Rising Taxes Drive Out Residents
There are many things public officials probably shouldn't do during a severe recession, but no one seems to have told the leaders in Florida about them. One thing, for instance, would be giving a dozen top aides hefty raises while urging a rise in property taxes, as the mayor of Miami-Dade County recently did. Or jacking up already exorbitant hurricane-insurance premiums, as Florida's government-run property insurer just did. Or sending an army of highly paid lobbyists to push for a steep hike in electricity rates, as South Florida's public utility is doing.
And you wonder why the Sunshine State is experiencing its first net emigration of people since World War II. (See pictures: "Florida's Paradise Lost.")
A few years ago, journalists - citing the chasm between Miami's high cost of living and its low level of income - began predicting that South Florida and its perpetual population-growth machine would soon face the unthinkable: a falling head count. Now it's official. The region - Miami-Dade, Broward and Palm Beach counties - lost 27,400 residents between 2008 and 2009, while Florida as a whole lost 58,000. That's not exactly a mass exodus for a state of 18 million; but it's the first net outflow in 63 years for a state that considers itself the new California. "It's difficult for the working middle class to justify living here," Mike Jones, president of the Palm Beach County Economic Council, conceded to the South Florida Sun-Sentinel. "As much as they may love the sunshine, as you squeeze them out, they may find it in their best interests to move."
Jones gets it, but residents are starting to question whether the rest of their leaders do. Homeowners, especially in Broward and Miami-Dade, have been falling out of their flip-flops in recent days as they open their preliminary property-tax notices to find increases of 15% or more. That's sizable in a low-income region where the median property-tax bill is already some $3,000, and it's doubly frustrating given that property values have slid by some 25% during Florida's housing bust. Residents have barely digested the recent news that their hurricane-insurance premiums, which can top $5,000 a year for most South Florida homes, will rise 10% a year for the next three years (vital, officials claim, for handling claims from the next big storm). And their public utility, Florida Power & Light (FPL), is lobbying the state for a 30% rate hike (vital, FPL execs insist, for upgrading infrastructure). "It all seems out of control to people here at the time when they can least absorb it," says Dr. Jose Valladares, president of the conservative Fair Property Tax for All in Miami-Dade. (Read about Florida's property-tax revolt.)
Granted, most local governments often have to raise taxes when they're staring at fiscal craters like the $427 million shortfall in Miami-Dade's proposed $7.83 billion budget. But the less than sunny mood in Miami-Dade is made darker by the feeling among most residents that their fiscal jam is not just a result of falling revenue, but also years of profligate mismanagement. The final determination on their property taxes will be made soon by the Miami-Dade County Commission - a feckless, corruption-tainted body, many of whose members ran up hundreds of thousands of dollars in police overtime costs recently by using cops as their personal chauffeurs. (None of the commissioners face any sanctions for it.)
Residents were further outraged last week when the Miami Herald reported that Miami-Dade Mayor Carlos Alvarez, one of the few Miami politicians with a reputation for probity, had raised the salaries of his chief of staff and other top lieutenants this year as high as 15% while calling for a 5% pay cut for county workers. Alvarez spokesperson Victoria Mallette says the raises resulted from a 2007 referendum that gave Miami-Dade's mayor, until then a relatively weak post, broad new powers that in turn thrust heavier duties on his staff. She also notes that Alvarez actually cut his office's budget last year by almost 15% and that he helped build an $80 million reserve fund. Still, a Herald editorial called Alvarez's raises "irresponsible." Watchdogs like Valladares complain that Miami-Dade's bureaucracy, like so many local governments in this decade, got too bloated during the economic boom. The County Commission, for example, has a staff of more than 200 serving only 13 commissioners - and yet it still managed to screw up tasks like its oversight of Miami-Dade's scandal-plagued housing agency.
Many Americans find it hard to feel sorry for Valladares and all the other Floridians who pay no state income tax. Floridians are indeed guilty of an arrogant belief that living in "paradise" should be a birthright as cheap as gassing up an SUV. It was, until Florida's relentless and miserably planned growth spawned problems that the peninsula is struggling to handle, including skyrocketing property taxes and hurricane-insurance premiums. Governor Charlie Crist has tried in recent years to rein in those twin vampires, but together they can still exceed what folks in many other states pay for state income tax, local property tax and homeowner's insurance combined. And whereas high-cost states like New York, California and Illinois also have some of the country's highest median incomes, Florida's is in the bottom half.
In a state that worshipped condo-flippers as great entrepreneurs, it was all a house of cards waiting to be blown down when the housing bubble burst. Now that it has happened, those Floridians who haven't left the state had hoped their officials might change the way they do things - or at least not attend a Kentucky Derby party hosted by the same FPL honchos lobbying them for a rate hike, as a Florida Public Service Commission director has admitted to doing a few months ago. But if Miami and Florida officials can't get their acts together, they can probably expect even lower head counts in the years to come.