City officials in Northeast Georgia are going to have to be prepared for what may come out of a state legislative session in which lawmakers are walking in facing a $2.5 billion budget shortfall, a municipal lobbyist said Thursday.

Some 80 city officials from 19 cities in District 2 gathered Thursday night for the annual meeting in which officials, legislators and members of the Georgia Municipal Association talk about legislative issues for the coming year.

Paul Radford, GMA’s deputy director of external affairs, told city officials that they are going to have to find flexible revenue sources as threats of property tax assessment caps and withheld Homeowner Tax Relief Grants loom over the upcoming legislative session. The state has said the tax relief grants, which make up the shortage in local property tax resulting from exemptions, may not be doled out to cities next year.

Radford said one of the main challenges cities face this year, aside from the state budget, is updating water, sewer and transportation improvements.

"Water and sewer and transportation infrastructure are woefully inadequate," Radford said.

Radford told city officials they are going to have to get projects ready for whatever comes out of federal- and state-level dialogue about infrastructure improvements.

Radford said city officials should consider implementing Municipal Option Sales Taxes and Transportation Special Purpose Local Option Sales Taxes to help fund infrastructure improvements on water and sewer as well as transportation.

A handful of state lawmakers attended the event, including Rep. Carl Rogers and Sen. Lee Hawkins from Gainesville.

All of the state legislators mentioned the challenges they will face with the state budget next year.

Hawkins also urged city officials to look into transportation and municipal sales taxes to supplement their revenues, and spoke about the decisions lawmakers face next year on property tax reform.

In 2009, lawmakers will walk into the session with a proposal to amend the state’s constitution to freeze the valuation of residential and nonresidential property adjustments. In January, the legislative session began with a proposal that would have eliminated property taxes completely. The municipal association vehemently opposed the proposal.

"Property tax has always been a sore subject," Hawkins said.

"Yes, we do have a trying time coming up in January to say the least," Rogers said.

Last month, the GMA also held a meeting with officials of cities from District 5, which includes Talmo, Jefferson, Commerce and Pendergrass.