Troubled Miami Asks State for Help in Paying Debts

Teetering toward bankruptcy and reeling from a bribery scandal, Miami has asked the governor to help regain control of city finances.

Miami celebrated its centennial this year with the resignations of its city finance manager and city manager amid a broad investigation of corruption. The remaining officials have just about run out of tricks.

“The city was in very poor fiscal health, and the internal administration needed major surgery,” said Merrett Stierheim, Dade County’s tourism chief brought in two months ago as interim city manager to assess the problems.

He found a $68-million shortfall and put together a 150-page recovery plan that recommended against a state bailout because it would harm the city’s image as a tourist destination.

But city officials now say the debts may run even deeper, leaving few alternatives but to seek state help.

“We truly don’t know where the money is,” said new City Manager Ed Marquez.

Miami’s bond ratings slid from “BBB” to a “B” rating last week, making it even more expensive to work the city out of debt through bond sales.

The city already pays for recurring expenses with nonrecurring dollars such as grants. Without major changes, it will be out of money by March.

Mayor Joe Carollo went to Florida Gov. Lawton Chiles last week to let him know the city was in a “financial emergency,” a first step toward getting state help. He likened Miami’s difficulties to New York’s request for state help during a financial crisis in the 1980s.

“The governor there put in an oversight board and look at New York--it came back stronger than ever,” Carollo said.

State officials weren’t making any major commitments. They agreed to send in technical advisors and may advance the city another $22 million in anticipated sales tax revenues, but not much more. The state sent a similar amount a few months ago and that is gone.

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“A major state bailout is unlikely,” Chiles’ spokeswoman April Herrle said. “The state is on a very tight budget.”

Florida has managed to resolve financial quagmires in small cities and counties, but has never encountered a problem of Miami’s magnitude, said Chiles’ budget director, Bob Bradley.

“It’s a little worse than we thought,” Bradley said.

Still, Carollo predicted that the state would save the day.

“Florida statutes say that once you reach certain criteria, the state shall take action,” he said. “There is no doubt in my mind that will happen.”