The Biscayne Times

Aug 11th
System Fail PDF Print E-mail
Written by Mark Sell, BT Contributor   
May 2020

The economy has cratered, people are suffering, and state leadership is nowhere to be found

Jason Pizzo on the state of the State in a crisis: “I’m getting more pissed off. Clearly, we are not all in this together.”

OPizzo_1n Tuesday afternoon, April 21, District 38 state Sen. Jason Pizzo finally had enough.

For weeks the first-term Democrat and his chief of staff, Maggie Gerson -- the two had worked together as prosecutors years before -- had been getting it from all sides. Five weeks on, and hardly anyone had received their unemployment benefits. Families were going hungry across Pizzo’s Biscayne Corridor district, where half a million residents live in 15 diverse and vastly unequal municipalities, from Liberty City to uber rich Indian Creek.

In phone calls, e-mails, and Zoom sessions with Tallahassee, Pizzo was getting either a song-and-dance or silence. The music had stopped, a potential second Great Depression loomed on the immediate horizon, and an ominous hurricane season threatened. Unemployment numbers of 20-25 percent looked likely. He was losing patience.

“Maggie and I were maybe 100 cases through, with these incredibly desperate suffering stories,” he tells the BT. “We looked at each other at 3:00 in the afternoon and I said, ‘Pack a bag.’”

Within 30 minutes, they were in the car, driving the 485 miles to Tallahassee as dusk set in.

Pizzo_2By Friday, April 24, Pizzo and Gerson were still in Tallahassee, at a hotel where 33 staff members, 75 percent of the total, had been laid off. “Every day I’m here,” he says from his office, “I’m getting more pissed off. This system has not been put through a stress test. I’m staying until the unemployment operates smoothly and most of the claims have been paid. People have to be made somewhat whole from this. Everybody knows why we’re here.”

So how bad will this get, and how long will it last?

No one can say for sure, but preliminary signs are frightening.

“I’m looking out my window and seeing 14 cruise ships idle. That’s 20,000 jobs,” says Shutts & Bowen chairman Bowman Brown, who as a banking lawyer for more than 50 years finds this implosion unlike any other.

Nationally, the Federal Reserve of St. Louis projects 47 million out of work by June, or a 32 percent national unemployment rate, exceeding the 25 percent record in 1933, which remained devastatingly high until the 1941 war mobilization.

Pizzo_3Then again, it may not get that bad -- although short-term employment is easier to predict than the end of a disease with no cure in sight. At this writing, Florida has had 32,846 reported cases and 1171 deaths. About 60 percent of those are in South Florida, with 30 percent of the state’s population. People of color are twice as likely to catch the disease as non-Hispanic whites.

Florida unemployment spiked in March to 4.3 percent from 2.8 percent in January. Nationally, April projections were at 10-15 percent, and May forecasts run as high as 23 percent.

Miami-Dade stands to suffer acutely since its 82,000 small businesses employ 53 percent of the county’s workforce, with an economy heavily dependent on tourism, hospitality, and service industries. The county’s level of income inequality is as appalling as any in the nation. More than 73 percent of Miami-Dade’s 356,086 public school students qualify for free or reduced-cost lunches.

While preliminary evidence seemed to show a slight leveling off of new cases, the disease calls the shots, and experts have warned of an even harsher recurrence in the fall.

Still, on April 21, Gov. Ron DeSantis was making the rounds at Fox & Friends and Hannity, offering assurances that the worst was behind us -- for outbreaks, if not the economy.

FPizzo_4rom the middle of March through April 19, 1.8 million of the nation’s 26 million unemployment claims were filed in Florida. As of midnight April 25, three-quarters of 825,000 verified claims remained unpaid.

Little wonder, then, that on April 24, the state had to shut down its unemployment website for three days to retool. If you’re waiting for a check, you’ll need forbearance from your landlord, mortgage lender, utilities, insurer, and credit card issuer.

That rickety website is responsible for distributing both the state’s Scrooge-like unemployment payment of $275 a week and the $600 weekly bridge money approved by Congress to tide over the unemployed for four months. The website was launched in 2011 during the first year of Gov. Rick Scott’s administration.

In late March 2020, Scott denounced the $600-a-week bridge as an incentive for loafers.

“It’s an insult to say $600 a week disincentivizes,” says Pizzo, “and a further insult not to even be able to pay that $600.”

Pizzo_5Years of warnings about the site, which cost $78 million, came to roost in late March with the family of state Sen. Joe Gruters of Sarasota, the 42-year-old chairman of the Florida GOP and 2016 Florida Trump co-chair. Gruters’ mother tried to file and failed 100 times after she was fired from her cashier’s job.

“Someone should go to jail over that,” he tweeted. He blamed the consultant, Deloitte, rather than DeSantis. But finger-pointing is rampant. On April 26, it exploded in public as DeSantis tweeted about “a deficient system...built by a previous administration. Re-engineering that clunker has been a 24/7 operation.”

Scott’s team, in turn, had blamed his predecessor, Charlie Crist. Blaming the contractor would make sense for Gruters since intraparty squabbling is unbecoming in such a system fail. Trump is counting on Gruters and DeSantis to deliver this swing state for him.

