Miami Commission Makes Controversial Paycuts

CORAL GABLES, Fla. - In recent years, the city of Miami has been dealing with some tremendous financial woes. According to local news outlets, Miami finds itself in a $105 million budget hole due to the economic downturn and a sinking real estate market. Additionally, overly inflated pensions of city employees were causing the city's debt to mount.

In a move that has many firefighters and policemen picketing and forming unions, the city of Miami commission has decided Tuesday to implement huge pay cuts in the salary of service workers. Despite the threats from unions, litigation, and a possible showdown with the state, the Miami commission unanimously voted to cut salaries, cap off pensions, and tape down health insurance costs of the police force and firemen. The city claims that this move will save them about $80 million.

While this could potentially solve the city's financial state, one has to stop and ask at what cost. Many union members, such as the President of the Association of Firefighters, are claiming that the city is attempting to rewrite a union contract without properly adhering to the law. Quoted in The Miami Herald as saying, "The actions you are taking today will cause irreparable damage. Keep in mind you are only as good as we make you look," President Armando Aguilar argued that he would file a lawsuit on Wednesday on the grounds that the city's decision is unconstitutional. Consequently, firefighters and members of the police force are infuriated. In a city with mounting violence angering those who protect the residents may not be the best idea. Is the city risking safety in order to mend the financial mess?

Then there is the other side of the spectrum, city service workers were getting very hefty payouts. Granted, they protect the community and sometimes risk their lives in doing so, but there is no need to drown a city into debt with overinflated payouts and pensions. The Miami Herald reports that a 55 year old firefighter with 36 years of service who earned $135,000 on his last year of employment could see payout of up to $984,000 - in addition to $133,000 a year for life. A 52 year old police officer who worked 30 years could easily see an $832,000 payday with a yearly pension of $92,000. At that rate, pension costs would engulf 100 percent of the budget in coming years.

The commission decided that starting in October yearly pension payouts for anyone who is not yet vested will max out at $100,000. And an employee's pension payout, based on the highest earning year for police and two for firefighters, will adjust to a five year average. Additionally, spouses who collect pension payouts if their partner dies can only do so for 10 years.

While this may seem a little extreme, one has to keep in mind that a big cause of the city's debt was the overly exaggerated pension payouts. The commission's decision was also better than the alternative which was firing 4,300 people - a third of the city's work force. At the end of the day, a city has to function and that cannot be done with the workforce sucking the finances dry.

Sources:
The Miami Herald - Miami Commission likely to cut city salaries, pensions
The Miami Herald - Miami Commission makes painful pay cuts
The Miami Herald - Reality Hits Miami