Boudreaux, who gained his administrative post in 2005 and earned a salary of just under $200,000, was called to City Manager Carlos Migoya's office first thing Monday morning and told the news.

The manager has also put a halt to capital projects using general fund money and ordered Miami to stop procurement for three months as the financially strapped city scrambles to steady its financial grip.

Migoya, brought in by Mayor Tomas Regalado two weeks ago to shore up the city's finances and deal with a widening federal probe, said he dismissed Boudreaux after studying a series of money transfers used to balance the city's books in 2007 and 2008.

Looking to balance the budget in 2007 and 2008, Boudreaux said he had found $26.4 million in unused general fund money in capital accounts from long dead or finished projects. He then shifted that money back to the general fund. Yet Migoya said Boudreaux's actions effectively halted projects that remained ongoing. Plus, he said, "the people in Capital Improvements were not told to stop spending money against it."

Boudreaux's attorney, Michael Pizzi, called his client "a convenient scapegoat" who won't rest until his name is cleared.

"They're trying to make Mike a scapegoat for decisions that were not his, decisions that were made by other people who were fully briefed, including elected officials," said Pizzi, who said he is weighing legal action.

Chief Financial Officer Larry Spring, Finance Director Diana Gomez and former City Manager Pete Hernandez were aware of the moves and signed off on them. Commissioners eventually voted to approve the $26.4 million in transfers, yet some say they were in the dark over the true source of some of that money.

In e-mails last summer, Gomez raised questions about those transfers - concerns detailed in a Miami Herald investigation exploring what critics call a financial shell game. A critical city audit questioned other transfers to prop up the budget, and now the U.S. Securities and Exchange Commission is investigating whether bond holders were misled about Miami's true financial picture. Boudreaux, Spring and Hernandez - who resigned last month - have been subpoenaed by the SEC.

Central to the probe is one $8.2 million transfer of highly restrictive impact fees used to offset development that can only be used on parks, police, fire and sidewalk improvements. Miami and state law prohibit the use of impact fees to balance the city's checkbook.

Commissioners who ultimately approved transferring the money said they were aware they were moving money from capital projects, but were never told it involved impact fees.

Migoya, a career banker on the job for two weeks, said he will take $8.2 million from the city's dwindling reserve fund to prop up the impact fee account.

The use of the reserve money comes at a difficult time for Miami leaders, who fear that rainy day account could be nearly drained to help plug budget holes. Regalado and Migoya are so concerned they've discussed selling city-owned parking garages, or possibly downtown's Knight Center, to keep the reserve at its mandated balance of about $85 million.

Migoya must also deal with worker-friendly union contracts that have driven the city's pension payout to over $100 million, roughly one-fifth of its entire operating budget. Migoya hinted Monday, however, that financial numbers due to be released in a few weeks may not be as dire as initially feared.

"It looks at this point like we may have a little surprise," said Migoya.

Boudreaux will receive no severance, but qualifies for a pension and other benefits. Spring, the chief financial officer, will serve as budget director until Migoya names a permanent replacement. Migoya said he has faith in Spring.

Mayor Regalado called Boudreaux's dismissal "an important step, and the right message."

"We need to show we cleaned the house," the mayor said.