The city of Miami may have lost a case before Florida’s high court involving more than $100 million in cuts to police officers’ pay and pensions, but taxpayers shouldn’t go sweating bullets just yet, a prominent credit researcher says.
In fact, in the short run, the city should be just fine, S&P Global Ratings said Wednesday after reviewing the potential consequences of a Florida Supreme Court ruling on a lawsuit brought by Miami’s chapter of the Fraternal Order of Police. The agency also considered related ongoing litigation by the city’s fire union.
“In S&P Global Ratings’ view, the protracted litigation is a source of long-term uncertainty but not an immediate credit concern,” the agency said in a statement.
Miami’s police union prevailed this month in its years-old case challenging a lower-court ruling that the city was justified in 2010 when it forced open the union’s contract and imposed steep concessions after declaring a “financial urgency.” City officials cut some $100 million in pay and pension benefits to close a massive budget gap.
The union now says the city owes its members and retirement fund at least $140 million in back-wages and pension benefits, but city officials have stressed that the Supreme Court’s ruling — which focused on whether the city went through the proper procedures and took “reasonable” steps to fix its budget before ripping up collective bargaining agreements — places the case back in the hands of the First District Court of Appeal in Tallahassee and a state administrative hearings court.
When those courts reconsider the litigation, Miami’s administrators believe they’ll prevail. S&P Global Ratings said after conversations with Miami officials that the stance makes sense, and if the city loses, it can always pay for its obligations with a bond issue.
“Should the cases ultimately be found in favor of the labor groups, we understand the city would have the option of bonding for any pension lump sum payments. This would likely, in our view, affect the city’s debt ratios but preserve flexibility,” the agency said.