Effective and Efficient

On Feb. 7, 2019, Mayor Greg Fischer outlined specific and “devastating” potential cuts to city services and staff that would, without new revenue, be necessary to cover an expected $65 million budget gap over the next four years, caused by a state-mandated pension increase that grows every year through FY23.

 

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Strong Stewards of Taxpayer Dollars

 

Fischer Administration Has Taken Steps to Address Pension-Related Shortfall in Current FY19 Budget

Anticipating challenges from the Frankfort-mandated pension costs, the Fischer administration implemented several cost-saving measures last year, including:

  • Eliminating 49 positions in the FY19 budget.
  • Adopting new fees, including implementing an EMS cost recovery fee increase that will generate $1.9M annually and bring LMG fees into greater alignment with similar services.
  • Implementing a hiring frost, only approving vacant positions and reclassifications if certain essential function criteria are met, including whether the vacancy would require overtime or is mandated.
  • Limiting spending on travel, training, technology, office supplies, subscriptions & assigned vehicles.

 

Fischer Administration Has Tightened its Belt

Holding Flat on Number of Employees in All Areas of Government Outside of Police: Under Mayor Fischer, there has been an increase in population of 3.3 percent yet the number of employees, outside of LMPD, has basically stayed flat – from 4,017 to 4,015. And, the number of employees is down dramatically from pre-merger, when there were 2,612 county employees and 3,500 city employees, for a total of 6,112 employees.  During the Fischer administration, calls for service have increased significantly, including calls to 911 increasing from 1,273,661 in 2011 to 1,361,987 in 2018. 

 

LouieStat, LMG’s nationally recognized performance improvement system, has helped departments use data to improve operations since its creation in 2012. Examples include:

  • Public Works & Assets cut injury rates – and, therefore, lost work time – in half.
  • Reduced the repair time of Metro vehicles by 15 days, a 29% improvement.

Fischer Administration Has Collected $23 Million by Selling Surplus Property.  LMG is proactive in selling capital assets such as surplus vehicles and other property to generate revenue that can be reinvested in programs, services and new capital investments. Since January 2011, LMG has collected more than $23 million through this practice that has been leveraged to benefit taxpayers.

 

Fischer Team has Increased Overdue Fee Collection. Civil Penalty Collections have increased from FY11 collections of $536,629 to an estimated $3.6 million in FY19.

 

Created One Water Cost Savings Initiative for Louisville Water and MSD. The One Water Initiative allows MSD and Louisville Water to share building space, equipment, facilities, etc. For instance, One Water IT purchases software for both organizations to get lower prices. Louisville Water and MSD have also found savings with joint purchases in other areas of the organization and sharing resources for the Customer Call Centers. Both organizations also now share a contract for parts and supplies. One Water leads to approximately $8 million in cost savings and over $5 million in new revenue, for a combined $13 million in benefit.  It is being used as a model approach for discussions being held with United States Environmental Protection Agencies —Environmental Financial Advisory Board (EFAB), Water Environment Federation (WEF) and National Association of Clean Water Agencies (NACWA) that other utilities across the country should be incorporating to realize maximum efficiencies and cost savings.

 

Fischer Administration Has Been Successful in Attracting Non-Taxpayer Revenue Funding Sources

Fischer Administration Has Received Millions in Grants and Awards from Foundations. The Fischer administration works tirelessly to seek outside sources of revenue in order to tackle Louisville’s biggest challenges and relieve pressure on the budget.  In recognition of the high quality of work done by the Fischer administration, it has received numerous competitive grants and awards from outside organizations, generating revenue totaling approximately $368 million, including:

 

  • A $29.5 million federal Housing and Urban Development Choice award to revitalize the Russell neighborhood.
  • A $4.8 million Bloomberg Philanthropies grant for innovation delivery teams.
  • A $1.3 million federal grant to expand ReImage, which focuses on young people who have been involved in the court system or are at risk for getting into trouble.
  • A $1.2 million grant for Thrive Fellowship from Kenan Charitable Trust.
  • A $5 million, five-year federal grant to launch an initiative to promote resilience and equity for Louisville families and young people most affected by trauma, inequity and violence.
  • $5 million grant from the Kenan Trust for the creation of an initiative called Russell: A Place of Promise, intended to be a national model for “equitable community development in African-American communities.”
  • The 2016 U.S. Conference of Mayors/USA Funds 2016 National Education Pathways with a Purpose award for the Cradle to Career initiative, a total gift of $100,000.     

 

Fischer Administration Repeatedly Noted for Efficiency and Stewardship of Taxpayer Dollars

LMG’s diligence to maximize resources for greatest impact has been acknowledged by numerous external organizations.

