UPDATE 3-Miami weighs 'financial urgency' to cut staff costs

Fri Jul 27, 2012 6:49am IST

MIAMI, July 26 (Reuters) - Miami officials pushing for $40 million in union concessions weighed on Thursday declaring "financial urgency," an action that would allow the Florida city to unilaterally alter employee contracts, according to a media report.

The Miami Herald website on Thursday quoted Miami Mayor Tomas Regalado as saying the declaration would be issued on Thursday by City Manager Johnny Martinez because the savings were needed to balance the city's $485 million operating budget for the next fiscal year.

"The unions are not cooperating with the process," Regalado told the Herald. "We need to have a balanced budget."

Regalado and Martinez did not respond to inquiries seeking comment on the report, though Regalado defended the proposed cuts at a meeting of the Miami City Commission.

Other city officials declined to comment on the timing of the expected declaration, which had been issued by late on Thursday.

Regalado, who has used the Florida financial urgency law three times to impose staff spending cuts since 2009, said austerity was needed, would encourage outside investment and migration, and leave the city of 410,000 well placed.

"The base of the future will be better," Regalado said.

Miami officials are pushing for the concessions from the city's four government workers' unions as part of a plan to plug a $60 million gap. Overtime limits for firefighters and higher health insurance contributions are among the city's proposals.

Part of the budget shortfall is caused by the scheduled expiration of temporary concessions made last year by police and other unions. Almost 80 percent of Miami's budget goes to compensate city workers.

STUNG BY HOUSING COLLAPSE

Labor leaders told city commissioners on Thursday that Miami's unions had made substantial give-backs to help ease financial pressure on the city. Firefighters said their pay has been reduced by 35 percent in recent years, when the city declared financial urgency three times.

Miami was losing experienced workers and having difficulties recruiting new ones because of the cutbacks, union leaders said. They said the city should consider increasing property taxes that Regalado has proposed reducing.

Stung especially hard by the U.S. housing collapse, Miami used Florida's financial urgency law in May 2010 to change labor terms that saved the city $80 million. Other Florida cities, like nearby Hollywood, have also used the law to force pay cuts on government workers.

On Wednesday, Moody's Investors Service put $669 million of Miami's debt on review for possible ratings cuts after federal regulators determined that city officials had misled bond investors about its finances.

Other leading ratings groups, Standard & Poor's and Fitch, said their analysts were closely watching the inquiry by the U.S. Securities and Exchange Commission but would take no immediate ratings actions on Miami's debt.

"While Fitch is concerned about the costs and potential operational disruptions associated with the ongoing investigation, recent financial results indicate some modest improvement in the city's overall financial position," Fitch said in written statement.

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