Friday, June 27, 2008

Budget Statement from Atlanta Mayor Shirley Franklin

I understand the City Council is considering an approach to the budget that would include an across the board cut in spending of 2.5%, as well as additional revenues. The spending cuts and new revenues would total as much as $17 million, which would eliminate completely the proposed millage rate increase and allow Council to add back some spending items. Our analysis is that this approach is flawed and unwise for several reasons.

First, an across the board spending cut of 2.5% could only be achieved by additional layoffs. All non-personnel items have already been cut nearly 25%. Council spending cuts would almost certainly require additional layoffs (a Reduction in Force or RIF).

Second, even if we were able to make cuts solely from vacant positions, the additional reductions – on top of the cuts already in the proposed budget – will definitely and directly reduce service delivery. These additional cuts, however, will lead us into unknown territory that could possibly reduce service in every city department funded in the General Fund including public safety and parks.

Third, forgoing the proposed .43 millage tax increase in FY09, in light of the economy and increasing demand for services, is unwise because it eliminates any leeway that we presently have should the economy turn even worse. Remember, we have not yet felt the impact of the foreclosure crisis in our property tax digest. There will likely not be a large increase in assessments, and we may well see de-assessments in the residential market.

While we can give you every assurance that the City will keep costs under control and within budget for this fiscal year, there is no such certainty about revenues. Whatever leeway we had is gone without the tax increase. The proposed millage increase equates to 45 cents per day or $162.00 per annum for a residential property valued at $1 million.

Looking forward to next year’s budget process, with little or no room to make additional service delivery cuts, and with no new property taxes built into our revenue base, there will be an almost guaranteed need for a property tax increase this time next year (FY10 budget).
Lastly, the budget amendment already passed by City Council, cutting the Office of the Chief of Atlanta Police by 10% would result in the elimination of approximately 16 sworn police officers. Because new officers and recruits would have to be let go before more experienced officers, it is certain that this cut would directly reduce the number of officers on the streets in Atlanta today.

You and I have made hard budget decisions in the past and the result is the city is safer, cleaner and more efficient than when we took office in 2002. Though we have more improvements to implement our hard work is not in vain. Let's not be pennywise and pound foolish.

I urge you to adopt the administration's proposed budget with the .43 millage rate adjusted for the approximately $5 million in new revenue you and the Chief Financial Officer have recently identified. Additional citywide service cuts and layoffs should not be under consideration given the modest nature of the proposed tax increase and the demand for more and better services. The negative impact of this recent proposal from the Council is shortsighted. For example, this proposal does not make any allowance for the likely negative financial impact of the foreclosure crisis on our FY 2010 revenue or the ever rising cost of fuel on our expenditures. We should plan for FY 2010 and beyond by stabilizing our revenue stream and not ignoring the downward revenue trends we've experienced this year.

The fate and the future of our city rest in your hands.
Shirley Franklin

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