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The city council last night voted unanimously to rescind the bond ordinance that would have enabled the city to borrow $1 million to make up for a budgetary shortfall in that amount.

A $1 million shortfall in the health care line item of the city’s 2012 municipal budget was announced at the Sept. 19 meeting. Since then, city finance officials and former chief financial officer [CFO] Juan Uribe publicly traded charges over who was at fault for the misstep.

As a result, the state’s Division of Local Government Services investigated the situation. They concluded that although the budget was ultimately city manager Terence Reidy’s responsibility, the decision to pass the budget with insufficient funds was “not a criminal violation of law, did not unduly enrich anyone, and did not increase or decrease any expenditures of the town that would not have been borne absent the decision.”

The division also said the city would not be permitted to borrow $1 million and pay it back over five years, which was the original plan. Instead, they advised Reidy to make up the difference in the health care line item using extra funds from other portions of the budget and possibly seek a short-term loan, which would be paid off in full in 2013.

The state division also said the city must have all its workers convert to the state’s health insurance plan, as the city’s current plan is “needlessly and inappropriately more expensive.” All of the city workers’ union contracts are up at the end of this year, and Reidy has already met with union leaders to inform them of the likely switch.

“Some of the silver lining is that we’re not going to have a $1 million bond,” said Long Branch resident Gerry Scarano during public comment at last night’s meeting. “The state is forcing your hand to try to reduce healthcare costs. That is a silver lining. What took years to get done is going to be done in a few weeks.”

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