What about Taxes–“Rollback” or “Rollforward”?

Local governments–Miami-Dade County and Coral Gables–are getting ready to raise taxes and fees.  There is no evidence so far that taxpayers are ready to resist these increases, although we are still early in the budget cycle.

Both cities are settling on the so-called “rollback” rate.

This term, rollback, is a misnomer in times of economic and real estate distress.  When property tax values are rising rapidly the rollback rate is a lower rate to keep tax income constant for the city.

But in times of declining real estate values the rollback rate is a “roll-forward” rate because your taxes will be higher to keep the tax revenues constant for the bureaucracy.

Hence your taxes rates will now rise to keep the bureaucracy going even though there is no inflation, but there are rising public security union contracts, spending on stadiums and other infrastructure and an abundance of employees and a reluctance of government to reduce expenditures, even though higher taxes will hurt a lot of people.

The Biltmore Hotel: Too Big To Fail?

I refer to the excellent note by Richard Namon on the the Biltmore Hotel matter and its financial connections, or lack thereof, to the budget of the City of Coral Gables.  The position of the City of Coral Gables vis-a-vis the the Biltmore Hotel (Seaway Biltmore, Inc.) appears to be a case of “Too Big to Fail”.  Our city authorities, City Manager and Commissioners alike, all seem to have a deep fear that the hotel will fail and drag down the whole city or darken the city’s image.

The Namon Report is sufficiently complex that it is worth re-reading but he raises several serious issues about the City’s oversight of the Biltmore Hotel management company that should be answered by the City.

• Did Seaway Biltmore use federal grant funds in lieu of insurance payments to repair the hotel, and did it actually perform the total repairs of about $2.0 million (federal grant monies) plus $8.2 million (insurance payments)? Did the City know how the funds were used or should the City have shared in the unused funds, or not?  Why didn’t the City supervise (sign off) on the repairs?
• Did the City overlook, or write off,  a deferred rent payment of $500,000 with no real evidence of promised infrastructure investments or even double counting the repair monies, federal grant and the rent credit?
• Why doesn’t the City have records on the various transactions, agreements and repairs at the hotel?

It would be a great time for the city authorities to clarify these questions now that we are in a budget cycle in which taxpayers will have to pick up the Biltmore’s rent due the City this year and in the coming years.

Coral Gables is the same as California

Propublica today refers to an article on pensions problem on a huge scale.

An editorial in The Wall Street Journal highlights a study that shows California’s taxpayers are potentially on the hook ($) for more than $500 billion in unfunded liabilities for the state’s biggest pension funds.

Actually, Coral Gables total pension liabilities are about the same on a per capita basis as California–so Coral Gables is a mini-California in its pension obligations.