Increase in Pension Contributions Required by the Kentucky Retirement Systems, Possible Reduction in Metro Services and Proposed Insurance Premium Tax

On February 13, 2019, Mayor Greg Fischer and five Metro Council members proposed to increase the city’s tax rates on home, life, marine and miscellaneous insurance, such as malpractice, title insurance and umbrella coverage, from their current five percent to 12.5 percent in FY20 and FY21, 13.5 percent in FY22 and 15 percent in FY23.

Auto and health insurance would be excluded from this increase, which overall would generate approximately $63 million by FY23.

“Louisville Metro Government has proven it is an efficient operation, and our city is seeing a good growth in revenue. But that growth is dwarfed by our increased pension requirements from the state,” said Mayor Fischer, noting that the impact of unfunded pension obligations is expected to grow 12 percent each year through FY23.

That amounts to $86 million in FY19, up from $77 million in FY18, and is expected to grow to $97 million in FY20, then to $136 million in FY23. The estimated gap for FY20 is $35 million, which reflects the additional $10 million pension bill for FY19, another $10 million for FY20, along with $15 million from increased healthcare costs and lower-than-projected revenues.

The Mayor detailed the specific potential cuts that would, barring new revenue, have to be made to cover the operating gap and ensure a balanced budget, as required by state law. The potential cuts range from staffing reductions in nearly every Louisville Metro Government (LMG) department, including police, fire and ambulance services, as well as closing library branches, fire stations, health clinics, community centers, pools and city golf courses. 

Click here to see potential reductions

Other potential cuts faced by the city without new revenue include eliminating all Metro funding for agencies like Brightside and the Belle of Louisville, making the Louisville Zoo independently operated, turning Youth Detention Services back over to the state, and eliminating all Neighborhood Development Funds allocated by Metro Council and External Agency Funds allocated to local nonprofits for arts, and social and community services.

The potential cuts amount to 317 layoffs in FY20 alone.

To illustrate the impact, the Mayor and Council member’s proposal would increase the average family’s home insurance by about $12 - $13 a month, or around 40 cents per day.

To be effective for FY20, the Council must approve the change and the city must file its intent to raise the tax by March 22.

On this page, all information connected to the proposal and links to all committee meetings have been created to give everyone the latest information about the pension contribution increase, possible reduction in Metro services and the proposed insurance premium tax.


Insurance Premium Tax Ordinance

O-060-19 The Proposed Ordinance Amending Louisville Metro Code of Ordinances Chapter 122 to Increase the Insurance Premium Fee 

The Amendment by Substitution approved by the Budget Committee on March 14th


Metro Council Committee meetings on the increase in pension contributions required by the Kentucky Retirement Systems, possible reductions in Metro services and the proposed increase in the insurance premium tax. 

All meetings are carried live on Metro TV, Spectrum Cable Channel 184 or on UVERSE at Channel 99. All meetings of the Metro Council are streamed live. Go to the Metro Council home page at https://louisvilleky.gov/government/metro-council and click on the Metro Council Agendas link.

Budget Committee Meeting - February 14, 2019

Special Budget Committee Meeting - Monday, February 25, 2019 at 4:30 p.m.

Budget Committee Meeting - Thursday, February 28, 2019 at 4:30 p.m.

Special Budget Committee Public Hearing - Thursday, February 28, 2019 at 6:00 p.m.

Special Budget Committee Public Hearing - Monday, March 4, 2019 at 6:00 p.m.

Budget Committee Meeting - March 14, 2019 at 4:30 p.m.

Metro Council Meeting - March 21, 2019 at 6:00 p.m.


If you submitted a question prior to March 6, it will be answered below by March 14. Answers will be coordinated by the Louisville Metro Office of Management and Budget. 

Questions asked by the Council members and members of the public are listed here. This page will be updated with additional questions and answers from the Louisville Metro Office of Management and Budget. 

1. Why did you zero in on property owners? What other taxes or fees can be levied by the City? Will the insurance of corporations be taxed? Will there by [sic] property assessments in the near future? When was the pension bill handed to the City?

All lines of insurance currently being taxed at the local level (aside from motor vehicle and Urban Service District group health) at 5% would be taxed at 12.5% for FY20 and FY21, 13.5% in FY22, and 15% in FY23.  There are no new lines of insurance being taxed and there are no exemptions for currently taxed insurance other than the motor vehicle and health above mentioned (which would stay at 5%).  Corporations would be affected as they currently are now.  Property assessments will come from the PVA in April with a certified assessment roll from the state usually in late July or early August.  The pension rates are adopted annually—for both hazardous CERS and non-hazardous CERS the rates have increased by 12% in FY19 and FY20.  Future rates will be adopted annually; however, it is anticipated that the 12% increases are likely to continue for a total of five years (through FY23).

 

2. Which specific insurance will be taxed at the new rate? I understand property taxes, life insurance and marine ( boat ) but any others? Specially title insurance? Professional liability? Finally I understand exempting auto insurance but why not set a high limit —day [sic] $50,000 and apply it then. 

Please see the attached list for insurances that are taxed along with their categorization.  Insurance premium taxes need to be adopted with a uniform rate, there is no statutory authority to exempt a portion as you suggest. Click here to view to list.

 

3. Alternative Proposal to Louisville Metro Mayor Greg Fischer Local Insurance Tax Hike Part 2. We have made a very serious effort to figure a clear path to avoid spending cuts in [sic] to public safety and a 12.5 percent local insurance tax hike in fiscal year 2021. After bouncing ideals [sic] off of dozens from Louisville metro citizens/residents across the county I fully believe we have a real and clear solution. Below is a full list of metro budgetary items to eliminate or delay.

