By David Pendered
Atlanta Mayor Keisha Lance Bottoms proposes to plug a $53 million hole in the city’s upcoming budget with expected federal pandemic funds. Meanwhile, Atlanta predicts revenue shortfalls over the next five years as income from property taxes declines and expenses rise.
Bottoms did not mention the city’s budget forecasts when she announced May 7 her decision not to seek reelection to a second term, in the November election.
However, the budget message presented by the city’s chief financial officer on April 16 does not appear to provide any mayor with much hope for attempting policies that go beyond traditional municipal services, such as timely trash collection and securing public safety.
Projected shortfalls range from a high of $61.5 million to a low of $16.7 million in each of the next five fiscal years, according to figures from the Finance Department.
This scenario leaves little room for new objectives on the scale of Bottoms’ achievements, which the budget proposal for the fiscal year that begins July 1 names as including plans to borrow $100 million to help pay for affordable housing, and another borrowing of $100 million to further the Atlanta BeltLine. Hiring more police officers, and raising salaries for current police and firefighters. Plus, a planned anti-displacement tax fund to support legacy residents, and a crackdown on nuisance properties. Not to mention the issuance of some of the $1.25 billion in bonds for the Gulch project that is said to be somewhere on or just over the horizon. And a human services package to be delivered at a retooled city detention center.
Instead, no layoffs are envisioned in the proposed FY 2022 budget, which begins July 1. Some vacant jobs are to be defunded and the money shifted elsewhere. Construction spending will be tailed down.
And all of this is subject to change. The proposed $706.8 million general fund is used to pay for basic services and is up nearly 5% from current year. The finance team advises to brace for budget revisions as the pandemic response evolves, and the economy with it.
These are among the points in the budget transmittal letter CFO Roosevelt Council addressed to the Atlanta City Council. The letter observes:
- “The Proposed FY22 Budget will continue to keep the City’s workforce intact. The City continues a budget balancing strategy where it defunds selected vacant positions, institutes a slow-down in specific ancillary programs and capital project spending, and keeps a well-preserved Fund Balance. Lastly, it is important to re-emphasize that the City is a recipient of ARP funds which serve as a one-time funding source to offset anticipated revenue shortfalls,” with ARP funds being the American Rescue Plan passed by Congress and signed by President Biden.
- “Nevertheless, we will continue to diligently monitor and evaluate the potential implications of changing economic conditions and market volatility connected to the pandemic. With that in mind, the Proposed Fiscal Year 2022 budget presented may be subject to change. In the event change is required and legislative action needed an ordinance will be submitted to City Council.”
Roosevelt and Bottoms present different figures on the amount of ARP aid used to balance the proposed budget. Roosevelt put the figure at $53.16 million, and added $8.4 million from the Building Permit Fund to reach a total of $61.6 million to balance the budget. Bottoms’ transmittal letter put the figure at $62 million in ARP funds to balance the budget.
Bottoms message does state that the property tax rate doesn’t have to be raised to balance the budget.
Elsewhere, the budget proposal notes that the city was authorized in 2018 to keep a portion of the revenue growth from reassessed property values without telling taxpayers. The budget refers to House Bill 820, passed by the Legislature in 2018 and enacted by voters that year:
- “The passage of HB 820 allows the City of Atlanta to retain 2.6% reassessment growth as well as new construction growth without any additional public hearing and tax notice requirements.”
Looking into the future, projections call for expenses to exceed revenues through FY 2026, which begins July 1, 2025.
The city’s finance team made the calculations with input from Deloitte, a Big Four accounting company the city brought aboard last year to help navigate the pandemic, Tina Wilson, the city’s deputy chief finance officer, told the city council’s Finance Committee in an April 28 meeting.
Wilson affirmed the budget-balancing figures Roosevelt cited in his transmittal letter: $53 million from the American Rescue Plan and $8.3 million from the balance in the city’s Building Permit Fund.
The decline in revenue projections comes from a drop in anticipated property tax collections on commercial properties. The projection is based on input from the Fulton County Tax Commissioner, though actual collections are not knowable at this time, Felicia Daniel, the city’s enterprise revenue chief, told the Finance Committee.
This list of anticipated revenues, expenses and shortfalls appeared on a slide presented to the committee:
FY 2022, projected (millions)
- Revenue: $645.3
- Expenses: $706.8
- Shortfall: $61.5
FY 2023, projected (millions)
- Revenue: $680.4
- Expenses: $724.6
- Shortfall: $44.2
FY 2024, projected (millions)
- Revenue: $701.7
- Expenses: $740.0
- Shortfall: $38.3
FY 2025, projected (millions)
- Revenue: $732.8
- Expenses: $749.5
- Shortfall: $16.7
FY 2026, projected (millions)
- Revenue: $716.5
- Expenses: $758.2
- Shortfall: $21.7