THE DIRE WARNINGS last week from City Manager Rob Hernandez about the "unsustainable" nature of Savannah’s financial situation only seemed to come out of nowhere.
In reality, he’d been sounding the alarm for awhile, in interviews and Council workshops.
If you were surprised, it might be because you were lulled into thinking Savannah had all the money in the world.
That would be understandable given all the consultant studies, the real estate purchases, the new bond issues for new parking garages, and the ambitious public works projects planned from Savannah River Landing to the new Canal District, from the east end of town to the west.
The apocalyptic warnings only came to a head at last week’s City Council meeting because of the backdrop: The suddenly announced layoff of almost 100 City employees, and a proposed new fee to fund Savannah Fire and Emergency Services.
The fee itself — estimated at an average of $370 per year per household — was guaranteed to be controversial enough on its own.
Not confined to private households, the fee would be assessed across the board, including nonprofits such as SCAD, churches, and even local public school buildings.
Basically, anything in danger of potentially catching on fire would have to pay the fee.
While opposition from the community and several Council members was strong, in the end Council voted to keep the option of the Fire Service Fee on the table for possible future implementation.
Mayor Eddie DeLoach was blunt in saying “it’s either this or a tax increase” to cover the at least $18 million budget shortfall the City faces in 2018.
However, adoption of the fee doesn’t in any way insulate citizens from tax hikes as well, on top of the fee.
School Board President Jolene Byrne mused openly that the School Board would probably have to raise its own property tax rate to cover the costs of the Fire Service Fee to the school system.
(For those who don’t know, or who rent and therefore don’t pay property taxes: The Savannah-Chatham Public Schools levy by far the highest amount of property tax in the County. And while it’s true that residents of Chatham County outside City limits have for years paid a standalone fee for fire safety, it’s also true that they don’t pay City property taxes, as City property owners do.)
Renters aren’t immune either, because landlords will undoubtedly pass along the cost of the fee to their tenants.
What is confounding about the City’s dire budgetary shortfall is how the numbers just don’t seem to add up with the reality we see around us:
• Tourism in Savannah has never been higher. 2017 is likely to be yet another record-shattering year.
• The Port of Savannah has never been busier. They are also touting yet another record-setting year, an amazing 25 percent higher than 2016.
• Nationally, the economy is robust and the markets often hit historic highs not just every week, but sometimes several times each week.
• Consumer confidence – which reflects directly in new businesses opening – is also at highs not seen in decades. A new bar or restaurant, or two or three, opens every week in Savannah. We literally cannot build hotels fast enough.
And contrary to what you might think, many of the City’s large new capital costs aren’t necessarily the things that are blowing up the regular budget.
Projects like the upcoming Westside Arena and the (overbudget) Cultural Affairs Center are funded by SPLOST, a sales tax voters have supported since the 1980s and which exists apart from the City’s own budget.
Why then, are our finances “suddenly” so bad, when so many economic indicators have literally never been this bullish in living memory?
And more importantly, what can be done?
Here are a few ideas:
1) A new Port container fee. One new fee that might make more sense than a Fire Service Fee has to do with the Port of Savannah itself.
It is routine everywhere but here for local governments to levy a per-container charge on traffic through the local port. At the Port of Savannah, however, we do not.
Almost all the profit from our record-shattering port, which boasts the largest container terminal in North America, is essentially extracted to multinational corporations and to Atlanta.
Instituting such a fee wouldn’t be easy, as it would have to be a countywide effort and supported by the county’s delegation to the state legislature.
But is there some rule that says we can’t even bring it up?
2) Let’s talk about the hotel/motel tax, which brings in about the same yearly revenue as the City’s projected 2018 budget shortfall. Its revenue is currently up more than ten percent over last year.
But the City only gets half the take from its hotel/motel tax. A third goes to fund Visit Savannah.
The Civic Center – yes, that Civic Center, the one that’s obsolete and set to be replaced by the Westside Arena – gets about half a million dollars a year from it.
As with container fees at the Port, changing the hotel/motel tax allocation would have to happen at the state level.
So why not at least take a look at it?
3) As for SPLOST, did you know that each six-year SPLOST term provides over a $1 million discretionary budget to each City Council district? Each Alderperson can spend the money as he or she wishes in their district on “neighborhood projects.”
Yep – your district representative gets more than a million bucks to spend, with very few strings attached. (I like to call it their “Re-election Insurance Policy.”)
While it’s illegal to use SPLOST funds for operating expenses, it’s worth noting that the total of all the City Council discretionary “neighborhood” SPLOST allotments would alone make up half the amount of our current City budget deficit.
4) And yes, let’s talk about the C word: Consolidation.
Sounds crazy, right? After all, we’re in the middle of breaking up a consolidated police department.
While it may seen counterintuitive given the looming breakup of the police merger, consolidation of City and County government seems inevitable as a topic of conversation when it comes to balancing our budget efficiently.
In a way, the police debacle might prove the point. We went about the police merger backward from the beginning.
Typically governments consolidate first, and then merge their police departments, rather than the contrarian way we decided to go about things—which is now costing us at least half the amount of the total 2018 budget shortfall in unforeseen expenses.
In any case, let’s not shoot the messenger. Rob Hernandez was hired in part specifically to address City financial problems. Streamlining and making tough decisions was always going to be part of the formula.
The controversial Fire Service Fee is only a small part of the big picture. The City’s finances are on fire, and somebody’s got to put it out, one way or another.
It’s a big problem, and thinking bigger is the best way out of it.