BRADENTON, Fla. - Miami-Dade County's repeal of employee healthcare contributions is a credit negative for Florida's largest county, Moody's Investors Service said Feb. 13.
County commissioners voted to eliminate a 5% contribution by employees toward their healthcare costs on Feb. 4, overriding a veto of the cut by Mayor Carlos Gimenez.
"The vote is credit negative because the already financially challenged county will have to cut an additional $42 million, or 1%, from fiscal 2014 budget," said Moody's analyst John Incorvaia. "The $42 million hole compounds an expected $23.4 million deficit for fiscal 2013 caused by shortfalls in property tax collections and transfers to bolster the cash-strapped fire-rescue fund."
The projected fiscal 2013 deficit will likely leave the county's contingency fund at $42.3 million, or a narrow 2.3% of revenues, he said.
In fiscal 2010 and 2011, the county required all public employees to pay a 5% healthcare contribution, including employees associated with the Public Health Trust, which operates the county-owned Jackson Hospital and health system.
Before 2010, employees did not contribute to healthcare. In fiscal 2012, the county raised the contribution to 10% for non-bargaining employees and 9% for union members. In fiscal 2013, the country returned to the 5% level.
The employee contributions were implemented along with millions of dollars in other employee concessions during tight budget times, Moody's said, noting that the contributions were originally planned to sunset in January 2014.
"However, due to continued budgetary stress, the mayor elected to continue requiring employees to contribute a percentage of pay towards healthcare through fiscal 2014," Incorvaia said. "After two unsuccessful votes, the commission delivered a 9-4 supermajority to override the mayor's veto."
In November, before the commission rolled back the healthcare contribution, Moody's assigned a negative outlook to Miami-Dade's general obligation and non-ad valorem debt due to the county's ongoing budget pressures.
Moody's assigns Aa2 ratings to the county's $1.5 billion of outstanding GO bonds and Aa3 ratings to $1.5 billion of non-ad valorem bonds. Fitch Ratings and Standard & Poor's assign AA ratings to the GOs, with stable outlooks.
