Louisville leaders will pursue massive budget cuts in the coming year, an outcome Mayor Greg Fischer lobbied hard to avoid.
A tax hike proposed by Fischer and his allies failed in Metro Council on Thursday, which means city leaders will need to cut $35 million from the budget for the fiscal year starting in July. They will need to find another $30 million in decreases over the subsequent three years.
That’s more than double the amount Metro Council would have had to cut if the body passed a compromise plan. That plan proposed gradually doubling the insurance premium tax from 5 percent to 10 percent on lines other than auto and health, and required $15 million in cuts. Fischer had originally called for tripling the tax.
“I am deeply disappointed and saddened for the people of Louisville by the Metro Council’s vote to cut $65 million in vital services from the city budget,” Fischer said in an emailed statement following the vote.
Fischer’s office has projected that, by 2023, Louisville will face a $65 million budget shortfall driven in part by rising employee health care costs. But Fischer says the real driver of the problem is a change in assumptions by the state’s pension board that would drive the city’s obligation up 12 percent a year for the next four years.
“On April 25, I will present a FY20 budget with the first year of cuts totaling $35 million, reflecting the service cuts that the majority of the Council voted for,” Fischer said.
Fischer added that the Council’s decision to authorize bond payments for capital projects that had been held up in the meeting two weeks ago may not save the projects he halted following that vote.
That “must be reviewed in light of their subsequent vote to cut $65 million from Metro Government, to determine whether or not those projects can go forward,” he said.
Despite the Democratic supermajority on the Council, sponsors of the compromise plan failed to garner the 14 votes needed to pass the hike.
A number of Democrats expressed their support, which some said was reluctant, of a plan that would lead to service cuts but reach a balance they hoped would be palatable to their colleagues.
Freshman councilman Kevin Triplett of District 15 seemed aware the measure would fail when he said, “The cuts scare me to death and what scares me is that tonight may come and go without a vote for a new stream of revenue.”
No one spoke in opposition to the ordinance, except with their votes. That group was split between Republicans and Democrats.
The no votes were Jessica Green (D-1), Keisha Dorsey (D-3), Donna Purvis (D-5), Paula McCraney (D-7), Kevin Kramer (R-11), Cindi Fowler (D-14), Scott Reed (R-16), Marilyn Parker (R-18), Anthony Piagentini (R-19), Stuart Benson (R-20), Robin Engel (R-22), James Peden (R-23), David Yates (D-25) and Brent Ackerson (D-26).
The yes votes all came from Democrats, while Mark Fox (D-13) did not vote.
Council members had six weeks to consider how to plug the budget gap, weighing between cuts, raising the insurance premium tax and a combination of the two. The timeline was short because although Louisville has the authority to change the rate of the tax on insurance premiums without state approval, it must give the Department of Insurance 100 days’ notice in order to implement. For a changed tax to go into effect in July, that would have required passage on March 21.
In a series of public meetings across the city and at City Hall, Louisville residents argued their sides of the issue, at times pleading for their jobs or essential services, or saying they would not pay higher taxes.
But Council members were, from the start, conflicted over how to address the issue. Some of them have echoed the mayor’s calls for more city taxing authority, such a restaurant tax. Approval from Frankfort for that is not likely anytime soon.
Fischer will present a budget to the Metro Council in late April. After that, the body will have two months to figure out what jobs, services and facilities will make the cut.