The city of Savannah continues to face budget challenges that are likely to last well into next year.


The city’s senior budget director, Melissa Carter presented a budget update at a workshop held on Thursday. To close a now projected $4 million budget deficit will require management and control "that doesn’t end," on Dec. 31, Carter said.


Big hits to the city’s revenue have come from drops in sales and hotel/motel tax receipts related to the pandemic.


The current projected $4 million deficit is an improvement, however, from the mid-year budget updates that forecast a $13 million deficit. That gap was closed when the city implemented Tier 1 of a multi-step approach to find savings and revenue.


City Manager Pat Monahan said operation cuts including a soft freeze on positions, travel restrictions, supply purchases and more have resulted in $9.2 million in savings.


Carter noted the city’s revenues are $7.5 million lower than budgeted with the potential for more drops due in large part to hotel/motel tax collection declines.


"We have been on a proverbial roller coaster with high points and low points, to changing the way we do business to meet changing priorities," Carter said. "And we’ve been doing this with a spending base that has increasingly become less and less reliable."


Carter said projections of a $4.8 million drop in hotel/motel tax collections will likely be adjusted in the next weeks. Council also discussed options for cutting costs by finding city space to move staff that are in leased facilities, such as at the Savannah Morning News building, located on Chatham Parkway.


One bright spot Carter reported was that the city was able to increase sales tax revenues by $2 million when a state audit found sales tax funds owed to the city.


Carter said the budget projections are solid on property tax revenues with the set current millage rate of 12.739 that is also being used as staff begin 2021 budgets.


The city had also projected being able to save about $4.5 million in personnel with part of the savings coming from a CARES act federal reimbursement for the $1.5 million the city spent on hazard pay for employees at the start of the pandemic. The city, however, recently learned those funds will not be reimbursed due to the state not releasing any more funds to the city.


Carter said more cuts to city expenses will be needed.


"We still have to look at further cuts to operations as we deliberate on the 2021 budget."


A 2021 budget retreat is planned for November.