Economics of the Coral Gables Budget: Expect the Worst!

The financial and economic factors affecting current and future budgets of Coral Gables are either under the direct influence of the Commission and the City Manager or outside of their control. Obviously, the main economic variables are completely out of local, regional or state control.

There are several factors under the control of management. The factors included: the number of staff; the salaries of the staff; the pension and health benefits of the staff; the organization of the government in different units; negotiations with labor unions; the hiring and firing of senior management; the timing and size of capital investments; work priorities for the government and staff; the fixing of relevant fees; operation and maintenance of vehicles and other equipment; and the assignment of different subsidized or free services to the community.

Irrespective of what happens in the local, state, national and world economy in the future, the city should proceed with the most conservative assumptions about the future economy.

To be fully responsible the Commission and management should assume the worst economic scenario in deciding on 2009-10 budget and taxes:

1) the economy is expected grow quite slowly for several years or have a double dip recession;

2) the State of Florida will lag the rebound of the national economy because of its dependence on real estate and tourism (this has been reported by several national and state analysts);

3) local businesses and employment will lag national economic recovery and, thus, local business and sales taxes will not recover quickly;

4) property values cannot be expected to grow and, indeed, will likely decline for two more years and will remain stable or slow growing after that; and

5) construction and property value expansion will not save the city from dealing with staffing and pension problems and rising debt.

This leads us all to realize that an increase in taxes and fees will almost certainly lead to increases in following years unless the Commission bites the bullet this year and reduces operating and capital spending. A serious reorganization of city government to reduce staff positions should be affected during this budget cycle.

Time to Act! Letter to the Commissioners from the Coral Gables PAC

Self explanatory letter from the Coral Gables Political Actiion Committee to the Commissioners.

September 14, 2009

VIA EMAIL donslesnick@coralgables.com

Mayor Donald D. Slesnick, II
City of Coral Gables
City Hall
P.O. Box 141549
Coral Gables, Fl 33114-1549
VIA EMAIL rcabrera@coralgables.com

Commissioner Rafael Cabrera, Jr.
City of Coral Gables
City Hall
P.O. Box 141549
Coral Gables, Fl 33114-1549

VIA EMAIL wwithers@coralgables.com

Commissioner Wayne E. Withers
City of Coral Gables
City Hall
P.O. Box 141549
Coral Gables, Fl 33114-1549
VIA EMAIL manderson@coralgables.com

Commissioner Maria Anderson
City of Coral Gables
City Hall
P.O. Box 141549
Coral Gables, Fl 33114-1549

VIA EMAIL wkerdyk@coralgables.com

Vice Mayor/Commissioner William H. Kerdyk, Jr.
City of Coral Gables
City Hall
P.O. Box 141549
Coral Gables, Fl 33114-1549

VIA EMAIL psalerno@coralgables.com

Patrick G. Salerno, City Manager
City of Coral Gables
City Hall
405 Biltmore Way
Coral Gables, FL 33134
Re: Annual Budget

Dear Lady and Gentlemen:

I am aware that you intend to consider the 2009-2010 budget at the September 22, 2009 budget meeting. I also note that you have commission meetings set for the September 21st and 22nd.

You heard the statements and testimonies of the citizens of Coral Gables on September 8th.

You have, hopefully, by now, reviewed your own actuary’s report with respect to the pension contributions and its calculation. That report is for the past year. We are already aware that actuary report for the year that will end on September 30, 2009 will require a massive contribution to the pension plan both because of the high salaries being paid by the City and by the loss in investment during this past 12 months (probably over $40 Millon).

It should be made clear to you that raising the taxes and imposing fees upon residents this year and getting 5% contributions from certain employees for this year is solely a band aid for a fatal wound, which will become apparent next year. You must face that issue now.

You must act now to reduce salaries City wide. Merely discharging certain low level employees and reducing salaries by 5% to certain employees is not sufficient. There must be a severe reduction in salaries and there must be substantial contributions to the pension plan by employees. This must be instituted for this year and for next year and it must be done now.

Anything less is gross negligent on the part of the Commission.

We all know that the pension plan should have been abolished and/or severely modified 8 years ago. It must be done now. This will not solve the problems for this year or next year but it will address the continuing problem.

Yours very truly,

Vincent E. Damian, Jr.
VED/rrs
cc: Coral Gables PAC