Miami officials project $21M deficit from coronavirus impact. City is discussing cuts

The economic crisis triggered by the COVID-19 pandemic is expected to create at least a $21 million shortfall in Miami’s municipal budget this year, administrators have warned. The gap is expected to force spending cuts that could affect public employees.

“To state that we are in an unprecedented financial situation and uncertain times seems both trite and understated,” Christopher Rose, Miami’s budget director, wrote in a memo sent to commissioners early Thursday. “Yet, the twin medical and financial crises facing the city of Miami and the whole world are nonetheless unique.”

Emergency measures that have brought much commercial activity to a halt have sent shock waves through the economy, sparking layoffs that have put nearly half a million Floridians on the street looking for work.

The ripples are also reaching the public sector, where shrinking sales tax collections reduce revenues for local governments. Coupled with fewer dollars being paid directly to the city, from permits to park programs to fines, the losses are mounting, forcing administrators to plan for spending cuts.

Rose updated commissioners on Miami’s difficult financial position during a virtual meeting Thursday in which elected officials discussed public affairs via video conference.

The anticipated deficit, representing about 2% of the city’s $1 billion budget, is slightly softened by healthcare costs that came in lower than anticipated before the crisis and the fact that Miami does not have tourist taxes, which have dipped significantly, in its operating budget.

Rose also said that by now most property owners have already paid their annual property taxes, the city’s largest revenue stream.

The budget director’s forecast assumes the city remains under existing stay-at-home and curfew orders for two months. Other municipalities have already started cutting. This week, Monroe County officials announced that up to 100 employees will be furloughed in an effort to save between $500,000 and $1.7 million. The city of Miami Beach has already laid off more than 200 part-time and temporary employees and placed others on furlough. In Broward County, the city of Oakland Park is furloughing most city employees other than first responders for one day every two weeks, amounting to a 10% pay cut.

Rose said that with nearly 75% of Miami’s general fund budget dedicated to personnel expenses, it is highly unlikely that city workers won’t feel the impact.

It’s too early to tell how cuts could be implemented, though everything is on the table, Rose said. That could include leaving open positions unfilled, reducing wages, imposing furloughs or laying people off. Rose and City Manager Art Noriega said discussions across all city departments are ongoing.

“There are many ways to do it, and we’re going to explore every option that’s out there,” Rose told commissioners.

Commissioner Joe Carollo said the financial picture is uglier than it might look right now. The city will seek federal reimbursement from unbudgeted spending in response to the spread of the novel coronavirus, from the purchase of testing kits to home delivery of meals to seniors — but those reimbursements take time.

“The problem is when we get reimbursed by the federal government,” Carollo said, pointing to the amount of time it took for the Federal Emergency Management Agency to reimburse Miami-Dade governments for dollars spent after Hurricane Irma in 2017. In May 2019, FEMA approved $119 million in reimbursements for Miami-Dade County’s cleanup costs.

Behind Miami City Hall, slow-moving repairs of the Dinner Key Marina illustrate the pace of the bureaucratic process. Damaged during Irma, the city was still trudging through paperwork in late 2019.

Noriega, the city manager, acknowledged the long-range impacts COVID-19 will have on the city’s finances, noting that Rose’s figures represented only a snapshot of the current fiscal year.

“The next two years will be impacted as well,” Noriega said.

Carollo predicted the need for cuts across all of the city’s departments, including commissioners’ offices, to support the city’s workforce.

“We’re going to have to clean those out in order to meet payroll,” he said.

Administrators are working on a mid-year budget adjustment plan to address the anticipated shortfall. It will require commission approval at a future meeting.

Herald staff writers Martin Vassolo and Aaron Leibowitz contributed to this report.