On April 15, DeSantis stripped Ken Lawson, director of the state’s Department of Economic Opportunity, of responsibility for the unemployment system, and handed that authority to Department of Management Services Secretary Jonathan Satter, who managed to make some progress on the site before it shut down for emergency overhaul April 24.

SPizzo_6low payments are but one target of Pizzo’s focused wrath. “Here’s another thing,” he says. “We have 160 legislative offices around the state. Rather than throw good money after bad, we could have made them unemployment call centers, with existing staff. But what did they do? They threw $110 million to outside companies as call centers.”

Pizzo maintains that this is a time when people expect to get fast relief to feed themselves and their families.

“And look at the efficiency,” he says. “Take Disney. Disney furloughed 43,000 workers April 19. Couldn’t the state design it so Disney submitted the unemployment claims as a unit to an overloaded state system, rather than force 43,000 people to figure it out for themselves? That’s not politics. That’s just common sense.”

Then there are issues of party preference and turf wars in Trump’s America. On April 23, Frank Rollason, Miami-Dade’s director of emergency management, said federal authorities had “hijacked” a million N95 masks meant for the county and assigned them instead to the federal stockpile.

Pizzo says he intends to take a hard look at how resources are distributed. “I’ll be watching for partisanship,” he warns. “I fully expect the Republican-controlled legislature and executive [branch] to favor their districts with appropriations in normal circumstances. But all our districts must now be treated equally. So if they’re getting responses on 50 percent of claims and I’m getting them on five percent, we’ll have a problem, and everyone will hear about it.”

Pizzo is also struck by what he considers misplaced priorities in Tallahassee.

“Every year maybe 2000 bills get filed,” he says. “Maybe 200 make it to the end. Very few this year have actually made it out of drafting to the governor’s desk. But one did -- on April 8, right in the middle of this pandemic. That was the tax package, House Bill 7097. It returned $543 million to Florida’s top corporate donors.

“What’s with the rush with the bill to return $543 million to companies furloughing people with no conditions?” he continues. “The governor wouldn’t have been wrong to say, ‘Give us 90 days to see if we have gotten through the worst.’

“It’s too soon to do a victory lap on Fox and Friends,” says Pizzo. “Suppose you’re a middle-class single mom making $52,000 a year with two kids and one with asthma. How the hell are you going to pay your $1500 insurance premium under Cobra without a dollar coming in? Clearly, we are not all in this together.

“Think of a bulls-eye,” he explains. “The shop owner is in the middle and the landlord is right outside, but still in the bull’s-eye. Then right outside that is the bank. And beyond that is the federal government. When the smoke clears, it’s the shop owner in the middle of the bull’s-eye who goes bankrupt.

“Or suppose you plan weddings. Sure, maybe it’s tough to own a giant signature hotel with debt overhang, but I’d hate to be the party planner. And those are gig workers who don’t get state unemployment. There are no workouts for them.

“Look at how few entities were funded by the State of Florida, and how few truly small businesses got anything from the federal PPP program. It smells of favoritism and cronyism.... These loans went to the bigger companies with established bank relationships. It’s like my godfather’s saying: ‘If you owe the bank $1 million, you’ve got a problem. If you owe the bank $100 million, the bank’s got a problem.’”

In Orlando, economist Stan Geberer, senior managing consultant at PFM Group Consulting, has been tracking the state and local economy for 40 years.

“We’re looking at somewhere around 80 to 100 percent of tourist development tax, and 60 to 90 percent of sales tax going away over the period,” he says. “When the lockdown ends, we’re looking at a slowball return. We’ll need all kinds of testing before industry gets going. It will be very, very weak through the end of the year. For the next 18 months, things are going to be choppy. That’s if we’re lucky. If we’re not lucky, it’s three years. Every toll road, every government is on credit watch. They’ve got an average of two to six months of reserves.”

The big question now, and one Pizzo is trying to answer, is how much money remains in the state’s coffers. The budget submitted March 18 counts for little in this new world, and normally the state would call a special session in June to get a revised budget to the governor in July.

The GOP leadership and state should have a better idea, Pizzo says, around mid-June.

But Ron Book, the state’s most powerful lobbyist, figures the state might be more likely to punt. In a BT interview in late April, Book speculated that House Speaker José Oliva of Miami Lakes and Senate President Bill Galvano of Bradenton would likely try to wait until after the November election rather than call a special session in June.

On April 7, Book elicited gasps from the North Miami City Council when he said that the statewide retail auto sales and repair business fell 70 percent in March. That industry is responsible for 20 percent of the state’s total sales tax.

Book believes the state can survive through the year, although revenue sharing may be impossible. “We’re not going to go bankrupt or belly up,” he says. “It looks as if we’ll end up with perhaps $5 billion to $8 billion in federal money at the end of the day. It isn’t going to be close to making us whole, but it should get us through. Cities and counties -- they’re going to survive for now. You’re going to be underwater because you might defer $10 million in pension liability, and rob Peter to pay Paul, but only to get through a short-term problem.”