- Request as a united Louisville Metro Council Delegation obtain 20 million in Kentucky State Budgetary Funds.
​- Take 5 million from Louisville Metro Capital Funds and place it toward pensions.
Delay for one final fiscal year the 2.2 million allotted for public park upgrades.
Delay for one final fiscal year the 500,000 for bicycle lanes.
Cut 1,000,000 from the 18.2 million(estimate) for paving for one final fiscal year.
Delay for one final fiscal year the 650,000 for the Living Room Project.
- Reduce $55,400 Library Substitute Positions- Item # 16 in Mayor's Spending Reductions.
- Reduce $125,500 additional operating funds to NE Library #17 in Mayor's Spending Reductions.
Louisville Free Public Library $1,114,800 by shortening branch hrs. #18 in Mayor's $ Reductions.
- Louisville Zoo enter into a privatization leasing agreement for $400,000 #20 in Mayor's $ Reductions.
Limit syringe exchange hours for $50,000 #21 in Mayor's Spending Reductions proposals.
Eliminate of Metro Employee OWLS Program for $53,000 #22 in Mayor's Spending Reductions.
Reduce one vacant lots crew for $350,000 #31 in Mayor's Spending Reduction proposal.
Reduce code enforcement officers for $630,000 #32 in Mayor's Spending Reductions.
Eliminate West Louisville Wi-fi for $45,000 #33 in Mayor's Spending Reductions.
Save $300,000 in personnel reductions for Development Louisville #37 in Mayor's $ Reductions.
Save $400,000 Eliminate general fund for market rate housing #38 in Mayor's $ Reductions.
Eliminate general fund for Sister Cities saving $61.000 #39 in Mayor's Spending Reductions.
Eliminate general fund for World Trade Center $72,000 #40 in Mayor's Spending Reductions.
Human Resources personnel reduction $100,000 #46 in Mayor's Spending Reductions.
Kentucky Science Center general fund support $100,000 #47 in Mayor's $ Reductions.
Eliminate NDF"s of Metro Council saving $1,950,000 #48 in Mayor Spending Reductions.
Metro Animal Services reduce second shift saving $300,000 #51 in Mayor's $ Reductions.
Personnel Reductions in Office of Performance Review for $130,000 #52 in Mayor's $ Reductions.
Personnel reductions listed in Mayor Spending Reductions Proposal #54 saving $800,000.
Reduce general fund support for Waterfront Development for $500,000 # 62 Mayor $ Reductions.
Draft bill for Kentucky General Assembly in 2020 to establish a local tax on gaming that would effect Churchill Downs, Derby City Gaming etc., to raise 1 million.
Return Youth Detention Services to the Commonwealth saving 3.2 million item # 18 Mayor's $ Reductions.
Additional 800,000 in Central Service Agencies Personnel Reduction item #67 Mayor $ reductions.
Delay for one final fiscal year 500,000 of 1.5 million allotted for public sidewalks.
Minor across the board metro government spending % cut (except public safety) to reach 45 million.

The sum total of fiscal year 1-30 reductions/revenue increases is just over $42 million dollars. This proposal for FY 2021 also saves libraries, neighborhood places, public works, and other departments without need of a large reduction in services or personnel. If additional revenue above 623 million budget baseline(estimate) #28 would be an unnecessary cut.

Thank you for your input on the work underway to address the challenge that Louisville Metro Government is facing, due to increasing state-mandated pension obligations. Your efforts to discuss the decision that Metro faces – devastating cuts versus new revenue – with neighbors, and your sharpened pencil in doing the math, are much appreciated. Your voice is important and your input is heard.

As requested by the Mayor, the Office of Management and Budget (OMB) reviewed the proposal made here line-by-line and has completed additional analysis, which is reflected in the attached file, click here to view. As noted in the “Notes” column in the attached, each line item generally fell into one of the categories below:

  • Identified as potential reduction: These are potential cuts that have been identified and would have an adverse impact on our city. In sum, these cuts would generate $11.4 million and would result in 186 layoffs of current Metro employees.
  • Requires state action: A couple of the items you identified would require action from state government, which is not likely.
  • Reallocating from the capital budget: Metro’s capital budget is largely funded through debt and restricted grants. These funding sources are not eligible to support Metro’s operating budget, including our increasing pension bill.

Moving forward to implement the reductions for which you expressed support could serve as part of the solution to fund our pension bill, but it does not get us to $65 million by FY23. OMB is working diligently to support the Mayor and Metro Council in their deliberations on our limited options to address the projected $35 million budget deficit for FY20, which grows to $65 million by FY23. The proposed new revenue represents the best option for the city’s future.

 

4. Why do we need a Department of Resilience? We lived without this department prior to 2018 and we can live without it now. This would save nearly $30 million a year. I claim Louisville would be much more resilient if we did not waste $30 million on this department. 

Louisville Metro Office of Resilience and Community Services enjoys a long and rich history in our community dating back to the establishment of a municipal human services focused agency in 1961.

The focus of Resilience and Community Services (RCS) is to provide essential services for Louisville residents, especially for low and moderate income populations, including: delivering Meals on Wheels; helping families build financial stability and security; operating LIHEAP to help residents stay safe and warm; making microloans to jumpstart small businesses; supporting eight Neighborhood Places; and preventing homelessness. 

Neighborhood Place, first established in 1993, is a partnership of multiple agencies which serves as the “front door” for thousands of individuals each month providing accessible health care, education, employment and social services.

Resilience and Community Services broadens our reach by administering External Agency Funding grants to local non-profits, including the Community Ministries, which are committed to offering programs or services that align with the Mayor’s and department’s strategic goals.  This fiscal year, EAF grants are helping to support the work of 75 external agencies delivering 93 programs.  EAF funding to Community Ministries supplements funding received by member churches and faith-based groups residing in their service area.

