Miami’s city government will spend more than $1 billion on operations next year for the first time in its more than 100-year history under Tomás Regalado’s 2018 budget, his final as mayor.
Regalado released another record spending plan over the weekend, punctuating an era of unprecedented growth. Under his proposed operating budget, the city’s workforce swells to 4,400 employees, pension expenses top $100 million, and the city makes investments in a new emergency radio system, fire trucks and climate change preparation.
Taxes would decrease slightly for the owners of homesteaded properties thanks to a small drop in the city’s millage. But as Regalado prepares to step down, another year of double-digit growth in property values has the Republican mayor who came into office imposing austerity measures leaving atop a historic wave of spending.
“This is a budget that will not break the city,” Regalado said. “We’re still on the same path that we were the first year [as mayor], which is don’t spend more than you get. The tax base has grown incredibly, and the budget reflects that.”
Regalado’s proposed $1.059 billion budget, which would begin in October, just weeks before term limits force the mayor from office after eight years, is a dramatic reversal from the first budget he passed in 2010.
At that time, generous union contracts combined with plummeting property taxes and problematic financial practices under the previous administration to leave a massive budget hole for Regalado to fill. Faced with a city on the brink, he proposed sweeping pay cuts and a tax increase — a position most any Miami politician is loath to take.
But since then, as Miami’s taxable property values have rebounded and swelled by an estimated 57 percent to a record $50 billion, Regalado and the City Commission have ramped spending back up to previous levels and beyond. Meanwhile, his final seven budgets have included modest tax rate reductions for Miami’s 456,000 residents, thanks largely to reductions in debt.
This year, a combined drop in the city’s operating and debt service tax rates from $8.29 to $8.03 per $1,000 of a property’s assessed value would save the city’s average homeowner $55 due to the 3 percent cap on taxable growth that comes with a Homestead exemption. Property owners without the exemption will see their bills increase.
“My legacy is that we brought back the city,” Regalado said.
And then some: The city’s rainy day fund topped $130 million last year — a 1,000 percent increase from his first year — and property values have risen so much that the general fund, where property taxes are gathered and the bulk of daily expenses are accounted for, has increased by 45 percent since 2010 to $725 million.
Heavily influenced by commissioners, Regalado has used that money to hire hundreds more police officers and dozens of new firefighters, and to restore pay and pensions. This year, for example, an estimated $23 million in increased property taxes would pay for $6.7 million in pay hikes, $10 million in pension obligations, and $6.2 million in healthcare increases.
The proposed budget “continues to say that public safety is one of our top priorities. It’s our biggest expense by far,” said City Manager Daniel Alfonso, who crafted a budget that is largely a continuation of previous spending plans. “There are no huge big ticket items. Operations, the way we see it, are running OK. Crime is down. We didn’t add huge numbers of employees.”
Some notable payments include $2.25 million to help settle a legal dispute with Hyatt over its riverside hotel and parking garage, $2.5 million for waste hauling trucks, $400,000 for Zika virus prevention, and a $2 million relocation of the city’s technology center. Regalado is also touting the creation of a new veterans affairs and homelessness department, and an increase in funding of more than $600,000 for Miami’s new resiliency office, which is tasked with bracing the city for the effects of climate change.
Alfonso, however, has warned in recent months that despite Miami’s record growth, expenses are outpacing revenues. He believes the city — potentially facing a cut in property tax revenues with a proposed new homestead exemption — must begin to curb spending or find new sources of income or face difficult decisions in the near future.
Left unmentioned in the proposed budget, however, is the potentially massive liability of a lawsuit by the city’s police and fire unions over the cuts imposed in 2010. The Fraternal Order of Police won a challenge of the cuts before the Florida Supreme Court this year, raising the potential that Miami taxpayers could be on the hook for more than $100 million in back pay and pension obligations.
Regalado and Alfonso say both unions have discussed settlement options. But Lt. Javier Ortiz, police union president, believes the case could throw off the city’s budget and bring Miami right back to 2010 — when Regalado was scrambling to fix a financial crisis.