Tax Cut Miami Style Tax Collections Spending Set To Rise
Written by Michael Lewis on September 20, 2007
By Michael Lewis
Local governments cry the blues over cuts the Legislature ordered to ease the tax burden on homeowners, but the way they define a cut doesn’t soothe the pain.
Take Miami, which Sept. 27 is to hold its second hearing on a budget that Mayor Manny Diaz and City Manager Pete Hernandez proclaimed rests on a $53 million property tax cut.
First, we learn that while they claimed to trim $53 million in taxes, they then inserted $22 million more to add police and parks workers. That totals $31 million, not $53 million, despite the doubletalk.
But worse, the city actually plans to cut neither the overall budget nor tax collections at all — the mayor and manager plan to increase both.
If the city commission approves the 2008 budget, it plans to add $1.26 million total revenues, and spending, from this year’s $724 million budget, and to raise property tax collections by $7.33 million — up 2.7% from this year’s budgeted $275.1 million to $282.5 million.
The sleight of hand comes in determining what spending is being cut from. Trims certainly aren’t calculated on this year’s budget. The juggling only works if they claim they’re cutting from what they would have been allowed to collect and to spend if the Legislature hadn’t reined tax collections in.
That’s like your business saying you’re cutting $53 million — or $31 million, or whatever number you pluck from thin air — from what you would have spent next year if you somehow had lots more money to spend. It bears no relationship to reality, because the additional money was never there at all, nor are the cuts.
Because fiscal 2007 ends Sept. 30, there’s no way to tally deviations from this year’s spending.
But we can find two yardsticks: what the city budgeted for 2007, and what it spent in 2006. By either standard, tax receipts and spending are both to rise, not take the massive trims officials bemoan. You could look it up, if you’re masochistic, in the 158-page 2008 budget that got issued just in time for the first budget hearing this month.
First, about all those lamented job cuts: the city plans to cut exactly two jobs, from 3,928 people budgeted this year to 3,926. And you can bet that those two slots aren’t filled. Budgeted job loss will turn into more actual employees, as opposed to fewer hypothetical people in the budget.
Now, look at some details. The city manager’s office budget is to rise $151,000 from this year’s budget and $574,000 from the $2 million actually spent there in fiscal 2006, up more than 28%. The city clerk’s office is to spend $577,000 more than budgeted this year and $717,000 more than actually spent in 2006, up nearly 40%. Wonder how they’ve been able to achieve those economies.
These aren’t isolated increases. In fact, among the 14 offices in general government, 13 are to spend more than in 2006, up a total $6.75 million. (The lone trim comes in civil service, down $44,000. What did they do wrong?)
Citywide, spending is to rise $29.5 million from 2006, up 6%. And remember, spending for 2006 is the line the Legislature told cities to hold.
How can that be? Well, that the state didn’t really order cities and counties to roll back taxes. The order is that total revenues from all existing properties not rise. So even with a tax rate trim from $8.30 per $1,000 of assessed valuation to $7.30, so much new construction and no 3% assessment increase cap on commercial and rental properties hand the city vast wiggle room to add revenues.
And it has. And it plans to spend them.
Now then, what was all that fuss about returning tax savings to taxpayers?