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June 5, 2018 Mayor's Memorandum, Part 3: Exhibit 2 NEMAC Budget Review

The mayor included this budget review as the second exhibit to his memorandum.
"Northeast Dade MAC Budget Review," drafted by PMG Associates, Inc., a company which provides economics, marketing and management services, provided a final, third party approval of the NEMAC budget necessary to bundle everything together before the Board of County Commissioners.
 The BCC voted in June of 2018 to pass a resolution filled with information compiled most recently in 2016, much of it older than that.

I greatly expected this report to finally provide the rigorous statistical methodology appropriate for the question at hand. After all everyone wants to know whether a city can run on the same level of taxes the residents currently pay to the county. Proponents argue our status as a donor community implies we could get improved services for the same level of taxation. Opponents point to the overwhelming majority of municipalities in the county who raised taxes to pay for maintaining their cities.
Given the general lack of accounting anywhere else in the resolution I prayed that here, in the words of unbiased, objective, third party, private professionals--HERE of all places--I could get some data crunching, but no! Not a bit. What an utter disappointment.



A better familiarity with bureaucratic jargon could have set off emergency alarms with the first sentence of this review. A little further they clarify that they will recommend changes.
One hopes an expensive firm would help a bunch of volunteers work out their numbers, but little of that actually happens because as they then state, this firm didn't use any numbers other than the ones used by the NEMAC to begin with.
Based on this I hope the MAC budget used REALLY good numbers.
As the fancy firm chose not to do any research of their own, the potential problems stem from the quality of the numbers used in creating the NEMAC budget. A few sentences prior we read:

Therefore moving forward keep in mind that they're using data  (but I really think they just mean numbers) provided by the county AND review of comparable municipalities. At no point do any numbers get explained other than in calling them reasonable compared to hand picked cities.
Miami-Dade County has over 30 municipalities. I couldn't name most of them if you asked me, and therefore I don't really know which are good comparisons. Here they don't explain them other than to call them "comparable."
The options with populations closer than these are Sunny Isles Beach (20,000, 1.8 sq mi), Pinecrest (18,223, 7.54 sq mi), and Opa-locka (15,219, 4.48 sq mi), but perhaps they based their comparison on multiple data points.
Oh nevermind, just population size.
They also put that little line in about recency of incorporation, but Miami Springs incorporated in 1926, Hialeah Gardens in 1948, Palmetto Bay in 2002, and Miami Lakes in 2000. Not only were two of them incorporated in the last century, they likewise were definitely not subject to county mitigation fees. Palmetto Bay and Miami Lakes paid those fees, as did any other municipality incorporated after 2000.

Returning to the budget review, based on this understanding I find it hard to take document seriously. PMG wasn't hired to determine the viability of the proposed budget in reality, just vaguely in comparison to the chosen cities.
With that in mind I don't think it's important to analyze this document in detail, but let me point a few things out.

The OMB document provides estimates the financial impact of incorporation on the Unincorporated Municipal Service Area budget based on fiscal year 2015-16. At this point I assume the document represents amounts based on actual population data kept by the Office of Management and Budget.
About half the question of financial viability depends very how much the residents spend now and how much service they get now. The budget review shows no indication they verified the numbers.
Therefore it seems we cannot likewise double check to make sure the various proposals make sense for our community.

Revenues

Do all tax related line items represent current level of taxes? Doesn't the state determine distribution of sales tax revenue? Aren't things like franchise fees negotiated between cities and businesses?

Franchise Fees

NEMAC estimates nearly $1M in franchise fees

OMB offered half that amount
Despite a 50% difference between the NEMAC number and OMB the private firm PMG found the NEMAC numbers "to be reasonable," but don't offer any explanation whatsoever. This kind of oversight represents potentially different outcomes in analysis.
You see the same issue in the next item.

Business Tax Use



Yet again PMGA does not state why they are approving NEMAC numbers that are multiples of the OMB numbers. If the OMB estimates the incorporation area only gets $28k in business use tax fees, how can the NEMAC quadruple that number without raising taxes?

Summary of Revenue

In summary PMG rubber stamped the NEMAC numbers based on this review. I again wonder what the original NEMAC budget and draft review said.

Expenditure

As with the revenue, NEMAC seems to have based their numbers for expenditures on best guesses. Since municipal government sets salaries and other expenses, the NEMAC had no choice but to estimate, however this review suggests they did not do a comparison here to other municipalities.

Police

About halfway through the review we get to the elephant in the room: a million dollar increase in cost provides the new city "minimal staffing for police patrol."

QNIP

Again PMG accepts a discrepancy in numbers without offering explanation.

Estimated Expenditures

As I mentioned previously this budget does not account for the mitigation fee demanded by the mayor. And given more recent information about a significantly more expensive cost of minimum police services, I just don't see how anyone can so easily agree with the feasibility conclusion of the new municipality.

Conclusion


Based on the fact that incorporation should increase services at lower cost, I find these words by PMG very sobering. And yet I found nothing critical in this review, just a rubber stamp:









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