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Nov. 8 – COMMENTARY: Hitting Aldermen with 48-hours’ notice on a $31 Million Decision is, well ....Pick Your Adjective

(Editor's Note:  This story was UPDATED Nov. 9 due to typo on the costs of the Savannah versus the Augusta Fire Dept. The figures were reversed.)

By Lou Phelps, Publisher

November 8, 2017 - City Manager Rob Hernandez took a wrong turn on Tuesday in pushing the City Council, at a ‘briefing’ in the late afternoon, to give him the go-ahead to move forward with implementing a citywide Fire Service Fee. He projects it will bring the City $31 million a year in new revenues. 

Many in the room were stunned at the presentation, the first time the idea has been aired, and his push to get the Council to move forward with voting on a Charter Amendment at this Thursday’s City Council meeting, less than 48-hours from now. 

It was a particularly stunning approach considering the lack of data he was willing to share with the Council on how he is coming up with  projected revenues and expenses for next year.

Hernandez used a scare tactic to push his strategy, stating the City was facing an $18.2 million budget shortfall in 2018, and offered up yet another consulting firm to stand with him to say so, yet he provided no detail on why revenues would be so soft when the City has thousands of new hotel rooms coming on line. He also admitted that sales taxes are projected to increase 6% next year.  A number of Aldermen tried to get more detail, but to no avail. 

Projected revenues and expenses should be laid out in depth at the upcoming two-day, public Budget Hearings, set for Nov. 28-29 at the Savannah City Center, when Hernandez will present his budget proposal.  As it is, the hearings being held just four weeks before the City's new fiscal year begins on January 1.   

There is no question that Hernandez has worked since his arrival to get his arms around the City’s budget;  to “pull it apart” as he told us he would; and to take a more businesslike approach to long-range planning.

But, it is too late in this year’s budgeting process to throw a $31 million ball up in to the air without vetting all of the options that the City Council has to address 2018, a year that will be impacted by one-time start-up costs of the Savannah Police Department as well as capital needs that have been underfunded. 

It was also very disappointing Tuesday that he acknowledged that the City’s team had not even met with any of the affected stakeholders who will get hit with those $31 million in new costs - the Fire Safety Fee. 

His llack of pre-work in talking to governmental, educational, healthcare and business leaders whose institutions and companies that will be significantly impacted by a new Fire Safety Fee, risks an even longer list of people lining up to say, “We don’t trust this guy.”    

After the collapse of the City/County police merger, endless battles still ahead on 911 service, the courts, jail costs and other legal battles with the County ahead, including the millions the County owes the City, it is not a way to ‘play nice’ with area leaders.  You just don't broadside people in the public arena in which he operates. 

The public, the voter, the taxpayer is trying hard to learn the truth behind why the Savannah-Chatham Metro Police Dept. merger truly fell apart, as well, and the true costs we all face ahead due to that decision. 

As Alderman Van Johnson said truthfully after the session, “We don’t know what it’s going to cost us. It’s a moving number, a moving target."  It must be staggering if Hernandez is looking for $18.2 million with property valuations going up, and strong tourism and sales tax numbers. 

Alderman Julian Miller continued to throw dis-information out to the public at the session, stating that the de-merger of the police department would be ‘revenue neutral,’ even though the City will lose the $11 million that Chatham County had been paying annually toward policing.  Few are buying that, at least so far. 

In the end, even though no votes are supposed to be taken at a “briefing,” the vote was 7 to 2 to let Hernandez move forward, with only Johnson and Alderwoman Estella Shabazz saying “No.”  Johnson said he could not approve rushing forward on a Fire Fee without basic information from the City’s financial team on costs and tax revenues.  We'll see what happens on Thursday after the phones ring off the hook of every Alderman. 

Who's going to take Paula Wallace's call? 

To add to the confusion, Hernandez threw another ball up in the air, stating that his proposed 2018 budget would include escalating the City’s five-year elimination of the City’s Inventory Tax on businesses.  Starting two years ago, the tax has been cut by 20%, a five-year plan to eliminate it by 2020, a deal that business leaders struck several years ago that was viewed as a pro-industry strategy.

And, while the Savannah Economic Development Authority might be pushing to end the remaining 60% all next year, it had never been discussed by the City Council, and the cynic might view the move as more of a Mayor Eddie DeLoach campaign move to business support his 2019 re-election campaign vs. a good financial move. 

Hernandez did not state what that eliminating the remaining 60% of the Inventory Tax revenue in one year would cost – how much more he was scrambling to cover.  “We might as well just end it all next year,” he said, to a look of surprise on the faces of the City Council, as well as other business leaders in the audience.

Bottomline is that at the Council’s budget retreat, they should spend less time on a line by line oration on the expenses of the Tree Dept, and more time being given options to fund the 2018 budget.  

That information should include a long-overdue zero-based budgeting discussion of why we spend so much for our Savannah Fire Dept. - a $32 million bill that Hernandez is trying to get out of his operating budget - and why this is the time to create a fire enterprise account and hit everyone in town with a new mega-fee. 

The cost of fire protection is a function of population, but it is also a function of the geography that any fire department must cover.  According to business leaders, the City of Savannah’s department covers 104 square miles, while Augusta’s covers more than 309 square miles – three times the mileage to drive to provide timely services.

Both cities’ departments have a IOS-1 rating.  Yet, Augusta spends $25 million a year, and we spend $32 million a year.  The cost per person, and per mile of coverage doesn’t seem to compute.

And, let’s be honest.  Hitting the School Department with a major Fire Fee for every building and lot owned by the SCCPSS Board of Education may force them to raise THEIR millage rate.  Hernandez had no projections – nothing on a piece of paper or an overhead slide – to answer questions by several of the Aldermen about what kind of bill on the public schools would face, nor SCAD, nor the churches.   Alderman Tony Thomas asked Hernandez, “Don’t you have at least projections by category?”  The answer was “No.”

Alderman Johnson pointed out, “You’re giving us a worst-case scenario,” of the potential shortfall next year, asking Hernandez if there wasn’t a range?   He couldn’t get an answer out of the City Manager on that, either.

A Fire Safety Fee may be something to look at … but not in 48 hours.  

The Council shouldn’t let themselves be pressured into a decision on Thursday without having more information, and without time to garner feedback from SCCPSS, SCAD, Memorial Health, St. Joseph’s/Candler and  the Council of Churches.

The City’s Budget Director Melissa Carter stated that one of the ways the city’s budget was balanced this year was by keeping positions dark through attrition, reducing payroll expenses by $8 million from what was budgeted.  What company doesn’t employ a similar strategy to balance the budget when revenues are down?

The City also have the potential to borrow to cover a shortfall, to look to the fire fee in 2019, after an analysis of all options.  Hernandez did state that the budget he will be putting forward has a net cut of 35 City employee jobs. That’s a very small number out of the total number of employees not working in public safety departments.  While he has visions of where he may want to take the City over the next five years, we may not be able to move as rapidly in 2018 as we absorb the startup costs of the new Savannah Police Dept.

Instead, Hernandez and his growing team of managers, financial and strategic planners and consultants should put a list of options on the table for the Council to consider, including a property tax millage rate increase.

All options should be vetted.  Because any other approach is just … well … pick your adjective. 

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