o, well the work will not get done.I been in town for 37,years and live in a few homes now on maple av. I see whats going on.bull shit put on workers. they have the work and you just need to look over them in the policea nite they are just waiting around for a call no call time to sleep and read a nutty book.yea that the story.

  17. thats so true.Iam very said about it but its time for the fire dept to go to none full time a lot of other towns do it.some are the same size.we need to stop all the bull shit spending on some off the dum thinking like sport fields plant grass stop wasteing money on shit in town.thats it its done.wake up.the town gost

  18. Fire Department needs to go! why can every other Bergen Count town work with volunteer fire departments and do just as good of a job ? I think the last time I looked Fort Lee had quite a few more high rises than we did it Ridgewood and probably more single and multi family homes and was supported by a volunteer force. CUT CUT CUT !! Lets take some responsibility !! CUT CUT CUT !!

  19. The reason we have paid FD is that the big property owners in town pay far less on insurance. If we went to a vol. FD your insurance costs go up. You save in one area and get hit in another. The major property owners will never let the village hurt them in the pocket book by doing away with the FD.
    Besides, are we going to be able to get the volunteers we need? How many Ridgewood residents are going to get up at 3AM and go to a fire alarm? Most towns are having trouble staffing volunteer services, in Ridgewood it will be just as bad if not worse. And what will we net – a $50 savings on the average property owner’s tax bill? The big money goes to the Board of Ed not Village services.

  20. thats so true the bord of ed is way out in the spending areas.they are at lest 85% of or tax,es when is this going to stop

  21. yea and mr dog boy cany even pick up any thing dead.I live on hillcrest and one saturday i call in a dead bird and i was told that i will have to call the street dept they are the ones who pick it up only then why do we have a dog runer.

  22. all I know is that all the town dept,s are so low in staff.its not even funy any more this is bull shit we all pay taxes for all this.I pay so hire workers they hire in police and fire put other depts they dont,and thats bull.I gess we are going to get police and fire to pick up dead birds and other stuff that dies on the week end when no one is on call for this.

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