Fresh Loaf

If you hadn’t noticed, the Atlanta budget crisis has resulted in some raw nerves and strained relations down at City Hall. The process has gone something like this: Mayor Shirley Franklin announces budget cuts. The City Council criticizes her cuts, but asks her to make some more. Franklin makes more cuts. The Council criticizes the new cuts. And so on.

On Friday, Council President Lisa Borders released a formal response to the Mayor’s announcement of $21.6 million in cuts, which include closing a fire station and laying off several dozen firefighters:

I am disappointed that additional personnel are being laid off by the Mayor as a way of achieving the City Council’s mandated 2.5 percent cut in the General Fund budget. Instead of reducing costs by eliminating jobs first, we should be more innovative in the way we do business and deliver services to residents.

A few hours later, Franklin sent this e-mail response directly to Borders:

You will have your chance as Mayor should you be successful in your election.

Snap! And minutes later, Franklin added:

The Council added costs to the budget and then gave me the authority to make the cuts after refusing to do so themselves. The Council and Chairman [Howard] Shook punted with your concurrence and instigation. I made the decisions for cuts the Council didn’t. I’m OK with that because that’s what Mayors have done all over America for years.

The ball’s in Border’s court:

I have great respect for you and the job you have done as Mayor of our beloved city. But let’s be clear: the Council is a 15-armed octopus and to suggest that I could “instigate” a unanimous vote – especially on something as complicated and critical as this monumental budget gap – is a stretch, to put it mildly. I certainly don’t have to tell someone with your experience that disagreements over policy choices are part of a healthy, natural tension between our branches of government.

Now, we should point out that we abbreviated the discourse slightly. Both Franklin and Borders acknowledged that the city is better off when the Mayor and Council work together and they expressed a desire to do so in the future.

But while it’s easy to imagine those two women settling their differences cordially and professionally, there are several members of the Council – C.T. Martin, for starters – who make collaboration between the administration and the Council all but impossible. Which means we’re probably stuck with the current back-and-forth.

Unfortunately, we’re probably not in the home stretch. Later this week, Atlanta officials expect to learn from Fulton County how much the city will be able to collect in property taxes in coming months. Because of assessment appeals, the figure could be much lower than the one the Council used when it approved the city budget last month. If so, there could be more budget cuts – and more bickering – in the city’s future.

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The chance that Atlanta residents can avoid a property tax increase next year seems to diminish with every new conversation we have with a Council member.

You’ll recall that Mayor Shirley Franklin called for a tax hike about a month ago in order to erase the last $40 million of a projected $140 million shortfall in the 2009 budget. The suggestion didn’t go over well with Council members, who vowed to find new revenue sources and/or other budget items to cut, in order to sidestep higher taxes.

A couple of weeks back, the Franklin administration announced that, because of higher-than-expected tax collections, the tax increase could be much smaller than first proposed. That may have softened the will of some Council members, although publicly they continued to push for more cuts.

Then, last week, the Council learned that its two leading prospects for generating new revenues have fallen through. The first was refinancing employee pensions to stretch out the payment schedule, a move that would free up $20 million in the coming year. The result, however, would be huge balloon payments in future years; the Council dismissed that possibility as irresponsible. Another $10 million or so might be raised through selling tax delinquencies, but the city would have to coordinate that with Fulton County, which has so far been unreceptive.

The Council is still looking at cutting some vacant staff positions, but nearly any other potential action would merely be nickel-and-diming a $40 million hole in the budget. Reading between the lines of what Council members are saying, it sure seems as if they privately believe there’s no way around a tax increase.

“The question is, are you willing to lay off police and fire personnel or absorb a tax increase?” says Council President Lisa Borders, who nonetheless says: “If we can avoid raising taxes, we will.”

Council Member Anne Fauver now expresses some regret at having said at a public meeting that the city would raise taxes “over my dead body.”

“We’ve found some things to cut, but I can’t say it’s $40 million worth,” Fauver says.

And Howard Shook, who chairs the Council’s Finance Committee, describes the quandary this way: “Which is worse – your constituents blaming you for a modest tax increase or them blaming you for the unprecedented failure to approve a balanced budget, and all the catastrophic financial fallout that would have?”

If the city were to miss its June 30 deadline to adopt a new budget, Shook says, Atlanta would officially be in default of tens of millions of dollars in municipal bonds, a move that would send our bond ratings crashing down.

Even though the Franklin administration has estimated that it cost the owner of a $200,000 house an additional $24 a year, Shook still says he hopes a tax increase can be avoided.

The Council has only a few more days to make it happen. Public meetings are scheduled for Wednesday and Thursday of this week, and Monday and Wednesday of next week before a final vote next Friday.

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On Wednesday the Atlanta City Council Finance Committee briefly discussed a proposal by Councilman Lamar Willis that … well, let’s just say it ain’t gonna make Shirley very happy.

Like most council members, Willis is fuming over the mayor’s recent announcement that the city is facing a $70 million budget shortfall because of unanticipated expenses and accounting mistakes. Therefore, Willis wants to rescind a number of pay-grade increases for city executives approved in November.

The increases boosted the salary ranges for top management positions, from chief of staff (max earnings rose from $208K to $237K) to chief financial officer (from $216K to $271K) to the budget chief (from $132K to $170K).

Councilman Howard Shook, who chairs Finance, says the increases were enacted last fall to make the city more competitive in attracting top-flight management talent. Besides, he says, since the pay-grade adjustments didn’t translate into immediate raises for the affected employees, the total cost of the measure has been estimated at about $10,000 so far.

“This is not how you overcome a $70 million deficit,” Shook says.

Perhaps, says Willis, but “it sends a message to the executives who possibly put us in this situation.”

The proposal has support from fellow council members Natalyn Archibong, C.T. Martin, Felicia Moore and Ivory Young. Still, Willis agreed to hold it until the next meeting to allow time to see what the actual cost of the pay-grade increases has been.

Who will figure up that figure? The city finance department, of course.

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In the wake of news that the city of Atlanta is facing a budget shortfall that could be as high as $100 million, Mayor Shirley Franklin will take the rare step of appearing in person before the Council Finance Committee at its next meeting on Wednesday.

It was at the committee’s previous meeting last week that Finance Director Janice Davis and Chief Operating Officer Greg Giornelli first reported that the city’s books didn’t add up, but they would not offer a public guesstimation of the anticipated deficit. Now that it’s known the figure approaches a staggering nine figures, Herroner has decided to take the heat herself and field Council questions on behalf of her administration.

There should be no shortage of questions.

“I am alarmed to have this kind of shortfall sprung on us, and I’m very interested in knowing what checks were written for what,” Councilwoman Mary Norwood says.

Adds Councilman Ceasar Mitchell: “We’ve passed some very conservative budgets, so I’m very curious as to how this happened.”

And those folks aren’t even on the Finance Committee – although it’s a good bet that some Council members will sit in on the meeting to find out what’s going on. Finance Chairman Howard Shook has also called for a full Council work session on Thursday to start figuring out how the city will dig itself out of this hole.

Wednesday’s meeting begins at 1 p.m. in the notorious Committee Room 2.

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