City of Miami Going Broke
Officials have dipped $50 million into reserves. So far.
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The City of Miami has found itself in a $50 million budget hole, a similar scenario to when it found itself on the brink of bankruptcy in 1996.
Don’t look now but the City of Miami is going broke. Maybe even bankrupt broke.
Almost as bad as it was in 1996 when things were so bad that they almost abolished the city altogether. The situation was so dire back then that there was talk of dissolving the City of Miami into Miami-Dade County.
The issue was even brought before the voters where an overwhelming 24 percent of registered voters opted to keep the city alive.
But despite that close call – as well as having to hand over control of its finances to the State – Miami is finding itself in that same hole again.
According to a Miami Herald investigation, the City of Miami is $50 million in the hole after depleting its reserves to plug operating deficits in four of the last five years.
It is essentially robbing Peter to pay Paul.
This is exactly what happened in 1996 when the city shuffled millions of dollars between 800 accounts to disguise what turned out to be a $68 million deficit.
Even City Commissioner Tomas Regalado is concerned. Especially because he is the only commissioner who was in office back then.
And also because he is running for mayor.
“They keep saying ‘Everything is OK. Don't worry about it. We'll take care of it,’” Regalado told the Herald. “This is a rerun of what I heard about the budget [in 1996]. Then everything collapsed.”
The investigation revealed that skyrocketing pension spikes, rigid union contracts and multimillion dollar lawsuits are the cause of this $50 million deficit.
But the extent of the true deficit is not really known because city officials have yet to untangle a series of multimillion-dollar transfers that have occurred over the last few years.
“'I don't believe there was any fraudulent intent,” budget director Michael Boudreaux told the Herald. “But it's a mess and we're still unraveling it.”
The 1996 scandal led to the conviction of two top city officials on corruption charges.
Time will only tell if history will repeat itself.
Posted Tuesday, Jul 14, 2009 - 12:59 AM EST
