Wednesday , 22 October 2014
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The community gets only what it’s willing to pay for

Property owners of Miami-Dade and our county government have for too many years been in conflict over what we expect in the form of services from our government and how much we are willing to pay in property taxes to cover these requested services.

How it works: We pay property taxes; additionally the county collects fees for services such as building permits and the money so collected, after paying for the administration of the government, pays for the community’s needs.

Certain expenses, such as capital improvements like the much needed rebuilding of our sewer system anticipated to cost billions over the next 10 years, would be financed through the sales of municipal bonds. The money borrowed is paid back, with interest, over a set period of years.

Municipal bonds are paid back in two ways — either through the revenues collected for services rendered such as airport landing fees or, as in the case of general obligation bonds, from the real estate taxes and fees collected each year by county government.

When the mayor and county commission establish a county budget they must take into consideration the funding of a “rainy-day fund,” officially known as reserves. Funds set aside each year in our budget, reserved to cover unexpected expenses that can and will arise after the county has approved a budget and set tax revenues to cover such expenses. Reserves are “not” used to cover normal anticipated expenses when the annual budget is approved.

Governments, their budgets and revenue collections, are rated by nationally recognized rating companies such as Moody’s bond rating system. How they rate the stability of our county government determines to a great extent how much we will pay in interest when we ask the investing public, banks, investment houses and well-to-do individuals to buy a bond issue such as the one we are anticipating to rebuild our countywide sewer system. The poorer the rating the higher the interest rate we must pay.

Elected officials, always mindful of the fact that they must please the majority of county voters to stay in office, must create a balance between how much they will ask the voters to pay in taxes and how they can provide demanded community services. Ask any elected official — this is not an easy task.

Moody’s did not like what they saw when they evaluated our 2014 proposed county government budget. They were especially concerned with the invasion of our reserve fund to cover known expenses such as the retention of our current library system. That is not the intended use of reserves.

When we already know what something is going to cost in the coming year we “must” include that expense in the budget. As a result of its findings Moody’s lowered their evaluation of our county’s credit outlook from “stable” to “negative.”

This is disastrous.When we borrow money our county government, you and I, will pay a higher interest rate. Higher meaning millions and millions of dollars more each year because we didn’t properly set our tax rate to cover anticipated expenses.

When our mayor sent his proposed 2013 budget to the county commission for approval he proposed a millage rate that would cover his recommended budget. Unfortunately, a number of vocal taxpayers went on radio talk shows and demanded that the mayor lower the millage rate. When he caved in to their demands he had to propose cuts in spending.

This brought out the defenders of our library system, fire rescue and animal care supporters demanding that services be returned to the budget. Taxpayers demanded increased spending but not increased taxes. How to resolve the dilemma? Raid the reserve account. This is the proposed no-no that brought Moody’s to reducing our county government’s credit rating.

Simply stated, we must pay for what we want from our county government. What are our choices? Fewer benefits or higher taxes — there is no other way in the long run. Our county millage rate is unrealistically low for what we demand in services. Want to keep taxes unrealistically low? Okay, cut back on services. Again, in the long run there is no other way.

We appreciate your opinions on this column whether in agreement or disagreement. Please send your comments to (fax number) 305-662-6980 or email to letters@communitynewspapers.com. The opinions expressed in this column are not necessarily those of this newspaper, its editors or publisher.

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