By Charles Rabin Miami Herald Staff Writer
Posted: 10:57 a.m. Sunday, March 14, 2010
When Tomás Regalado took Miami's reins in November, two commissioners had just been arrested, the city's reserves continued to plummet and a federal probe into the city's budget practices was on the horizon.
The new mayor has moved assertively on some fronts, hiring an ex-banker as a manager, supporting the firing of the budget director and pushing Miami to lay its faults out in the sunshine.
Yet four months into his term, the city's lasting problems remain. Miami struggles to keep its rainy day fund healthy, is deep into responding to a U.S. Securities and Exchange Commission investigation and faces yet another budget crisis.
``I think we can get our arms around the issues,' new City Manager Carlos Migoya said. ``But there are an awful lot of them.'
The biggest of them all: a skyrocketing pension obligation caused by worker-friendly union contracts. How Regalado resolves that issue -- involving unions that supported his mayoral bid -- will say much about the state of city finances and his stewardship of the city.
To balance last year's budget, Miami had to pay almost $60 million to the pension plan. This year the cost is expected to escalate to $101 million, meaning one in every five dollars of property tax goes toward the retirement of its workers.
``The atom is the contracts, the molecule are the pensions,' Commission Chairman Marc Sarnoff said. ``It's the city's biggest issue.'
That financial strain factors into the SEC probe. Gaping budget holes also prompted former Budget Director Michael Boudreaux to scour capital accounts for cash to prop up the general fund.
In 2007 and 2008, Boudreaux transferred $26.4 million from capital projects to help balance the budget -- transfers now at the heart of the inquiry over whether Miami misled investors about its financial picture.
Migoya fired Boudreaux last week, saying he didn't properly shut down projects from where the money was taken. Boudreaux said other city brass were aware of what he was doing.
Meantime, the union salary and benefits system is so out of whack the former manager's benefits package of $329,000 package doesn't even crack the city's Top 10. The pension is so debilitating, Regalado and Migoya are considering selling city-owned property to replenish the reserve fund.
The reserve, which was a bountiful $141 million in 2003, is expected to drop to $55 million in the next few weeks. It's a level that would break a city ordinance created from the ashes of the last financial meltdown in 1996. The remainder of the reserve could be in jeopardy if projections for this year's budget are true.
The contracts of two of the city's three main unions, police and general employees, are up at the end of September. Those unions are required to submit proposals by April 1 and the city counters a month later. Fraternal Order of Police President Armando Aguilar said the sides have been discussing how to cut the pension cost.
The third union, the firefighters, would have been up at the end of the budget year as well, but commissioners desperate to balance the budget last year agreed to extend that deal another year after the union agreed to a one-time salary concession. The fire union contract, with its perks and cost of living allowances, has allowed its employees to become the highest paid in the city.
Union president Robert Suarez said there would be no renegotiating before the next contract is due Oct. 1, 2011. ``We completely eliminated our raise,' Suarez said. ``The more we give up now, the less we'll have to give up later.'
A LONG SPIRAL
Miami began to spiral well before Regalado took a seat in his bayview office upstairs at City Hall.
Within two weeks of his swearing in, state prosecutors charged one commissioner with grand theft and another with securing a job for a family member through a city contractor. Both left office. And with another commission seat vacant for several weeks because of a runoff, the two-member commission couldn't make legally binding decisions.
The bad news kept coming.
Just before Thanksgiving, City Auditor Victor Igwe issued a critical audit calling the city's budget practices ``misleading' and outlining $8.2 million of highly restrictive money used to balance its books the previous year.
That caught the attention of the SEC, which had begun snooping around after a summer 2009 story by The Miami Herald detailing the city's budget woes and questionable money transfers.
By mid December, the SEC investigation was in full swing and the city had been ordered to turn over all communication between several department heads concerning the $26.4 million in transfers and all bonds dating to 2006.
``It was a domino effect you couldn't stop. I knew there would be challenges, but I didn't expect 80 percent of the bad news we were getting,' Regalado said. ``I was surprised to learn how little information I got as a commissioner.'
Wholesale, controversial changes have also taken place in the police department. John Timoney, a national figure, was replaced as chief by Miguel Exposito, a 35-year city police officer who was an investigator in Internal Affairs during a decade when police shootings ran rampant. His relationship with Regalado dates back a decade.
