External auditor gives Savannah a clean opinion; staff warn revenue growth is slowing and recommend holding millage at 11.749 mills

An external auditor presented a clean opinion on Savannah’s financial statements while city finance staff described a cautious mid-year budget outlook and recommended retaining the current millage rate.

Trey Scott, partner at Mauldin & Jenkins, told council the independent audit of the city’s 2025 financial statements produced an unmodified (clean) opinion and that the single-audit of federal grant compliance was also clean; he emphasized there were no audit findings and no auditor-proposed adjustments.

"I am pleased to report that we were able to issue the city a clean, unmodified opinion," Trey Scott said. The audit firm also noted the city prepares its own ACFR (formerly CAFR), an uncommon capability, and that the pension and OPEB funding positions are healthy.

Mid-year finances and main takeaways

Senior Director for Management and Budget Melissa Carter and Finance Director David Maxwell presented financials through the first five months of the fiscal year. Carter described the overall state as "cautionary": revenues through May are up versus pre-pandemic levels, but expenditure growth is outpacing revenue growth.

Key figures presented on the record include: - Baseline budget across all funds: about $646 million; general fund appropriation just over $300 million. - Workforce: approximately 2,687 FTEs funded in the budget. - General fund revenues through May 2026: about $97.1 million (versus $91 million through May 2025); that $6 million variance was driven largely by a payment-in-lieu-of-taxes (PILOT) from Rockingham Farms recorded in other grant revenues. - Sales-tax collections through the first five months were about $1 million below last year’s pace; staff said sales tax growth has softened after a strong 2021–23 run. - Auditor reported government-wide net position positive (~$2.3 billion) and general fund unassigned balance at about 24.9% of expenditures (~88 days of reserves).

Carter warned departments are spending earlier in the year (42% of budget expended in five months versus 39–40% in prior years), and she flagged personnel costs, temporary labor and contractual services as primary pressure points. She noted temp-labor trends could create roughly a $100,000 risk if current patterns continue.

Millage discussion and schedule

Finance Director David Maxwell explained digest growth for the tax year: overall digest up about 5.5% (2.4% new growth and 3.1% reassessment). The county’s rollback rate calculation was 11.402 mills. City staff recommended holding the current millage at 11.749 mills rather than adopting the rollback rate; Maxwell warned the rollback rate would produce roughly a $900,000 budget shortfall that would require council action to cut appropriations.

City Manager Jay said he did not recommend raising the millage and urged caution about short-term reductions that force higher rates later. Council generally endorsed scheduling the statutory public hearings and readings required if council maintains or adopts a rate above the rollback, and staff proposed hearings beginning July 9 with further sessions in August to comply with state law.

What’s next

Staff will prepare public-hearing notices, provide follow-up details on the drivers of revenue variance (including the Rockingham Farms PILOT) and return with mid-year budget projections and potential options for how to use captured growth (public safety priorities, reserve additions, or other policy uses).