Service cuts still possible

The news didn't get better for Atlanta property owners: Water and sewer rates also went up last week, by 12.5 percent. In June 2008, the City Council approved four consecutive years of rate hikes, beginning in July 2008, to pay for Atlanta's $4 billion effort to fix its aging sewers and improve water quality.

Between the property tax hike and the increase in water/sewer bills, the average city homeowner with a home worth $240,000 will pay an additional $440 over the next year to City Hall.

An uproar over the property tax increase renewed talk of enacting a commuter tax and turning some city services over to the private sector. When the council voted 8-7 to raise taxes, it was largely to restore services —- chiefly fire and police protection —- by ending employee furloughs.

Furloughs have been blamed for rising crime rates in the city and for slow responses to some fires and emergencies. With the tax increase, police and firefighters will no longer be required to take a four-hour-per-week furlough effective Thursday.

But services remain vulnerable, Glass said. The city might have to make more cuts in the next 30 to 90 days if sales tax revenue, already down 10 percent, falls below projections. Glass said more budget cuts could mean more recreation centers being closed or the city taking longer to fix a sidewalk or pave a road.

The tax increase debate generated age-old talk about taxing suburbanites for the services they use while working in Atlanta. Supporters say a commuter tax would be a welcome source of cash for a city with few revenue streams. Critics say such a tax would discourage businesses from setting up shop in the city. Besides, they note, there's little appetite for it among state lawmakers.

The tax increase also sparked the familiar cry from others who say Atlanta can save more money by allowing the private sector to compete to operate more city services. Outsourcing supporter Barbara Payne, who had pushed hard against a tax increase, was near tears after Monday's vote.

"They're not feeling the pain [of taxpayers]," said Payne, executive director of the Fulton County Taxpayers Foundation.

Atlanta is one of the fastest-growing big cities in America. Federal officials reported this week that its population grew by 17,000 people during a 12-month period that ended July 1, 2008. Maintaining city services at pre-furlough levels, officials say, is critical to its continued residential and commercial growth.

City leaders last raised property taxes in 2002, when newly elected Mayor Shirley Franklin walked into office facing an $82 million budget deficit.

Despite the current budget projections, Councilman Jim Maddox believes the economy will improve faster than expected.

Maddox initially suggested the city needed to raise taxes higher than the mayor's proposed increase, but he voted against the increase, saying he was swayed by homeowners who said they couldn't afford to pay more. The entire City Council is up for re-election in November.

Councilwoman Felicia Moore has proposed a "financial stability plan" that includes seeking a solution for funding the city's three pension plans, which have seen their obligations grow from $44 million in 2005 to more than $100 million.

For now, Moore said, the city must live within its means.

"There are a lot of things that need to wait until we get our house in order," she said.

A tax roller coaster

This chart shows Atlanta's general fund property tax rate since 2001, the year before Shirley Franklin was elected mayor.

Year Mills

2001 6.19

2002 9.02

2003 8.71

2004 8.25

2005 7.64

2006 7.53

2007 7.09

2008 7.12

2009 10.12

Here's a breakdown of where Atlanta's property taxes go:

Atlanta schools general fund 21.64 mills

Fulton County 10.53 mills

City of Atlanta general fund 10.12 mills

City of Atlanta bonds 1.18 mills

Atlanta parks 0.50 mills

State of Georgia 0.25 mills

Atlanta schools bonds 0.05 mills

Source: City of Atlanta