Presentation to Commission on 2007-2008 City Budget (1)

The following is a first installment of verbatim comments to the Commission of Coral Gables on its budget delivered on September 25, 2007;


During the year 2006 to 2007, total property values in Coral Gables have registered an increase of about 20 percent, I repeat, 20%. This is a giant increase in what are now uncertain property values on which you are basing taxes. We know that these increases are temporary and will begin to fall in the near future.

Also, it is understood that if it were not for the State of Florida the city might have increased property tax revenues by another 10 or 12 percent this year. Fortunately for our businesses and citizens this has not happened.

Now there is an opportunity for the city to reduce its taxes in 2007 and in the future. Almost certainly there will be new requirements from the State of Florida in 2008 to cut back on local taxes and spending– the city government should get ready for that eventuality.

During the real estate bubble some governments, including the City of Coral Gables, have increased their tax millage rates, while other cities have decreased their rates. Those cities who reduced their rates made a good decision.

Some cities have used the windfall tax monies largely to improve their communities, increasing investments, raising reserves, undertaking community development programs and services.

Coral Gables seems to be treating the ever increasing windfall revenues from property values as stable, certain and sustainable. Unfortunately, our city government has used its new monies mainly to increase staff, pay higher salaries and benefits, and payoff unfunded retirement liabilities. We surely missed an opportunity to stabilize the millage rates over the years, raise government productivity, increase reserves and fund capital investments.

As the expression goes, the chickens have come home to roost.

I conclude that the only alternative to more taxing and spending is to reduce government staff and benefits on an urgent basis this year and in the coming years.

I respectfully suggest this will be a serious challenge for the city government to live within a realistic budget in the face of declining property values and citizens who are tired of seeing property taxes increase without control.


About Stephen E. McGaughey
Resident of the City of Coral Gables

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