Atlanta has $70 million budget deficit
Mayor wants to mend finances with hiring freeze and spending cuts
The Atlanta Journal-Constitution
Published on: 01/30/08
Atlanta faces an estimated $70 million gap in its current budget, Mayor Shirley Franklin said Wednesday.
Franklin said the city hopes to close the current shortfall through a hiring freeze on non-essential positions; 50 percent cuts on spending for items like out-of-town travel for job training; and by directing city administrators to look for other cost savings.
City officials also expect to spend some or all of the $65 million it set aside as reserve money to help plug the projected deficit.The City Council approved a 12-month budget last June of $645 million. The city's budget year begins July 1 and ends June 30
The mayor told council members she does not expect at this point to lay off any city workers or raise property taxes to meet its financial challenges. Franklin said she expects more discussion about the city's options as she and her staff work with the City Council on the next budget. Franklin called Atlanta's current money problems a "perfect storm" —a combination of the unstable economy, budgeting errors and long-standing financial practices the mayor said the city is trying to correct.
For instance, some salary expenses, pension payments and workers compensation payments were listed as "reserves" when they were expense items, city officials said. The city didn't anticipate spending $11 million to settle a lawsuit to police officers not paid for overtime and penalties to the Internal Revenue Service for payroll processing delays.
The city also expects to spend $30 million more than it anticipated for fuel, utilities, health insurance, vehicle repairs, consultant fees and other expenses."It's the combination of all of those things put together that has put us in this situation," Franklin told council members. Franklin also announced Wednesday she wants to create a separate reserve fund to prepare the city for any future financial problems.
For weeks, rumors have swirled inside City Hall about a budget deficit. The mayor said she learned about the situation just before Christmas, when the city's Finance Department converted to a new computer software system. Franklin said she asked her staff to gather more information.
Top aides to Franklin warned council members about the problems in a letter earlier this month. City officials noted Atlanta is not the only government facing financial troubles. They handed reporters a packet of newspaper articles detailing budget shortfalls in higher-populated cities like Los Angeles, New York and Phoenix. Sacramento, Calif., a city with a population similar to Atlanta, is grappling with a $55 million shortfall.
Some council members still wondered why the city continued with some of its budgeting practices."I'm having a very hard time understanding why we continue to do it," Councilwoman Felicia Moore told the mayor. Franklin said her staff tried to budget accurately."We thought we budgeted what was the right number and it was still higher," she replied.The mayor afterward brushed aside questions about whether some staffers should be blamed for the budgeting errors."This is not a fault-based analysis ... we have not found any malfeasance nor incompetence," she said.
City officials said the estimated gap may not be as large as they currently believe, describing their revenue projections as conservative. Franklin said the early warning to council members about the situation was important."If you know the train wreck is coming, it gives you a chance to adjust your behavior and practices in a way to avoid the train wreck," the mayor said.
The End