Mayor Greg Fischer is condemning a recent Metro Council vote to suspend bond payments for capital projects and said in response, the city would stop work on these projects immediately.
Last week in an 18 to 8 vote, Council members elected to table approval of an ordinance that would authorize bonds for public projects, citing concerns about Louisville’s budget troubles.
Republicans Marilyn Parker of District 18 and Anthony Piagentini of District 19 said they were motivated by the city’s current and previous budget issues. At the moment, city leaders are debating how to fund a projected gap in the budget the mayor has said is driven by a rising pension obligation and increasing employee healthcare costs.
“My concern here is simply the increasing debt load the city continues to accumulate,” Piagentini said. “This continued capital expense does have impact on the operating expense, which is increased interest.”
Fischer pushed back on the Council decision in a press release on Saturday. He said the decision was made without consulting the city’s Office for Management and Budget, and that it could threaten vendor relationships and projects.
“New council members may not have known the implications of their action, but all who voted to table the ordinance have unnecessarily thrown our hard-earned recognition for fiscal dependability into question,” he said in a statement. “I urge them to get their questions answered quickly so we can minimize the legal and financial complications their action has caused.”
On Twitter Saturday night, Metro Budget Committee Chair Bill Hollander echoed Fischer’s message, calling the Council vote “reckless.”
Rejecting the funding mechanism for all previously approved projects, including some well underway, was reckless. The measure tabled Thursday was unanimously approved in committee one week before. The non-debatable motion, with no notice, was a mistake.https://t.co/YrKzyQv6GN
— Bill Hollander (@BillHollander) March 10, 2019
Council president David James voted against tabling the ordinance on Thursday. He said he had not seen the mayor’s press release, but that he would have voted to approve the bonds had the ordinance not been tabled. He said he plans to convene a meeting this week to address this issue.
“We’ve made commitments, set contracts, we have a legal obligation to these particular issues,” he told WFPL.
Move Comes Amid Debate Over Tax Hike Or Budget Cuts
Last summer, the Metro Council approved a capital budget including bonds for projects ranging from sidewalks to the planned Louisville Urban League track and field facility at 30th St. and Muhammad Ali Boulevard.
As of last week, the League had raised about $17 million of a needed $35 million for the sports complex, according to CEO Sadiqa Reynolds. The city planned to issue a $10 million bond for the project late in this fiscal year, or during the next fiscal year, which begins in July. The development agreement between the League and the city states that the 24-acre plot will be sold to the league for a dollar once the nonprofit provides written evidence of “sufficient capital” for the facility’s construction.
Reynolds said she is not worried about the decision yet, since she believes the project has broad support across the city and among politicians.
“I don’t believe there is any way the Mayor’s office or Metro Council would not invest in the Louisville Urban League Sports and Learning Complex,” she told WFPL in a text. “They’ve already invested in soccer and they’ve made a commitment to us. So, I trust them to stand and deliver.”
In total, Metro Council approved about $83 million in bond expenditures for this fiscal year, of which $19.3 million has been spent and another $19 million committed for work in progress, according to the mayor’s office.
Work on debt-funded capital projects is now on hold, because the bond ordinance that was tabled was “simply the mechanism to pay for projects already approved,” Louisville Chief Financial Officer Daniel Frockt said in the press release.
The Jefferson County Attorney’s office, which represents both the mayor and Metro Council, also responded to the vote on Saturday. In a letter to Council president David James, of District 6, and deputy mayor Ellen Hesen, assistant attorney Matt Golden wrote that terminating or suspending existing contracts could make the city vulnerable to claims including contract delay.
“The damages that flow from these breaches may be significant,” he wrote.
Council members are considering the mayor’s proposal to triple the insurance premium tax by 2023 in order to pay for a $65 million budget shortfall. Fischer’s alternative is deep cuts to a slew of city services and personnel.
But last week, some Council members offered another option, following a flood of citizen feedback: increase taxes at a lower rate, while still implementing some budget cuts. Under this new plan, the insurance premium tax would double to 10 percent over the next four years. The group of Democrats also asked the mayor’s office to consider freezing hiring on positions that don’t produce revenue, raising health insurance premiums for Metro employees and ceasing yard waste collection in the winter, among other measures.
The Metro Council’s budget committee will vote on the mayor’s tax hike on Thursday, ahead of a March 21 deadline for passage by the full Council as required by state law. Committee chair Bill Hollander of District 9, who co-authored the new proposal, recently told WFPL any amendments to the mayor’s plan would come before the ordinance makes it to the full Council.
This post has been updated.