Citizen Team To Dig Into City Of Miamis Finances Hunt For Solutions
Written by Risa Polansky on April 8, 2010
By Risa Polansky
A citizen taskforce charged with helping Miami out of its fiscal quagmire is to convene for the first time as early as this week.
Private-sector members say the first step will be to get a grip on exactly where the city stands fiscally before even spit-balling potential solutions.
Commission Chair Marc Sarnoff since February has called for a budget advisory committee, hoping a team of outside local experts could help brainstorm moneysaving and revenue-generating ideas.
Things really started coming together late last month, when the administration announced a surprise $54 million hole that needed filling in last year’s budget and a projected $28 million deficit for the ongoing fiscal year, now half over.
"Now that we have the numbers for ’09 and we have at least a projection, I believe it’s time to convene the committee," Mayor Tomás Regalado said at the last city commission meeting.
Committee members say they’re ready to get started — but first need a clear and detailed financial picture.
"You don’t want to attack a problem with an idea already," said Tony Argiz, managing partner at accounting and consulting firm Morrison Brown Argiz & Farra and a member of the newly formed taskforce.
He’s waiting to see a final audit and other documents like union contracts, to powwow with city numbers crunchers and "really get a good orientation," he said. "Then once you’ve done that, you can start getting ideas."
Investment banker and former securities lawyer James Cassel, president of financial advisory firm J. Cassel & Co. and another taskforce member, said the same. "I really want to get educated by the staff as to what the status of the city is, what the potential issues might be," he said. "I think one has to go into these things with an open mind."
Until a full financial picture is painted, "I think it’s difficult to come forth with any recommendations," Mr. Cassel said, acknowledging that "it’s very difficult choices that have to be made," though it’s up to commissioners — not the taskforce — to make them.
Mr. Argiz pointed to pension liabilities as a standout city problem.
Miami now faces $892 million unfunded liabilities.
He noted also that labor eats up much of the city’s budget.
In theory, "all you’ve got to do is focus on that," Mr. Argiz said, though it can’t happen without union cooperation.
Many city officials have also cited labor costs as one of the roots of the fiscal fiasco, noting that they make up 80% of the city’s $500 million-plus budget.
Union negotiations are upcoming, with proposals due May 1.
Commissioner Sarnoff has called labor the "meat" when it comes to getting the city back on track financially, and any other budget cuts simply "gravy."
Alarmed with the city’s financial state and fearful reserves could dip below $11 million this year, Mr. Sarnoff is looking into the ins and outs of declaring a financial emergency or bankruptcy, with a memo from City Attorney Julie Bru due soon.
Mr. Argiz said he’s been reading up on cities in similar situations, such as Vallejo in California, which declared Chapter 9 bankruptcy in 2008 and is still stuck with a reported $84 million in future pension obligations.
"So I’m not really sure what you can do with a Chapter 9," Mr. Argiz said.
Mr. Cassel also noted that neither the taskforce nor the commission has free rein to make changes in certain areas, such as restricted revenue use.
It’s important, he said, to "understand what the flexibility of those things are. Certain things are fixed, certain things are not."
While Mayor Regalado plans some private commission sessions to talk union contracts, the idea is for budget taskforce meetings to be public.
He said he plans to attend, as does Commissioner Sarnoff.
Commissioner Frank Carollo, an accountant, has also expressed interest.
Other taskforce members include accountants Fausto Alvarez and Carol Gardner; Arturo Ross, who Mr. Sarnoff has called an expert in union and pension issues; firefighter Tom Gabriel, Michael J. Butler and Bob Rodriguez, president of NatCom Marketing.