We really shouldn’t be in this situation.
The Savannah economy has been growing steadily, at times even robustly, for about seven years. In theory, the increasing property values, employment gains, population growth, tourism boom, steady pace of development and other factors should be generating sufficient revenue to fund our city government.
But City Manager Rob Hernandez, who has been on the job for just over a year and who can’t rewrite history, finds himself in the unenviable position of proposing nearly $13 million in cuts for the city’s 2018 budget.
If you want to dig into the numbers for yourself, you can find the preliminary budget at http://www.savannahga.gov/DocumentCenter/View/10739.
Over the next few weeks, Mayor Eddie DeLoach and members of City Council will certainly hear from many citizens who oppose the cuts. And they’ll also hear from many citizens who oppose raising new revenues, including the proposed imposition of a controversial fee to fund the fire department.
How did we get here?
In a memo about the preliminary budget, Hernandez noted a number of ongoing factors and one-time decisions that continue to impact the city’s bottom line.
For example, the Stephens-Day homestead exemption enacted in 2001 has limited property tax revenue. I bought my house in 1996 and have benefited greatly from the exemption, but it doesn’t seem fair that new residents and landlords in my neighborhood are paying so much more than I am.
In 2007, with the promise of immediate growth on the east side of downtown, a tax allocation district was implemented, which reduced flexibility for budgeting during the recession and beyond.
The city has also seen reductions in other tax revenues, including a 2013 cut in the city of Savannah’s share of the local option sales tax, or LOST, collected in Chatham County.
The city also over-promised in terms of SPLOST projects before the recession, and we have had elected and appointed officials who have generally been willing to kick the can down the road.
Also, the city has in recent years made some questionable and expensive decisions regarding property purchases.
In the budget overview, Hernandez stresses that no single entity or decision is to blame for the current situation.
To his credit, Hernandez seems serious about bringing revenues and expenditures into line, but he sure doesn’t sound happy with the level of the proposed cuts, which include eliminating 200 positions, eliminating a merit wage increase and eliminating support for outside social service and cultural organizations.
“The preliminary budget before you remains grounded in financial best practices by adhering to conservative revenue projections, funding recurring expenses with recurring revenues, and maintaining adequate reserves,” writes Hernandez in bold-faced print in last week’s memo.
“Although this Preliminary General Fund Budget is balanced from a mathematical perspective, it is imbalanced in terms of impacts on service levels and staffing. In short, this budget is balanced only through spending reductions and limited fee increases.”
It’s déjà vu all over again
“This year’s budget development process is a case of déjà vu,” Hernandez writes. His office faced a similar situation in 2016 shortly after he started work, but the shortfalls were addressed through unsustainable maneuvers, including drawing down $1.8 million from reserves.
I find Hernandez refreshingly forthright about the disconnect between public expectations for services and the funding necessary to deliver them.
“Despite revenue limitations and increasing expenditure obligations, the public’s appetite for services is fueling a growing expectation for cleaner streets, sustainable infrastructure, rapid drainage, better parks, and enhanced public safety,” Hernandez writes.
“This is an expectation we cannot fulfill without changes to our funding approach or without lessening public demand and expectations.”
What happens next?
Council members and city staff will hold a budget retreat on Nov. 30 and Dec. 1. City Council will hold the first reading of the budget on Dec. 7. Citizens opposed to some of the cuts – especially the elimination of funding for outside arts and social service organizations – are already making plans to attend those meetings.
Almost certainly, Savannah City Council will find a way to split the difference. The mayor and aldermen will probably raise additional revenues but still allow some cuts to go into effect.
I hope that the political wrangling will prompt Savannah residents to reevaluate their priorities.
You’ll be reading more about the budget debate in future columns.
City Talk appears every Tuesday and Sunday. Bill Dawers can be reached via firstname.lastname@example.org. Send mail to 10 E. 32nd St., Savannah, Ga. 31401.