By John Schaffner
Mayor Shirley Franklin told the Atlanta City Council’s finance/executive committee Jan. 30 the city is facing a $70 million deficit in its fiscal 2008 budget due to budgeting errors, inappropriate budgeting practices and general economic factors.
This shortfall is nearly as large as the $80 million one the mayor faced when she took office in 2002 after the stewardship of Mayor Bill Campbell.
According to Franklin, the city failed to foresee $30 million in higher costs for fuel, health insurance, litigation expenses and other items.
But, according to the mayor, there were more serious problems with incorrectly budgeted items and at least $38 million of expenses the city simply failed to budget for at all—including $11 million for Internal Revenue Service penalties and for its overtime settlement with the Atlanta police; $18 million in workers compensation payments, pension payments and salaries; and $8 million for Underground Atlanta, which the city underwrites.
Another $21 million in underestimated expenses came from several items the city “incorrectly budgeted” according to the mayor. These included overbudgeting the revenue the city receives from hotel/motel tax and underbudgeting the amount of money necessary to fund trash pickup and 911 services. She said that practice goes back decades, but she was only recently made fully aware of it.
As if that news is not bad enough, the mayor said the city expects fiscal 2008 revenues will drop 1 percent to $598 million, after 5 percent average annual growth during her six years in office. There is not sufficient reserves in the $645 million 2008 budget to cover the gap and the unbudgeted costs.
The mayor did not propose any new funding measures to take care of the deficit, but said the city will continue its hiring freeze and discretionary spending cuts.
Following the gloom of the Jan. 30 announcement, on the following day members of the council’s finance/executive committee grilled the city’s chief financial officer Janice Davis about one-time and long-standing budgeting problems.
Committee Chairman Howard Shook, who represents much of Buckhead, asked, “Why were there no warnings that we were going to have these problems?”
Davis put much of the blame on individual city departments, but told the committee, “This CFO’s position is the most impotent position I’ve had. It does not exercise control over departments.”
Davis did not name any names, but council has launched an independent audit of the budget that independent city auditor Leslie Ward could answer that question in six to eight weeks.
Davis did say that mayor’s plan to close the deficit gap, won’t be enough if current projections bear out.