BRADENTON, Fla. — The Atlanta City Council late Monday approved a $1.8 billion budget that won’t require an increase in property taxes in fiscal 2013.
The budget puts more than $110 million into reserves on July 1 — the most savings for the city in several years.
“The city’s healthy reserve strengthens our position with rating agencies and will allow for potential bond financing in the future,” said Jim Beard, the city’s chief financial officer.
No additional details were available about Atlanta’s potential bonding plans. The city last sold general obligation bonds in 2009.
The fiscal 2013 general fund budget calls for $526.6 million in spending for operations, $24 million less than the adopted budget for the current fiscal year.
The lower general fund budget is largely due to a continued decline in property tax revenues mostly as a result of the decreasing residential tax base, negative reassessments and successful tax appeals.
Taxable assessed property values reached their peak in 2008 at $27.6 billion and have declined each year since. Assessed values were $23.1 billion in 2011 and are projected to decline in fiscal 2013. Property taxes represent a third of general fund revenues.
“The city of Atlanta’s fiscal budget for 2013 includes vital investments for public safety and puts us in a very strong financial position,” said a statement from Mayor Kasim Reed. “Despite having a decline in projected revenues, we have more than $110 million in cash reserves and the funding needed to help us achieve a police force of 2,000 officers.”
The city does not anticipate laying off employees in the coming fiscal year, and 41 police officers are being hired to reach the 2,000 mark. Most employees could see pay increases, though they will not be across the board.
Atlanta had $245 million of unlimited-tax GO debt outstanding as of June 30, 2011. The city’s last GO sale was a $78 million refunding in 2009.
In March, Standard & Poor’s revised its outlook on the city’s GO bonds to stable from negative, citing measures to eliminate the general fund’s structural imbalance, curtail future pension obligation growth and improve cash flow.
“The outlook further reflects our expectation that the city will maintain at least balanced general fund operations over the near term, make progress on its sizable receivables balance, and build its cash position,” said S&P analyst Le T. Quach. “In our view, the city still needs to contend with a soft revenue environment, ongoing expenditure growth in part due to delayed capital needs, and a weakened underlying economy.”
If Atlanta taps reserves to deal with ongoing fiscal challenges, Quach said Standard & Poor’s would consider lowering the rating over the next two years.
S&P assigns its A rating to the city’s GOs, while Moody’s Investors Service assigns its A1 rating with a negative outlook.