ATLANTA — Atlanta Mayor Shirley Franklin this week said that the city faces a budget shortfall of roughly $70 million for fiscal 2009, which begins July 1.
She made the statement before the finance and executive committee of the City Council. The current budget is $645 million. Officials are currently working on the fiscal 2009 budget.
To address the shortfall, Franklin said she initialed a hiring freeze for all non-essential jobs and asked department heads for reductions in spending.
Officials point to several reasons for the projected shortfall. One related to the subsidies that the city provides for Underground Atlanta, a shopping and tourist attraction in downtown Atlanta.
The city’s chief financial officer, Janice Davis, and the mayor said that the $8 million in subsidies for Underground Atlanta had been left off the city’s balance sheets for fiscal 2008. Franklin simply referred to that oversight as a “mistake.”
Also contributing to the gap are higher fuel costs for the city’s fleet. Franklin also blamed the national slowing economy, which has led to a decline in tax collections for the city. Officials said city revenues decreased 27% during the first three months of the fiscal year, while expenditures increased 9% compared to last fiscal year.
Franklin also said that the city’s accounting system had become antiquated, which was an issue she addressed by upgrading to new Oracle office software.
Franklin said that job cuts would be a last resort. Also, she said that the city had no intentions to raise taxes. On Feb. 5, Atlanta voters will go to the polls to decide on renewing the one-cent kjhat is backing debt issued for water and sewer upgrades. That is being taken into account due burdening taxpayers during this downturn in the economy.
In addition, Franklin said she wants the city’s charter to be amended to require creation of an additional reserve fund.
In a ratings report ahead of the city’s bond sale last week Standard & Poor’s maintained the AA-minus rating, but changed the outlook to stable from positive, citing the city’s declining revenues. Moody’s Investors Service rates the city Aa3 with a stable outlook.
The city has not announced any specific plans for debt issuances. The city’s charter enables it to sell $8 million of GOs for various capital projects each year.