Miami to Impose Union Contracts to Help Cut Deficit, Mayor Regalado Says

Miami commissioners are likely to impose contracts on the city’s employee unions that will cut wages and pensions to ease a projected $96.5 million operating- budget gap next fiscal year, Mayor Tomas Regalado said.

“Probably in two weeks the commission will impose a contract whereby we will be reducing salaries and pensions, which is what’s responsible for the deficit,” the first-term mayor said in an interview on Bloomberg Television outside City Hall today.

Miami faces a pension payment exceeding $100 million in the fiscal year that begins Sept. 30, Regalado said, which will consume a fifth of its operating budget. Moody’s Investors Service and Standard & Poor’s both cut the city’s general- obligation bond ratings in the past two months, citing the deficit and pension costs.

City workers filed a lawsuit in 1979 known as Gates vs. City of Miami alleging that pension money was being used to pay for operations. A 1985 settlement required the city to make catch-up payments.

Police and general-employee contracts expire next month and the firefighters’ agreement ends in October 2011. Miami, Florida’s second-largest city after Jacksonville, was at an impasse with the unions over renegotiating the contracts, said Regalado, who was elected to the nonpartisan office in November 2009.

He didn’t say how much the forced contract would reduce wages and benefits. A message seeking additional comment from Pat Santangelo, the mayor’s media spokesman, wasn’t returned.

Rating Cut

Miami’s unlimited general-obligation bond rating was cut one level on July 1 by Moody’s to A1, its fifth-highest rank. Standard & Poor’s cut the city’s rating on June 16 by two levels to A-, its fourth-lowest investment grade.

The city will be deprived of $37 million of property taxes for this year’s $514 million operating budget because of declining real-estate values, Regalado said in the interview. It won’t increase levies to make up the difference, he said.

“If we raise taxes, more people will leave the city,” he said. “We’re trying to bring people in.”

Regalado said Miami’s downtown, where about one-third of 22,000 condominiums are vacant, is attracting renters to units being bought by investors from Latin America and Europe.

“We’re getting more renters than buyers, which helps the retailers but not the housing market,” he said. “At least we have property owners paying taxes, which is what we want.”

To contact the reporters on this story: Betty Liu in New York at bliu17@bloomberg.net; Jerry Hart in Miami at jhart@bloomberg.net.

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