Atlanta Mayor Appeals to Congress for Aid

BRADENTON, Fla. - Atlanta Mayor Shirley Franklin is asking Congress for help with debt issuance, as the city is under pressure to make budget cuts after seeing revenues decline 12.5% in the first quarter of its fiscal year.

Responding to a projected $50 million to $60 million budget shortfall, Franklin late Wednesday said she would propose an immediate hiring freeze in all general fund departments and a four-hour weekly furlough for all 4,600 employees beginning next month through the end of the fiscal year. She also is recommending using $12 million from budget reserves.

In May, Franklin laid off 298 employees to cut costs after a proposed tax increase was rejected by the City Council. Her current recommendations are subject to council approval.

"These cost reductions, combined with the use of reserves, leaves an additional gap of between $13 million and $18 million," Franklin said in a report. "I have asked the [chief operating officer] to develop ... an action plan to achieve these savings."

Additional cuts would almost certainly require reductions in services, the mayor said, but would leave $22 million in reserves for the remainder of the year.

Franklin reported that Atlanta home prices are down nearly 9% this year and more than 13,000 homes are currently in foreclosure. Building permits are down 38% nationally from last year, while the city's permitting is down 20%.

While the city has tried to control expenses with general fund costs 2% below budget, she said sales tax revenues are down more than 3% and revenue from licenses and permits are down more than 50%.

Aviation revenues are holding up, Franklin said, but a hiring freeze is in place in anticipation of a slowdown.

The city estimates that 3,000 jobs are at risk at Hartsfield Jackson Atlanta International Airport "due to an inability to issue bonds in this financial environment," Franklin said in a letter Monday to U.S. House Ways and Means chairman Charles Rangel, D-N.Y.

The airport has planned a $550 million variable-rate refunding issuance since early this year, but it has been delayed by agreements needed from insurers and letter of credit providers, according to city documents.

"The lack of liquidity in the financial markets is forcing the suspension of billions of dollars of infrastructure investments that could otherwise help to offset the struggles in the private economy," Franklin wrote to Rangel.

Saying that Atlanta faces a $750 million infrastructure deficit, Franklin said she supports a comprehensive financial rescue package that would include federal investment in local public infrastructure.

Congress should provide an "immediate injection of liquidity into the financial sector through investment guarantees or other mechanisms to jump-start the market for public bond issuances," Franklin said. "The waiving of the alternative minimum tax related to airport bonds would be one effective method for stimulating the market for public bonds."

Franklin said Atlanta could create 5,500 jobs in 18 months if federal funding for maintenance and repair of essential public works infrastructure was available.

"I urge you and your colleagues to look hard at what is happening to the municipal governments in your districts," Franklin wrote. "They are facing the gravest threat to their financial future than in any time in the last 30 years. We ignore them at our peril."

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