By John Schaffner
Mid-November was the point at which Mayor Shirley Franklin’s administration was able to fully analyze the first quarter of the city’s operating budget, which ended the last day of September, and get a clear picture of the prospects for the fiscal year.
The picture was not good, with a projected budget shortfall of $50 million to $60 million for the year.
On Nov. 11, the mayor announced 4,600 city employees would have their hours and their pay cut by 10 percent each week to help the city weather the shortfall. She included her own pay.
Franklin also announced an immediate hiring freeze for most agencies and said the city will have to cut some services, dip into its reserves for about $12 million and make other personnel moves.
The shortfall was blamed on the nation’s economic crisis, and Franklin said the city needs a “federal rescue plan” in addition to its cuts to balance the budget.
On Nov. 17, the Atlanta City Council discussed cutting its expenses — and possibly its pay — by 10 percent to help with the budget crisis. The council has a budget of nearly $7 million.
Council members also proposed legislation that would eliminate carrying forward unspent money in their own accounts from one budget year to another.
Council President Lisa Borders said she also will recommend the council use some of the $2 million in its reserves to offset the shortfall.
On Nov. 21, Atlanta Councilwoman Natalyn Mosby Archibong, whose district includes Druid Hills, East Atlanta, East Lake and Kirkwood, announced she is taking $140,000 from her spending account and giving it to three departments to help address the budget shortfall. Archibong wants $50,000 to go to police officers’ salaries, $50,000 toward code enforcement operations, and $40,000 toward sidewalk repairs and replacement projects in her district.
Council members Howard Shook, Anne Fauver, Jim Maddox and Ceasar Mitchell indicated they might follow Archibong’s example.
Asked if there were any surprises in the mayor’s announcement of the new $50 million deficit, District 7 Councilman Shook, who chairs the city Finance Committee and represents Buckhead, said: “Yes, I didn’t think the revenues would be that far off in the non-sales-tax areas. I pretty much knew that sales tax was running about 3 percent under. But I did not expect the other fees and permit activity to be down 50 to 60 percent.”
Shook said the council needs to understand “what it is that the mayor has done across the operating departments.” He said it “looks like it is a 10 percent reduction in personnel expenses starting from Dec. 1 and running through the end of the fiscal year.”
He explained, “If you apply a 10 percent personnel line-item reduction to council on Dec. 1 through the end of the fiscal year, our target number is $187,000 that we would have to make up to make the same budget-cut contribution.
“There are 15 of us — 16 counting the council president — so we move at a slower pace than the mayor. So it is going to take us a couple of days to figure out and come to a consensus. But we all understand the need to make cuts. We just need to understand what our options are for making the cuts. But it looks like the target figure is $187,000.”
In June, council members cut their annual expense accounts from $30,000 per member to $1,800.
Asked what the chances are that the second-quarter results will be even worse, Shook said: “The written presentation that the mayor walked us through in committee noted, in fact, that it may deteriorate moving forward. They have publicly stated that is a concern. I haven’t heard anyone suggest that we may get over this in a quarter. It is possible we may be in a protracted period of anemic revenues.”
Franklin told Shook’s committee that if current economic conditions continue, “this will not be the last time you see me before the end of the fiscal year.”
Shook said he believes that the administration reacted as soon as it finished the first-quarter numbers. “Although they came later than we would have liked, they came sooner than they ever could have been developed in the past,” he said.
“One reason the first-quarter figures were late getting to us is that we had a new CFO who had been here just long enough to know he had to question everything,” Shook said. “He did not want the first big splashy thing that came out during his tenure being something that he later would have to go back and apologize for or amend 20 times. So he asked for and council blessed giving him extra days.”
Shook said he doesn’t know why the mayor developed the financial plan on her own. “It looks to me that the mayor’s Cabinet was briefed on the plan about an hour before she told City Council. Apparently the plan was developed without consultation with any of the department commissioners.”
The mayor’s plan leaves the city $18 million short of filling the projected $50 million gap. That number was supposed to be made up after discussions with the operating departments. Shook said he understood those discussions began around Nov. 18.
“The commissioners are apparently being called in to throw their ideas out on the table that are going to come up with another $13 million to $18 million,” he said.
Asked whether council members are getting the support they need to decipher the financial information presented to them, Shook said: “Well, you know, garbage in, garbage out. It doesn’t help much to deliberate over a budget the underlying figures of which were developed improperly. We have had a horribly rough time trying to look at the last two budgets, because as we have learned later, some of the stuff wasn’t worth the paper it was printed on.
“I am hopeful that the next budget will be a more intelligent and transparent process.”