Miami-Dade County

Mayor: Miami-Dade may need higher taxes to pay for SMART plan

A Metrorail car leaves the station in downtown Miami.
A Metrorail car leaves the station in downtown Miami. El Nuevo Herald

Miami-Dade’s mayor has promised an historic expansion of the county’s transit system, and he says higher taxes may be needed to pay for it.

Mayor Carlos Gimenez recently informed county commissioners that Miami-Dade won’t have enough transit tax for at least a generation to build the 80-mile expansion known as the SMART Plan, which a consultant said could cost $6 billion to build and about $1 million a day to operate. Those costs would overwhelm the county’s half-percent sales tax dedicated to transit over the next 40 years, Gimenez wrote, and property taxes already face pressures from various budgetary fronts.

Gimenez, who unveiled the SMART framework during his reelection campaign last year, suggested commissioners weigh new property or sales taxes to cover the expansion’s massive costs.

“Given the significant amount of resources required to implement the SMART plan,” Gimenez wrote in the March 7 memo, “we may want to consider enhancing the revenues available by dedicating a higher Countywide millage rate, and/or assessing another half-penny for transportation purposes.”

The statement has Gimenez speculating that Miami-Dade residents may have to pay more to build the kind of expanded rail system first promised in 2002, when voters approved the transit sales tax in a referendum. While generating about $250 million a year to subsidize transit operations, city trolleys, road improvements and some construction efforts, the tax hasn’t yielded nearly enough money to expand Metrorail farther into the suburbs.

Gimenez’s spokesman, Michael Hernández, said the memo shouldn’t be read as any sort of proposal. In a statement, Gimenez said: “I am not recommending a tax increase to fund the SMART Plan.”

The mayor’s memo offers the latest test of how much Miami-Dade’s elected officials are willing to risk to pursue the SMART Plan. After a Miami Today report on the memo, County Commission Chair Esteban “Steve” Bovo publicly discouraged Gimenez’s suggestion. Shortly after taking over the chairmanship of the 13-member board, Bovo formed a “policy council” in part to study how to fund the SMART Plan.

“The policy council has not entertained, nor is it contemplating increases in property taxes nor sales taxes to fund transportation,” Bovo tweeted Thursday. Later, he said: “We are not going to raise taxes to pay for transportation.”

It’s not clear how a no-taxes stance would reconcile with the financial concerns in Gimenez’s memo. Bovo has touted the possibility of transit zones around the expanded rail lines, which would siphon property taxes into funds used to pay for the new transit routes. Gimenez cautioned against tapping property-tax dollars needed to fund core services in Miami-Dade.

The transit tax zones “limit our ability to utilize future revenues to support public safety services, recreational and cultural programming, social services and roadway and neighborhood services,” he wrote. “Additionally, we limit the County’s flexibility to address future fiscal challenges or emergency events, such as the recent Zika outbreak.”

The mayor’s memo, written in response to a commission request on the zones known as tax-increment financing districts, did not rule out the use of the technique to help with SMART. He said there could be a way to protect the county’s budget while generating new money for SMART. But he said current financial projections show a wide gap in the transit tax available for the next several decades.

“Preliminary capital cost estimates greatly surpass the estimated net present value of the current 40-year Transit and [transit tax] pro-forma,” he wrote, using the term for financial projections.

Gimenez has said he hopes to secure hundreds of millions of dollars from Washington to help build SMART. The county could also shrink the plan’s blueprint, or shift to only building one or two corridors. Design changes could yield cost savings; while a November analysis by AECOM put the construction cost at $6 billion, Miami-Dade’s Transportation department estimates it can be built for $3.5 billion.

Even so, transportation planners have yet to detail how they could afford even a single new rail line under the county’s current budget.

Alice Bravo, Gimenez’s transportation chief, said the mayor’s memo only highlights one option for a plan that is already widely known to be out-of-reach for the county’s current financial resources.

“We need more money than we have today,” Bravo said.