A CITY which for decades has prided itself on rock-solid financial management found itself staring into the abyss at year’s end, asking itself:
Where did all the money go?
It’s now a common refrain at local cafes, bars, offices and kitchen tables. How can a metro area with about 14 million visitors a year, one of the Western Hemisphere’s busiest ports, two key military bases, two universities and a globally-hyped art school be in such poor fiscal shape?
Where did all the money go?
It has been the job of City Council and new City Manager Rob Hernandez over the past few weeks to carve out a budget for 2018 which in some way attempts to stem the bleeding and keep the City within fiscal restraints.
However, old habits die hard.
Their solution was arguably the worst of all worlds. In a nutshell, it combines a deeply unpopular new Fire Fee with extensive service cuts, which unfortunately don’t address the core problem: Savannah is committed to more large projects than we can afford even under the new budget regime.
As deliberations went on, the magnitude of Savannah’s penchant for having bigger eyes than its budgetary stomach became starkly clear.
For example, the massive commitment to a new Westside Arena — which to be fair was embarked upon before this Council and City Manager — has ballooned into a budget buster all its own.
The arena project was sold to the public as a gimme, because the building itself is funded purely through a special one percent sales tax (SPLOST).
However, what the City has never adequately explained was the scope of the project’s entire infrastructure cost — a cost which SPLOST specifically does not fund and which we are now informed we must borrow more money to pay for.
That’s right — a Savannah that is already broke must go deeper into debt to complete the new arena, groundbreaking on which isn’t even expected until sometime in 2019.
At last week’s pre-meeting workshop discussing the budget, the arena was a topic of conversation.
“Can I ask a question?” said Alderman Tony Thomas to City Manager Hernandez. “Do we really have enough money to start all this?”
To which Hernandez replied in frank fashion: “To start, yes.”
It’s then that the news came out, almost casually, that the plan is for the City to float new bonds in order to complete construction of the new arena. (An arena the actual purpose of which was still being debated at the meeting, by the way.)
Keep in mind that one of the barriers to sound fiscal management that Hernandez had already identified is the fact that Savannah has piled up bond indebtedness for various capital projects.
Our dependence on them is apparently increasing, not decreasing.
With SPLOST projects like the new arena, government ties its own hands, as these capital expenses are legally bound to go ahead now that voters have had their say by passing the last round of SPLOST with the approved project list.
On the other end of town, another massive capital project is underway in one of the easiest-flooding, lowest-lying areas in the county.
The “new” Savannah River Landing will feature more debt-driven, taxpayer-underwritten development, in the form of a parking garage and greenscaping for a private sector project.
The development will spill across President Street — perhaps literally given the swampy topography — to a new hotel.
Well at least the crosswalks over President Street are already built!
This stubborn commitment to admirably big ideas that unfortunately we just can’t afford is a feature, not a bug.
It has spanned mayoral administrations and to a lesser extent, city managers themselves.
Because of this, our chickens have come home to roost.
A lack of imagination and discernment have made the problem worse.
I’ve written many times in this space that the tourism number the City bases much of its decisions on is inflated.
It’s not that anyone is lying. It’s true that we get about 13-14 million visitors a year — but a visitor isn’t the same as a tourist.
And that’s the mistake we keep making. We make very serious long-term financial commitments based on an assumption that arguably doesn’t reflect reality as accurately as it should.
The official visitor number to Savannah, bandied about by politicians and planners and developers, includes day-trippers.
So if you’re coming into Savannah from Effingham County for a dentist appointment, you’re counted in that 14 million.
Our actual tourist number is closer to half that figure — roughly 7 or so million a year, about the same as Charleston’s actual tourist number.
Still very healthy, and still a very good thing. But my point is that many of our long-term financial decisions are being based on a number twice that big. We are paying the price now, literally,.
I have written about this for years. But it’s like banging my head against a brick wall at this point for all the good it’s done.
So many of our problems and their possible solutions are staring us in the face.
Savannah will cut the Rape Crisis Center’s already miniscule budget to save money, but we will not look at how revenue at the Port of Savannah is almost all extracted profit — the community itself makes almost no money off the record-shattering traffic.
Savannah will institute a new Fire Fee which might not even be enforceable, but we will not look at how the sizeable revenue from the hotel/motel tax essentially exists to fund the tourism industry in a self-perpetuating, closed circle.
But the silver lining is that these dots are now easier to connect. I only hope it’s not too late to begin making the right decisions.