Community engagement programs are another focus of RCS which provide avenues for nearly 600 low income and/or retired seniors, 55 years or older, to volunteer and engage in the community through partnerships with 73 different community organizations.  These two programs, the Foster Grandparent Program and RSVP, are both funded by the Corporation for National and Community Service.  Furthermore, RCS’s four Advocacy Offices provide opportunities for residents, service providers and community agencies to come together to address issues facing special populations.

The $29 million operating budget for RCS is heavily grant funded, with 67%, or $20 million, provided by federal, state and other grants.  The remaining 33% is provided by Louisville Metro General Funds which also supports EAF and partner agencies.   

RCS is a dual-purpose agency, also serving as the community action agency for Jefferson County, part of a network of 1,000 agencies nationwide.

These are the numbers of people served through Resilience and Community Services in FY18.  However, they are not unduplicated numbers so it wouldn’t be accurate to add them together for a grand total:

•         37,109 numbers directly served by prevention programs

•         2,000 individuals served through Meals on Wheels Senior Nutrition (approximately 300 meals per day)

•         148,725 individuals visited Neighborhood Place

•         88,043 (this number also includes 54,274 individuals who received emergency assistance from the Community Ministries)

In 2016, the department formerly called Community Services was renamed the Office of Resilience and Community Services with the appointment of Eric Friedlander as the city’s Chief Resilience Officer.  This position and resiliency efforts are funded and supported through The Rockefeller Foundation's 100 Resilient Cities, which selected Louisville to join its network aimed at building urban, environmental and economic resilience. 100 Resilient Cities will give Louisville $268,000 for our participation. Also, with Gena Redmon’s retirement,  Chief Friedlander is serving in the dual role of Chief and Director of Resilience and Community Services. This means that 100 Resilient Cities has supported his work for ending homelessness and direct management of all the programs at Community Services.

 

5. Alternative Proposal to Louisville Metro Mayor Greg Fischer Local Insurance Tax Hike Version 2.0. We have made a very serious effort to figure a clear path to avoid spending cuts in to public safety and a 12.5 percent local insurance tax hike in fiscal year 2020-2023. After bouncing ideals off of dozens from Louisville metro citizens/residents across the county I fully believe we have a real and clear solution.

Below is a full list of metro budgetary items to eliminate.

- Enact a Car Rental Fee of 3% in FY 2020 Raising One Million(Estimate) in Revenue.
- Enact a Franchisee Tax of 5% in FY 2021 generating 13 Million(Estimate) in Revenue.
- Enact a Restaurant Tax of 3% in FY 2022 generating 15 million(Estimate) in Revenue.
- Across the Board Metro Government Spending Reduction in FY 2020 of 35 million across Personnel Departments. No tax increases would be needed for FY 2020 except the Car Rental Fee. The Car Rental Fee and Items 4-25 raises over 11 million in reductions would be eliminated specifically to offset cuts to Louisville Police and Fire Department items 1-3.
-Delay for two (FY 2020 & FY 2021) fiscal years the 500,000 for bicycle lanes.
- Reduce $55,400 Library Substitute Positions- Item # 16 in Mayor's Spending Reductions.
- Reduce $125,500 additional operating funds to NE Library #17 in Mayor's Spending Reductions.
- Louisville Free Public Library $1,114,800 by shortening branch hrs. #18 in Mayor's $ Reductions.
- Louisville Zoo enter into a privatization leasing agreement for $400,000 #20 in Mayor's $ Reductions.
- Limit syringe exchange hours for $50,000 #21 in Mayor's Spending Reductions proposals.
- Eliminate of Metro Employee OWLS Program for $53,000 #22 in Mayor's Spending Reductions.
- Reduce one vacant lots crew for $350,000 #31 in Mayor's Spending Reduction proposal.
- Reduce code enforcement officers for $630,000 #32 in Mayor's Spending Reductions.
- Eliminate West Louisville Wi-fi for $45,000 #33 in Mayor's Spending Reductions.
- Save $300,000 in personnel reductions for Development Louisville #37 in Mayor's $ Reductions.
- Save $400,000 Eliminate general fund for market rate housing #38 in Mayor's $ Reductions.
- Eliminate general fund for Sister Cities saving $61.000 #39 in Mayor's Spending Reductions.
- Eliminate general fund for World Trade Center $72,000 #40 in Mayor's Spending Reductions.
- Human Resources personnel reduction $100,000 #46 in Mayor's Spending Reductions.
- Kentucky Science Center general fund support $100,000 #47 in Mayor's $ Reductions.
- Eliminate NDF"s of Metro Council saving $1,950,000 #48 in Mayor Spending Reductions.
- Metro Animal Services reduce second shift saving $300,000 #51 in Mayor's $ Reductions.
- Personnel Reductions in Office of Performance Review for $130,000 #52 in Mayor's $ Reductions.
- Personnel reductions listed in Mayor Spending Reductions Proposal #54 saving $800,000.
- Reduce general fund support for Waterfront Development for $500,000 # 62 Mayor $ Reductions.
- Youth Detention Services listed in Mayor's Spending Reductions Proposal # 8 saving 2.4 million. (Return to State by 12/31/2019 in FY 2020.)
- Draft bill for Kentucky General Assembly in 2020 to establish a local tax on gaming that would effect Churchill Downs, Derby City Gaming etc., to raise 2 million beginning in FY 2021.
- FY 2021 Additional 800,000 in Central Service Agencies Personnel Reduction item #67 Mayor $ reductions.

FY 2020 Spending reductions/tax increases raises over 35 million, FY 2021 spending reductions/tax increases raises over 45 million, FY 2022 spending reductions/tax increases raises over 55 million, and FY 2023 spending reductions/tax increases raises over 65 million.

The sum total of fiscal year 1-27 reductions/revenue increases is just over $65 million dollars through FY 2020-2023.