With Timoney gone, 15 of the department's top brass either retired or were demoted.
Regalado received the endorsement of the powerful police union during his mayoral campaign, a union that had clamored for change.
Though the top police brass were demoted in November, their salaries were reduced only this week. Migoya said Thursday that the sides have yet to reach an agreement on how, or whether, the money will be repaid. The error could cost the city as much as $200,000.
AN ACTIVE LEADER
Regalado has been active with the new commission, attending every meeting, offering agenda items and pushing to fill committee slots. ``He was very proactive and he showed his leadership qualities throughout the process,' said Commissioner Francis Suarez, who represents the district Regalado oversaw for over a decade.
As mayor, Regalado moved forward on two big-ticket items he had opposed for years as a commissioner: Approving Miami's $50 million piece of a $1 billion tunnel to the Port of Miami, and a $120 million plan to build parking sites at the Florida Marlins' new ballpark in Little Havana.
``I wasn't supportive of the tunnel,' Regalado said. ``But . . . we have a contract.'
The mayor also pushed to salvage a prominent development project and to cut costs on the parking garage.
Now a new lease is in the works for a decade-old mega-development planned for the south end of Watson Island. Regalado also surprised commissioners when the developer of the garages at the Marlins site said he'd struck a deal with the mayor that would save $20 million.
``He could have very easily made political hay, but he has versed himself in the nuts and bolts of the city more than most expected him to,' attorney and city-watcher Tucker Gibbs said.
Now the new mayor must confront the biggest challenge yet, the pensions.
MIAMI DADE COUNTY GOVERNMENT BY THE NUMBERS
2009 Current Proposed Budget $7.83 Billion
Cost of County Government per person $2,900 (proposed budget)
Miami Dade Current Population 2.7 Million
1993 County Budget $2.5 Billion
1993 Cost Per Person $1,250
1993 Population 2 Million
1993 Budget adjusted for inflation and population growth $5 Billion at this level the current cost per person of county government should be $1,888 not $2,900. A family of 4 currently pays on average $11,600 for county government.
Please keep in mind these figures don't include school board, municipal or other taxing authorities if you add these in, the figure would exceed $5,000 per person ($20,000 + for a family of four) and this figure does not include state and federal taxes (I here Greenland is nice this time of year).
In 1993 essential and other services provided by the county were more than adequate (Criminals did not control our streets (thank you 2nd amendment), houses did not burn down by the dozen, and people were not dying of starvation in the streets (see Calcutta), so why the increase of over 35% in real dollars adjusted for inflation and population growth?
Miami Dade County Government is out of control only we the citizens can reverse this situation by truly becoming involved, otherwise we will have to either move or continue to pay for a bloated, intrusive and inefficient bureaucracy.
This is not about not raising taxes, this is about pushing for a 35% reduction in county expenditures and in turn OUR PROPERTY TAXES.
Call or email the Following Commissioners and tell them you are sick and tired and if you don't see a significant reduction (Not 1,2, or 5 percent) in your taxes you will not vote for them (even if the position of dog catcher becomes electable)
Check fat salaries in the City of Miami - Year 2009
SOUTH FLORIDA PROPERTY VALUES, CITIES TAKE BIG HIT
BY MATTHEW HAGGMAN
Taxable values declined steeply for the third straight year across Miami-Dade and Broward counties, as the region continues to wrestle with a recession that has cost thousands of workers their jobs and sent real estate prices tumbling.
Miami-Dade property values fell 13.4 percent compared to last year, the county's property appraiser reported in an estimate issued Tuesday. The news was also bleak in Broward, with a projected decline of 12.1 percent.
The drops are the biggest since the once-roaring real estate market took a steep dive, both shrinking land values and shuttering work sites. Illustrating the impact of the building slowdown: Taxable property values in Miami-Dade County stemming from new construction for the past year reached $2.6 billion, down from $8.4 billion the year before.
The steep dip promises to make this one of the toughest budget-writing seasons in years for local governments.
Cities and counties derive much of their revenue from property taxes. As property values wither, local leaders from Homestead to Margate are left in the uncomfortable position of either increasing property owners' tax rate or further cutting services.
``We have tough decisions to face in the budget cycle coming up,'' said Cutler Bay Mayor Paul Vrooman, whose village saw a 22 percent decline in property value. ``We are a new city and we were incorporated as a break even municipality. I don't have an arts program to cut. We were lean to begin with.''
