The Mystery of Millage Rates

October 17, 2009 Leave a comment

City officials are repeatedly saying to us that the millage rate is “lower than two years ago”.  (And why didn’t they mention that the millage rate is much higher than last year–more misinformation and misdirecting the commentary!).  In fact, the millage rate is a simple residual after calculating the budget needs and other sources of revenue such as permit, fire and other fees.  What counts for the city are property assessments and new construction and the budget requirements, and then comes the millage rate to calculate the revenues to fill the gap with the other income source.

The city fathers do us no favor by having a lower or higher millage rate.  They do us a favor by better managing the city’s budget–that is the variable that counts.  Why in the world does the city want to keep spending merrily on capital projects during a crisis–this gives the impression that the commissioners and city manager think that the recession will be over quite soon.  Why can’t the city reduce the number of the senior managers now they have reduced the number of low level staff?

Now that the unemployment rates is 11 percent in Miami-Dade (this means really means 20 percent measuring discouraged workers and part-time employment at lower wages) and will certainly not be back to normal for several years, and is much higher than the national average of 9.8 percent.

Also, there is talk in financial circles of mortgage problems increasing among new groups of homeowners, not in the subprime category, but in conventional loan categories.  The does not portend a good future for the city’s property taxes.

Another kind of silly statement is that the Coral Gables taxes are only (say) 27 percent of your total tax bill.  Right, it is only a 27 percent, but two years ago it was a lower percentage of the tax bills.  Now Coral Gables is the fastest growing share of our property tax bills.

Therefore, mayor and commissioners, plan for the worst and hope for the best.  Let us see what happens in the coming months.

Filed under Coral Gables, Finance, Management

Where are the City’s Reserves and Capital Improvements?

September 26, 2009 1 Comment

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.

Filed under Coral Gables, Employees and Unions, Government, Management

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