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Atlanta's budget crisis

City officials looking at tax hike, layoffs and raising water rates

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The numbers are dizzying. The mood is tense at City Hall, verging on surly. The choices are nearly all painful.

And it will only get worse from here on out.

Mayor Shirley Franklin justified the fears of City Council members – and many taxpayers – this past Thursday when she laid out a budget proposal that calls for the sacking of 440 city employees; cuts in municipal services; increases in various fees and fines; and, the most dreaded element, a $40 million property-tax increase.

Actually, Franklin didn't so much propose citywide layoffs as announce them, since by law the mayor's office can make near-unilateral decisions regarding staff reductions. By the time you read this, most of the pink slips likely will have been handed out.

The 700-page proposed budget that Franklin dropped on the council last week will almost certainly keep city officials bickering and sniping late into May, when the council is required to pass a balanced budget for the upcoming fiscal year, which begins July 1.

Council members are already feeling the pressure – and they don't appreciate it.

"You're telling us we have to raise taxes or close fire stations?" Councilman C.T. Martin asked Franklin during her presentation to the council's Finance Committee last Thursday.

The question was rhetorical. The mayor had, indeed, just told council members that, unless they approved a tax hike, the city would have to fire 200 cops and 90 firefighters, and close nine fire stations. That's on top of the hundreds of layoffs already in process.

"We don't believe there's another $40 million in the budget" that can be trimmed, Franklin replied. "We can't bridge the gap with spending cuts alone."

Councilman Howard Shook isn't so sure.

"The mayor has given us a 'Sophie's Choice,'" he says, referring to the movie where Meryl Streep is forced to decide whether to leave her son or her daughter behind to be killed by the Nazis. "I'm not yet ready to say, 'Read my lips,' but I want to look for cuts elsewhere," he says. "The problem is, we're talking about cutting another $40 million out of a crisis budget. That's going to be tough."

The budget proposal Franklin unveiled last week was a complicated assortment of solutions: staff layoffs and service cuts, including the temporary closure of 11 neighborhood recreation centers; increases in fines and new fees; the privatization of parking enforcement; and savings from tightening up staff perks. Franklin says her budget will reduce a projected $140 million shortfall by about $100 million. To cover the remaining $40 million, she wants a tax hike.

Franklin wasted no time in announcing that she would begin by cutting her own staff by half. Other departments taking significant hits under her proposal are human resources, procurement, finance and planning.

It will take council members some time to digest the proposals. Last week, they began the laborious process of hearing from each department, one by one, to determine the expected impact of the changes. But already, several council members have voiced concerns about not having enough building inspectors, code enforcement officers or Municipal Court prosecutors.

"Although some council members wouldn't admit it, I think there's been a general understanding that the city has too many employees," Shook says. "I want to see cuts up and down the food chain."

Still, he and others want to be sure that staff cuts are targeted so they don't impair the city's ability to provide essential services.

Unwanted as it is, a prospective tax increase needed to generate $40 million in revenue could be relatively modest. Given the current size of the city tax base, it would likely mean about a 1.75-mill increase, which would cost the owner of a $200,000 home approximately an extra $150 a year in property taxes.

Fulton County assessors are nearing the end of a large-scale reappraisal of commercial property that's expected to add billions of dollars of value to the city's tax base, however, which could mean that the proposed tax hike could be scaled down, costing taxpayers less.

Since officials won't have the final numbers from the county for several days, Franklin refused to speculate how large an increase she will actually seek.

But for council members like Martin, long a Franklin opponent (and a Campbell foe before that), the size of the tax hike isn't as important as the fact that the city's $140 million hole was caused in part by accounting errors and lousy bookkeeping practices.

"I won't vote for a tax or rate increases because we have poor management and some of those managers need to go," he says.

But the property-tax increase isn't the only bitter pill the city is being asked to swallow. Amid all the commotion over the budget crisis, the Department of Watershed Management has quietly reported that, because of drought-related conservation efforts, water-rate revenues have dropped by 25 percent. Atlanta's sewer system is on a separate budget from the rest of city operations.

To generate an additional $27.5 million needed to meet the payment schedule on the city's sewer bonds, the department has proposed a 25 percent increase in water and sewer rates. If approved, the average monthly residential water bill could rise from about $85 to more than $100.

"Council members are likely to be so upset about the budget crisis that they'll shoot down the sewer proposal," says Shook. He fears that if the council balks at approving the rate hike, Wall Street could downgrade Atlanta's bond rating, which would end up costing the city still more millions.

In other words, there's no end yet to the bad news.

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