FINANCIAL UPDATE May 16, 2013

Financial Update will Cover Four Main Topics 1.Review of local economic indicators 2.Review of financial results for year ended December 31, Review of 2013 financial results based on four months ended April 30th 4.Projected Impact of new LOST certificate City of Savannah Financial Update May

Review of Local Economic Indicators- Local economy in recovery 1.Leading and coincident indexes 2.Unemployment rate 3.Initial jobless claims 4.Home foreclosure trend 5.Retail sales/sales tax revenue trend 6.Hotel/motel tax revenue trend 7.Building inspection fees City of Savannah Financial Update May

4 Source: Armstrong Atlantic University Center for Regional Analysis

City of Savannah Financial Update May 2013 Source: Georgia Department of Labor 5

City of Savannah Financial Update May Source: Georgia Department of Labor

City of Savannah Financial Update May 2013 Source: RealtyTrac, Inc. 7

City of Savannah Financial Update May

Source: City of Savannah 9

City of Savannah Financial Update May 2013 Source: City of Savannah 10

City of Savannah Financial Update May 2013 Source: City of Savannah 11

Economic Indicator Take-aways... Unemployment rates remain high but have been improving for last 12 months Initial Jobless Claims are higher than normal, but have been declining for past 24 months Number of mortgage foreclosures has dropped significantly in last 6 months Hotel/Motel tax revenues exceed pre-recession levels Building activity permit fees have been inching up in last six months but still well below pre-recession highs Most recent “leading indicators” suggest growth for next 9 months Taxable sales are projected to decline – due to change on law. City LOST revenue forecasted to decline – LOST formula change Most prudent course is to remain conservative in financial decisions City of Savannah Financial Update May

Review of financial results for year ended December 31,

How did the City do Financially in 2012? 1.General Fund revenues were $3.23 million over final budget (1.9% variance) 2.General Fund expenses were $195,000 under final budget (0.1% variance) 3.Net revenue was $322,000 4.General Fund unreserved fund balance at $31.3 million; 17.8% of expenditures City of Savannah Financial Update May

City of Savannah Financial Update May 2013 General Fund turned in favorable variances for Year Ended December 31, 2012* 15 *Reflects General Fund Only

Savannah General Fund fund balance is below many comparable Cities… City of Savannah Financial Update May

General Fund fund balances as % of Expenditures for several southeastern US Cities City of Savannah Financial Update May Average

City of Savannah Financial Update May

City of Savannah Financial Update May

Combined Sales Tax Stabilization Fund and General Fund fund balance City of Savannah Financial Update May

The Revenue Variance is due mainly to five broad categories City of Savannah Financial Update May *Reflects General Fund Only

City of Savannah Financial Update May

City of Savannah Financial Update May Total Property Tax Levy

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City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

In summary, favorable revenue result attributable to five revenue categories* City of Savannah Financial Update May *Reflects General Fund Only

Expenditures less than Final Budget by $195k or 0.1% City of Savannah Financial Update May *Reflects General Fund Only

City of Savannah Financial Update May

City of Savannah Financial Update May

City Self-funded medical program costs compare favorably to Mercer norm City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

In summary, expenditures under final budget by 0.1% City of Savannah Financial Update May *Reflects General Fund Only

How are we doing so far in 2013? Based on Four Months ended April 30th We will look at: – Revenues, and – Expenditures for the first four months of the year City of Savannah Financial Update May

General Fund 2013 Revenues 4.84% behind 2012 as of April 30th City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

In summary 2013 General Fund Revenues… Are behind 2012 as of April 30th –This due mainly to reduction in LOST revenue Formula change HB 386 Impact –Lower Real Property Tax revenue due to billing timing –Lower H/M tax due to timing of payments Detailed forecast for the year based on first quarter projects a $4.1 million unfavorable variance –This is due to reduced share of LOST. Projected Net of all other categories is on target. City of Savannah Financial Update May

General Fund 2013 Expenditures 3.61% above 2012 as of April 30th City of Savannah Financial Update May

City of Savannah Financial Update May

Overall Vacancy Rate down to 6% from 8% last year City of Savannah Financial Update May Full-time Permanent Positions* April 2011 April 2012 May 2013 BureauBudgetedFilledVacant BudgetedFilledVacant BudgetedFilledVacant General Administration Management Services Public Development Public Facilities, Events & Services Police Fire & Emergency Services Public Works Sanitation Water and Sewer Total 2,484 2, ,481 2, ,489 2, Overall Vacancy Rate 14% 8% 6% * Includes full-time trainee positions

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

City of Savannah Financial Update May

In summary 2013 General Fund Expenditures… Are ahead of 2012 as of April 30th This is due to higher expenses for base wages, medical contribution, pension contribution, and overtime A detailed expenditure forecast based on actual at April 30th is $1.1 million under budget City of Savannah Financial Update May

Updated revenue and expense projections for the General Fund show a 2013 deficit City of Savannah Financial Update May

Challenges and Bright Spots on the Horizon … Challenges- Immediate imbalance for 2013 –HB386 Impact –LOST revenue reduction Capital improvement needs Medical benefit cost Funding City drug squad Funding fire staffing for new station Intergovernmental Issues CDBG future federal reductions Capital Markets impact on Pension Cost Bright Spots- Effective cost controls Property digest stable Tourism strength Short term 2013 local economy outlook favorable Medical benefit cost Jail cost savings Capital market turn-around City of Savannah Financial Update May

THANK YOU

City of Savannah Financial Update May

Turning now to Projection of Tax Reform – HB 386 Impact

The HB Tax Reform Measure impacts local revenues in several ways Major changes are: Vehicle taxation –Eliminate vehicle ad valorem tax –Eliminate sales taxes on vehicle sales –Institute new “Title Fee” on all title transfers Eliminate sales taxes on energy sold to manufacturers Sales tax holidays for back-to-school and energy- efficiency products in 2012 and 2013 E-Fairness measures City of Savannah Financial Update May

HB 386 changes are phased-in so the impact varies from year to year (fully implemented in 2016) City of Savannah Financial Update May Thousands of Dollars Change in taxation of vehicles $ - $ 370 $ 116 $ (498) $ (859) Elimination of sales tax on energy to mfg - (141) (433) (741) (1,048) Sales tax holidays (507) (538) E- Fairness sales tax on internet sales Other provisions (film, ag, and constrcn mtl exemptions) (135) (235) (198) (57) (52) Total Net Savannah Impact $ (642) $ (372) $ (271) $ (1,042) $ (1,694)