BUDGET WOES: Atlanta braces to cut deeper

Atlanta officials suffered another round of grim financial news —- and braced for new cuts —- Wednesday as the city posted dismal second-quarter numbers projecting a $70 million revenue shortfall by June 30.

The numbers make yet another round of cuts likely for a city that’s already seen police officers and firefighters furloughed, recreation centers and a fire station closed, and trash and recycling pickup curtailed. No tax increase is planned this year but one could be proposed to balance next year’s budget.

Greg Giornelli, Atlanta’s chief operating officer, declined Wednesday to say what cuts would come next, saying the city would first try to cut nonpersonnel-related costs. Whatever cuts are enacted will be announced by March 1.

“These second-quarter numbers have added another $20 million in revenue shortfall to our finances,” Giornelli said. “Our revenue performance continues to deteriorate.”

The shortfalls were particularly acute in property tax receipts, which are expected to be down 15 percent, and sales-tax collections, which are projected to fall 7 percent short.

Officials said they fear worsening numbers from the third and fourth quarters, January through June.

Mayor Shirley Franklin now expects city revenues to fall short by about 12 percent by the end of the fiscal year. The city began the year projecting $571 million in revenues but now expects to collect only about $497 million.

For stunned council members, who have consistently balked at Franklin’s suggestions to raise property taxes, the numbers were yet another dose of hard news after more than 18 months of repeated cutbacks.

“It looks like we are taking steps to cover our deficit, but it seems we keep getting further behind,” said Councilman Jim Maddox, who represents southwest Atlanta.

The cuts have triggered sharp criticism throughout Atlanta from residents who say there are not enough police officers and firefighters on city streets amid a rise in property crime and high-profile cases such as last month’s unsolved shooting death of a bartender inside a Grant Park restaurant.

Giornelli stressed that things may not be as bad as they seem.

In December, the city made a third round of cuts and furloughs, which are projected to save about $40 million. But the effects of those cuts don’t appear in this period, which ended Dec. 30 —- about the same time the cuts were made. He said he did not know yet whether the cuts already made would meet their target savings.

Giornelli said Atlanta had also saved about $10.6 million over the past six months by carefully controlling spending, which would also help offset the shortfall. And, he said, Atlanta also has $28 million in reserve it can dip into.

The COO said he was confident in the projections made despite a series of council questions.

“It is safe to say from a budget standpoint, $20 million is the maximum number,” Giornelli said.

Giornelli said property tax collections could be down by as much as $30 million, or about 15 percent. The city had budgeted to collect considerable revenue from a countywide reassessment of commercial property. However, much of that value remains in dispute and may not be collected.

Atlanta’s numbers may well get worse in the third and fourth quarters.

Just last week, state officials posted a January record revenue drop of 14 percent. Atlanta won’t get those numbers until the end of its third quarter, March 30.

Franklin’s team will be hard-pressed to make another round of spending cuts without further slashing law enforcement —- a move that would probably trigger a backlash from neighborhood activists who complain they are already suffering from a crime wave. The mayor also set off a hue and cry last year when the administration closed a fire station in West End.

The latest grim news drew a sigh Wednesday from the president of the Fulton County Taxpayers Foundation, John Sherman, as he hosted a luncheon discussion in Buckhead titled “Preventing The Bankruptcy of Atlanta.” Sherman said the numbers prove his point that Atlanta should more frequently allow businesses to compete with departments to provide services, which he believes will save the city money and be more efficient.

“[The city] needs the outsourcing more than ever,” he said.

David Edwards, a policy adviser to Franklin, countered that the city has outsourced two services and is working on privatizing a third, parking enforcement. The sky is not falling, Edwards told the audience of about 50 people.

“The city is not going bankrupt,” he said. “The city is not close to bankruptcy.”

Any decision the council makes this year to resolve the financial crisis will also have repercussions next year.

Next year’s budget, by law, will be set at 1 percent less than the city collects this year.

The current projection of $497 million is a sharp drop from the $645 million spending plan adopted just two years ago.

Council last year balked at a property tax increase for the current fiscal year. The next budget debate will come amid the backdrop of a political season, when the mayor’s race and council elections will be heating up.

 ELIZABETH LANDT / Staff 
ATLANTA BUDGET SHORTFALL 
Second-quarter numbers show the city of Atlanta's fiscal 2009 revenues will fall short by more than $70 million.

Revenues 
Budgeted: $570.9 million 
Projected: $496.9 million .... $74 million shortfall 

Expenses 
Budgeted: $573.9 million
Projected: $563.3 million .... $10.6 million savings 

Shortfall in taxes 
Property taxes 
Projected: $171.3 million 
Expected: $140 million .... $31.3 million [shortfall]

Sales tax (local option) 
Projected: $106.4 million 
Expected: $98 million...... $8.4 million  [shortfall]

Source: Office of Mayor