ATLANTA -- Mayor Maynard Jackson has proposed a lean $348.9 million general funds budget for fiscal 1992 that would slightly reduce Atlanta's property tax.

The proposed budget calls for a 0.7% increase over this year's $346.4 million budget and will now be taken up by the City Council, which must act on it by the end of February. The council will be asked to consider a 0.2 mill decrease in property taxes that will save taxpayers $1.3 million.

This budget "furthers the priorities of my administration in a fiscally responsible manner, while lightening the property tax burden for our citizens," wrote Mayor Jackson in a letter to the council on Friday.

"A major thrust in the 1992 budget preparation was to bring forward even more reductions without hurting the delivery of basic city services," he added.

Council President Marvin Arrington backs the tax cut, according to a spokesman.

Mayor Jackson said he expects the city's finances once again to be under strain in 1992. He projects only a 1.9% increase in recurring revenues, with sales tax revenue falling $3.1 million from year-earlier levels.

He noted that the city has been forced to deal with a reduced state revenue sharing, including a $2.1 million cut in funding from Georgia's Aid to Municipalities program and a $2.1 million reduction in the state's insurance premium tax distribution.

After the adoption of the 1991 budget, city officials had projected an operating deficit of as much as $15 million. This deficit was avoided, however, after a hiring freeze and other cost-savings measures were implemented.

According to Michael Bell, the city's chief financial officer, Atlanta will end this year with a $5.4 million increase in its net general fund balance, bringing that fund to $33.4 million.

"The big news here is that we have avoided further depleting this fund after drawing it down two years in a row," Mr. Bell said yesterday.

Mr. Bell said the city is moving forward with the first sale of new-memory water and sewer revenue bonds since 1979. He said Atlanta hopes to sell about $140 million of this debt by the end of the first quarter.

This borrowing will include $90 million for a new program designed to prevent sewer overflow and $50 million for water purification projects.

He also said the city would consider asking voters for about $50 million of new general obligation bond authorization. Atlanta has a constitutional limit of $8 million of new GO debt annually, $4 million of which must be used for schools.

City officials also expect to sell about $25 million of tax anticipation notes early next year to balance out cash flow.

The proposed budget would slightly increase funding for the city's police, fire, and corrections operations -- raising it 0.7%, to $157.9 million -- but would not add to the current number of job slots for law enforcement.

Atlanta's Public Works Department, however, would have its budget trimmed 2.7%, to $53.6 million, and funding for Parks, Recreation, and Cultural Affairs would be reduced 3%, to $53.6 million.

In addition, funding for the offices of the mayor and the city council will both be cut from 1991 levels.

"It sounds like the city is taking prudent steps to keep its spending in line," said Maury Cooper, a senior vice president at Standard & Poor's Corp. "It is also good to know that the mayor expects to balance Atlanta's operating budget this year and add to its reserves. We will look closely at this addition to see how it has been achieved."

Atlanta's $70 million of general obligation debt outstanding is rated Aa by Moody's Investors Service and AA by Standard & Poor's.

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