Much as states and regions are doing nationally, local cities are forming their own alignments to seek common solutions.

“They’re all meeting. They’re all talking. They’re all working closer together,” says Richard Kuper, executive director of the Miami-Dade League of Cities. “Golden Beach, Sunny Isles, Bal Harbour, Surfside, and Miami Beach share a beach. If only Surfside is open, how are you going to be able to work with that? When this opening happens, there are going to be a lot of common rules to be followed by people making them. I’m on the daily calls with county Mayor Gimenez. He always has two or three medical people with him.”

Aventura is affluent and only 25 years old as a city, with reserves equal to about three-fourths the operating budget, no legacy expenses, and nearly all employees contracted except for unionized police. Mayor Enid Weisman is trying to balance her desire to reopen with health and safety.

“People who’ve never been on the government dole in their life are not getting unemployment benefits, and I’m very, very worried about it,” she tells the BT. “If you can open a Costco, can you open a Bed, Bath & Beyond? People can adjust to dog groomers by appointment only. But we’ve had a mall expansion and redevelopment in the last two years, with Park Square opening. We have a dozen restaurants one to nine months old that haven’t had time to build a reputation.”

Indeed, the definition of essential service is malleable. DeSantis designated Vince McMahon’s World Wrestling Entertainment an essential Florida business. McMahon is a Trump friend and donor, and his wife, Linda McMahon, headed the Small Business Administration and in 2019 left to lead the pro-Trump SuperPAC America First Action, to which the McMahons pledged $18.5 million.

Up in Hallandale Beach, Gulfstream Park is racing horses, but without spectators, and has denied threatening the city with legal action for compelling a closing.

North Miami Beach city manager Esmond Scott says the city has maintained and increased the reserves it strengthened during a 2015-18 building boom, but it’s in a hiring freeze for now.

North Miami’s finances are murky. It has been operating at $6 million deficit spending, and acting city manager Arthur “Duke” Sorey III didn’t respond to the BT’s queries. City Councilwoman Carol Keys did say she is deeply concerned about the city’s upcoming budget.

In Miami Shores and surrounding areas along NE 2nd Avenue, the pandemic threatens new mom-and-pop businesses. Veteran Councilman Stephen Loffredo has called for a city loan program.

Miami Shores Mayor Crystal Wagar is sympathetic but not ready to commit until more facts are in. “The biggest challenge is trying to figure out how to help the business community,” she says. “Downtown Miami Shores was on the precipice of greatness two months ago, and now we have to start all over. It’s heartbreaking. We face landlords, business owners, and unknown challenges. You want to be as helpful as possible while being responsible.”

On the ground, businesses are getting creative. The Citadel at 8300 NE 2nd Ave. in Little River and Pebble & Vine on 98th Street are offering indoor plants to go. Ebb + Flow at 8200 NE 2nd Ave. and the new Sins Gastrobar at 98th Street are distributing cocktail mixes. Amaranthine Mediterranean Bistro and Côté Gourmet are offering takeout, as is Proper Sausages. Flight Wine Lounge and Shop is delivering sandwiches and “breakfast in bed.” KC Healthy Kitchen, at 119th and Biscayne, is catering for North Miami’s workers and first responders, and Ivan’s Cookhouse at Biscayne Commons is doing the same in North Miami Beach.

Says Greater Miami Shores Chamber of Commerce executive director Carla Peters: “Businesses all over our area are getting creative. We’re rethinking how to apply for relief and learning what’s available, while supporting the businesses. We begged them to come to Miami Shores, and now we need to support them just when they most need it.”

Alexandra Caba Palomino and Raul Parra Orizondo are adjusting at Mima Market at 98th Street and NE 2nd Avenue, not just for pickup and delivery, but as an online clearinghouse for 100 local vendors around the community, with local produce, homemade crafts, and gifts.

The struggle of quarantine extends into loneliness and scarcity that can drive people to crimes of despair.

North Miami Police Chief Larry Juriga says that so far the streets are calm and citizens cooperative and helpful. “Most people are complying with orders and recognizing the severity,” he tells the BT, “but once in a while we find someone who wants to walk into a business without a mask, and businesses call us immediately. That’s where calmness and education come in.

“We’ve seen more domestic violence, and it’s similar to hurricanes,” he says. “But in a hurricane, everybody’s on top of each other for several days, and it’s been several weeks now. You flip a switch after a hurricane, but this isn’t going to change overnight.”

Lobbyist Ron Book is also chairman of the Miami-Dade County Homeless Trust, and on April 18 his confidence cracked.

“I really thought until the last couple days we had done all the right things and really had an umbrella,” he says. “Then on Saturday, I had my first death in a shelter, and it really has shaken me personally. A 26-year-old guy. Now every day, every other day, around 9:00 or 10:00 o’clock, I get a call with bad news. Last night a family of five tested positive, with the mom in Jackson [Memorial] and two kids under age three at Holtz Children’s. All symptomatic, in bad shape.

“I don’t know.... I’m in my 60s. I used to be one of those guys who thought I’d live to a hundred and fifty. Not anymore.”


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