GLOOM OVER MIAMI

The rules are different here is a slogan Miami has used to lure tourists. Unfortunately, city officials seem to think it applies to them as well. One of the mayor’s chief foes, a Cuban-American multimillionaire, once offered to settle their feud with a duel in Central America. A few years ago, when city bureaucrats squabbled over jobs, voodoo dolls with tiny nooses began appearing at City Hall. And Miami officials were caught buying stolen designer clothing for pennies on the dollar in a scandal known as “Hot Suits.”

Now Miami’s tradition of unruly official behavior is finally bringing painful consequences. After years of reckless financial management and a bribery scandal that produced federal charges against three top city officials, South Florida’s largest city stands on the edge of bankruptcy, with a $68 million budget shortfall and bonds that have been downgraded to junk. Last week Florida Governor Lawton Chiles declared Miami to be in a “fiscal emergency” and said he would name a financial control board to oversee its finances. This could be the city’s last chance to save itself; a grass-roots movement of Miami citizens has gained support for a proposal to dissolve Miami into surrounding Dade County and do away with city government.

Miami is the fourth poorest city in the U.S., mainly because anybody with any money has long since moved out of town. Miami Beach, a separate municipality, has most of the area’s prime beaches and luxury resorts, as well as the hip, Art Deco district of South Beach. Outside a thin necklace of fancy hotels, parks and wealthy enclaves lining the waterfront, Miami comprises largely the kind of inner-city neighborhoods that never make it into the tourist brochures. Middle-class flight–first of whites and now of Cubans–has made Miami increasingly a city of struggling, often illegal immigrants from Nicaragua, Guatemala and El Salvador. The downtown business district, which pays about 30% of Miami’s taxes, is losing patience. “Taxes in Miami are twice what they are in the county, police and sanitation services are poor, and increasingly businesses don’t see it as worth it,” says Gene Stearns, a Miami lawyer and community activist.

Even so, much of Miami’s fiscal mess is directly traceable to its uniquely fast-and-loose municipal traditions. A Miami Herald investigation found that in the midst of its current fiscal crisis, the city is still leasing out a good chunk of its $600 million in property to politically connected businesses at well below market rents. Among those who benefit: the Municipios Trust Fund Corp., a group of prominent Cubans who got a $1-a-year, 20-year lease on city-owned property to build a clubhouse and community center. “The politicians here just give land away to their friends,” says Pan Courtelis, a businessman and a leader of the petition drive to dissolve the city.

The city’s financial woes are made worse by recordkeeping so poor that even City Hall can’t tell where the red ink is leaking. Mayor Joe Carollo, who took office last July and inherited the current financial mess, concedes that the $68 million deficit figure is little more than a guess, given the state of the city’s books. “We know less about our checkbook than the average husband and wife do,” says Thomas Tew, a lawyer advising the city.

An FBI operation known as Operation Greenpalm helped unravel Miami’s fiscal madness. The sting uncovered the worst-kept local secret–that to do business with City Hall it is sometimes necessary to offer a “retainer,” which non-Miamians might call a bribe. “It was ‘Pay me as a consultant, and we’ll get you the contract,'” says Assistant U.S. Attorney Wilfredo Fernandez. The Greenpalm began when former Miami finance chief Manohar Surana, caught soliciting a bribe from Unisys in connection with its bid for a $20 million city contract, agreed to wear a microphone for the FBI. Surana caught then city commissioner Miller Dawkins on tape in a Denny’s parking lot taking a $25,000 bribe to help with the same Unisys contract. He allegedly taped former city manager Cesar Odio counting out $3,000 in bribe money. Unlike Dawkins, who has plead guilty, Odio is vigorously fighting the charges.

Some Miamians say it is time for the city, which is celebrating its 100th anniversary this year, to disappear gracefully. These activists claim to have gathered more than the 12,000 signatures needed to get a referendum on the ballot in the next few months that would break up the city into Dade County. “You don’t abolish the citizens, you don’t abolish the streets and sidewalks. You abolish a political system that isn’t working,” says Rafael Kapustin, a downtown businessman.

Critics of the referendum drive say it is little more than an effort by citizens of the last remaining wealthy Miami neighborhoods such as Coconut Grove to separate themselves from the city’s impoverished majority. But organizers claim they have support from all over town, including poor people suffering under the city’s high tax burden and inadequate services. “One widow told me she’s afraid the city will start asking her to empty her garbage cans into the trucks,” says Courtelis.

Mayor Carollo insists his constituents are not ready to give up on the city. He vows to “rebuild Miami from top to bottom” and says technical support from the state in areas like budgets and capital planning will make a real difference. But the first step is for the city to develop a workable plan for getting expenditures and revenues in balance, and that has not happened yet. What may save Miami in the short run is not so much Carollo’s drive for reform but old-fashioned ethnic politics. Latinos have a lock on Miami government; four of the five city commissioners, including the mayor, are Latinos. They could stay in power by pushing for a big turnout of the Latino majority on referendum day.

Miami has had more than its share of calamity in the past few years, including Hurricane Andrew, major riots in black neighborhoods and a nasty wave of tourist murders. But with the current fiscal crisis, the stakes are higher than ever. If Carollo can stave off bankruptcy and persuade voters to reject dissolution, he could be remembered as one of Miami’s most important mayors. If he fails, he may be remembered as its last.