With less than two weeks to go before Metro Council members must decide whether to pass a version of the mayor’s proposed tax hike, lawmakers have yet to reach a consensus on the specifics.
At a special meeting at City Hall on Monday, most of the council’s 26 members gathered to discuss their ideas on how to address the projected budget shortfall the mayor’s office anticipates will amount to $65 million over the next four years. Mayor Greg Fischer and his allies blame the gap largely on an increasing state pension liability, though employee health care costs are rising as well.
Lawmakers are now sizing up their options — and each other. In a series of anonymous exercises, they each shared how much they would be willing to raise the insurance premium tax and how much they would be willing to cut from the city budget. Then, most detailed what changes they could support.
In terms of cuts, the most common response was to eliminate up to $15 million worth of personnel and services starting in the new fiscal year, which begins in July. To fill the rest of the budget gap will require raising the insurance premium tax, which Louisville Metro can do without state approval.
Budget committee chairman Bill Hollander, of District 9, said after the meeting that he and some fellow Democrats are working on an amendment to the mayor’s original tax proposal, which he hopes to introduce ahead of the budget meeting on Thursday.
“I think we’re closer than a lot of people probably thought,” Hollander said, pointing to the general agreement among council members that the solution needs to involve raising revenue and implementing cuts. “The question is how much revenue and how much cuts. We’re not quite there yet but we’re getting closer.”
The amended tax ordinance will likely resemble ideas put forth by Markus Winkler, the Democrat from District 17, last week. He suggested doubling the insurance premium tax over four years, and imposing hiring freezes, increasing health premiums for Metro employees and stopping yard waste collection in the wintertime, among other measures. Unlike the original tax proposal, he recommended including an increase on the tax on auto insurance, which would be phased in over time.
Last month, Fischer called for tripling the tax to 15 percent by 2023. As an alternative plan, he proposed cutting $35 million in the first year, and $10 million a year for the following three years.
Monday’s discussion did not include many specifics regarding what services may be on the chopping block when the level of cuts is determined, although one council member mentioned bike lanes. This year’s budget includes $500,000 for that bit of infrastructure, an expense that is often invoked by politicians and taxpayers as frivolous.
But council members acknowledged that in some districts, particularly those with lower average incomes, services provided or funded by the city can be essential. Democrat Nicole George said as much.
“In District 21, we’re in need of more services, not less,” she said. “There’s a lot of work that needs to be done on implications and how certain cuts disproportionately impact different areas.”
The Bond Question
Another point of discussion at Monday’s meeting was why the mayor’s office halted work on city projects following a Metro Council vote to table approval of planned bonds.
The conversation between council members and city CFO Daniel Frockt was at times contentious. Some members insisted there was no problem delaying the vote on whether to issue the bonds while seeking answers to larger budget questions, while Frockt said the two were not related.
Council is responsible for authorizing bonds that have already been allocated in order to release the funds for capital projects. The matter could come up for a vote again at the next full council meeting on March 21.
In an effort to highlight the problem with delaying paying out bonds, Frockt and Council President David James, of District 6, pointed to the leaders of the Louisville Affordable Housing Trust Fund and the Louisville Urban League, both of which use city funding.
Urban League CEO Sadiqa Reynolds said she is trying to leverage a $10 million bond earmarked for her nonprofit’s planned $35 million track and field facility at 30th Street and Muhammad Ali Boulevard to secure more funding. At stake are New Market Tax Credits, which require the recipient to have other sources of funding.
“We need you to act,” Reynolds said at the meeting. “We can’t go on indefinitely because people really do begin to lose confidence, and I mean folks that we’re trying to get funding from.”
Investors could begin to question the city’s commitment, she said. But in an interview after the meeting, Reynolds told WFPL she believed the project still had the city’s support.