More than 250 Miami Beach workers released, city manager takes furlough in COVID crisis
The economic shutdown brought on by the coronavirus pandemic has hurt the bottom lines of hotels, restaurants and other businesses that rely on tourism and a vibrant nightlife to make money.
But the governments that ordered businesses to close are not immune from the effects.
The shutdown has cost Miami Beach an estimated $14.4 million per month that has already resulted in layoffs, furloughs and the likelihood of budget cuts.
More than most cities, Miami Beach relies on revenue from tourism — taxes and utility bills paid by hotels and restaurants and the parking fees that visitors are charged. The city ordered most of those businesses to close or cut their operations. The resulting loss of income will force the administration to dip into its emergency reserves and consider millions in budget cuts.
“The reason we have a rainy day fund is for precisely moments like this,” said Mayor Dan Gelber, who noted that the city tucked away a $16 million budget surplus in its reserves in 2019. “It’s so you don’t have to reduce essential or critical services like fire and police, so you don’t have to dramatically change your quality of life.”
City Manager Jimmy Morales, who has used the emergency powers granted to him by the city charter to shut down restaurants, bars and hotels across the city, has already furloughed about 300 full-time and part-time employees.
Now, he is taking a furlough. The city’s top administrator, who makes $305,736 a year, will take 10 days off without pay in the next few months. City Attorney Raul Aguila and City Clerk Rafael Granado will also take 10-day furloughs. Employees working for Morales, Aguila and Granado will take five-day furloughs.
Just to make it through September, which marks the end of the fiscal year, the city will use up to $19 million in reserve funds — or about 20 percent of the $95 million piggy bank, said Commissioner Ricky Arriola, who chairs the Finance and Economic Resiliency Committee.
Gelber told the Miami Herald he would support dipping into the reserves, but a majority of the seven-member City Commission must vote in favor of the move. The finance committee meets April 17.
“We have reserves that will fund us for three months,” Arriola said. “We already started cost cutting, so it’s not like we’re running under a normal operating budget. That will further extend our financial capabilities.”
Across the bay, the economic crisis triggered by the COVID-19 pandemic is projected to create at least a $21 million shortfall in the city of Miami’s municipal budget this year, which is expected to force spending cuts that could affect public employees. In the Keys, officials announced that up to 100 Monroe County employees will be furloughed. The city of Oakland Park in Broward County is furloughing most city employees other than first responders for one day every two weeks, which amounts to a 10% pay cut.
Cuts are likely in Miami Beach
Property and resort taxes, along with parking revenues, make up the lion’s share of Miami Beach’s $669 million operating budget, with property taxes accounting for 28 percent, resort taxes 14 percent and parking 8 percent of the 2020 budget.
The city’s hiring freeze and elimination of overtime has already saved roughly $10 million, the administration said.
The city is likely to save at least some of the $1.7 million it budgeted for policing during high-impact periods, like Memorial Day weekend, because the usual events are not likely to take place this year due to coronavirus. The cancellation would also save the city $300,000 in restroom services.
The administration has also proposed deferring certain budgeted items to next year, such as a $100,000 payment to the Orange Bowl and a $100,000 sponsorship of an International Tennis Federation event.
In a tourist destination like Miami Beach, where payments from homeowners make up less than 20 percent of the city’s annual property tax revenues, the city is vulnerable to the government-induced shutdown of tourism and hospitality, said Commissioner David Richardson, a member of the finance committee and a former federal auditor.
The city has just 93,000 permanent residents, but hosts 6.7 million visitors a year.
“It’s a blessing when we have something like the Super Bowl but a curse when we have a crisis such as this,” Richardson said. “We’re not receiving the level of money that we previously had for the resort tax because the hotels are closed.”
Fortunately, the crisis hit in the middle of the year, after the city raked in $20 million alone in resort tax revenues in January and February as the Super Bowl returned to Hard Rock Stadium.
“I’m expecting it to be a combination of cuts to the budget, pushing some projects out to the future and looking for every opportunity that we have to save dollars,” Richardson said. “The good news is that the city has about $80 million in reserves for the general fund. ... We have a little bit of a cushion.”
Shelter in place may last through May
Officially, the city’s shelter-in-place order and the economic closures brought on by coronavirus can be extended until April 23 without approval from the commission. But Morales has suggested, in emails to the commission obtained by the Miami Herald, that the city extend its orders “through May.”
Morales blamed a lack of decisive action by Gov. Ron DeSantis earlier in the coronavirus crisis for a longer economic shutdown in Miami Beach.
“The Governor’s failure to enforce [social distancing] statewide may well push those projections deeper into May,” he said in an email.
In announcing an initial wave of furloughs to the commission and city staff on March 26, Morales said Miami Beach “planned in advance for shocks like this through our overall efforts to build resilience through reserves and real experiences like the downturn from Zika.”
“While the impact of COVID-19 will likely be very significant, due to prudent financial planning, we have strong reserves in place that will help us navigate this crisis. We are committed to paying the city’s debt and other vendor obligations,” he said. “Like many cities across the country, we will be requesting an infusion of funding from the State and Federal Governments to help offset revenue losses that are critical to providing continued services during this time.”
Gelber said he hoped to begin discussing a reopening of the economy in May. Until then, he said, residents can take comfort in knowing critical services like police and fire rescue will not be impacted by the downturn.
“This is a hard hit, but it’s surmountable and we’ll be able to navigate it,” he said. “For how long will be an entirely different question but for now, we feel comfortable that we can cut costs, dip into some of our reserves and move forward with people believing our government is responsive and on the job.”
This story was originally published April 11, 2020 at 6:30 AM.
CORRECTION: Correction: This story has been updated to reflect that Miami Beach furloughed nearly 300 city employees, and did not lay anyone off.
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