Emotions ran high at Miami-Dade County’s annual preliminary budget hearing last week as speaker after speaker begged for more funding from a $9.048 billion spending plan that’s bulging at the seams.
From the north to the south, city and county officials in Miami-Dade are holding on, trying to keep staff employed and public services running while grappling with the financial toll of the pandemic.
Collectively, county and local governments employ tens of thousands of people in Miami-Dade whose jobs are now on the line in the current economic downturn, not to mention countless services residents depend on and sometimes take for granted. Local governments depend largely on property and sales taxes to fund employee salaries and public services such as sanitation, libraries, parks, arts and culture, and police and fire departments, among other public works.
Most property taxes were collected by February, but people spent less money during quarantine and cities spent more to deal with the public health emergency. That one-two punch has caused revenue losses for the current fiscal year ending Sept. 30.
Governments are turning to their reserves to balance budgets and considering different cost-saving measures while preparing their budgets for the 2020-2021 fiscal year that begins Oct. 1. The consequences of revenue shortfalls are projected to be felt for the next 2-4 years as the economy struggles to rebound.
Miami-Dade County has already implemented a hiring freeze for the upcoming fiscal year. County budget director Jennifer Moon says she has avoided layoffs, furloughs and cuts in services without increasing taxes.
“Service levels all remain the same as the prior year, other than an additional fire rescue unit that will come online, an additional 45 police officers that will be hired by the end of the fiscal year and then an expansion of the hours in the libraries,” she said.
Additional funding allocated to Miami-Dade’s police department in the current political and economic climate was met with outrage by speakers at a virtual public budget hearing Sept. 3, who asked that the department receive a 10% cut to its $781 million proposed budget so more funds could be invested into social services. Mayor Carlos Giménez was dismissive, rationalizing a population growth in Miami-Dade with the need for more police to guarantee public safety.
Not a single commissioner pushed back on the increase to police. A flat property tax rate and the preliminary budget were approved, but not without some criticism from Commissioner Daniella Levine Cava, who is running for county mayor against Commissioner Esteban “Steve” Bovo. She said more needed to be done to help Miami-Dade residents.
“The future risks have not been adequately addressed in this budget,” she said. “The budget must reflect our priorities, as so many have said, but this budget lacks vision in these unprecedented times. This isn't a budget as usual, we've never lived through a pandemic and we’ve never had such a dramatic call for government reform.”
The commission will vote on the final budget Sept. 17, with the expectation that the 2021 fiscal year will be tough as the economic impact of the pandemic continues.
Meanwhile, local city governments across the country are reporting revenue losses, but Frank Nero, a former U.S. Department of Labor official, New Jersey mayor and CEO of Miami-Dade's Beacon Council, said South Florida’s preparation for emergencies has helped.
"Some cities have depleted or inadequate reserves due to preexisting challenges in their communities,” he said. “In Miami-Dade, planning for emergencies like hurricanes makes our cities more likely to have healthy reserves. What's happening now is a timed explosion. The fuse has been lit, but the explosion is yet to come."
Local governments are preparing for that explosion.
A scramble to balance budgets
The Center on Budget and Policy Priorities projected in July that state and local governments will see budget deficits totaling $290 billion by the end of the 2021 fiscal year. That is higher than the $230 billion shortfall of 2010, the worst year of the Great Recession.
At the same time, these governments have furloughed or fired about 1.5 million employees in 2020, even though the Bureau of Labor Statistics reported that employment in local government rose by 95,000 in August.
This is the environment Miami-Dade municipalities are working in.
Some resorted to layoffs and hiring freezes to save money after shutdowns started in the spring. Further layoffs are likely but not right away because some cities report having enough rainy day funds to maintain services and keep staff employed.
On Aug. 12, Miami Gardens Mayor Oliver Gilbert referred to a $5 million deficit in his August State of the City address, but said reserves covered immediate shortfalls. Gilbert said that although the city is prepared to continue facing the pandemic in the upcoming fiscal year, a partial hiring freeze will help save money and not exhaust reserves.
Opa-locka’s City Manager, John Pate, also said his city’s reserves have come in handy. Opa-locka lost about $600,000 in revenue that it would have otherwise received without the pandemic, but it has neither laid off employees nor cut services so far. Pate expects the city’s reserves to cover both services and salaries next year. He does not, however, rule out the possibility that budget cuts may be necessary as the pandemic continues to impact revenues in the long term.
