How bad was was Miami's financial state when the city manager decided to make this move?
"the City of Miami has a population of 358,000"
"Miami's millage rate is 9.5995, very close to the 10 mill state constitutional cap."
"In order to balance annual budgets, the city officials resorted over time to a number of unsound financial practices."
"It gradually used up $17 million in its fund reserves, leaving no money for car, building, and other infrastructure maintenance. It used restricted funds for unrelated activities. For example, $32.5 million of a $42.5 million stormwater drainage fund, which had been built up by a voter-approved homeowner tax, was used to pay for garbage pickup and other budgetary shortfalls. A $75 million pension bond was issued in December 1995 and $25 million in bond proceeds was transferred to the previous year's budget."
"The unfunded liabilities and depleted reserve accounts were estimated to be in excess of $200 million."
$200 Million dollars in debt divided by 358,000 residents. How much debt is that per resident? That works out to $558.66 in debt per resident.
How does that compare to Polk City's current financial state?
"The town has grown from its low population level of 203 in 1960 to
reach the nearly 2,000 people today living within the city Limits." In the Polk County Commission meeting on September 15, 2010, the population was quoted to be 1,675.
Polk City's millage rate is 8.6547%, and recently was nearly approved at a proposed increase to 9.6547% very close to the 10 mill state constitutional cap.
In order to balance the 2010-2011 budget, $1,905,000 of the total $3,484,000 in estimated revenues will be coming from "Charges for Services". A bulk of those charges are from water and sewer fees. In City Water fees run approximately 200% higher than surrounding Polk County Utility customer rates. In City Sewer fees run between approximately 200% to nearly 400% higher than surrounding Polk County Utility customer rates. Out of City rates for these services get an additional 25% tacked on top of these fees.
As of September 20th, 2010, Polk City will be in default in excess of $358,000 in interest payments due to Polk County. Polk City is also delinquent by approximately $569,000 of impact fees collected from builders and used to pay other city operating expenses instead of sending this money to the county's portion of these fees.
The estimated current city debt is approximately $10.4 million.
In comparison, let's look at $10.4 Million dollars in debt divided by 1,675 residents. How much debt is that per resident? That works out to $6,208.96 in debt per resident. That is over 11 times worse than Miami's debt per resident.
In conclusion, the City of Miami had a viable plan for controlling its own destiny, but when the city commission failed to increase revenues by raising the garbage collection fee, the city faced an uncertain future. Polk City will be loosing approximately 1,165 water customers, and 887 sewer customers with the county taking back the Mount Olive sewer system effective September 20, 2011. This will result in a major decrease in the city's constant revenue flow. Plans are in the works to add additional city debt by purchasing the property of the Cardinal Hill Utility plant. Appraisals are being done as we speak. Currently, the city continues to add to the debt through lawsuits and has plans of expanding the sewer utilities to additional customers. Polk City officials still think they can work their way out of it???? What are they thinking??
Quotes and Miami statistics are taken from the article:
Local government financial emergency: the case of Miami, Florida.
By Thai, Khi V.
Publication: Government Finance Review
Date: Sunday, June 1 1997
Quotes and Polk City statistics are taken from Polk City Council meetings minutes, Polk County Commission Meeting Live Feeds and Polk City's Official Website.
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