HIALEAH (CBS4)- Hialeah’s mayor announced on Friday a surprise $7.8 million shortfall this fiscal year and said he would seek a line of credit to bolster city finances.

The unexpected gap comes less than two months after previous Mayor Julio Robaina resigned to run for Miami-Dade County mayor. During his unsuccessful bid, Robaina frequently touted his financial success in managing Hialeah and pointed to the county’s second-largest city as a model for Miami-Dade, CBS4 news partner The Miami Herald reported.

His successor, Carlos Hernandez, said Friday the city would fund the current deficit by dipping into reserves. By state law, the city is required to have a balanced budget when the fiscal year ends on Sept. 30. Hernandez couldn’t say how much Hialeah has in reserves.

Hialeah’s general fund — which saw its balance shrink 40 percent to $20 million from 2006 to 2010 — has a certain amount allocated as reserved funds. There is no separate rainy day account.

Hernandez said for next fiscal year, which begins Oct. 1, the city faces a $13.7 million shortfall. But he vowed not to raise taxes. That shortfall would be about 10 percent of the city’s $122 million general operating budget, and Hernandez is already asking department heads to trim their costs by 10 percent.

The line of credit — likely at least $4 million — will be used to repay the city for money it has to front for capital projects ultimately funded through federal and local grants, Hernandez said. In addition, Hernandez said he will seek to refinance a bond issued in 1999 to obtain an additional $2 million. He said the line of credit would not pay for everyday expenses such as payroll.

“I want my general fund to be stronger,” Hernandez said. “It’s an administrative decision where I feel comfortable with that money in my account.”

Like many other cities in Miami-Dade, Hialeah is facing its fourth straight year of declining property values, the Miami Herald reported.  Property tax revenue funds the bulk of its budget. Why the gap is coming to light now — after the heated race for county mayor just ended — is unclear.

Hernandez, who is running to keep his job as strong mayor in November, said his measures were not “political.” He attributed the bulk of the shortfall — $5 million — to firefighter union concessions that never materialized.

“If the money came in, we would have had a balanced budget,” he told The Miami Herald.

But in the budget message for this fiscal year, Robaina wrote “no estimate of the concessions that will be provided by Firefighters Union can be placed into this budget” because of ongoing negotiations. Robaina couldn’t be reached Friday for comment.

The mayor’s move to seek credit comes with less than three months left in the fiscal year and as budget season ramps up. Like other municipalities in Miami-Dade, Hialeah will not see any major revenue relief until December when property taxes make their way to the city’s dwindling coffers.

(© 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)


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