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Its Time to Set Up a New Jersey Financial Control Board

Phill Murphy -Sara Medina del Castillo

the staff of the Ridgewood blog

Ridgewood NJ, On October 16, 1975, New York City was deep in crisis. At 4 p.m. the next day, four hundred and fifty-three million dollars of the city’s debts would come due, but there were only thirty-four million dollars on hand. If New York couldn’t pay those debts, the city would officially be bankrupt.

Phil Muphy may be forced to follow this blueprint  for the coming COVID19 financial apocalypse in New Jersey.

A few months before, in mid-April, the city had run out of money for the first time. Governor Hugh Carey was willing to advance state funds to allow the city to pay its bills under the condition that the city turn over its financial management to the state. This led to the creation of the Municipal Assistance Corporation, which was authorized to sell bonds to meet the city’s borrowing needs. (Its detractors referred to it as “Big mac,” because of its authority to overrule city spending decisions.)

The mac, which was chaired by the financier Felix Rohatyn, insisted on significant reforms, including a wage freeze, a subway fare hike, the closing of several public hospitals, charging tuition at the previously free City University, and tens of thousands of layoffs.

In September 1975,the Emergency Financial Control Board was established , and few doubted the appropriateness of the name. New York City, awash in $3.3 billion of debt, was near bankruptcy.

The New York State Financial Control Board was created by the State legislature in September 1975 pursuant to the New York State Financial Emergency Act of The City of New York (the “Act”). The Act gives the Control Board powers and responsibilities of review and oversight with respect to the financial management of the New York City government and certain related public authorities. Among other things the Act requires the City to prepare and submit a “rolling” four-year financial plan to the Control Board prior to the beginning of each City fiscal year and, to modify the plan as necessary from time to time to conform with standards set forth in the Act. Prior to July 1, 1986 all financial plans, financial plan modifications, and borrowings, together with certain contracts, were subject to the approval of the Control Board prior to implementation. However, on June 30, 1986 the Control Board determined and ordered that the control period terminate, at which time the Board’s approval powers sunset.

During sunset, the Control Board must review the four-year financial plan at least quarterly, and must notify the City if a plan or modification to the financial plan does not conform to the Act’s standards. In addition, the Control Board must make a determination annually whether a new control period, under which the suspended powers are reimposed, should be reinstated by the State Legislature. The Control Board reviews the following events in making the determination:

the City fails to pay debt service on any of its obligations when due or payable;
the City incurs an operating deficit of more than $100 million during a fiscal year;
the City issues notes in violation of the Act;
the City violates any provision of the Act which violation substantially impairs the ability to repay its notes or bonds or its ability to adopt or adhere to a balanced budget, or
the State and City comptrollers cannot make the joint certification, described above, on the basis of existing facts.

This determination is usually made in July.

The Act also directs that the Control Board coordinate various of its activities with the Office of the State Deputy Comptroller (“OSDC”). The Act also directs the Control Board to coordinate with OSDC with respect to the Control Board’s review and monitoring of revenues and expenditures.

11 thoughts on “Its Time to Set Up a New Jersey Financial Control Board

  1. Our rights and freedoms as taxpayers are being trampled by the theft of our money! The Federal government is right: states should file for bankruptcy.

  2. We had a volunteer one in Ridgewood but it became politicized, and then Knudsen disbanded it in an act of petty political retribution because they asked her questions that made her uncomfortable, like “why aren’t you recusing yourself from discussing the police & fire contracts when your sons have been hired by the Village?”

    1. you had no such thing in Ridgewood just a bunch of aronsohn a$$ kissers

  3. Could have been so much more James, but you never will agree because you’re a Knudsen lackey.

  4. Aren’t you a Knudsen a$$ kisser? Howse that working for ya?

  5. Actually Knudsen’s ego is so big, she couldn’t stand having volunteer financial and contract negotiation experts give her free, non-binding advice.

    She also didn’t want anyone watching over her actions, like manipulating the RPD hiring requirements fiorher sons, or her quid pro quo with the Police Dept to buy the old Elks HQ to free up space in Village Hall for the RPD to store more parking quarters and build a “rubber room” fir naughty officers like the guy who tested positive marijuana and underage sextet and drug paraphernalia possessor Guido Pete.

  6. Take you meds . Please!

  7. Susan, that you?

  8. No its not Susan. Just another post that read all you hate and wounder how you make it through life.
    Sad.

  9. C’mon Susan…

  10. Can’t believe Susan Knudsen never demanded that the RPD fire the positive marijuana testing officer or Guido Pete, the underage sexter found with drug paraphernalia in his home. Such poor governance!

    We’ve entrusted these people to serve & protect us, yet the Village Council can’t even protect us from officers who’ve betrayed that public trust. So sad. Could it be that a Knudsen boy tested positive for weed and she’s protecting him?

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