Unhappy hour

City officials looking to tax their way to financial health

As 2003 dawns, Atlanta is still the picture of fiscal distress. Facing more than $100 million in budget shortfalls since she took office, Mayor Shirley Franklin and the City Council have laid off employees, increased property taxes and tried to improve the city's fee collections. If that weren't bad enough, the city is looking for more money for its cops and faces a billion-dollar tab to fix its rotten sewer system.

It's enough to drive a man to drink.

Actually, speaking of that, you might be interested to know that city officials want to raise $3 million by doubling the $5,000 annual fee that bar owners across Atlanta currently pay to the city. That's on top of proposed taxes on the restaurant business that would amount to up to 3 cents more for every dollar spent in a restaurant or bar — generating an estimated $11.5 million annually for city coffers.

State lawmakers first must approve the tax, and restaurateurs would be under no obligation to pass on the hike to their customers. But it would be naive to think they wouldn't.

Michael Tuohy, owner and chef of the Woodfire Grill, says he'd have no other choice. All he could do is "pray that it doesn't negatively affect people's desire to eat out."

Indeed, the budget crunch — itself due in part to the shoddy stewardship of the Campbell administration — is forcing the city to come up with imaginative ways to bring in extra dollars, much to the consternation of affected taxpayers.

"I have to run my business efficiently, and if I make mistakes running my business, I cannot raise my prices in this economic climate," says Karen Bremer, owner of downtown institutions Dailey's and City Grill. "So bad management of the city of Atlanta — even though it was before Mayor Franklin — does not mean the city of Atlanta should raise its prices."

In the case of tacking on an extra fee to food and alcohol sales, city officials don't seem worried that it would have long-term negative effects. "We don't want to kill the goose that lays the golden egg. But at the same time, it is the mayor's position and my position that it does not make a difference to someone if their beer costs $3 or $3.09," says Robert Ashe, the city's intergovernmental manager and legislative lobbyist.

Rather, Ashe says, the intent of the proposed measure is to have the businesses that require extra police services to pay for those services. Besides, he says, some changes are long overdue. In the case of the alcohol licenses, the current $5,000 price tag was set in 1980. Needless to say, the price of fire and police protection has gone up since then. What's more, a bar in rural Georgia pays exactly the same amount as a bar in Atlanta.

While Bremer understands the city's need for additional revenue, she says Atlanta would do better to collect the money it's already owed; sometimes restaurant owners are left trying to find out whom in City Hall to send their money to. For example, every restaurant in the city already pays a grease-trap fee every year to City Hall — about $150. Problem is, all the licenses expired in September, and the city hasn't decided how much it will charge restaurateurs to renew.

But the grease-trap problem is a relatively new one for a city with a history of failing to collect what's owed it. In 2001, for example, Atlanta missed out on about $20 million in sanitation fees.

District 8 City Councilwoman Clair Muller, whose committee is devising a new fee structure for the grease traps, admits that Atlanta can do a better job with collections.

"We are trying to move in a better direction," she says, noting that the city went to a private collection agency to improve the poor payment of sanitation fees. "It's been incredibly difficult digging ourselves out of the hole of the last eight years. We don't even have good records of who has business licenses."

Ashe says the city isn't trying to frighten business owners and is willing to explore any compromises the hospitality industry has in mind. It's a fix Bremer seems willing to explore, especially when it comes to working with Atlanta to develop a better permit and fee system that would be more efficient for the city and more responsive to business owners.

"Obviously, we're interested in seeing if there's a win-win," Ashe says. "The hospitality industry as a whole has an interest in seeing Atlanta with a fully staffed police force. They know that us having a visible and adequate police presence is something that is important to visitors. Taxes for taxes' sake is not what we're interested in."

Still, that explanation doesn't do much for Tuohy, who hopes the city can offer a tradeoff if it gets the go-ahead from the state to increase fees, a possibility political observers say is not very likely.

"Just the fact that they're proposing these kind of things doesn't give me the warm-and-fuzzies about opening a new business," says Tuohy, who opened Woodfire Grill this year. "Had I known this, I probably would have chosen something else."