“If the problem is greater than currently anticipated, cost reduction plans will be developed since it is important for the city to preserve and grow our reserves to be able to deal with even greater issues in the future, such as being able to recover from major hurricane damage if that should occur,” Pate said in a written statement to The Miami Times.
Homestead Mayor Steven D. Losner said his city also has used its reserves while saving money through a hiring freeze and reduced operations to hold the line on layoffs and furloughs.
“Some reallocations have been made in the budget and we’re going to have to take from our reserves to a certain extent to balance this year’s budget,” he said. “For example, because our parks were closed down and community centers and so forth, we had savings in operations. But still, that didn't totally cover the reductions in revenues.”
The situation in the City of Miami is more dire with a projected $23.3 million deficit by the end of this fiscal year.
Budget Director Christopher Rose said the largest city in the county hasn’t laid off or furloughed employees but has used its reserves, reduced operational expenses and frozen hiring. He said some services have been cut for operational reasons rather than financial, like drivers in the solid waste service taking time off because they had been potentially exposed to the virus.
For the upcoming fiscal year, the city is working through expected revenue challenges.
“We have put a proposed budget together that does not increase the taxes, does not increase the fees of our residents or businesses,” Rose said. “It does not reduce a lot of city services, but it does have some reductions of services. And it does not use reserves further than we’re using them in the current year.”
One service that could be cut is the Neighborhood Enhancement Team, which serves as a link between residents and government resources. The city may reduce some offices and staff.
It’s also working on curtailing overtime in services like parks and public works. Rose said that means reducing services but not laying off workers. He harped on the protections to employees included in the city’s proposed budget.
“It does not have furloughs, it does not have layoffs and it does not have pay cuts to city employees,” he continued. “What it does do, though, is it asks all employees to stay at the exact same pay rate that they have right now. So, it foregoes any raises.”
The city is discussing that agreement with unions and employees, he added, as well as freezing hiring in the upcoming year.
The city commission will hold a public hearing on Sept. 10 to consider the proposed budget and special assessment fees for the solid waste services.
Similarly, during a budget workshop held on Aug. 20, North Miami City Manager Theresa Therilus said the city’s current deficit will be addressed through income from land sales to help fill the gap, but cuts and increased fees might be needed.
Therilus said the city laid off part-time staff during shutdowns and might not rehire them in the incoming year. The proposed budget also includes cutting special events like the city’s Thanksgiving parade and Fourth of July celebrations, implementing furloughs of one day per month and increasing monthly sanitation rates by $11.55 while reducing the city’s subsidy.
Some of these proposals received pushback from Mayor Philippe Bien-Aime, Vice Mayor Alix Desulme and some members of the city council. They worried about raising those rates while eliminating all events and raising salaries for some staff, which was also proposed.
The measures are likely to change as the budget is finalized in upcoming hearings. The public can attend those online on Sept. 10 and Sept. 24.
Waiting for federal help
The Federal Emergency Management Agency (FEMA) can reimburse cities for the extra money spent handling the pandemic. Miami-Dade County can also help through the coronavirus rescue package that Congress passed earlier this year.
“There is some CARES Act money coming our way that we will utilize to replenish reserves,” said Losner. “Now, that's not going to cover everything we pulled out to balance this year and next year, but it gives us a comfortable level that we’re not getting dangerously low in reserves.”
Still, both Losner and Pate noted that their cities cannot use this assistance to make up for the lost revenue. Only extra expenses used to respond to the pandemic can be reimbursed, such as money spent on protective equipment or overtime hours of employees running COVID-19 testing sites.
Moon told The Miami Times that municipalities must first submit their expenses to the county to determine if they are eligible for county assistance. Those that had already submitted by the end of August could expect reimbursement in a few weeks.
But, receiving the CARES Act money didn't come without a fight. In late July, mayors called on the county to allocate more money from the federal relief package to municipalities, after the county proposed giving them $30 million. Miami Mayor Francis Suarez even threatened a lawsuit. The county relented, agreeing to reserve $100 million for municipalities from the $474 million package it received from the state.
What these local municipalities are facing is multiplying itself across the nation, resulting in cries to Congress for more federal assistance to help save budgets on the brink of a freefall.
“A shopping center owner or building owners that lose their tenants, or have to renegotiate their leases to a lower rate to keep their tenants, are obviously going to appeal their tax assessment,” said Losner. “So, that will result, potentially, two years from now, in reduced income from tax revenue to us.”
This means the pain will continue.