City of Coral Gables Budget Shortfall

The City of Coral Gables newsletter distributed today include the following:

The City of Coral Gables, like other local governments throughout Florida and the nation, is facing a decline in revenues due to the downturn in the economy. The latest financial information reveals approximately a $9 million general fund budget shortfall for the fiscal year that ends September 30, 2009. This shortfall is due to a number of factors, beginning with a decline in revenues totaling nearly $5 million. Added to this number is approximately a $2.5 million increase in expenditures as a result primarily of collective bargaining agreements with the general employees’ and firefighters’ unions and other operating costs. Also adding to the shortfall is approximately a $1.5 million appropriation from last fiscal year’s reserves to balance the budget. In addition, the City is projecting a similar shortfall as it enters the budget preparation process for next fiscal year which begins October 1, 2009 and that would need to be addressed prior to adopting a balanced budget. In a letter sent to all City employees on April 28th, City Manager Patrick Salerno announced a citywide freeze on hiring, capital and discretionary spending as initial steps taken to address the situation. Furthermore, 16 part-time temporary positions were recently eliminated. The City Manager has expressed his desire to minimize the number of positions that need to be reduced further from the City’s workforce. City administrators are analyzing other cost cutting measures and revenue enhancement strategies to address the current financial challenge. For additional information, contact the City of Coral Gables Office of Public Affairs at 305-460-5205.

Some interesting questions are 1) why the decline in revenues was not anticipated months ago by City authorities, as it was by the Obama Administration, Governor Crist or the Miami-Dade County Government; 2) why did the City negotiate employee salary increases when they couldn’t be paid for by the City under the most optimistic projections; and 3) who neglected budget control and supervision during the last few months and why didn’t the City Commission know that?
Why would the City Manager’s main objective be to avoid reducing employees? Is he expecting that the problems be quite short lived and the large numbers of staff will be needed during the next boom phase of the City?

About Stephen E. McGaughey
International consultant in economic development programs and projects

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