Louisville Mayor Greg Fischer’s budget proposal calls for slashing city spending by more than $25 million in the next fiscal year. The cuts, which are less than originally expected, still call for significant reductions to areas including public safety, libraries and public health.
Fischer’s proposal, which was released Thursday, is reacting to a projected significant budget shortfall over the next four years, due to rising pension and employee health care costs.
Fischer is recommending cuts of about $9.6 million to public safety spending in the next fiscal year. In February, he had proposed slashing the budget by even more — by nearly $16 million.
To make up for the decreased hit to the Louisville Metro Police Department and Louisville Fire, Fischer’s proposal calls for the closing of two public libraries, eliminating more than 300 city worker positions and cutting funding for the Office of Safe and Healthy Neighborhoods, which is considered to be a public safety service.
Fischer has said he did not want to make these and other cuts. He had asked Metro Council to raise the insurance premium tax to offset the shortfall, but that effort failed last month. Fischer presented his proposed budget to the Metro Council on Thursday afternoon.
He warned that cuts could continue even longer than anticipated, as the Kentucky Retirement System board predicts people will live longer.
“It now appears, unfortunately, that we can expect the rate of increase in pension funding to continue even beyond 2023,” as originally anticipated, Fischer said.
Even as he cautioned that Louisville cannot rely on the state for help or support, Fischer touted the city’s current growth and struck an optimistic tone.
“Even with this pension challenge, the truth again is that our city, today, has good momentum,” he said, referencing the transformed skyline, the reopening of the Kentucky International Convention Center and, of course, bourbonism.
The proposed general fund for the next fiscal year, which starts on July 1, will be $623 million, compared to $626 million this year.
Unlike last year, attrition and new revenue will not be enough to cover the rising employee health care and pension costs the Fischer administration expects to owe next year.
Still, the Fischer administration expects general fund revenue to grow about $4 million next year. That’s due to some fee increases as well as the assumption the city will collect an additional $1.2 million in property taxes through a combination of increased property values and a potential property tax increase implemented by Metro Council, said Daniel Frockt, the city’s CFO.
That, combined with shifting some of the burden of rising health care costs onto employees by raising insurance premiums 3 percent as well as other changes, contributed to the outlook changing since February for some items, Frockt said.
Plus, Metro Government has been losing employees recently, with resignations at all levels as workers facing an uncertain future with an employer who will continue cutting its budget in the coming years.
“As people are unclear about their future at Metro government, unfortunately, they’re voting with their feet and leaving,” Fischer said. Turnover, which is typically about 6 to 8 percent, is currently about 14 percent, he said.
Since last July, 170 employees have retired, 402 have resigned and 89 have been terminated.
Frockt said all those factors are why the cuts won’t be as deep as the $35 million Fischer initially projected.
Overall, the Fischer administration expects to cut more than 300 positions of all types, including both union and non-union workers. As of April 1, 2019, the city had 5,937 full-time, part-time and seasonal or temporary employees.
Here are some of the most significant changes in the mayor’s proposal:
- Police: Fischer cancelled the June recruit class for the Louisville Metro Police Department, and will pull School Resource Officers from Jefferson County Public schools to put them on street patrol. Accounting for expected attrition, there should be a net decrease of 40 police officers ($5.5 million). The city will cancel its contract with ShotSpotter ($400,000).
- Other public safety: Louisville Fire will close one station, likely Engine 1 on Grade Lane, leading to a loss of 15 positions by attrition ($1.7 million). One ambulance will be removed from service and seven positions reduced through attrition and a layoff ($1.3 million). Funding for the Office for Safe and Healthy Neighborhoods will decrease 18 percent. ($446,000).
- Metro Council: Each district will give up $30,000 in Neighborhood Development Funds and $10,000 in operating funds ($1.04 million).
- Parks and recreation: As previously announced, four public pools will close ($272,500) and four of 10 golf courses will close or be taken over by other entities following the summer season ($550,000). Fischer said he had received interest from pizza company Papa John’s to help with the pools, but did not provide details.
- Capital projects: The city will appropriate $8.2 million less through bonds for activities such as sidewalk repairs, road paving, bike lanes and investing in affordable housing ($710,300). The investment in affordable housing will drop to $5 million, from $12 million this year. At the same time, the city will maintain $1.1 million in funding for community ministries and add $1 million to the budget for homeless services, although how that will be spent is not yet determined.
- Mayor’s office: The new budget will cut 18 positions from the mayor’s office, Office of Management & Budget and Internet Audit through layoffs and attrition ($1.1 million). Fischer said state law prohibits him from cutting his salary, so he will donate 20 percent of it, about $25,000, to SummerWorks, whose budget will be cut by $100,000 ($75,000).
- Libraries: The Fern Creek Library and Middletown Library, which operate in leased space, will close ($940,000). Most branches will go from being open 12 hours a day to 8 hours a day and will maintain some Sunday hours ($1.15 million). Overall, library funding will go down more than $2.26 million.
- Public health: The city will discontinue support for The Living Room, which helps people will mental illness and substance abuse problems ($1 million).
- Community services: The Charmoli Neighborhood Place, which is in leased space, will close ($819,000). No other community centers will close.
How We Got Here
In February, Fischer said rising pension and employee health care costs would take $35 million from the city’s budget in the coming fiscal year, and continue to increase by $10 million through 2023. He lobbied, unsuccessfully, for tripling the insurance premium tax to cover that shortfall.
But cuts were always on the table, as compromise measures that recommended a lower tax hike and relatively smaller decreases in personnel and services spending worked their way through Metro Council. An eventual proposal that would have required $15 million in cuts eventually failed.
That left the mayor about a month to fine-tune a list of cuts he proposed earlier this year, when he first alerted the public to the expected scale of the budget gap.
He announced some smaller potential measures — that would amount to less than $5 million — earlier this month. The city will close its outdoor pools, raise health insurance premiums for employees and reevaluate certain contracts, such as for gunshot-detection system ShotSpotter, he said.
One other idea that failed to gain any steam was the freezing of city employee pay, including that of the 75 percent of workers who are union members. Union leaders swiftly and unequivocally rejected that proposal.
Democrats have a supermajority on the council, and it was a bipartisan group who voted down the tax hike. But passing the final budget will not require crossing the political aisle.
Council members will work on the budget for the next two months before passing it in late June.
The Metro Council’s budget committee will hold three hearings during members of the public can address officials, on May 7, 16 and 20.