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.