Budget season in North Miami is never without drama.  This one promises to be just as entertaining.

This time last year, City Manager Larry Spring and his complicit Deputy Manager Arthur “Duke” Sorey duped the Mayor and Council into passing what turned out to be a fraudulent budget of epic proportions.

Upon painstaking review of the Preliminary Annual Budget FY 2019-20 posted on the city’s website last week, it appears they’re about to do it again.

But first, we direct your attention to the current state of the city’s finances.

According to its own transparency portal, as of Wednesday the City of North Miami was still operating under a nearly $7 million budget deficit for the current fiscal year.

This is the very same deficit that former Assistant Budget Director Terry Henley warned city officials about in the summer of 2018 … and then was promptly fired for doing so.

According to page 40 of Larry Spring’s Adopted Annual Budget FY 2018-19, the city’s General Fund Revenues were expected to be $69,528,188 by September 30, 2019.

Aside from being woefully short of that goal, before this fiscal year is over the city will still have to pay out more than $5,000,000 in employee payroll expenses alone – in addition to the usual and customary operating costs of running the government.

With only 40 days left in this fiscal year, it is statistically impossible for the city to bring in $16,524,222.26 to make up for the shortfall before the year end.

Imagine our surprise this morning when we checked the city’s website and discovered that overnight the city’s deficit had grown to more than $7.5 million.

Tomorrow it will probably be even worse.

At this rate, North Miami could very well end up closing this year with a deficit of between $8 to $10 million.

It’s patently obvious that Larry Spring grossly underestimated revenues for FY 2018-2019.

And it sure looks like he’s about to do it all over again.

According to the Preliminary Annual Budget FY 2019-20, Larry Spring is predicting that revenues will increase from this year to next year by $5,157,593.

If you’re wondering how the City Manager came up with this magical number, you’re not alone.

According to his letter to the elected officials (page 1), Larry Spring stated that he expects an additional $2.3 million in ad valorem (real property) taxes.

The City Manager also inexplicably explained that his projected budget includes a “one-time revenue of $2.6 million that would be allocated to funding the annual reserve and reduction of last fiscal year’s operating deficit.”

That would be the same deficit that Deputy City Manager Sorey denied existed when he testified under oath at a Personnel Board hearing after he fired Terry Henley for blowing the whistle about the deficit.

It also sounds a lot like the “one-time revenue of the Costco $2 million” that Deputy Duke liked so much he included it as revenue at least twice before – that we know of.

But we digress.

Let’s take a look at some of the revenue highlights (or lowlights, as it were) of Larry Spring’s Magical Mystery Budget.

In his proposed budget, Spring lists pages and pages of all his projected sources of revenue, including real estate and other taxes, license fees, program revenues, facility rental fees, permit fees, code violation fines, and the like.  Most of them appear to be legit but a few of them are really shady to say the least.

For instance, the City Manager is expecting to bring in $150,000 for code violation citations, which is an increase of $95,000 over the current fiscal year.  We wish him much luck collecting those fines.

Back by unpopular demand, “the Administration” wants to reinstate the controversial red-light camera policy to North Miami.

While the Florida Supreme Court ruled in 2018 that the use of red-light cameras were legal, many cities in South Florida decided against using them, including Hallandale Beach, Hollywood, Delray Beach and Boca Raton.

Hollywood Mayor Josh Levy told the Sun Sentinel, “I think enforcement can be done with police officers.”  We wholeheartedly agree.

Larry Spring, however, is all for bringing back red-light cameras since the $158 per ticket fines will help pad his proposed revenue by $1.1 million – even if it’s on the backs of those who are least able to pay.

The City Manager is also hoping to bring in $1,750,400 from the “Disposition of Fixed Assets.”

Which is not to be confused with the $2,640,404 he’ll get from the “Sale of General Capital Assets.”

We can’t help but wonder what those assets actually are, why they’re for sale, and whether or not the city will get a fair market value for them.

We’re betting not, but whatever.

Another mysterious item is entitled “Miscellaneous Revenues,” which Spring projects will be $640,608, and for which there is no explanation.

And finally, the City Manager listed a $2,500,000 “Special Revenue-CRA Contribution.”

This is really curious because Florida Statute 163.387 (7) (a) through (d) is very specific about how community redevelopment agencies (CRAs) must spend the tax increment financing (TIF) it receives from the county.

The law states:

(7) On the last day of the fiscal year of the community redevelopment agency, any money which remains in the trust fund after the payment of expenses pursuant to subsection (6) for such year shall be:

1. 1. Returned to each taxing authority which paid the increment in the proportion that the amount of the payment of such taxing authority bears to the total amount paid into the trust fund by all taxing authorities for that year;
   2. Used to reduce the amount of any indebtedness to which increment revenues are pledged;
   3. Deposited into an escrow account for the purpose of later reducing any indebtedness to which increment revenues are pledged; or
   4. Appropriated to a specific redevelopment project pursuant to an approved community redevelopment plan. The funds appropriated for such project may not be changed unless the project is amended, redesigned, or delayed, in which case the funds must be reappropriated pursuant to the next annual budget adopted by the board of commissioners of the community redevelopment agency.

Accordingly, Florida law expressly prohibits CRA money from being used to balance a city’s budget.

In fact, the article CRA Basics published by the Florida Redevelopment Association states, “The tax increment revenues can be used immediately, saved for a particular project, or can be bonded to maximize the funds available. Any funds received from a tax increment financing area must be used for specific redevelopment purposes within the targeted area, and not for general government purposes.”

In 2014, Broward County sued several municipalities for the return of mishandled CRA funds after the Inspector General conducted “a review of how some municipal CRAs in Broward have handled funds unspent at the end of each fiscal year,” according to the Florida Bulldog.  The IG’s main target became Hallandale Beach after a July, 2013 audit “identified $12.6 million in CRA funds co-mingled with city funds.”

We can only hope this is not the case with North Miami’s CRA.  But, it wouldn’t surprise us in the least.

In our next installment, we will review the expenditure side of Larry Spring’s preliminary FY 2020 budget.

We guarantee you’ll be amazed.

Stay tuned.

Stephanie