This proposal for FY 2020-2023 also saves libraries, neighborhood places, public works, and other departments without need of a large reduction in services or personnel. If additional revenue above 623 million budget baseline(estimate) #25 would be an unnecessary cut.

Thank you for continuing your diligent work to develop a proposed solution to the $65 million budget deficit Metro will face by FY23, due to increasing state-mandated pension obligations. Your participation in this process is appreciated.

As requested by the Mayor, the Office of Management and Budget (OMB) has reviewed the new proposal. We applied the same line-by-line review to the new proposal and have added analysis in the “Notes” column in the attached file, click here to view. Each line item generally fell into one of the categories below:

  • New Revenue: Your support of enacting a rental car fee and franchise fee is noted. Please note that the $1 million in receipts you included in the proposal is the high end of our estimate for this potential new revenue stream. Challenges with the franchise fee, the second new revenue source you included in the proposal, include it being an unstable revenue source due to winter seasonality and that the fee cannot be levied on suburban cities.
  • Requires state action: A couple of the items you identified would require action from state government, which is not likely. There has been a long-term effort, led by the Kentucky League of Cities, to expand the restaurant tax to 1st class cities including Louisville Metro. Given that funds are needed to support ongoing operations, versus a one-time capital project that can be delayed, we cannot plan on these revenue streams being made available in the timeframe they are needed.
  • Identified as potential reduction: These are potential cuts that have been identified and would have an adverse impact on our city. In sum, these cuts would generate recurring savings of $9.9 million in FY20 and an additional $800 thousand in FY21. These cuts would also result in 186 layoffs of current Metro employees.
  • Reallocating from the capital budget: Metro’s capital budget is largely funded through debt and restricted grants. These funding sources are not eligible to support Metro’s operating budget, including our increasing pension bill.

Similar to your initial proposal, moving forward to implement the new revenue streams that fall within Metro Council’s purview in conjunction with the reductions for which you expressed support could serve as part of the solution to fund our pension bill, but it falls short of the $65 million needed by FY23 (as noted in the “Remaining Budget Gap” line).

 

6. How do taxes in Louisville compare to taxes in other cities? I think it would be irresponsible to raise taxes without understanding how our taxes compare to other cities, particularly our peer cities. From what I can tell, based on the limited studies that are available from intuit.com, the city of Washington DC, and Paul Coomes at UofL, Louisville is already one of the highest taxes cities in the country!

The intuit study is flawed for several reasons: 1) It only looks at one city per state—eliminating cities such as San Francisco, Pittsburgh, Miami, Cleveland, Dallas, and numerous others; 2) It ascribes sales tax to Louisville—a tax that we cannot constitutionally receive; 3) It aggregates mutually exclusive property tax rates—no one pays both an Urban Service District tax AND a suburban fire district tax; 4) The raw numbers make little sense for Louisville—it would imply an almost $5 billion tax base (using our published fiscal year 2018 Comprehensive Annual Financial Report, or CAFR) whereas Metro’s General Fund budget is closer to $621 million:

    FY 18 CAFR page
Population $ 771,158 136
Per Capita Income $ 47,096 124
  $ 36,318,457,168  
TurboTax Stated Tax Rate: 13.7%  
Taxes at the Stated Rate: $ 4,975,628,632  

 

The Tax Foundation publishes a more comprehensive and data driven report that compares combined State and Local Tax Burden. We rank 24th out of 50.

 

7. If Y.D.S. (Youth Detention Services) Is turned over to the state, what happens to the contract employees who work there? Does the state have to honor the contract until it expires? What are the facts? Also, how does this affect the children in our custody?

It would be up to the state as to how they would administer children in custody—establishing a facility in Jefferson County or using its other detention centers.

 

8. Many homeowners live paycheck to paycheck. What resources, other than the homestead exception, will be available to the public to help pay for the increase in taxes to avoid possible foreclosure? What changes are going to take place to make sure that our tax money is spent responsibility in the future? Will a full budget audit be released to the public?

The homestead exemption is not related to the insurance premium tax.

Support for homeowners is provided by a number of organizations that receive grants from Louisville Metro through External Agency Funding. A complete list of the organizations that received funding in the 2018-2019 budget is included on pp. 220-225 of the executive budget document, available online at the hyperlink below.

https://louisvilleky.gov/sites/default/files/2018-2019_approved_executive_budget.pdf

Louisville Metro’s audits, Comprehensive Annual Financial Reports (CAFR), annual budget documents, credit rating agency reports, etc. are available on the Office of Management and Budget’s website at the following link: https://louisvilleky.gov/government/management-budget 

 

9. What is the living room project which is listed as a potential reduction?

The living room project is a diversion program intended to be a safe, calming space for adults in crisis.  In partnership with Centerstone, the program helps people struggling with opioids or other substance use issues get treatment and mental health support instead of going to jail or the emergency room.   

Direct link to the CenterStone website: https://centerstone.org/?s=living+room

 

10. Is it possible for Louisville to become like Lexington and separate from all these independent other counties in regards to taxes. I believe that maybe necessary for Louisville to look into/consider to prevent from having to pick up the tab moving forward.

This would require a General Assembly change to the existing consolidation Kentucky Statute (Chapter 67C).

 

11. Why are the citizens just hearing about this at the 11th hour? Let’s convert pensions to ones like most private citizens have (non-defined) and require public employees to work the same number of years the rest of us do before being eligible to retire. Pay public employees public sector wages, none greater and finally, quit spending money on arenas, bike paths, parks et al.

Mayor Fischer and Louisville Metro CFO Daniel Frockt have repeatedly warned about the impact of the increased state pension obligation since 2017. Please refer to p. 4 of the attached “Effective and Efficient” document, which is also available online at https://louisvilleky.gov/government/mayor-greg-fischer/effective-and-efficient.

State government authorizes specific pension benefits. Additional information is available on the Kentucky Retirement Systems website at https://kyret.ky.gov/Pages/index.aspx.

