A month ago, Miami city leaders said dramatic measures might be necessary to balance the city’s $485 million budget.
But at their first budget hearing on Thursday, the City Commission gave preliminary approval to a spending plan that doesn’t contemplate either furloughs or layoffs.
The turning point came earlier this week, when city officials reached tentative accords with the police and sanitation workers unions that will generate about $13 million in savings. They are still working on deals with the firefighters and general employee unions.
“If we are able to reach agreements with our four bargaining units, we will have a balanced budget,” Mayor Tomás Regalado said.
City Manager Johnny Martinez said he was confident the deals would be brokered before the final budget hearing on Sept. 27.
Martinez hailed the overall budget as “stable and sustainable.”
Regalado said it will usher in a new era of fiscal responsibility.
“Our administration and this commission have been able to break the city’s bad habit of living above our means,” he said, noting that the spending plan boosts the rainy-day fund instead of spending it.
The city saved $20 million by eliminating 27 vacant positions, renegotiating information technology contracts and cutting back on bulky trash pickups. Departments were also asked to trim their budgets.
Suddenly, Miami finds itself in a stronger financial position than it was last year.
Revenues from property taxes are expected to rise by $2 million. Still, the city’s finance team had to tackle a $40 million budget gap because pension and healthcare costs spiked .
At the beginning of the summer, Regalado predicted a legal maneuver known as financial urgency would be necessary. The move would enable the City Commission to force employee concessions if union accords could not be reached.
When Martinez declared a state of financial urgency, however, he was met with a legal challenge from the Fraternal Order of Police. A Miami-Dade circuit court judge voided Martinez’s declaration in August, but an appeals court later let the financial urgency claim stand.
In the meantime, the city came under scrutiny when its treasurer, chief accountant over payroll and director of capital improvements resigned. Additionally, Moody’s Investors Services threatened to downgrade the city’s credit ratings.
The situation started to turn around two weeks ago.
City officials were able to change the accounting methodology used to calculate the city’s pension obligation. Budget Director Danny Alfonso said the new formula is more precise.
The city was also able to make a tentative deal with the police union that will save $11.5 million next year. Much of that savings comes from increasing the amount employees contribute to their pension plans, taking the some of the burden off of the city. In exchange, officers will get a 3 percent pay increase in 2014.
The budget team hopes to negotiate a similar deal with the firefighters union.
Firefighters union President Robert Suarez said the two sides are “a lot closer” to reaching concensus than they were earlier in the summer.
Thursday night, Commission Chairman Francis Suarez praised city officials for their work.
“The budget has been done in a competent manner,” he said.