Addressing the Louisville Metro Council, Mayor Greg Fischer said the city needs additional revenue if it wants to remain competitive and that a local sales tax option would give the city more independence from state government.
The mayor has been pushing lawmakers in Frankfort to allow the city to put temporary sales tax increases up for a public vote. He outlined his plan—dubbed Local Investments For Transformation, or LIFT — for council members Thursday.
According to the Fischer administration, the option could bring in $90 million annually with a one percent to the state sales tax.
Fischer says the city’s general fund is not enough to keep pace with similar-sized cities, and this effort is about taking Louisville to the next level.
“I believe that we need more options. We need to be able to take control of our own destiny,” he says. “And local options sales taxes are the most common method that people use to raise money for specific projects, for a specific time, paid for in a specific way and these funds do not go into the general fund.”
But the mayor’s proposal is an uphill legislative effort that will require a change to the state constitution. It first requires a two-thirds passage in both the Democratic-controlled House and Republican-controlled Senate in addition to a statewide referendum.
Besides meeting the members of the Jefferson County delegation, Fischer has been touring the state to lobby other mayors and state officials. Several council members peppered the mayor with questions about the plan, but many showed support for creating the local option.
“Philosophically, I believe consumption taxes are more fair,” says Councilman Jerry Miller, R-19. “And I’m certainly an advocate for putting tax increases on the ballot. That’s the bedrock of Kentucky being a commonwealth and we being a democracy.”
But council Republicans such as Miller have said they would only be willing to support Fischer’s plan if the administration would be open to lowering other levies such as the occupational tax.
During the presentation, Councilman Ken Fleming, R-7, said the mayor’s office should considered other offsets first. He also challenged Fischer’s numbers that said the current tax burden in Louisville is low compared to other cities.
The city faces a built-in deficit of around $20 million, but Fischer says the local sales tax option would not be used to supplement the general fund.
Other council members have pointed out that the shortfall should be the top prioary and that city shouldn’t be pursuing special projects that could pit neighborhoods against each other when basic services are lagging.
“At some point we’re going to have to find some other kind of revenue source other than just continually taxing this community,” says Councilwoman Mary Woolridge, D-3. “When I can’t get the grass cut in my district, when I’ve got board up and vacant houses it’s hard for me to have this vision about what we can do 25 years from now.”
Fischer tells WFPL that he will start an education campaign for residents and then meet with state leaders leading up to the 2013 legislative session to convince them that the sales tax options is what the city needs.