Where are the City’s Reserves and Capital Improvements?

In the recent Budget Hearing the mayor and commissioners (e.g., Mr. Withers) explained the need for high wages and pensions for public security staff (and by implication all other employees) and justified this by a tight labor market in Miami.

A cursory look at Bureau of Labor Statistic data for the last decade in the Miami area for firefighters and police patrol officers do not show a rise in salaries similar to that which occurred in Coral Gables during the period 1999 and 2007 (overall wage payments rose by about 7 percent on average in Coral Gables).

In the Miami regions the average salary for firefighters increased from $42,000 in 1999 to $54,000 in 2007. This an average annual rate of 3.2% per annum that approximately covers inflation during the period. For police patrol staff the wages increased from 44,100 in 1999 to 57,800 in 2007. This is also an average rate of 3.4% in the period without in major fluctuations on a year to year basis.

This suggests that the market for these workers was not especially tight in the period in which Coral Gables dramatically increased salaries and benefits and wages were good and they more than kept up with inflation.

City income increased dramatically during the real estate bubble that lead to an average annual increase in property tax revenues for the city of almost 12%, and total revenues increases of about 10%. Under these circumstances the city should be sitting on an ocean of reserves and top notch capital improvements.

Rather the funds were squandered in exaggerated salaries and pension benefits that has left the city with immense pension liabilities that have “come home to roost” because tax revenues are falling dramatically now and will not grow in coming years.

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

One Response to Where are the City’s Reserves and Capital Improvements?

  1. lois says:

    this is a very good piece–but could you add for comparison purposes–what happened to the salaries of those employees in coral gables over that time period as well? thanks!

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