 

  • Citing our city’s strong economy, sound management and budgetary flexibility, the nationally recognized credit rating services, Fitch Ratings, Inc. and Moody’s Investors Service have continually rated LMG positively—in the top quartile of municipalities.
  • Metro received its eighth consecutive "Certificate of Achievement for Excellence in Financial Reporting" for its Comprehensive Annual Financial Report from the Government Finance Officers Association of the U.S. and Canada.
  • GFOA presented Metro's fifth consecutive "Distinguished Budget Presentation Award" for the 2017-2018 budget.
  • Selected by Bloomberg Philanthropies and Results for America as one of the first cities to participate in the What Works Cities initiative, a $42 million program to help 100 mid-sized cities better use data and evidence.
  • Governing magazine recognized Louisville as the "Top Performer" in its Equipt to Innovate Report. 
  • In 2017, WalletHub named Louisville among the best-run cities.

 

Fischer Administration Delivering Quality Services with Fewer Personnel or Investment than Other Cities

  • LMG has the 4th fewest government employees per capita amongst 19 peer cities based on a review of each city’s Comprehensive Annual Financial Report (CAFR).  For example, we average one government employee for every 123 citizens compared to one for every 46 citizens in St. Louis.
  • The Louisville Free Public Library, for example, has one staffer for every 3,117 residents, as opposed to one per 1,244 in Cincinnati, one per 2,164 in Indianapolis and one per 2,139 in Nashville.
  • Cities with a population of 500,000 to 999,999 have an average ratio 2.61 police officers per 1,000 people.  Louisville is lower at 1.82 police officers per every 1,000 people; compared to Indianapolis, which has 1.83, Nashville, which has 2.13, Memphis, which has 3.14, and Milwaukee, which has 3.14.
  • Louisville’s number of fire engines on the street per 1,000 citizens, at .073, is already less than Buffalo (.074), Cincinnati (.081), Richmond (.086), Knoxville (.094), Pittsburgh (.111), and Chattanooga (.113). 
  •  LMG’s total IT investment, at $14.5 million, is 23 percent lower than peer cities.

 

Fischer Administration Delivered Innovative Solutions for Emerging Problems

  • The Fischer administration has successfully reorganized and targeted personnel at emerging challenges, including:
  • Successfully handling the 2018-19 Hepatitis A outbreak – response labeled the Gold Standard by the Centers for Disease Control.
  • Created Louisville Forward, a one-stop shop for business development, planning, talent recruitment, workforce development and planning, which has been recognized by Site Selection magazine as a Top Economic Development group four years in a row.
  • Centralization of the Office for Management and Budget, which resulted in enhanced oversight to ensure policy compliance and cost savings including the elimination of positions.
  • Created the nation’s first Chief Innovation Officer in a mayor’s office and the Office for Performance Improvement (OPI). The Office for Civic Innovation is directly responsible for the City receiving more than $12 million in grant funds for innovations to benefit residents.  OPI’s focus on performance management is an integral part of Metro government’s management system to drive departments to make their operations more efficient so we provide better service to our residents.
  • Created the Office for Safe and Healthy Neighborhoods (OSHN) to break the cycle of violence, becoming the nation’s hub of Black Male Achievement work.
  • Reversed a spike in homicides and violent crime through a reorganization of the Louisville Metro Police Department, and partnership with federal partners and OSHN.
  • Created the Real Time Crime Center, which uses the latest in technology to gather valuable intelligence for investigations.
  • Implemented ShotSpotter, technology used to detect gunfire in certain areas and help officers get to scenes quicker, often before a 911 call can be made.
  • Tackling a surging homelessness problem.
  • Emergency Services was created in February 2015, merging the departments of EMA/MetroSafe and Louisville Metro Emergency Medical Services, which created efficiencies in administration and strengthened our city’s coordination in emergency response.

 

Fischer Administration Has Not Raised Taxes, While Competitor Cities Are Raising Revenue

There Have Not Been Tax Increases by Louisville Local Governments in Decades. The last time Louisville increased taxes was in the early 1980s, when it increased the insurance premium tax rate from rate from 2.5% to 5%.  Jefferson County last increased taxes approximately three decades ago, when it began collecting an insurance premium tax following the state’s authorization of that collection for counties. Merged Metro government has never increased taxes.

