Record Property Value Drops Leave Governments Budget Holes Even Deeper
Written by Risa Polansky on June 3, 2010
By Risa Polansky
Steeper-than-expected property value declines leave local governments to fill budget holes deeper than projected.
Miami is looking at a fiscal 2011 revenue drop roughly $10 million larger than anticipated, City Manager Carlos Migoya said Tuesday after Miami-Dade’s property appraiser released taxable value estimates.
The analysis shows a 15.5% hit to Miami’s tax roll since last year.
The city was bracing for a 10% decline. The difference brings the expected budget hole as high as the $97 million range.
"We’ll figure out what that means," the manager said, and come up with budget alternatives.
But, Mr. Migoya added, "it’s a number that we believe is manageable."
Meanwhile, Miami-Dade is facing a budget gap between $360 million and $400 million in fiscal 2011, which begins Oct. 1.
The county had yet to run the final numbers as of Tuesday.
Officials for months predicted a 12% hit before the appraiser released the analysis reflecting a 13.4% drop in countywide taxable value.
The long-projected 12% decline would have meant a $360 million budget deficit.
A "worse-than-expected" 15% hit would have meant a total shortfall near $400 million, Manager George Burgess said last month.
The only comment from the administration following the appraiser’s announcement came via a written statement by Mayor Carlos Alvarez: "The preliminary tax roll estimates are what we projected them to be. We anticipated 10, 12 and 15 percent scenarios. We will continue working on our budget focusing on preserving County programs and services."
Local governments since last year’s unprecedented tax roll decline have been steeled for another year of steep hits but didn’t truly know what to expect until Tuesday, when Appraiser Pedro Garcia released the tax-roll estimates.
Final values are due out in a month.
But now that local governments have a solid jumping-off point, budgeting can begin in earnest.
"The gap that the county was expecting was under budget," Commissioner Rebeca Sosa said Tuesday. "Now we have the reality."
It’s time to begin analyzing where to cut fat, she said.
Miami Commission Chair Marc Sarnoff said the higher-than-expected hit to the city’s tax roll "simply means further cutbacks and further reductions in services."
The latest values shrinkage comes after what was considered unparalleled decline last year.
The city grappled with a 6.4% drop in taxable values and the county a 9.5% drop, both buoyed significantly by new construction — something the governments couldn’t count on this year.
Between then and now, taxable value in the city fell from $37.1 billion last year to just shy of $31.4 billion this year.
The countywide tax roll during the same period shrank from just more than $222 billion to about $192.5 billion.
The drop in property values does not necessarily translate to smaller bills for taxpayers, however.
It’s up to commissioners to set the tax rate that will determine how much property owners will pay.