Louisville leaders have about six months before Mayor Greg Fischer’s next budget proposal, which could cut another $10 million. That’s on top of the more than $25 million officials cut this year.
Those cuts are driven in large part by a growing pension bill from Frankfort that will continue rising for the next few years. Some Metro Council members are concerned about the city’s limited options for avoiding cuts for years to come.
A common complaint from local officials is the way state law constrains which taxes they can levy. For example, Louisville can’t tax restaurants or impose a local option sales tax.
Budget committee chairman Bill Hollander (D-9) said Louisville needs to raise taxes to offset another round of cuts. That’s despite the fact that earlier this year, lawmakers blocked a proposal to raise the insurance premium tax.
Hollander said he is hopeful that the Kentucky General Assembly will make some beneficial changes — especially because many cities across the state are feeling the crush of an increasing pension obligation.
“Revenue diversification, giving cities more options, is something that mayors and city council members throughout the state are talking about, and we hope for some relief from the Kentucky General Assembly beginning in January,” he said.
But city and county officials have questioned the limits on their taxing abilities before. Why would it be any different now?
“It has been an issue for awhile,” Hollander conceded. “I think it is more likely now than ever before because of the situation that cities and counties are in throughout the state.”
But Councilman Mark Fox (D-13) is not so optimistic.
“It’s not been done yet,” he said. “I don’t see an appetite for it going forward.”
He said he wants Louisville to be able to apply its own sales tax, which he said would affect everyone equally, based on their spending habits. But he doesn’t expect any imminent changes from Frankfort.
The budget priorities for Fox, a retired policeman, are police, fire, emergency medical services and street paving.
“Then when we see what we’ve got left over, then we look at everything else the government has been doing, we establish a priority list of what our citizens think is most important and we work down that list,” he said.
Both Hollander and Fox are concerned that the city’s budget shortfalls will continue to affect police and other essential departments. Hollander said there will be 70 fewer officers on the streets this year, and that trend could continue without new revenue. Officials cut one recruit class as part of the cuts to this fiscal year’s budget.
Last month, Louisville Metro Police Chief Steve Conrad addressed the Council’s public safety committee about retirements and resignations. He blamed some of these issues on pension concerns and officers seeking higher pay. He also made comments on not being responsible for officers’ low morale; these comments triggered a backlash and prompted a public apology.
Fox said the department needs to make the police department a more attractive place to work. Some, but not all of that, has to do with pay, he said.
Hollander said he is worried that communities are more concerned about the potential closing of amenities such as public golf courses, pools and libraries than about cuts to police or economic development workers who help small businesses stay afloat.
“I think it’s just so important that people understand all of these issues with the budget and not just focus on the shiny ball, the swimming pool, the library, the golf course — all those are very important,” he said. “But folks really need to understand what we did to balance this budget. And there are lots of things that I think long-term are not sustainable for the city.”
Hollander said the budget committee will hold hearings later this month to assess the city’s fiscal performance so far this year and to discuss options for next year. The schedules will be available online.