 

Metro Competitors Raising Revenue to Invest in Their Communities. If we aspire to have the growth of our best competitor peer cities, we must recognize that while we are dealing with an operating budget challenge bought on to us by Frankfort, Louisville’s competitor cities are raising new revenue to invest in their communities and people:

 

  • Indianapolis raised its income tax to fund bus rapid transit and other transit improvements.
  • Austin passed a $250 million bond issue for affordable housing (with a 73-27 margin).
  • Tampa passed a 1 cent sales tax last year for transportation and transit improvements.  
  • Denver has spent $4.7 billion on road and rail improvements since 2004 with a local sales tax.
  • In 2018, 30 of 36 transportation-related referenda across the nation call for increased taxes for transportation passed, including:
    • Austin, TX: $160 million bond referendum for street and intersection improvements
    • Arlington, VA: $75 million bond for transportation
    • Kansas City, MO: special tax assessment for street car extension
    • Broward County, FL: 1-cent sales tax increase for transportation 

 

Fischer Administration Has Repeatedly Warned About Pension Impact to Budget

Fischer Called on State to Fix the State Pension System in 2017. “And I am calling on the state government to – yes, fix the state pension system and tax code.  [7-27-17, Ali Spirit speech; said again at 9-5-17, Rotary Club] 

 

CFO Frockt Told Council in November 2017 to Be Mindful of Potentially Larger Pension Bill.  “Looking ahead, Frockt stated that he does not anticipate any mid-year ordinance adjustment for fiscal year 2017-18 (Metro’s current fiscal year) and that the city will need to be mindful of a potentially larger pension bill from Frankfort in fiscal year 2018-19.”

[https://www.lanereport.com/84114/2017/11/louisville-metro-budget-balance..., Lane Report, 11/29/17]

 

CFO Daniel Frockt told the Council Budget Committee “this is quite a sizeable number” in December 2017. In a December 2017 presentation to the Metro Council Budget Committee, CFO Frockt gave detailed testimony on the budget, which included the hike in the pension obligation. [12-7-17, Budget Committee, http://louisville.granicus.com/MediaPlayer.php?view_id=2&clip_id=5392]

 

CJ December 2017 Article: “City pensions to climb by $38 million”.  Daniel Frockt says pension increase is eating up all the growth in city revenues. [https://www.newspapers.com/image/358276114/?terms=%22daniel%2Bfrockt%22%..., Courier-Journal, 12/11/17] 

 

Fischer Said in January 2018 Pension Obligations Would Force Reduction in Services, “If You’re Feeling Anxious About the Impact of the Pension Issue, You Should.” “Because of a shortfall in the state pension system, unless Frankfort acts, Metro Government’s obligations will increase by $38 million this year alone.  We are always ready to deal with the unexpected. But this will be difficult for the people of Louisville, and force Metro Government to reduce existing services. We’ve got a great team, and will work with the Metro Council and citizens to find ways to meet this challenge….And as businesspeople, we know that we would never create a two-year budget without knowing both our pension and tax reform solutions – that’s just more common sense.  So, if you’re feeling anxious about the impact of the pension issue, you should. Let your legislators know we need a fair and workable long-term solution that includes giving more local control to cities and counties, and get going on the win-win of raising the cigarette tax at least a dollar a pack, which would not only create as much as $266 million in revenue, but save lives.  Let them know that the citizens of Kentucky deserve better than the tax and pension systems we have today.” [1-4-18, State of the City address]

 

Fischer Said in April 2018 Underfunding of State Was Biggest Budget Challenge, Will Be Drag for Foreseeable Future. “This year, our biggest budget challenge is the impact of decades of Frankfort underfunding of our state’s pension system. It’s hitting us in this budget, and it’s serious.  It will have a $9.4 million impact on our budget this year.  … And we’ve worked to implement cuts and reductions in a way that’s fair and minimizes the impact on city services, though let’s be clear: there will be an impact.  I am very excited and optimistic about Louisville’s future, but absent accelerated revenue growth and with more painful budget cuts, this pension issue will be a drag on our budget for the foreseeable future.” [4-25-18, Budget Address to Council]

 

CFO Daniel Frockt gave details of the pension contribution in May 2018. In a May 2018 presentation to the Metro Council Budget Committee, CFO Frockt said it was “no small feat” to avoid layoffs in FY19 considering the size of the pension obligation.

 

Fischer Said in January 2019 Metro Pension Obligation Would Grow to $50M Within 5 Years, Face Prospect of Serious Cuts. “Another issue we’re facing that involves state government, of course, is the pension situation.  Louisville is facing an increased pension obligation of $10 million this year; $20 million next year; $30 the following year. Within five years, our annual pension obligation is projected to be $50 million more per year than it is now and will stay at that level for the foreseeable future.  That puts serious pressure on our city budget. In the last eight years, Metro Government has focused on finding efficiencies and synergies, consolidating services and accomplishing more with fewer people.  Our continued high bond ratings attest to the fact that we run a lean, efficient operation.  That’s another reason I can say that the State of our City is strong. But without additional revenue, we now face the prospect of serious cuts in services that will impact every connection between Louisvillians and their city government:  the number of police on our streets, the hours you can visit your local library, maintenance in our public parks. And it will hamstring the momentum we’re experiencing. That’s unacceptable. And it’s avoidable.” [1-17-19, State of the City address]