By John Fredericks and Jonathan Copsey / STAFF

Roswell Budget Pothole

“You can’t spend more money than you bring in,” says Roswell councilman Rich Dippolito.

The problem is right now Roswell has at least a $1.1 million shortfall in its 2009-2010 budget, and by city charter, the budget has to be in balance.

That’s the good news. The bad news is that the city’s maintenance fund – money for the upkeep of facilities, vehicle replacements, etc. – has so far been gutted by nearly $1.4 million from its historical average, so some infrastructure improvements will have to be deferred. Absent the maintenance reductions, the deficit would stand at $2.5 million.

Some Want More Cuts

Roswell Councilman Kent Igleheart and Dippolito, however, want to see more cuts. They have asked Roswell staffers to prepare an analysis that would accommodate a total reduction of $3.1 million from the original budget proposed last month. “I am not advocating that we cut another $2 million out at this point,” Dippolito asserted. “I just want to see what it would look like so we can thoroughly evaluate the alternatives and make an informed decision.” Staff is expected to present their findings as early as tomorrow.

Regardless of the call to investigate more spending reductions, the city has to come up with a least $1.1 million. There are five alternatives: dip into Roswell’s reserve, or “rainy day fund,” raise property taxes, borrow the money in the form of a bond, defer more maintenance or reduce spending in the general fund.

No one on city council appears warm to a tax increase in the current economic climate, and borrowing money at a higher interest rate than the reserves earn in the bank makes no economic sense. The problem with a larger cut in maintenance is that in the long run it will cost taxpayers more money in terms of the future improvements that will need to be made and the potential service declines that may result from a lack of proper up-keep. That leaves cutting spending or dipping into savings.

Businessman vs Lawyer

Dippolito, a businessman, says he believes the council should take a vigorous approach to cost cutting prior to making a savings account withdra  wal.  “I want to be sure we have aggressively reduced expenses before we dip into savings,” he reiterated. Dippolito also voiced concern over future revenue projections. “What if the economy continues to decline over the next four years,” he asked?

But Mayor Jere Wood, an attorney by trade, differs with that philosophy. “Any more significant expense reductions in the general fund will have to be realized in the form of job elimination.  I don’t think that is wise, nor prudent,” Wood said. “The long-term cost of recruiting and training a new employee to replace a valuable associate that we let go for short term cost savings far outweighs that immediate savings,” Wood maintained. The mayor instead recommends dipping into the city’s reserves to bridge the gap. “I agree with Councilman [David] Tolleson,” Wood said. “We have a rainy day fund and it’s raining. We don’t have to defer maintenance and we don’t have to lay off valuable employees. We need to repave our streets and we need to keep our good people,” Wood added.  “Cutting another $2 million out of the general fund in this economic environment makes no sense.”

Dippolito countered. “We need to get as lean as possible right now. That is what families are doing, that is what businesses are doing. That is how we should operate, too.”

Alpharetta’s Golden Parachute

It should be a matter of pride for Alpharettans that, when city staff were handing out their proposed budget last Monday, there were already 10 percent in cuts across the board, totaling about $1.4 million. And this was before any councilmember had even looked at it.

Alpharetta has a history of budgeting conservatively, even when times are good. Last year, with property reassessments having just gone through, the city was looking at a massive property tax revenue increase. But instead of welcoming that money, they decided to hedge their bets. They figured only about half of those reassessments would be upheld during the appeals process that everyone whose property value increased decided to go through. As it turns out, Alpharetta was right.

This year, as they stare down the barrel of lower tax revenue, cuts have been made across in all departments in the preliminary budget. Overall revenues are down almost 3 percent and, as would be expected, so are the expenditures. The only thing that will not be declining is the Millage rate, which, despite dropping almost 20 percent in the last three years, is expected to hold steady.

On the chopping block are numerous capital investments, such as road and intersection improvements, as well as some IT upgrades.

“It’s just a culture in Alpharetta,” said Councilman David Belle Isle. “It didn’t have to come before council for those decisions to be made. People understand from the top all the way down the necessity of being conservative with the dollars and being very conscientious and conservative with how we spend it.”

Good Rating is Good News

Alpharetta is one of only two cities in Georgia with a AAA bond rating (the other being Roswell) and only a handful in the country. With this rating secured, the two cities’ municipal bonds are among the safest bets for investment. This comes at a time when, thanks to the sour economy, Moody’s Investments, the company that rates bonds, has for the first time decided that municipal bonds are not the safe bet they once were.

With such a rating, Alpharetta can demand lower interest rates on any debt they acquire, eventually saving the taxpayers money.

“That doesn’t mean that we can go spend money on everything we want,” said Belle Isle. “We are the best possible credit risk that a city can have.”

The reaffirmation of the bond rating is all the more encouraging in the face of the massive $24 million debt Alpharetta is hoping to take on with the City Center bond referendum. The city is expecting to increase its debt by a large sum, yet Moody’s still gave them a gold star.

Editors note: Milton and Johns Creek budget analyses next week.