 

12. After the shortage is corrected, what happens to the tax increase then? Does it go away? Is it used for some other emergency the mayor dreams up? He's wanted to raise taxes ever since he's been in office. Now he's trying to scare people into giving him what he [sic]

Louisville Metro’s increased state pension obligation creates a structural budget challenge in that the amount owed for pension will not decline after FY23, it will continue at the $136 million level (at minimum) beyond that year.

The proposed ordinance to increase the tax on insurance premiums sponsored by Council President David James, Council Budget Chair Bill Hollander, Councilman Mulvihill, Councilwoman Sexton Smith and Councilman Markus Winkler includes language that the increased revenue is for the purpose of addressing “Metro’s pension obligations, health insurance costs, or unforeseen emergencies.” It also states that “Metro will continue to consider other revenue options.”

 

13. What about "bourbonism"? i heard it generates 8 billion dollars into our economy....why can't that industry be taxed more? you guys are killing us with more and more taxes.....if i have a shortfall in my finances- i have to cut my spending...you guys should do the same....it's just so much easier for you all to raise taxes than to actually look into where cuts could be made...

State government authorizes and administers taxes on alcohol. The Kentucky General Assembly must pass legislation in order for the tax to be increased.

 

14. So When Are they scare tactics going to stop. This is the typical mayor’s way of scaring people into voting for what he wants. I CANNOT AFFORD TO PAY MORE FOR MY HOUSE! Why can’t we raise sales tax to 7% then EVERYONE feels the pinch!

State government authorizes and administers sales tax. The Kentucky General Assembly must pass legislation in order for sales tax to be increased.

 

15. First and foremost the Mayor fear mongering is just plan shameful. Scaring the citizens of this community into his my way or no other way is a new low for this Mayor. His how great this city fiances are in before and during election time then go right into fear mongering the community screams how mismanaged Metro Louisville is.

My first question I have is how can the Mayor make a statement like this in April 2018???? This plan, with total expenditures of $ 874 million, including $ 623 million of General Fund dollars,is evidence of our city’s economic strength, as made clear by the 72,000 new private sector jobs, 2,500 new businesses added since 2011 and nearly $13 billion of capital investment we’ve welcomed since 2014. Our strong economy is helping us manage this significant challenges of Frankfort’s $9.4 million pension funding requirement and $9.6 million for increased employer healthcare costs in FY19 without layoffs or significant reductions in services. and all the fear mongering now after the election?????

My nest question is. Why hasn't Metro Louisville question the legality of the new tax plan?? Given the fact the only ones that benefit from this new tax plan is the exact same people making these decision. How can the same people that will benefit or has benefited from the massive unfunded liability not have a direct conflict of interest in this new tax plan? Given the fact that 84% of the state population make up the private sector workers. How can this tax plan be in the public interest when only 16% will be benefiting from the new tax plan.

Now I am not a lawyer but I do believe we do have laws on the books that should make Metro Council pass laws that are in the Public Interest. 16% is not all the public interest. Using of official positions to secure or create privileges, exemptions, advantages, or treatment for himself or herself or others in contravention of the public interest actually is against the law.

My suggestion would be go back and make laws that will benefit all the great Metro Louisville citizens not just the 16% (Government Workers). Clearly stop all the fear mongering to the citizens of this community!!

Mayor Fischer and Louisville Metro CFO Daniel Frockt have repeatedly warned about the impact of the increased state pension obligation since 2017. Please refer to p. 4 of the attached “Effective and Efficient” document (click here to view), which is also available online at https://louisvilleky.gov/government/mayor-greg-fischer/effective-and-efficient.

State government authorizes specific pension benefits. Additional information is available on the Kentucky Retirement Systems website at https://kyret.ky.gov/Pages/index.aspx.

 

16. When is the governor /officials going to take a pay cut ? I don’t have free internet!!!

 Governor Bevin’s compensation and benefits are not funded in Louisville Metro’s budget.

 

17. People can't afford the increase in rent and other items that will be passed on to them in order to recover the tax hike on insurance expense. So could you please present a line by line monthly expense statement for our city in a public format so that we can see other areas of bloat that can be cut besides police and fire?

Please refer to Louisville Metro’s 2018-2019 approved budget documents at the links below. The detail budget provides a breakdown of each department’s budget by category of revenue and expense. 

2018-2019 approved executive budget: https://louisvilleky.gov/sites/default/files/2018-2019_approved_executive_budget.pdf

2018-2019 approved detail budget: https://louisvilleky.gov/sites/default/files/management_budget/fy18budget/2018-2019-approved-detail-budget.pdf

 

18. At https://www.forbes.com/sites/travisbrown/2014/03/14/why-is-florida-the-n... a 2014 article states this:

According to Internal Revenue Service data contained with How Money Walks, Kentuckians are leaving their state for more tax-friendly states such as Florida, Tennessee, North Carolina [...], South Carolina, and Texas. Based on calculations from www.SaveTaxesByMoving.com, a sales representative[...] making $89,440 [...] a year could earn over $800,000 more in his or her lifetime by moving from Louisville, Kentucky to Jacksonville, Florida.

Then at https://www.marketwatch.com/story/10-us-cities-with-the-highest-taxes-20... it states that Louisville, Ky in their rankings for cities is ranked no. 4 for the highest taxes. Here are some of the finds:

Taxes for family earning $25,000: $3,594 (8th highest)

Taxes for family earning $150,000: $18,008 (5th highest)

Then there is the JCPS board that in August of last year did this according to WDRB: The JCPS board voted to raise the tax rate. What this means is that a "100,000 home will pay $21 more in taxes toward Jefferson County Public Schools."

MSD and LG & E want to increase rates too. Kentucky recently proposed adding tolls to the interstates to have more money for road work. Kentucky also wants to implement an increase in fuel tax.

