Coronavirus pandemic expected to wipe out nearly $300M from Miami-Dade budget

Shutting down much of the economy to slow the spread of COVID-19 will sap nearly $300 million from Miami-Dade County’s budget over the next year, and that’s only the start of the pandemic’s damage to the tax dollars and fees that sustain local government.

Estimates released Tuesday by the county’s budget office show the extensive fiscal damage caused by emergency measures that emptied out hotels, shuttered shops, and generally ground economic activity to a fraction of what was underway at the start of the year.

Despite the widespread unemployment and the paralysis of much of the hospitality industry, the budget projections are counting on a relatively quick recovery.

The $278 million estimated revenue loss assumes a recovery starting mid-summer, cruise ships sailing again by the fall, and travel spending bouncing back at roughly the same pace it did after the 2001 terrorist attacks and the 2008 financial crisis.

Hotel taxes are projected to miss revenue forecasts by about 16% through 2021, and restaurants would be nearly recovered with only about a 5% miss from projections through the budget year that begins Oct. 1.

“It all depends on what happens with tourism,” said Jennifer Moon, the deputy mayor who oversees the county’s budget. “We went back and looked at right after 9/11 and right after the recession in ‘08. In both cases, things bounced back a lot faster than anyone anticipated. We’re trying to model after those two events.”

Industry forecasts are more pessimistic than Miami-Dade’s, with hotels forecast to see record drops in bookings and spending. Jan Freitag, senior vice president at the STR travel research firm, said fear held back travelers in 2001 and steep job losses depressed hotel spending in 2008 and 2009.

“Here, we face the combination,” he said of 2020. “We can safely say this is going to be more severe than 2001 and 2008.”

Even with predictions of a comeback, Miami-Dade’s first projections on the long-term budget impact of coronavirus show a broad sweep of damage to a spending plan that this year topped $8.9 billion.

The county’s transit agency expects to lose almost a third of its passenger revenue after suspending fares as a safety measure while keeping buses and Metrorail running. By the fall of 2021, the agency predicts a loss of $25 million in fares and parking fees, roughly 30% below prior projections. Another $20 million loss is predicted for the half-percent sales tax that funds transportation in Miami-Dade.

Miami-Dade’s animal shelter projects it will miss revenue targets by $2 million thanks in part to the current suspension of fees and services, including vaccinations.

County bridges that connect the mainland to South Beach and the closed Bill Baggs state park on Key Biscayne are expected to lose more than $5 million in toll revenue, a roughly 30% drop. Miami International Airport expects to lose $65 million in waived rent from tenants and operators.

When will cruises return to PortMiami?

The county zoo expects a nearly $7 million hit, county parks nearly $7 million in fees from programs and facilities, and PortMiami roughly $43 million from lost cruise revenue and reduced cargo fees during a global economic slowdown.

The county’s landfills expect $5 million less in tipping fees, and the Fire Department predicts it will earn $1 million less in ambulance charges.

The revenues in the projections account for just $2.1 billion, a 13 percent decline from original estimates, and Mayor Carlos Gimenez has months to go before the traditional unveiling of a budget proposal in July.

One factor that could rescue Miami-Dade from a true budget crisis is emergency federal aid. On Wednesday, the county’s budget office said it expected to receive about $225 million in rescue dollars from the federal CARES Act — a figure that almost matches the nearly $240 million the agency expected to raise this year from fares and sales tax.

The county’s port projections capture an astounding change for a facility that was having a record year before coronavirus spread throughout its vessels, killing some aboard and leaving passengers and crew stranded at sea and at PortMiami docks. Miami-Dade’s budget forecasts assume no cruise ships sail again until October.

“We’re prepared for a six-month delay,” said port director Juan Kuryla. “We’re keeping our fingers crossed it’s July 1” when ships return.

Forecasting the end of current business shutdowns is one big challenge in mapping out the budget plans needed this summer, when local governments set property tax rates for the following year.

When will Miami economy rebound from coronavirus?

In Miami, the city’s budget office assumes stay-at-home orders remain in effect through mid-May, as do curfews barring most travel after 10 p.m. Those conditions are expected to lead to at least a $21 million budget shortfall this year owing to sharp drops in the collection of sales tax, permit fees and fines. Property taxes, which form the backbone of the city’s general fund budget, are largely unaffected since most people have already paid those by now.

Miami hasn’t said what cost-saving measures it plans to close the gap in a budget where 75% of most general taxes cover payroll expenses. Some smaller cities in South Florida have already cut pay to cushion against lost revenue.

In Oakland Park, a city of about 45,000 people in Broward County, City Manager David Hebert decided earlier this month to have all city employees, except for first responders and solid waste truck drivers, refrain from working every other Friday. That represents a 10% pay cut.

Hebert said in an April 3 letter to employees that he was projecting a revenue shortfall of $5 million to $6 million for the current fiscal year due to the economic fallout from the pandemic.

“In an effort to get ahead of this challenge, I have made several difficult decisions,” Hebert wrote. “This was not an easy decision to make and I know for some this will be difficult to manage, but I am hopeful that by taking this action now, I may be able to avoid more drastic action later.”

In Miami-Dade, hope for a federal rescue

Moon said there are no immediate plans for payroll cuts in Miami-Dade beyond a freeze in hiring for most positions. There’s hope that Washington will provide more stimulus help to compensate for lost revenue, but Moon said Miami-Dade doesn’t yet know how much total aid to expect.

The county also is counting on Washington covering most of its emergency expenses tied to coronavirus, including $10 million so far on meals for home-bound seniors. Mayor Carlos Gimenez said in a memo Monday that the full tab tied to the virus is expected to hit $45 million.

For the current budget year ending Sept. 30, Moon said the county currently expects to get by on leftover cash in various department accounts without having to tap into Miami-Dade’s $56 million reserves.

Gimenez this week announced plans to start drafting a strategy to lift COVID-19 restrictions as the threat from the virus stabilizes. The budget forecast assumes the economy comes to back to life this summer, with spending hitting a bottom by June and then starting a slow rebound into the fall.

“We’re trying to be a little bit optimistic,” Moon said. “Once things are opened up, we’re thinking people will want to travel.”

Miami Herald staff writers Joey Flechas and Aaron Leibowitz contributed to this report.