GLOOM OVER MIAMI

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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.