My question is, isn't Louisville seeking to overburden the common worker whose wages are stagnant? Will these increases not force people to move out of the state, or not want to come to the state, or force people to try to hold two jobs to make do? I suggest the local government minimize departments that are non essential, such as the property maintenance dept., and cut some of the staff in all departments by implementing some longer work hours or overtime for those who remain in those departments. In short, the government needs to be run leaner and more efficiently as is done in the private sector, such as is done by many trucking companies.

The Tax Foundation publishes a more comprehensive and data driven report that compares combined State and Local Tax Burden. Louisville Metro ranks 24th out of 50.

 

 

19. I would like to know why the new taxes would be levied against a necessity like Insurance rather than luxury items, such as gambling, tobacco or alcohol (which could in turn reduce health care spending)? Also, why is the threat of cuts always to necessary areas such as the fire department and the police department?. Why not cut the budget of the elected officials? Also, the latest budget shows a one billion dollar increase in Post Secondary Education expenditure, can you explain this?

State government authorizes and administers taxes on gambling, tobacco, or alcohol. The Kentucky General Assembly must pass legislation in order for the tax to be increased.  With public safety making up approximately 60% of the general fund budget, cuts this big can’t be made without public safety being affected.  The $65 million budget challenge we’re facing will impact just about every department of Metro Government—including the elected officials.  Post-secondary expenditures do not reside in Louisville Metro Government’s budget—it is funded through the state budget.

 

20. In the Fiscal Year 2013-2014, the Louisville Metro budget was $566 million. In Fiscal Year 2018-2019, the budget is $877 million. This represents an increase of $311 million or 55%. Some of the non-essential departments that have increased the most are Capital/Debt Service which has increased $82 million, Economic Development and Develop Louisville have increased by $32 million, the Office of Management and Budget has increased by $19 million and Metro Technology Services has increased by $6 million. The increases in these departments alone amount to $139 million. Why aren’t we looking at the dramatic increases in these departments as a way of funding the shortfall due to the increase in the pension obligation instead of asking homeowners to pay more for their insurance or cutting essential services such as fire, police and EMS? These departments could be cut by the $65 million needed to fund the pension shortfall and their budgets would still be above where they were in Fiscal Year 2013-2014.

The budget comparison you are using includes different funding sources (e.g., you are comparing a local funds-only budget to one that includes state, federal, and capital funds along with local funds)—it is not an apples-to-apples comparison.  Many of the services have been centralized to manage costs and contracts in a more uniform and efficient manner—for example, software licenses are now centralized in the Department of Information Technology (including software costs for public safety)—this allows us to manage our seat licenses better.  Additionally, items such as credit card terminal fees have been centralized into OMB—allowing for lower overall costs and better customer service.  The easiest way to review departmental changes is to view them in the budget document—see section 8 on page 32 of the FY19 Budget to view the two positions that OMB eliminated in the current year: https://louisvilleky.gov/sites/default/files/2018-2019_approved_executive_budget.pdf

Each year’s budget lists those types of changes summarized in the same section.

 

21. The Chief of Louisville Forward has a budget of $28 million for Economic Development and $16 million for Develop Louisville. How do these expenditures benefit the homeowners that are being asked to pay more for homeowners insurance and why isn’t the budget for this department being cut with the current budget crisis?

Louisville Forward is an integrated approach to economic and community development, combining business attraction, expansion and retention activities, and talent and workforce attraction, with all of the city's real estate development, land use and planning and design functions to present a unified solution for job growth and quality of place.  All departments that report to the Chief of Louisville Forward (Economic Development, Develop Louisville, and Codes & Regulations) are listed on the potential reductions list (click here to view).


22. How much does the current budget have for pay increases by department and why aren’t we considering freezing salaries as a part of the solution to the budget crisis? Local companies have had to do this in recent years when there was a shortfall in revenue.

The Fiscal Year 2018-2019 budget includes a 2% cost of living increase for non-union personnel.  Pay increases for employees represented by a union are determined by their collective bargaining agreements; approximately 75% of Louisville Metro’s full-time workforce has union representation. 

Louisville Metro has implemented 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.


23. What is the cost of the KFC Yum Center in the current budget and why isn’t this cost being passed on to the venue’s that use this facility?

The KFC Yum Center arena payment is budgeted under the Office of Management and Budget at $10.8 million in Fiscal Year 2018-2019.  The Louisville Metro Government guarantee of $10.8 million along with the University of Louisville and the State of Kentucky provides the arena with unique resiliency in the event of an economic downturn that reduces the demand for basketball and other entertainment events held in the stadium. 

Additional information can be found on the KFC Yum Center website: https://www.kfcyumcenter.com/arena-information/louisville-arena-authority

 

24. What is the cost of the Louisville Extreme Park, bike lanes and Champion Park in the current budget and why aren’t these items being cut during the current budget crisis?

Louisville Metro’s 2018-2019 operating budget includes approximately $20K for the Louisville Extreme Park. Funding to maintain Champions Park is embedded within Metro Parks & Recreation’s operating budget.

The Fiscal Year 2018-2019 budget includes $500,000 for bicycle infrastructure. Item #49 on the list of potential reductions that has been shared with the public would reduce debt funding for the capital budget by $8.2 million, which would reduce investment in projects such as repairs to sidewalks, paving, bike lanes and affordable housing.

 

25. Not a question, just a couple of suggestions for increasing revenue. Legalize marijuana and gambling and tax those.

State government authorizes and administers taxes on gambling, tobacco, or alcohol. The Kentucky General Assembly must pass legislation in order for the tax to be increased. 

