Little-known board could steer A.C.'s future
Seaside Heights had a financial hole to fill. Last fall, the borough learned that it owed $522,000 in tax refunds stretching back to 2010.
Seaside Heights had a financial hole to fill. Last fall, the borough learned that it owed $522,000 in tax refunds stretching back to 2010.
Its solution - borrowing to pay the money back - would cost a typical homeowner $50.26 annually for four years. But before Seaside Heights could proceed, it needed permission.
The Local Finance Board, little known to most New Jerseyans but familiar to municipalities in trouble, scrutinizes a swath of spending: from bonding to pay back taxes, to fire districts looking to buy new ladder trucks, to improvement authorities incurring questionable costs.
Now, the board may soon have another - and higher-profile - role: assisting a state takeover of Atlantic City.
Under legislation backed by Gov. Christie and Senate President Stephen Sweeney (D., Gloucester), the board would be authorized to turn over functions of the nearly broke city's governing body to the director of the state Division of Local Government Services.
The board also could give the director - who is also the board's chairman - authority "to take any steps to stabilize the finances, restructure the debts, or assist in the financial rehabilitation and recovery" of the city, including breaking labor contracts. The last item has been a sticking point with the Assembly speaker, who has proposed an alternate recovery plan.
On Wednesday, Sweeney, Sen. Paul Sarlo (D., Bergen), and Assembly Majority Leader Louis D. Greenwald (D., Camden) proposed an amendment to the takeover bill that would give Atlantic City 130 days to deliver a reform plan that cuts spending per resident nearly in half.
Under the proposal, the Local Finance Board would have final say if the Local Government Services director wanted to reject the city's plan, according to Sweeney's office.
The board's oversight of municipalities helps ensure "there isn't an extreme issue that causes a community . . . to get into financial difficulty," said Ted Light, a former Piscataway mayor who has been on the board for "many, many years."
In contrast to Atlantic City, most of the board's business is "pretty well routine," Light said.
Discussing the Seaside Heights case last month, Timothy Cunningham, board chairman and Local Government Services director, expressed surprise at the borough's delay in discovering the tax appeals, but recommended that the board support the borrowing plan.
Overall, "I don't recall many instances of the board going against the director," said Bill Mayer, an attorney with DeCotiis, FitzPatrick & Cole, who has been involved in New Jersey public finance transactions for more than 30 years.
Cunningham was not made available for an interview, despite requests.
Cunningham's staff does "a lot of the procedural and preliminary work" in reviewing applications, and produces reports for board members with "various recommendations or questions," said Alan Avery, one of the board members and a former Ocean County administrator.
When Cherry Hill's fire department went before the board in November for approval of $1.2 million in financing to build a training facility, Cunningham questioned the need for the project, and whether it was allowed under state law. The board delayed a vote pending legal analysis.
The department went back to the board this week, appealing a decision by Cunningham that its project did not meet the criteria for financing because it wasn't a "firehouse," according to Department of Community Affairs spokeswoman Tammori Petty. The board again delayed a vote, according to Petty.
A review of six months of meeting transcripts found the board consistently voting with Cunningham on financial applications, apart from occasional abstentions.
The Local Finance Board "may say yes to everything . . . but you've got another set of eyes on things," said Marc Pfeiffer, senior policy fellow and assistant director at the Bloustein Local Government Research Center at Rutgers University.
The board already deals regularly with Atlantic City, which was placed under state supervision in 2010, but current law "does not empower the board to force city action," Petty said.
The board, which has been approving Atlantic City's budgets, could have told the city to "go back and cut your budget some more," said Pfeiffer, a former deputy director of the Division of Local Government Services.
And while board members can't break labor agreements, he said, "they could have engaged in a deeper level in labor negotiations."
Community Affairs Commissioner Charles Richman told lawmakers during a hearing Monday that "if you want to suggest that we didn't take sufficient action earlier, maybe we didn't." But he said the city's current challenges - including a $100 million deficit on a budget of roughly $250 million - require a significant state response.
Christie said Thursday that he continues to support the takeover bill but that if Democrats reached "something that represents a consensus, I'll consider it at the time."
The governor previously said that under the takeover legislation, "we would hire experts in each specific area to help to assist the Local Finance Board. Those things would need to be run by me."
The current board, which meets monthly in Trenton, has five members, including Cunningham, and three empty seats - two vacant since 2014 and one since 2011. Christie made three nominations in 2014, but none was acted on by the Senate, according to Christie spokesman Kevin Roberts.
Three members, counting Cunningham, are Republicans, and two are Democrats, according to Light, one of the Democrats.
"Usually the things we look at are not politically related," Light said.
Members, who include Idida Rodriguez, a public affairs firm partner from Paterson, and Francis Blee, a former GOP assemblyman in the Second District, get a $12,000 annual salary and "benefits eligibility," Roberts said. He said Avery, the only member nominated by Christie, forgoes salary and benefits.
Assembly Speaker Vincent Prieto (D., Hudson), who has refused to post the takeover bill passed by the Senate, last week introduced a bill to rescue Atlantic City without oversight from the Local Finance Board. Prieto's bill would form a committee of state and Atlantic City officials to create a five-year plan. If the city didn't meet benchmarks, the committee would gain added powers.
Prieto's office said Thursday that the bill was "poised for an Assembly floor vote."
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