Miami-Dade County’s government has a spending problem. Blame the taxpayers.
Weaker spending in shops, restaurants, hotels, auto dealers and other businesses across the county is causing alarm over sales-tax dollars in Miami-Dade. That’s reviving budget angst in a government that only recently retired the deficit spending and layoffs that began during South Florida’s housing crisis a decade ago.
Several months ago, Miami-Dade clamped down on hiring for its 27,000-position workforce. Mayor Carlos Gimenez warned in his annual budget address that the county sees softness in revenues “driven by spending in the community.”
A special sales tax charged at hotels fell 7 percent this year and is in the midst of its longest losing streak since the Great Recession ended in 2009. The tourism slump helped bring down spending countywide, with taxable sales in Miami-Dade still growing, but only at about a third of the pace they were just a year ago.
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South Florida’s ties to South America can be both a blessing and a curse. We’re on the curse side of things right now.
Sean Snaith, economist at the University of Central Florida
Zika, the mosquito-borne virus that prompted a federal warning against pregnant women visiting Miami, remains a prime suspect in the tourism downturn. But Miami-Dade’s last Zika zone was lifted in early December, and hotel taxes continue to plunge during the peak of vacation season. That has heightened concerns that something more fundamental is weighing down tourism spending.
Passenger arrivals at Miami International Airport are down about 3 percent this year, with both domestic and international flights seeing declines from 2016. Economic woes in Brazil, the county’s top foreign tourism market, are cutting into a key source of overseas dollars for Miami shops and hotels.
“South Florida’s ties to South America can be both a blessing and a curse,” said Sean Snaith, an economics professor at the University of Central Florida. “We’re on the curse side of things right now.”
Revenue cushions in the current budget have the county’s budget writers saying they’re not overly concerned with spending in 2017. With six more months until the 2017 budget year ends on Sept. 30, Miami-Dade has plenty of time for consumer and tourism spending to rebound. Since tax reports lag, the data could already be masking stronger spending this year.
“There are indications the needle is starting to move again,” said Ginny Gutierrez, head of communications for the Greater Miami Convention and Visitors Bureau. “We’re looking at March and seeing signs the numbers are starting to change.”
The county’s budget office also says it’s too early to know exactly what shortfalls they might encounter when the budget-writing season ramps up in the coming weeks for a 2018 spending plan Gimenez is expected to submit to the county commission in July.
There are indications the needle is starting to move again.
Ginny Gutierrez, spokeswoman for the Miami-Dade tourism bureau
Since tax data reports lag by several months, the weak revenues sparking worry in County Hall may not reflect current economic conditions. Manuel Lasaga, who runs the StratInfo consulting firm in Miami, said he was concerned about economic performance last year. But as 2016 came to a close, Lasaga said he’s seen economic activity pick up, and is more optimistic about a rebound in Latin America.
“The momentum is still going,” he said. “It’s probably going to be a relatively good year.”
The big question looming over Miami-Dade’s budget anxiety is whether the current weakness signals a larger turning point for South Florida’s economy.
Miami-Dade posted 2 percent job growth in March, compared to just under 3.5 percent in Broward and Tampa, and nearly 4 percent in Orlando and Jacksonville, according to Friday’s statewide hiring report. Sales of single-family homes in Miami-Dade have been down for eight of the last 12 months, according to the Greater Miami Association of Realtors, though prices continue to post double-digit increases over 2016 levels.
Real estate gains allowed the county to give most unionized workers a 4 percent raise in 2016. The pay boost was part of a $7.2 billion spending plan that Gimenez used as a centerpiece of his reelection campaign, saying that Miami-Dade had “turned a corner” from the austerity that defined municipal finances during the 2007-2012 housing downturn.
Even with sales and hotel taxes approaching $500 million in the county’s 2017 budget, they still represent a fraction of the $1.6 billion expected from property taxes. That has county officials hopeful that real estate values will provide another windfall for 2018, as the tail end of a second building boom continues putting new condos onto the tax rolls.
“You see all the cranes,” said Jennifer Moon, Miami-Dade’s budget director. On property taxes, she said: “They will still be at least what we anticipated.”
Moon now must approve individual hires within the county’s 25 agencies, the result of an order Gimenez detailed during a meeting with department heads in mid-February, spokesman Michael Hernández said. Hiring continues, he said, but Miami-Dade is trying to go without filling vacant positions that aren’t crucial to safety or public health.
Gimenez told directors that “if the position is not critical, let’s hold off on hiring,” Hernández said. “We are prioritizing the hiring of public-safety personnel and employees in the mosquito-control division.”
Wall Street analysts remain bullish on Miami-Dade’s prospects. An April 12 report from Moody’s, which handicaps governments’ ability to repay debt, noted the county government posted back-to-back budget surpluses following three years of operating deficits.
That’s helped the hiring market: After 89 months of losses in local government jobs, the Bureau of Labor Statistics reported Miami-Dade’s public sector began adding jobs again in December 2015 and hiring is up about 2 percent this year.
The Moody’s report noted a “markedly improving tax base and economy” for Miami-Dade, while also cautioning that elected leaders will likely be stuck with current property-tax rates.
Officials “face political challenges in raising more recurring revenues,” Moody’s wrote, “which could be an obstacle in attaining sustainable long-term financial health.”