Mayor Greg Fischer unveiled a plan on Wednesday to dramatically increase the tax rate on certain insurance premiums over the next four years, in an effort to fill a $65 million budget hole over that time and avoid “devastating” cuts to government services and layoffs.
Fischer proposes to increase the city’s tax rate on home, life, marine, malpractice and title insurance from its current 5 percent to 12.5 percent in the next two fiscal years, with that rate increasing to 13.5 percent in the following year and 15 percent by 2023.
Together, these insurance tax hikes are expected to generate roughly $63 million over those four years, nearly matching the projecting deficit over that time.
The mayor’s proposed tax increases will not apply to vehicle insurance premiums, as several Metro Council Democrats had suggested exempting last week due to the disproportional impact it would have on west Louisville residents that are charged higher rates.
These tax increases would have to be approved by Metro Council before March 23 to go into effect in the net fiscal year beginning July 1. Five Democrats have agreed to sponsor an ordinance to push through the tax increases: Council President David James, Budget Chairman Bill Hollander, Councilman Pat Mulvihill, Councilwoman Barbara Sexton Smith and newly elected Councilman Marcus Winkler.
The Fischer administration’s projections assume that the 83 small incorporated cities in Jefferson County follow suit and lift their tax rates for these insurance premiums by the same amount to keep that revenue in-house, as Insider Louisville reported on Monday that several cities are already planning to pass before March 23.
Last week, the mayor issued a lengthy statement warning of the potential for massive cuts to city services unless the city was able to identify an additional source of revenue. Fischer said such potential cuts could include up to 317 layoffs of city employees in the next fiscal year alone, reducing the number of police officers in the city by 250 over the next four years, and the closure of library branches, fire stations, health clinics, community centers, pools and golf courses.
Fischer said Wednesday that he was “reluctantly” pushing forward this proposal to raise taxes — which hasn’t been done in Louisville for decades — but reiterated his point that these tough measures were “mandated” upon them by the increased pension contribution payments set by the leadership of the Kentucky Retirement Systems.
This story will be updated.
Reposted from https://insiderlouisville.com/government/local/fischer-proposes-escalating-insurance-premium-tax-increases-to-avoid-budget-cuts/