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Miami could face hefty budget deficit for fourth year in a row

 

Despite several years of salary cuts and concessions from its four main unions, Miami is likely, once again, to face a budget deficit that could be more than $35 million next year.

crabin@MiamiHerald.com

Miami commissioners learned Thursday they could be facing a budget deficit for the fourth straight year, this time as high $35 million, as revenues remain mostly flat and pension costs continue to eat away at the city’s general fund.

During his monthly update, Budget Director Daniel Alfonso said Thursday that if everything going into September’s budget hearings remains status quo, the city is already starting $21.9 million in the red.

That’s because commissioners and the city’s four unions last year agreed to one-year contracts reflecting $21.9 million in concessions to balance the city’s books. That means if new revenues are not found or new concessions not agreed to, and costs hold steady, the city will start out at least $21.9 million in the hole beginning Oct. 1.

“And I want to caution, the number is going to change,” likely reaching higher, Alfonso said during a City Commission meeting.

City Manager Johnny Martinez said new contract negotiations with the city’s unions, which he hopes will make up the difference, are expected to begin soon.

Alfonso listed items that could leave Miami with an even larger deficit. The city’s Firefighter’s and Police Officer’s Pension Trust is telling him that cost increases and market fluctuations could open an additional $4.7 million hole. He expects similarly negative news from a general service employees union meeting Friday.

Additionally, federal grants that have been paying the salaries of 43 police officers expire this year, the city will soon have to decide if it wants to make up federal community block grants that could be cut by as much as 50 percent, and the city hasn’t even begun to discuss possible capital expenditures for next year.

“Thirty to $35 million would be a starting figure,” Alfonso said.

Despite the dour news, commissioners seemed upbeat that deficit amounts continue to trend downward. They were also relieved to get the warning this early in the budget year.

Last year, after learning the extent of the city’s deficit, commissioners struggled late into the night of September’s final budget hearing to find more than $60 million in savings. That allowed the city to slightly lower its property tax rate for homeowners.

Commissioner Frank Carollo, an accountant who is generally critical of the city’s finances, said, “It appears we’re on the right track.”

He commended Martinez for hiring Alfonso late in last year’s budget session, and for the recent hiring of a new chief financial officer.

Martinez said he intends to meet with every department head in coming weeks to see if budgets can be slashed any further. Commissioners agreed to hold a budget workshop in late April, after a closed-door session at the end of March to discuss union contract negotiations.

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