Who will ultimately support county social service groups?

Even while Miami-Dade tries to figure out how to fund non-profit social service groups this year, those fearing similar panic in years ahead have put two answers on the table. Both may pass, but will they do the job?

One would slip into property tax notices a way to contribute to both cultural programs and to a variety of life-sustaining social service providers for seniors, families and children. The other would force firms with county contracts to fuel a trust for nearly 100 non-profit social service groups by paying in 2% of each bill they send to the county.

The contribution program could be easy for those who pay property tax. Its flaw is that psychologically the worst time to seek a donation is when we’re looking at a tax bill that’s bigger than last year’s and seems inflated anyhow. 

Streetcorner Santas collect from us because Christmas is a jolly time of giving. Opening the tax bill is a time of pain as we look at writing what may be our largest single check. That’s not conducive to generosity. Don’t count on tax-bill giving to replace government funding. 

Having greater upside potential is legislation by Kionne McGhee to have most types of firms that sell the county either goods or services pay 2% off the top of their invoices to the county into a trust to support human and social service groups.

That could reap big bucks. 

Miriam Singer, CEO of Jewish Community Services of South Florida, who aided in Mr. McGhee’s plan, says an existing 2% off-the-top take from the bills of vendors to the county will yield $20 million this year. Since the county has been funding social service groups by about $16 million a year, a similar amount in a new social services trust could solve the problem.

My reaction was that if the county is taking 2% off bills like a commission for getting contracts that Ms. Singer calls privileged deals, vendors will simply raise bid prices to cover the difference, which mathematically would be 2.04%.

Ms. Singer before retiring in 2017 was chief county procurement officer. Today she represents a coalition of 63 groups that would benefit from a social services trust fund. She says bids to the county for goods and services wouldn’t rise, so the chosen bidders would bear the entire county burden of funding the non-profit social service groups.

As evidence, she noted that in the early 2000s she worked to create a 2% off-the-top take from contracts to create a User Access Program in county purchasing. That fee became the model for the proposed social services trust fund.

In assessing that access program’s impact, the county sampled the market. “In no case was the county paying more for any of the goods and services,” Ms. Singer said, and “there was no impact on the number of vendors competing.”

The reason, she said, is that vendors to the county pad prices above what they should be. So even taking off 2%, she said, “they’re going to do really well” because their margins permit it. Vendors to the county in the access program ate the 2% deduction.

Vendors haven’t yet had a voice in this new 2% legislation, which cleared a first reading and heads for an October committee hearing. The trust fund concept “will get a lot of discussion” at that hearing, Chairman Anthony Rodriguez predicted. 

And well it should. 

“There are going to be other humans and other businesses impacted by this and they have a legal right to speak on it,” said Commissioner Raquel Regalado in seeking the hearing, noting that sellers to the county would pay the 2%.

Vendors to the county may well build fat margins into bids, but that doesn’t mean they want to reduce profits to finance social services grants that the county itself has been making for decades. 

Further, those margins help cover the higher costs of winning and then fulfilling county contracts. Doing business with the county is no walk in the park. 

Miami Today reports this week that as five firms bid in January on a Miami International Airport revamp, each spent a lot to meet the bidding rules and procedures. Four would normally lose that investment when the fifth won. In this case, however, all five worked for nothing after a procedural error led the county to reject all bids and start again with new specifications.

That’s why working with the county is more costly than private business and causes bidders to raise prices from the outset. I’ve no doubt that most bids would rise 2% or more if potential payments fell that much, despite Ms. Singer’s wise experience in county service. What do you think?  

If Ms. Singer is right, businesses will eat the cost of this program to fund community-based organizations for $20 million a year.

If I’m right, the county will end up paying the $20 million through higher prices for its purchases each year. Trust fund payments won’t show up on the books as county spending for social services, but the extra 2.04% contract cost will ultimately become social service funds nonetheless.

Though well intended, neither voluntary giving nor the 2% county vendor tax is a pot of gold at the end of the rainbow. There is no free lunch.