Miami Beach Sets Maximum Millage Rate for FY 2019-2020

The Miami Beach City Commission this past week set a maximum millage rate of 6.0221 meaning residents will pay approximately $6 in property taxes for every $1,000 in property value in the next fiscal year. The total reflects an increase in debt service of 0.1333 mills on the General Obligation Bonds approved by voters. 
 
Millage rates in the City had been decreasing since 2011 but even with the increase, the FY 2020 rate is 33% less than 1999 and 20% less than 2007, according to the Administration.
 
A proposal by Commissioner Joy Malakoff supported by Commissioner Ricky Arriola to increase rates slightly more to set money aside to pay for regular repair and maintenance of City assets including streets, sidewalks, roofs, HVAC systems, etc. did not have support from any other Commissioners.
 
July 31 was the deadline for setting the maximum rates in order to mail public notices prior to the start of the fiscal year on October 1. Rates can decrease from the published number but they cannot increase.
 
Arriola made one last pitch to get his colleagues to support a further increase. “Nobody likes raising taxes,” he said. “I don’t like raising taxes but I also believe in doing the right thing for the City. One of the things that I feel strongly about is always making our city look at its very, very best. That’s why I was a strong supporter of the GO Bond. It allows us to reinvest in the City.”
 
The GO Bond, he noted, allows the City to “catch up” with the repair and replacement of sidewalks and streets but on an ongoing basis, there is no money to make necessary repairs.
 
A slight increase in taxes, he said, is in keeping with “the general policy of this admininistration to be conservative, to set aside money for rainy days and that’s essentially what this does.” The money would be set aside for the “Pay-go” fund, not general operating expenses, something that should give residents comfort, he said.
 
The proposal for a further 0.1529 increase would generate $5 million per year which would translate to a $30 annual impact on median home value, $76 on average home value.
 
“If we don’t do this then we just go down the road, kick it down the road for another administration a decade from now, who then all of a sudden have to dramatically raise millage rates or issue yet another GO Bond in order to catch up,” Arriola said. Voters approved the $439 million General Obligation Bond offering last fall.
 
City CFO John Woodruff said about 25% of the City’s sidewalks, those deemed “poor and marginal” are being replaced with GO bond money. That said, he indicated 35% of the City’s sidewalks are only “fair”. 
 
“That’s at this point what we would be worrying about going forward,” Woodruff said. “In the future, that “fair” [condition] is going to start becoming “marginal” or “poor” at some point.” 

If the City started setting aside the money needed on an annual basis to repair and replace sidewalks, it would cost $500,000 a year.  “If we don’t do this now, then that number would probably grow over time," he told Commissioners.
 
With regard to the City’s streets, he said, “Ideally you get in there and mill and pave the road before it gets to a certain point because that’s much cheaper than having to reconstruct it or rehab it.” 
 
“There really isn’t any budget here for repaving streets,” Woodruff said. Before the GO Bond funding, the amount needed for road repairs was about $6.8 million annually. Now, he said, the number is approximately $3 million.
 
Commissioner Mark Samuelian said, “For me, when the need is there, and we’ve gone down every other path, then at times raising taxes is right.” But, he said, he wasn’t ready to support an increase in the millage rate. 
 
Instead, he suggested a referral to the Commission’s Finance Committee and the Citizen Budget Advisory Committee to look at other options.
 
“I believe Commissioner Arriola is correct, we have a major problem,” Samuelian said. “We don’t have sufficient funds for ongoing capital replacement and renewal, so-called 'Pay-go'. It’s a huge gap. I think it was over $10 million of asks from the administration that we said no to, so where I think we have good consensus is there is a problem. Now the question is what do we do about it?”
 
He suggested four ideas to discuss further in Committee: Dedicating funding from new revenue streams such as the Convention Center naming rights and funds above the guaranteed dedicated funds from rent on the Convention Center; efficiencies in spending suggesting one way might be to cut Commission generated sponsorships of programs and events in half; using unspent end-of-year funds; and more multi-year financial planning.
 
“If we’ve gone down every path, kicked over every stone, and the answer is there’s no way out but raising millage rates, let’s have that discussion but that is not tonight,” Samuelian concluded. “We need to go to Finance first. We need to play those other opportunities out and I hope we can get pretty close by doing that.”
 
Mayor Dan Gelber who supported the GO Bond said, “That’s partly why I don’t think this is the moment” given the increase in the millage rate to reflect the first tranche of the bonds. 
 
“I think it would be a big lift to say to voters in addition to the GO Bond millage, we have this other millage,” Gelber said. “If there comes a point when we really can’t [handle the repairs] then I would engage the discussion honestly and directly. I just don’t think we’re at that point right now.”
 
“By not voting on this, we’re basically saying the condition of our streets and sidewalks are going to be subpar and we’re okay with that,” Arriola said.
 
“We’re going to kick the can down the road,” Malakoff added.
 
The vote for the millage rate as proposed was 5-2 with Arriola and Malakoff voting against.
 
Public hearings on the millage rate and budget will be in September.