Nearly every week has brought more good news on the budget front from Miami-Dade Mayor Carlos Gimenez, as newfound dollars allowed him to cancel planned cuts. On Monday night, he issued a memo to commissioners saying he could save the county’s Boot Camp program for young offenders, and would scrap a planned 25-cent fare increase for buses and Metrorail.
In both cases, Gimenez avoided budget cuts by using one-time revenue sources — surplus transit dollars for the fares and proceeds from the sale of rescue helicopters to pay for boot camp. The funding strategy follows a larger theme in the mayor’s 2015 spending plan: confidence that an improving economy will ease Miami-Dade’s current revenue squeeze.
“Governments are the last to feel the effects of the recession, and the last to feel the effects of a recovery,” Gimenez said at a recent town hall at the West Dade library. “I believe we really have turned a corner.”
Gimenez will need new dollars in 2016 to continue boot camp and avoid a fare hike, increasing the stakes for a continued real estate rebound.
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If revenues do roar to life in later years, Gimenez can claim to have finessed Miami-Dade’s pokey recovery by avoiding steep budget cuts while preserving the popular 2011 tax cut he championed during his first year as mayor. But if property taxes don’t exceed current projections for 5 percent yearly growth, the delayed costs could circle back and present Gimenez with another bruising budget fight as he gears up for reelection to second full term in 2016.
“We can’t continue to think we can always do things on the cheap and expect to have the kind of community our residents want us to have,” said Commissioner Dennis Moss, one of five commissioners to vote against Gimenez’s flat-tax budget plan in July. “We can have these little fixes, and that’s fine. But at the end of the day, we need to have a sustainable budget, and that means we need to bring in the revenues we need.”
When Gimenez sat down with WPBT’s Helen Ferré for a televised interview aired Sunday, he repeated a favorite selling point for his 2015 budget: “The good news is, with our conservative estimates, our five-year forecast is balanced.”
But his budget’s actual five-year forecast says the opposite: a $25 million deficit forming in 2016, the first of three before a surplus returns in 2019. As the mayor’s own spending proposal states on Page 93: “the Countywide budget will develop shortfalls throughout the scope of this five-year financial outlook.”
Gimenez and his aides dismiss the deficit forecasts in his budget as problems that exist mostly on paper, saying they’re caused by future payments to rainy-day reserves that Miami-Dade can cancel if revenues don’t exceed expectations. With high-rise construction again on a tear, Gimenez sees his budget’s tax projections as conservative enough that the county will likely have more money to spend by the time 2016 arrives.
Miami-Dade stopped making contributions to its rainy-day fund in 2011, Gimenez’s first year as mayor. Now at about $45 million, the reserves are down 40 percent since their peak in 2009, according to budget documents.
Citing the leaner financial cushion, Moody’s issued a “negative” outlook for Miami-Dade’s credit in November 2013, the first step in what could be a downgrade to the county’s actual debt rating. Moody’s cited “significant strengthening of county financial reserves” as a prime way for Miami-Dade to boost its financial standing.
“I don’t think much has improved up to this point,” John Incorvaia, lead public-finance analyst for Moody’s, said in an interview Monday. “We’ll take a look at the final adopted budget.”
Building up reserves wasn’t an option for the coming 2015 budget, with a three-year suspension of union pay increases set to expire Oct 1. Gimenez initially proposed austerity measures, including cutting 450 police jobs, to absorb the higher payroll expenses. But now his budget includes no police-officer cuts, thanks in part to delayed costs and one-time windfalls:
▪ In June, Gimenez unveiled a new deal with Miami Beach involving a pair of taxing districts that allow the resort city to retain millions of dollars in property taxes that otherwise would go into county coffers. In exchange, Miami Beach agreed to back-load county payments from another taxing district that had the effect of giving Gimenez an additional $18 million in property taxes for the 2015 budget.
▪ Gimenez’s budget deferred about $55 million of short-term purchases and spending requests from county departments, including resurfacing parking lots, replacement computers and office equipment, new county cars and trucks, and swapping out worn carpets, office furniture and other items showing age.
▪ On Aug. 28, Gimenez restored $4 million worth of police positions, getting the money from the sale of four rescue helicopters being replaced with leased copters. The initial intent was to use the $14 million profit to offset debt expenses and earmark the freed-up dollars for police over multiple years, said budget director Jennifer Moon. On Monday, Gimenez announced a plan to squeeze the windfall more by spending $3.5 million directly on restoring Boot Camp for just one year.
Other savings depend on Miami-Dade locking in reduced healthcare costs it’s predicting for 2015, with Gimenez hoping to avoid the remaining 300 county job cuts called for in the budget as more unions agree to the new insurance options.
In a country where the national government spends $55 million more per hour than it takes in (thanks to an estimated $490 billion annual operating deficit), pushing costs into the future is hardly novel.
It isn’t for Miami-Dade, either. This year departments reported $182 million in “unmet needs,” a tally of spending requests that weren’t granted in the budget. That’s the highest since Gimenez took office, but down slightly from the $198 million reported in 2011, when Carlos Alvarez was mayor. Gimenez also notes that the $90 million in surplus hotel taxes and library funds used to balance the last two budgets are gone from the 2015 plan.
Even so, Miami-Dade politics brings an added twist to this year’s deferred spending. Gimenez lost a reliable anti-tax vote in August when incumbent Lynda Bell was unseated by union-backed Daniella Levine Cava. If Miami-Dade’s budget picture worsens for 2016, Gimenez might find it harder to hold off calls for a tax increase if layoffs are the alternative.
“It’s going be tougher for Gimenez to balance the budget solely by seeking concessions from unions,” said Jorge Luis Lopez, a County Hall lobbyist who is widely considered a Gimenez confidant. “The political shift of the county will be more more progressive. The ability to push back against the unions will be pretty much out the window.”