 

26. Since the proposed Budget ....... why and how would you even consider closing Fire Houses, and Police Recruitment? First and foremost Public Safety, would you not agree? Even losing some Ambulance service? The people taking away our Safety would be the persons involved in such a decision, I would never want to make a decision like that. We as tax payers should be able to vote on any serious decisions as such; not just the selected few. Safety First! Whatever is proposed, should be put into vote by the taxpayers.

With public safety making up approximately 60% of the general fund budget, cuts this big can’t be made without public safety being affected. 

 

27. Why is the council and the mayor’s office not considering raising the occupancy tax on hotel rooms to help pay for the pension shortfall? Increasing this tax slightly could offset the increases on the insurance tax which will effect this community. Use our robust tourism industry to our advantage.

State government authorizes and administers taxes on hotel rooms.  The Kentucky General Assembly must pass legislation in order for the tax to be increased. 

 

28. Why don’t they tax alcohol? That should generate a lot of money. People that’s on Social Security shouldn’t have home owners insurance tax increased because we don’t have an increase on our check. Also if they legalize gambling, they could open casinos. They do have Derby City Gaming, which is just like a casino. Since it is owned by Church Hill Downs it’s legal. How that can be legal when it’s just like a casino. 

State government authorizes and administers taxes on alcohol. The Kentucky General Assembly must pass legislation in order for the tax to be increased.

 

29. Is this tax on home owners insurance? What about the people that dont have home owners or property insurance? Is it assumed every property in louisville has insurance?

The insurance premium tax, as currently proposed, would affect the following lines of insurance: Life, Marine, Fire, Casualty, and Miscellaneous (includes malpractice and extra liability policies). 

 

30. Has anyone calculated the impact to the citizens who rent their housing once their landlords pass on the insurance tax increase to them? It will impact those citizens more than the property owners.

Louisville Metro has looked at the impact on a renter’s insurance policy. With a tax rate of 15% in the fiscal year that begins July 1, 2022, a renter in the 40204 zip code would see an increase of $12.30 a year, or $1.03 a month.

 

31. I Think all the problems with the budget shortfall can be corrected easily by adding higher tax to things that are bad for you. Starting with Cigarettes, E-Cigarettes and Liquor!

State government authorizes and administers taxes on cigarettes, e-cigarettes, and liquor. The Kentucky General Assembly must pass legislation in order for the tax to be increased.

 

32. Why can't there be cuts in the budget to trim the fat? Eliminate unnecessary administrative jobs, reduce redundancy. Why can't the mayor reimburse the taxpayers for his Derby guests?

Louisville Metro is an efficient operation (click here for highlights). The potential reductions list as outlined by the mayor identifies areas to eliminate. The full list is attached (click here to view).

 

33. It appears that the city payroll has risen 29% in two years, not including uncontrollable costs like health care. How many Full Time Equivalent employees were on the City payroll in 2016, and how many are budgeted for in 2019. Also, what percentage pay raise have city employees received in the last 2 years.

The budget documents report average filled positions by quarter to better reflect staffing patterns by agency. An example of the filled position detail can be found starting on page 89 of the 2018-2019 approved executive budget: 

Direct link to the 2016 approved executive budget can be found here: https://louisvilleky.gov/government/management-budget/fy16-approved-budget-0

Direct link to the 2018-2019 approved executive budget: https://louisvilleky.gov/sites/default/files/2018-2019_approved_executive_budget.pdf

The Fiscal Year 2017-2018 and 2018-2019 budgets included a 2% cost of living increase for non-union personnel.  Pay increases for employees represented by a union are determined by their collective bargaining agreements; approximately 75% of Louisville Metro’s full-time workforce has union representation. 

 

34. Alternative Proposal to Louisville Metro Mayor Greg Fischer Local Insurance Tax Hike Version 3.0(Brand new proposal).

We have made a very serious effort to figure a clear path to avoid spending cuts in to public safety and a 12.5 percent local insurance tax hike in fiscal year 2020-2023. After bouncing ideals off of dozens from Louisville metro citizens/residents across the county I fully believe we have a real and clear solution. Below is a full list of metro budgetary items to eliminate. We have tried to adjust to modifications suggested by the Louisville Metro Mayor's Administration Budget Office.

