When a surprise legal ruling threatened the city of Miami’s ability to balance its budget last month, Commissioner Michelle Spence-Jones called for an emergency meeting to consider raising taxes.
It never happened.
Only Commissioner Willy Gort responded in writing, saying he would attend if the other four commissioners would be there. It was well known that Commissioner Frank Carollo was on vacation that week, and Spence-Jones had plans to travel to the Democratic National Convention when Carollo returned.
That kind of inertia, observers say, is why Miami often finds itself in crisis mode when it comes to balancing its budget. Hobbled by unimaginative leadership, passive management and petty political gamesmanship , the city careens from one budget shortfall to the next without fixing its fundamental fiscal problems.
Among the city’s chief issues, according to experts: spending beyond its means, ballooning pension costs and failing to generate new revenues.
“It isn’t going to be until they have some discussions with the unions and make some long-term structural changes that this will be resolved,” said John Incorvaia, an analyst for Moody’s Investors Services. “It’s going to be a battle every year.”
But with the mayor and two city commissioners facing re- election next year, such discussions have stayed on the back burner.
“Right now, all they want to do is get to their next election,” said former Assistant City Manager Frank Rollason.
Overspending took center stage Thursday when commissioners finalized the city’s $485 million budget. During the budget hearing, Carollo pointed out that the budget does not address a $45 million loan payment Miami must make to Wells Fargo bank in January for the city’s portion of the PortMiami tunnel dig.
A quasi-independent city agency is working to get private financing to pay off the loan, but if it fails, Miami could be on the hook for a payment it can’t afford.
Miami has also poured money into projects like Jungle Island, which leases a plot of city-owned land on Watson Island. The attraction failed to make good on a loan from the U.S. Department of Housing and Urban Development for almost a decade, leaving Miami footing a bill that climbed into the millions.
“These shiny little projects are a constant drain to the city treasury,” said Dario Moreno, an associate professor of political science at Florida International University.
Pension costs, meanwhile, are up significantly, in large part because investments by the city’s two pension boards have underperformed expecta- tions.
Experts have raised red flags about the city pension program before.
In a stinging report last month, Moody’s blasted Miami for ballooning pension and healthcare spending. The rating service warned that the combined costs could account for one-third of total spending by 2017 unless leaders make sweeping changes.
Earlier this year, Miami revised the actuarial method used to calculate the city’s share of pension payments. Budget Director Danny Alfonso said the new formula is more precise and would generate millions of dollars in savings for the cash-strapped city.
In addition, the police union raised the required pension contribution for new hires. The new, two-year contract also reworks the Deferred Retirement Option Plan, known as DROP, so that officers can contribute more to their pension plans in exchange for increased flexibility at the end of their careers.