Mayor Shirley Franklin says a tax increase is one option on the table to cover a projected $120 million revenue shortfall for the next fiscal year. That's a troubling notion for Atlanta residents who have had to swallow stiff hikes in water and sewer rates.

But in an e-mail on Tuesday, Franklin defended the possibility of a property tax increase. She noted that the millage rate has been rolled back for the past several years, but "the economy was stronger then.

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"Now, collections are down, the economy is in the tank and the people of Atlanta still expect a clean, safe city," she said. "I refuse to ignore the need to hire and retain more police and fire[fighters], to protect the city's bond rating by investing in longstanding pension liabilities, to cut the grass on a regular schedule, to invest in [information technology]."

It's no surprise that the treasury is a little low, since sales tax revenues always decline during an economic downturn. While around 40 percent of general fund revenue comes from property taxes, another 40 percent or so comes from sales taxes, according to Finance Committee Chairman Howard Shook. (The rest comes from various fees.)

As revenue has slowed, costs in a couple of critical areas — such as fuel and health care — have increased sharply. In addition, City Hall has decided to put in substantially more funds to cover its pension obligations to current and future city retirees. Employee benefits — pensions and health care — now account for 22 percent to 25 percent of general fund revenues, Shook said.

But Shook also noted that the city's financial picture is not as clear as it should be because of sloppy accounting. Janice Davis, chief financial officer, admitted earlier this year that city officials neglected to include $8.5 million in the budget to run Underground Atlanta, which City Hall subsidizes. In March, Davis announced that the city had failed to pay Republic Services for landfill use for several months — a $2.7 million bill — and that wasn't the only company the city had failed to pay.

Franklin said she maintains her confidence in Davis — "an accomplished municipal finance professional" — but "even with her experience and hard work, we've made mistakes." In February, Davis delivered a damning assessment of the city's financial management practices, telling council members that the city's budgeting measures deserved a grade of F. She also said she had greater control over spending in other cities where she had served in a similar capacity.

Davis cited such problems as a lack of training in accounting procedures and a failure to hold employees accountable for improper spending. She said some of the faulty procedures were longstanding city practices, such as paying for goods or services out of accounts set aside for other purposes. That sort of ineptitude is a huge problem in an operation the size of Atlanta's City Hall, with current annual revenues of more than $600 million.

Franklin has been a good steward of the city's finances, cleaning up the corruption left over from the Bill Campbell years, restoring a high level of ethics and tackling the mega-mess of an aging sewerage system — a problem that had been ignored by several prior administrations. For that alone, she deserves high marks.

And it's certainly not her fault that the economy is going downhill as she starts to wind up her tenure. Other cities and states are also facing tough times — cutting back on services and laying off employees. The challenge for Franklin — indeed, for any elected official — in times like these is to convince constituents that she is as careful with their funds as they would be.

Franklin said she's doing just that. "We started reforming the Finance Department last year. Some of the problems we are correcting and systems we are replacing have been broken for years," she said.

And if taxes must be increased to keep the city on track, she's up for that job, too. "As a term-limited official with no political aspirations, I could coast for 21 months or I could meet the challenges head-on. Taxes are never good news, but neither is the distinction of being a lousy mayor because I am scared to stand up for what I believe."

• Cynthia Tucker is the editorial page editor. Her column appears Sundays and Wednesdays.