Just to Be Clear About Our Problematic Finances

 
Just a few years ago, some of us, including me, expressed dire concern about the state of the Village's finances.  The sky was falling, we shouted, and something had to be done.  The issue in play then was annexation, which those of us who were shrieking about Village finances proposed might even be life-saving.

But then, some of us crepe-hangers and gnashers of teeth and tearers of clothes seemed to be spending money like there was no tomorrow.  We decided to renovate the log cabin and build a new Village Hall, and we spared no expense.  Some said we invented completely frivolous expenditures.

How can this be, some wondered?  What gives?  Are we in trouble, really, or are we awash in dough, and misled by some dishonest and manipulative Village residents?

Are we in deep fiscal trouble?  Yes, we are.  We always have been.  We can rearrange the deck chairs here, but we can't prevent the ship from sinking, which it gradually is.  No matter whether we repair the sun shade over the tot lot, or we don't, the streets will continue to erode.  And there's nothing we can do about it.

All streets erode over time, and the only question is whether they get maintained and repaired.  One of the things that erodes streets is prolonged exposure to water.  If an area, like let's say Biscayne Park, has poor drainage, the streets are exposed to immersion in water, and water pressure from below, and this weakens the asphalt/macadam.  Our problem, again, is that we have no way of repairing our streets.  Some residents were even heard to complain recently that the North Miami side of 121st St was resurfaced in the past couple of months, and it makes our side look bad.  Some wondered why North Miami didn't do us the courteous gesture of slapping some new asphalt on our side, too.  Because it costs money to recoat streets, and North Miami has no reason to spend their money to recoat our streets.  And we can't afford to do it ourselves.

That's only the surface treatment.  More destructive are the erosion by water and the invasion from tree roots.  We have no way of attending to these problems.  We also can't afford to improve our medians (at least not from Village coffers), increase and improve lighting, or any of a number of other municipal responsibilities.

Some Village residents who don't want us to spend the money-- or to try to find it to spend-- argue that we don't really have a water/drainage problem.  Considering the pooling that happens after heavy rains, and the obvious deterioration of the streets, this claim is like the knight in Monty Python's "Holy Grail," who suffers amputation in battle, and calls it only a "flesh wound."

So if we have such fiscal trouble, how is it we undertake a major project like the log cabin and the new Village Hall?  Well, the State spotted us over half the money.  And we borrowed about half of the rest.  With those kinds of underwriting and deferred payment assists, we give the appearance of being fiscally competent.  We're not.  What we can do is drain our reserve, and then commit to a manageable $35K per year payment on the loan.

I have very recently had two relevant conversations with our neighbors.  One was about a reserve we had in about 2007 or 2008.  The neighbor recalled that reserve as having been about $500K.  (It was actually about $800K.)  Where, the neighbor wondered, did the money go?  It "went" to two places.  One was that we spent it on the cost of existing as a municipality.  About 80% of our homes are homesteaded, and the ad valorem revenue on homesteaded properties cannot increase by more than 3% per year.  Expenses are in no way limited like that, and they can, and do, increase as much as they want.  We just can't keep up with them.

The other place the money went was that at the end of 2007, and through 2008 and 2009, the economy crashed.  With it went property values.  And when property values decrease, and the assessments on them decrease, the ad valorem property tax decreases.  We took a very big ad valorem hit in those years.

The other conversation I had was about the money we don't have to pay for clean-up after hurricanes.  The resident was concerned what we would do, since we don't seem to be able to afford the clean-up.  The fact is, we don't lay out all the money for hurricane clean-up.  The contractors put us on account, and we pay it over time.  And FEMA reimburses us most of it.  But it was a good enough illustration of a problem.  And the last time we paid for hurricane clean-up, in '05, it cost us about $1.2M.  No normal BP reserve could ever cover that.

We cannot afford our existence.  We pretend we can, or that limitations are due to one mistake, or element of irresponsibility, or another, but we really can't, and they're really not.  We act like the important decisions are whether we should resurface the tot lot, or buy new police cruisers, or pay for an assistant to the Manager, but this is very small stuff.  And we scrutinize the budget and what supports it, and argue about whether we should charge ourselves 9.7 mills, or 9.3 mills, or 10 mills.  But it doesn't matter.  We lose, regardless of which millage we choose.  Millage won't support us here.  We desperately needed annexation, but we screwed up badly, and we didn't get it.  Every time a long homesteaded house sells, and it gets upgraded (at least in terms of the ad valorem tax), it helps us, for a while.  We get a nice infusion for the first few years, but then that property gets the protection that is outstripped by reality.

We are, in no uncertain terms, in trouble.  We can afford the small stuff, and with enough propping up, we can even afford a specific big project, but we cannot afford our real lives.