By John Schaffner

“I’m girding myself for a higher number” than the $70 million 2007-08 Atlanta city budget shortfall estimated so far, City Councilman Howard Shook, Dist. 7, told the Buckhead Reporter after stating that much of the $65 million budget labeled as reserves has already been depleted.

Shook, who represents a large portion of Buckhead and chairs the Finance Committee on council, said he fears “we will be forced to make up a much bigger gap.”

He said it is unclear how big the shortfall might be. Shook said that is why council ordered an audit of the entire budget. Results of that audit are expected in April.

At-Large City Councilwoman Mary Norwood said she had seen documentation Feb. 15 that $24 million had been used to pay employee overtime.

Norwood said she was told by the city’s Chief Financial Officer Janice Davis on Feb. 19 that, although council had been told the reserve budget was $65 million, the actual restricted reserve fund is $40 million and that money has not been tapped. The remaining $25 million may have been inappropriately placed in that budget, because it has line items associated with it, such as health insurance and legal fees.

Davis told Norwood the true reserves of $40 million have not been touched.

Shook, Norwood and Dist. 9 Councilwoman Felicia Moore all were asked if the city charter requires council’s approval of withdrawals from the restricted reserve funds. Each said that was their understanding. They indicated no such council approvals had been requested nor made for withdrawal of those funds.

Shook also said there apparently have been “long-standing traditions of using reserves for other things than just emergency situations.”

He said that because some feel the city charter “is a little vague as to how the reserve funds can be used,” he introduced an amendment to the charter at the Feb. 18 council meeting to clarify how the funds can be used and that council approval is required for use of the funds.

Shook said Mayor Shirley Franklin knows the ordinance is in the works.

Suggesting she does not want to waste time considering “how we got here,” but focusing on solutions, Mayor Franklin said at a press conference Feb. 18 that she is looking at possibly cutting the budgets in every city department to resolve the current budget crisis. But she repeatedly stated, “We don’t know the answer yet” to balancing the budget.

The Mayor emphasized that the city is not only facing a shortfall of around $70 million for the current fiscal year, ending in June 2008 — which could be greater or less — but she said that the next fiscal year, 2008-09, may be even worse. Financially, with projected revenues as low as $500 million, overall, it would be about 22 percent less than the city budgeted for in 2007-08.

“We see both a shortfall for 2008, and a very tough budget for 2009,” Franklin said.

In order to balance this year’s budget, and next year’s, “what we are doing is putting everything on the table, so that we fully understand what our options are,” Mayor Franklin explained.

She did not say what she would recommend to the Atlanta City Council. She has already frozen positions in city government and has asked department heads to submit tentative plans for cutting up to 25 percent of their budgets, if it were to come to that.

“We don’t have any answers yet,” Mayor Franklin said. “What you are hearing, legitimately, from the council, and from the public and from the department heads, is, ‘Oh my golly, this is terrible! Well, now, you’re hearing it from me, too.”

Shook said the audit being done by the city’s independent auditor will be “a key resource to help us as we move forward,” including with the upcoming 2008-09 budget discussions. He said he also is requesting that council hire outside professional consultants to assist council members throughout those budget considerations.

Norwood, at council’s Feb. 11 meeting, issued a request for a technical review committee of outside financial professionals to review the processes used in creating the city budget. (See Councilwoman Norwood’s guest column on page 6.)