1. FINANCIAL UPDATE May 16, 2013

2. Financial Update will Cover Four Main Topics 1.Review of local economic indicators 2.Review of financial results for year ended December 31, 2012 3.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 2013 2

3. 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 2013 3

4. 4 Source: Armstrong Atlantic University Center for Regional Analysis

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

6. City of Savannah Financial Update May 2013 6 Source: Georgia Department of Labor

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

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9. Source: City of Savannah 9

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

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

12. 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 2013 12

13. Review of financial results for year ended December 31, 2012 13

14. 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 2013 14

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

16. Savannah General Fund fund balance is below many comparable Cities… City of Savannah Financial Update May 2013 16

17. General Fund fund balances as % of Expenditures for several southeastern US Cities City of Savannah Financial Update May 2013 17 Average

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20. Combined Sales Tax Stabilization Fund and General Fund fund balance City of Savannah Financial Update May 2013 20

21. The Revenue Variance is due mainly to five broad categories City of Savannah Financial Update May 2013 21 *Reflects General Fund Only

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23. City of Savannah Financial Update May 2013 23 Total Property Tax Levy

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29. In summary, favorable revenue result attributable to five revenue categories* City of Savannah Financial Update May 2013 29 *Reflects General Fund Only

30. Expenditures less than Final Budget by $195k or 0.1% City of Savannah Financial Update May 2013 30 *Reflects General Fund Only

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33. City Self-funded medical program costs compare favorably to Mercer norm City of Savannah Financial Update May 2013 33

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41. In summary, expenditures under final budget by 0.1% City of Savannah Financial Update May 2013 41 *Reflects General Fund Only

42. 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 2013 42

43. General Fund 2013 Revenues 4.84% behind 2012 as of April 30th City of Savannah Financial Update May 2013 43

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50. 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 2013 50

51. General Fund 2013 Expenditures 3.61% above 2012 as of April 30th City of Savannah Financial Update May 2013 51

52. City of Savannah Financial Update May 2013 52

53. Overall Vacancy Rate down to 6% from 8% last year City of Savannah Financial Update May 2013 53 Full-time Permanent Positions* April 2011 April 2012 May 2013 BureauBudgetedFilledVacant BudgetedFilledVacant BudgetedFilledVacant General Administration 41 35 6 42 35 7 47 40 7 Management Services 275 221 54 272 250 22 271 244 27 Public Development 119 102 17 125 114 11 129 116 13 Public Facilities, Events & Services 231 194 37 222 206 16 222 213 9 Police 841 742 99 842 801 41 842 818 24 Fire & Emergency Services 331 293 38 330 305 25 329 319 10 Public Works 142 121 21 141 128 13 142 127 15 Sanitation 221 202 19 226 213 13 225 212 13 Water and Sewer 285 233 52 281 241 40 282 260 22 Total 2,484 2,143 341 2,481 2,293 188 2,489 2,349 140 Overall Vacancy Rate 14% 8% 6% * Includes full-time trainee positions

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58. 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 2013 58

59. Updated revenue and expense projections for the General Fund show a 2013 deficit City of Savannah Financial Update May 2013 59

60. 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 2013 60

61. THANK YOU

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63. Turning now to Projection of Tax Reform – HB 386 Impact

64. The HB 386 - 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 2013 64

65. HB 386 changes are phased-in so the impact varies from year to year (fully implemented in 2016) City of Savannah Financial Update May 2013 65 Thousands of Dollars 20122013201420152016 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 - 173 243 254 265 Other provisions (film, ag, and constrcn mtl exemptions) (135) (235) (198) (57) (52) Total Net Savannah Impact $ (642) $ (372) $ (271) $ (1,042) $ (1,694)