Repeated decisions by Miami city officials to kick long-term pension and healthcare obligations down the road to be paid by future generations of taxpayers have left city residents with an outsized debt burden, according to a new report by a financial watchdog agency.
The nonpartisan Truth in Accounting released its 2016 Financial State of the Cities Wednesday, detailing the debt borne by taxpayers in each of the 50 largest cities in the nation. Miami taxpayers, according to the report, carry the 13th largest debt load in the nation at $14,000 a person.
“If the taxpayers have been told their budgets have been balanced, then there should be zero taxpayer burden,” said Sheila Weinberg, a CPA and founder of Truth in Accounting.
The group’s review of municipalities, based on each city’s 2015 year-end financial audit, analyzed finances by comparing assets to liabilities excluding capital and restricted assets, and then dividing the balance by the number of taxpayers.
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In the case of cities like Charlotte, Fresno, Raleigh and Louisville, the formula shows taxpayers enjoy a surplus due to assets outweighing liabilities. Taxpayers in New York, Chicago and Philadelphia, on the other hand, would each have to pay $27,500 or more to pay off their respective city’s debts.
Miami, according to Weinberg, has only $423 million in cash available compared to $2.25 billion in debt, with long-term pension and retiree healthcare liabilities, typically referred to as OPEB, accounting for just about the entirety of the unfunded debt. “We believe those costs should be included in current budget numbers,” she said.
But city officials in Miami and other municipalities carrying pension and retiree healthcare debts often say that responsibly managing the debt is a better alternative to financing it and paying it down upfront, even though that’s what they’re now encouraged to do under accounting standards. The totality of a city’s unfunded liability — assumed 30-year obligations based on expectations of how long benefit recipients will live and whether they’ll be healthy — will most likely never come due, meaning paying the long-term debt down now would be akin to diverting funds from services in order to pay a hypothetical bill.
“If I was a city resident, I wouldn’t be losing any sleep over an OPEB obligation,” Miami Finance Director Jose Fernandez said two years ago in response to a report critical of the city’s healthcare liabilities. “You’re not really looking at a hard dollar liability.”