The economic fallout from closures and stay-at-home orders meant to slow the spread of the novel coronavirus has blown holes in public coffers of local governments, leaving administrators with certainty that there will be revenue shortfalls. The magnitude of the budget pinch is difficult to predict, even as South Florida’s economy slowly reopens.
Miami’s plan to fill about $17 million of the gap avoids the kinds of layoffs or furloughs facing public servants in other local governments. For now.
“This reduction of expenditures will be achieved by all departments and, at the moment, defers the need for across-the-board personnel adjustments in the current year,” reads a memo from City Manager Art Noriega. He emphasized the caveat by putting it in bold.
Miami commissioners on Thursday will consider tightening the city’s belt through a mid-year budget amendment, an annual exercise meant to account for changes since the budget year began Oct. 1. Commissioners approved a $1 billion spending plan that funds salaries and benefits for a workforce of more than 4,000 city employees who maintain public parks, issue building permits, patrol the city and respond to 911 calls.
Proposed adjustments included deferring $106,000 in repairs to asphalt at the Miami Marine Stadium, $300,000 to update air conditioning units at police facilities and a quarter-million-dollar upgrade to the city’s information technology systems.
“We will revisit them later,” said budget director Christopher Rose. “We wouldn’t have funded them if we didn’t need them. It’s just necessary to delay them.”
The hiring freeze will keep vacant positions open longer, which will impact city services in the long term. It’s unclear how average taxpayers might feel the impact of a City Hall that can’t fill open jobs.
“We’re going to be asked to do as much with less. It’s not a “do more with less,” at least,” Rose said. “Because the world has changed, significant revenues that are already coming in lower mean the city has had to adjust, just like any other small business or household.”
In some cases, the COVID-19 pandemic led to savings that will help defray other costs. When Miami-Dade County schools sent students and teachers home for the remainder of the school year, the city saved the cost of placing city police officers at each school during the day.
The crisis did not impact property tax revenue because by the time the pandemic triggered an economic downturn, the vast majority of people had already paid their tax bills. Rose said that because property values will be based on valuations as of Jan. 1, 2020, next year’s property taxes will likely not be an issue.
It’s what could happen in the 2021-2022 budget year that has budget analysts concerned. If values fall in an extended financial crisis, revenues will fall with them. It’s too early to predict with any accuracy, but administrators are looking at the unemployment rate to gauge the potential fluctuation in property values. With a 17 percent unemployment rate and more jobless claims being filed every week, it would take a sharp, fast economic recovery to soften future budget blows.
“That is a concern,” Rose said.
Commissioners must approve the proposed budget plan this week before it takes effect. The commission is scheduled to hold a virtual meeting beginning at 9 a.m. Thursday.
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