The numbers released Tuesday give taxing authorities -- ranging from cities and school boards to hospital districts -- a basis to start preparing budgets for the next fiscal year, which begins Oct. 1. But the taxable values announced Tuesday are estimates and can change.
Final tax rolls will be certified next month and sent to state officials for approval. In August property owners will receive their proposed property taxes in the mail, the so-called TRIM notice.
Broward County Property Appraiser Lori Parrish underlined the fact that tax assessments capture taxable values from the year before -- in this case, from Jan. 2, 2009 to Jan. 1, 2010 -- and should not necessarily be viewed as a reflection of where things stand today. She said the county's 12 percent dip was less severe than the 16 percent she feared.
Parrish said she has already seeing indications that the real estate market is improving this year. ``I think we've bottomed out,'' she said. ``I think.''
Even if that proves true, local governments will have to scramble to fill the budget gap.
Miami-Dade County government's budget hole for the coming fiscal year is expected to exceed $400 million, and county administrators have already warned of significant cuts, including possible layoffs.
Hialeah Mayor Julio Robaina said the county's projection -- a 19 percent decline in his city's taxable property value -- was more than he expected, but not a shock. ``It should be no surprise to any of us,'' he said.
Robaina said he would not raise taxes in the coming fiscal year but plans to lay off as many as 250 city workers. So far, 52 employees have lost their jobs. Robaina, who acts as city manager, is also pushing the city's three unions for concessions and has limited new purchases.
In Broward, West Park saw nearly 27 percent of its value erased. North Lauderdale's taxable value dropped 24 percent. By contrast, Sea Ranch Lakes was off 2.6 percent and Pembroke Park declined 5.8 percent.
Dade's lightest-hit pockets include wealthy enclaves such as Pinecrest, Coral Gables and Bal Harbour.
The hardest-hit include Homestead, which is dotted with half-built subdivisions, and suffered an estimated 30 percent drop in taxable value.
Mayor Steve Bateman said ``the city has substantial reserves to weather the storm,'' but did not specify how much.
Yet real estate attorney Steve Losner, a former Homestead vice mayor, said he speaks daily to residents ``who have a real frustration or sense of uncertainty on how much further down the market's going to go and when and if things are going to turn around.''
Losner said a house he owns has lost 60 percent of its value in the last four years.
Others hit hard: North Bay Village, where values plummeted 26 percent, and Biscayne Park, where they fell 22 percent.
Steven Alexander, the town manager in Cutler Bay, said cuts will be made across the board.
``The idea is to take whatever cuts we can without affecting public safety and keeping as much public service as we can,'' said Alexander, espousing a theme likely to be adopted across the region. ``I've gotta look at every single item,'' he said. ``I knew we were going to get a reduction. I was hoping it wouldn't be this deep.''
Broward's less-than expected drop could ease the size of the budget battle between Sheriff Al Lamberti and the county commission. Commissioners had asked Lamberti to cut 14 percent -- or about $60 million -- from the county funded portion of his budget. Instead, he submitted a proposal that only cuts about 1 percent from the general funded county portion.
Broward County's budget director Kayla Olsen, who said she saw the figures Tuesday afternoon, said she didn't immediately have a new estimate for what the drop translates to in terms of budget cuts. ``Under the same rate scenario obviously the gap would be less,'' Olsen said.
The county had anticipated a gap of about $55 million for county programs including parks, libraries and social services. Parrish had estimated a 16 percent drop in February but cautioned that was preliminary -- it didn't include new construction, for example.
Miami-Dade County Mayor Carlos Alvarez said the tax roll estimates are ``what we projected them to be. We anticipated 10, 12 and 14 percent scenarios.''
The mayor, County Manager George Burgess and commissioners came under criticism recently following a report in The Miami Herald detailing how they continue driving luxury cars and receive free gas, insurance and maintenance amid the budget crunch.
The mayor said he would consider eliminating the car perk, but only if other elected leaders did too. On Tuesday, he shed little light on his broader budget agenda.
``We will continue working on our budget focusing on preserving county programs and services,'' Alvarez said.
Herald staff writers Liana Kozlowski, Laura Morales, Laura Isensee, Amy Sherman and Phil Latzman contributed to this report.
