Oct. 17 (Bloomberg) -- New Jersey Governor Chris Christie’s administration has given East Rutherford, home to the National Football League’s New York Giants and Jets stadium, a week to approve a budget or it may impose one.
East Rutherford is the last municipality without a budget out of more than 550 in the state that operate on a calendar year, said Thomas Neff, director of the state’s Local Government Services division. The borough has been locked in a legal battle with the Giants over whether its training center is exempt from a $1.5 million property-tax bill.
Moody’s Investors Service on Oct. 11 said it may downgrade East Rutherford’s debt because of its failure to collect $4.1 million of revenue, more than 16 percent of the 2012 total projected. That also includes $2.6 million from the New Jersey Sports and Exposition Authority for costs related to the American Dream Meadowlands mall under construction.
The state Community Affairs Department has directed the municipality to turn over budget documents by Oct. 22, going so far as having the state’s Local Finance Board approve a subpoena of the records. That step hasn’t been taken yet, Neff said in an Oct. 16 letter to Mayor James Cassella and the council.
Salaries at Risk
Neff gave the borough until Oct. 24 to approve its budget or the state will set a tax rate the next day “to ensure that your municipality remains stable,” according to his letter. The town would then have 45 days to adopt a spending plan.
“The division will make such reductions in your budget as appropriate, including the elimination of any funds to pay for your continued salaries and other benefits as you will have failed to perform one of the most basic functions of local government, establishing a budget,” Neff wrote.
Borough officials introduced a budget in June and haven’t approved it amid the disputes with the sports authority and the Giants.
East Rutherford’s council approved the sale of tax-anticipation notes last night to pay bills, Cassella said in a telephone interview today. The authorization is for $12 million, though the mayor said the total may not be borrowed if the situation is resolved.
“They want to use the word subpoena to embarrass us like this is a court action and we’re in trouble,” Cassella said. “They have most of the documents already, but if there’s other stuff they need they can just ask us.”
The mayor said the Moody’s report is “off base” because the situation is not as serious as the credit-rating company suggested. The municipality isn’t teetering on the end of bankruptcy and has access to cash to continue operating, he said.
Absent the payments from the Timex center and sports authority, the borough would need to raise an additional $1 million through property taxes to fund operations this year, Cassella said.
A Moody’s downgrade would affect $16 million of the borough’s general-obligation debt outstanding. The bonds are rated A2, the sixth-highest investment grade.
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