Boom times turn bad for area governments

In these pinched times, government agencies are doing a lot of things to make ends meet. They’ve cut spending and raised fees, asked residents what they can do to make a dollar last longer. They have put off spending on big-ticket items. One town an hour away from downtown Atlanta abolished its police department.

For now, say executives, this is the new fiscal reality. For metro municipalities and counties accustomed to boom times, these are bad times.

If you are a city or county manager, you slice departmental budgets, defer buying new trucks, leave positions unfilled. Raises or cost-of-living adjustments? Gone, for now, with the winds of economic misfortune.

Public officials recently said they’ve done just about everything to keep operations in the black. At the same time, they’re committed to maintaining services.

Budgets, rarely fat, have never been so lean.

‘Worst I’ve ever seen’

Austell Mayor Joe Jerkins foresees tighter finances when the Cobb County city puts its next budget in place July 1.

Austell gets a prominent footnote in the history of the record floods of 2009. Sweetwater Creek swept away playgrounds and sheds, beat down doors and left appliances wedged in tree trunks. Crews are still cleaning some areas where coffee-brown water buried everything. Seven-hundred homes and about 50 businesses suffered damage in the flood, whose costs federal officials are still totaling.

Those damaged homes mean a lower property valuation — and that means decreased tax collections for the city. This is not a good time for depressed valuations, Jerkins said.

The city also suffered about $2.2 million in damage to its own property in the flood. Sweetwater Creek swept through Austell’s public works building, destroyed some city equipment and just about demolished a park.

To help defray flood costs, the city is using inmate labor, he said. And when they begin assembling the budget this spring, Austell’s leaders are going to look at cutting departmental budgets even more than before.

Jerkins wonders about the long-term future of his town, and that of others in the area. It was built on the expectation of continued growth – new homes and new businesses, always fueling a machine that showed no signs of stopping.

Now it has. “I’ve never seen that happen before,” said Jerkins, mayor for about two decades. “This is the worst I’ve ever seen in my life.”

These are hard times, agreed Snellville City Manager Russell Treadway. The eastern Gwinnett city has frozen four or five jobs. The hardest hit was the recreation department, which lost two employees from work force of eight to nine.

Also, city employees have gone for nearly two fiscal years without a cost-of-living pay increase. They’ve been required to hike contributions to employee health plans, too. They’ve experienced, in effect, a pay cut.

He foresees no layoffs or furloughs — not immediately, anyway. “I’m not sure we’ll continue to do it that way.”

The cost-cutting began more than two years ago. For example, in July-September 2008, the city’s operating costs were $2.3 million. By October-December of last year, they had dropped to $1.97 million — a cut of more than $300,000.

“It was just something we had to do,” Treadway said.

The recession has not hit everyone equally. Some agencies have managed to defer buying big-ticket items, such as fire trucks and police cruisers. Others have had to make much harder choices, none more so, perhaps, than the Jackson County town of Hoschton.

Officials in the town, 60 miles north of Atlanta, said they’d save nearly $300,000 annually by discontinuing funding for its three-officer police department. Last month, the City Council did just that.

‘Squeezing blood’

It’s a given that people who best weather rocky financial times are those who diversify their investments. A professor at Kennesaw State says public agencies are similar: Those with diverse revenue sources aren’t as hard-hit as single-industry towns.

Bill Baker, an assistant professor of public administration at KSU, last year surveyed spending habits of towns and counties across Georgia. The university’s A.L. Burruss Institute of Public Service & Research produced the reports for the Georgia Municipal Association and the Association County Commissioners of Georgia.

Governments with a diverse tax base are doing best, he said. Baker cited Gainesville, with a number of industries — poultry and health care, particularly — as one of those weathering the storm.

On the other end: Dalton, the town made famous by carpet. It’s in straits because its No. 1 industry is as flat as the floors Dalton’s products cover. “It’s hurting,” Baker said.

But even the most frugal agencies may reach a point when they cannot maintain the status quo, Baker warned.

“You can only squeeze so much blood,” he said. “I don’t think there’s much more to squeeze.”

Cobb County began squeezing three years ago, when officials predicted tight times, said Robert Quigley, a government spokesman. It froze hiring, and county commissioners also recently approved an incentive plan to encourage some 400 longtime employees to leave, he said.

Enlisting residents

Faced with tough economic questions, officials in Duluth, and their counterparts in Gwinnett government, took their case to the people. Duluth recruited 42 residents to form the Citizens Budget Committee. City officials asked them to suggest ways Duluth could cut costs, said City Administrator Phil McLemore. Nothing, he said, was off-limits.

The committee, composed of homeowner association presidents, business people and others interested in the city, took the task seriously. It suggested that the city look for new user fees to defray costs – for example, charging for some activities at its city parks that had been free before. The committee urged the City Council to make lawbreakers pay user fees in addition to fines at its city court.

The city has not had to reduce services, he said — another decision based on the committee’s report.

The group, McLemore said, managed to come up with about 20 percent in reductions. The budget two years ago was $21 million; in the next year, it was $17 million.

Gwinnett County, a model of bottom-line, conservative spending, ran into the same bumps that confronted other government organizations. In 2004, planners predicted Gwinnett’s financing would not keep pace with its building plans within the next five years, said Aaron Bovos, the county’s chief financial officer.

In 2008, the county formed nine teams, composed of about 70 Gwinnett employees, which looked at different departments’ operating costs and procedures. They suggested $33 million in cost cuts, as well as areas where the county could raise an additional $6 million. Those changes took effect when commissioners adopted the 2009 budget.

But that wasn’t enough, and last June commissioners proposed a hike in the millage rate. Commissioners backed down from that idea when faced with protests from residents.

In late June, the board cut another $205 million from the county’s financial plan; and in July, another $41 million.

And yet that still wasn’t enough. In December the commissioners approved a 2.28 percent millage increase, the first in nearly two decades. They needed the increase, said Bovos, to avoid cutting safety services.

“We decided those cuts were too painful for the organization,” he said.

Gwinnett last year also formed an agency similar to Duluth’s. Called Engage Gwinnett, the panel’s members have met every other week since October, suggesting what services the county will need in the future. The committee also has to suggest how to pay for services over the next five years.

The committees, city and county officials say, have worked. Duluth plans to create another committee as budget time nears, but McLemore is realistic. “There’s not a whole lot more to cut,” he said.

Others share his assessment. In many city halls and county government buildings, the budgetary blade now hangs over jobs and services.