Shirley: City shortfall is $70 million

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Franklin addresses City Council Wednesday.

(Photo by Joeff Davis)

For more than an hour Wednesday, Mayor Shirley Franklin fielded sometimes contentious questions from City Council members regarding the surprise budget shortfall the city is facing. While CL had first reported the figure in the range of $75 million to perhaps more than $100 million, Herronor pegged the estimate at $70 million.

There are two major reasons for the snafu: On the one hand, the city will spend about $41 million more than expected because of rising fuel costs, spiraling health-care expenses, unanticipated legal settlements and IRS penalties.

The rest of the problem is apparently explained by human error. Because of lousy accounting practices — which Franklin took pains to emphasize were in place long before she got elected — the city thought it had $21 million more in the bank than it actually did. And, finally, another $26 million in anticipated cash evaporated once bean-counters caught what Franklin described as a series of “flat-out mistakes,” such as forgetting to account for the $8 million annual payment to Underground Atlanta. Oops.

The administration has ordered a hiring freeze and slashed discretionary spending, but the mayor deflected questions about whether a tax hike will be needed to correct the budget imbalance.

“We don’t have an answer yet for how to close this shortfall,” she said.