The Cost of Living Largely 

Budget committee members worry that if the operating budget goes up another 51.2 percent in the next seven years Miami Beach will be left with two choices: either raise taxes or cut services.   

A lot of municipalities in Florida don’t do this: take a step back and look at how much the cost of servicing the public increases over the years.  They especially don’t do it during years when property values are going up and up and up.

The Miami Beach Budget Advisory Committee did, at the direction of the city manager and in accordance with the wishes of many members of the Miami Beach City Commission.  The committee has looked at the city’s operating budget over the last seven years. What did they find? That the cost of servicing the public has cumulatively increased during those seven years by 53.5 percent.  Including the contingency fund, it cost $99 million to run the city in the 1997/1998 budget year.  In the 2003/2004 year it is now costing $152 million.

What is pushing this cost up?  The very thing that makes services happen: city employees.  Salaries have gone up 51.2 percent from seven years ago.  Pension costs are up 40.5 percent.  Health insurance is up 170.9 percent.  Fringe benefits are up 55.3 percent.

Budget committee members worry that if the operating budget goes up another 51.2 percent in the next seven years Miami Beach will be left with two choices: either raise taxes or cut services.  The committee plans to look at all departments costing more than one million dollars.  Other than that it has no recommendation except to search for more data.

The seven-year “spreadsheet” also has illustrated something a growing number of Beach residents have been grumbling about over the years: that Miami Beach has become too top heavy.  The Office of the City Manager used to have a budget of $1.2 million in the 1997/1998 fiscal year.  By 2003/2004 it has cumulatively grown by 56.7 percent to more than $1.8 million.  Again: it’s the human cost.  Salaries total $1.2 million, which is 60.3 percent higher than seven years ago. Health insurance has gone up by 74.6 percent compared to the 97/98 budget.  And then there’s “other fringes.”  That has skyrocketed by 347.8 percent over the seven years.  In fairness it should also be pointed out that the Mayor and Commission Office budget increased by 79.8 percent from $647,431 seven years ago to $1.2 million.  This isn’t the result of any pay increase to elected officials, which still remains at a base of $9,999 a year for the mayor and $6,000 a year for commissioners.  It’s because the office now has a lot more aides and employees.

You can go down the line and point to other increases in other city departments.  The SunPost agrees with those who think that the city’s upper echelon administrative costs have become bloated and that the trend should be reversed. 

At the same time, the SunPost has to say to Miami Beach residents: you asked for it.  When they approved the full $92 million in general obligation bonds there came with that the cost of maintaining the new improvements and also to administratively oversee them.

And while Beach residents did not necessarily ask for it, the cost of protecting the residents—even part time ones—of the new residential projects now on line must also be paid for.

But for Miami Beach it is not too late.  The administration did have the foresight to begin an “exercise” studying how to make services more cost efficient, not only for the residents but for the municipal employees as well.  During last week’s Budget Advisory Committee meeting there were horror stories of employees facing the prospect of paying for their entire health insurance and not receiving any benefits.

Question is, will other municipalities follow suit?  Miami, North Bay Village, Sunny Isles Beach, Aventura—all are experiencing increases in property values. Life looks good.

But as members of the Beach Budget Advisory Committee observed, there is less and less real estate available and homestead exemption property can only be increased by three percent. 

Sooner or later, maybe in seven years, things could change.