1.) Enact a Car Rental Fee of 3% in FY 2020 Raising One Million(Estimate) in Revenue.
2.) Enact a Franchisee Tax of 5% in FY 2020 generating 13 Million(Estimate) in Revenue.
3.) Disbursement of 10 million of capitol reserves/rainy day funds for fiscal year FY 2021-2022 and 20 million for FY 2023 for sum total of 40 million for FY 2021-2023 not FY 2020.
4.) Additional across the board for all Louisville Metro Government Departments spending reduction of 3 %(excluding Public Safety) raises over 13 million dollars in revenue in FY 2020. Continue across board spending reductions for all Louisville Metro Government Departments spending reduction of 3%(excluding public safety) for fiscal years 2021, 2022, and 2023 respectively.
5.) Reduce $55,400 Library Substitute Positions- Item # 16 in Mayor's Spending Reductions.
6.) Reduce $125,500 additional operating funds to NE Library #17 in Mayor's Spending Reductions.
7.) Louisville Free Public Library $1,114,800 by shortening branch hrs. #18 in Mayor's $ Reductions.
8) Louisville Zoo enter into a privatization leasing agreement for $400,000 #20 in Mayor's $ Reductions.
9.) Limit syringe exchange hours for $50,000 #21 in Mayor's Spending Reductions proposals.
10.) Eliminate of Metro Employee OWLS Program for $53,000 #22 in Mayor's Spending Reductions.
11.) Reduce one vacant lots crew for $350,000 #31 in Mayor's Spending Reduction proposal.
12,) Reduce code enforcement officers for $630,000 #32 in Mayor's Spending Reductions.
13.) Eliminate West Louisville Wi-fi for $45,000 #33 in Mayor's Spending Reductions.
14.) Save $300,000 in personnel reductions for Development Louisville #37 in Mayor's $ Reductions.
15.) Save $400,000 Eliminate general fund for market rate housing #38 in Mayor's $ Reductions.
16.) Eliminate general fund for Sister Cities saving $61.000 #39 in Mayor's Spending Reductions.
17.) Eliminate general fund for World Trade Center $72,000 #40 in Mayor's Spending Reductions.
18.) Human Resources personnel reduction $100,000 #46 in Mayor's Spending Reductions.
19.) Kentucky Science Center general fund support $100,000 #47 in Mayor's $ Reductions.
20.) Eliminate NDF"s of Metro Council saving $1,950,000 #48 in Mayor Spending Reductions.
21.) Metro Animal Services reduce second shift saving $300,000 #51 in Mayor's $ Reductions.
22.) Personnel Reductions in Office of Performance Review for $130,000 #52 in Mayor's $ Reductions.
23.)Personnel reductions listed in Mayor Spending Reductions Proposal #54 saving $800,000.
24.) Reduce general fund support for Waterfront Development for $500,000 # 62 Mayor $ Reductions.
25.) Youth Detention Services listed in Mayor's Spending Reductions Proposal # 8 saving 2.4 million. (Return to State by 12/31/2019 in FY 2020.) The cost savings is 3.2 million starting in FY 2021.
26.) Save 1 million listed in Mayor's Spending Reductions Proposal # 49.
27.) Raise Louisville Metro Insurance Premium on all Louisville Metro Government Employees by $18.00 per week, $72.00 per month, or $936.00 per fiscal year from FY 2021-2023 not FY 2020 would raise over 6 million each year.
28.) FY 2021 Additional 800,000 in Central Service Agencies Personnel Reduction item #67 Mayor $ reductions.
FY 2020 Spending reductions/tax increases raises over 35 million, FY 2021 spending reductions/tax increases raises over 45 million, FY 2022 spending reductions/tax increases raises over 55 million, and FY 2023 spending reductions/tax increases raises over 65 million.
The sum total of fiscal year 1-28 reductions/revenue increases is just over $65 million dollars through FY 2020-2023.
This proposal for FY 2020-2023 also saves libraries, neighborhood places, public works, and other departments without need of a large reduction in services or personnel. If additional revenue above 623 million budget baseline(estimate) #25 would be an unnecessary cut.

Thank you, again, for continuing your diligent work to develop a proposed solution to the $65 million budget deficit Metro will face by FY23, due to increasing state-mandated pension obligations. Your input is appreciated and heard.

OMB has reviewed the new proposal (v. 3). We applied the same line-by-line review to the new proposal and have added analysis in the “Notes” column in the attached. Each line item generally fell into one of the categories below:

New Revenue: Your support of enacting a rental car fee and franchise fee is noted. Please note that the $1 million in receipts you included in the proposal is the high end of our estimate for this potential new revenue stream. Challenges with the franchise fee, the second new revenue source you included in the proposal, include it being an unstable revenue source due to winter seasonality and that the fee cannot be levied on suburban cities.

Identified as potential reduction: These are potential cuts that have been identified and would have an adverse impact on our city. In sum, these cuts would generate recurring savings of $9.9 million in FY20 and an additional $800 thousand in FY21. These cuts would also result in 186 layoffs of current Metro employees.

One-Time Funding Sources  - Capital Budget & Rainy Day Fund: Metro’s capital budget is largely funded through debt and restricted grants. These funding sources are not eligible to support Metro’s operating budget, including our increasing pension bill. 

As noted in the attachment (click here to view), the increased pension obligation poses a structural budget challenge that one-time sources of funds cannot address in a sustainable manner. Once the Rainy Day Fund is depleted, it is challenging to replenish it especially given the budget challenge we are facing. Reducing Metro’s Rainy Day Fund would have a negative impact on Metro’s currently strong ratings, which would affect Metro’s ability to borrow funds at competitive interest rates for strategic capital investments.  Use of the Rainy Day Fund would need to have a replenishment plan, it would reduce our current interest earnings—exacerbating the ongoing shortfall, and likely require Metro to incur short-term borrowing to manage cashflow throughout the year (not all taxes are received uniformly each month such as property taxes).

Similar to your previous proposals, moving forward to implement the new revenue streams that fall within Metro Council’s purview in conjunction with the reductions for which you expressed support could serve as part of the solution to fund our pension bill, but it falls short of the $65 million needed by FY23 (as noted in the “Remaining Budget Gap” line).

 

35. In the presentation at the meeting it was told that health insurance premiums were exempt from the tax increase. From what I have been able to find it looks like that was not completely true. While individual plans are exempt, group health plans are only exempt for businesses in the urban service district as well as plans for state workers. This puts a much larger share of the burden on businesses outside the urban service district. How is that fair? If it were applied to everyone including all the big companies downtown the % of increase could be lower. And the exemption for auto insurance only applies to individuals so businesses will pay for that as well. When trying to make it sound like this tax increase would only cost individuals $10-20 a month you didn't bother to mention the increase cost to businesses which will certainly be passed on to their customers. The service industry just had to deal with adding sales tax to their prices (I know that wasn't local) but what you are doing is putting salt in that wound.

At present the only Group Health Plans that are subject to the Metro Louisville Insurance Premium Tax are those that are levied within the Urban Services District. No other Group Health plans outside the Urban Services District are subject to the tax.  Under the proposed tax rate change, there will not be any change to the Insurance Premium Tax as it applies to the Group Health Plans issued both inside and outside of the Urban Services District. The Group Health Plans issued inside of the Urban Services District will continue to be taxed at the same 5% rate while those outside of the Urban Services District will continue not to be taxed.  As far as Insurance Premium Tax levied on auto insurance, the proposed tax rate change would not apply to any auto insurance policies. That is, the tax rate would remain at 5% on all auto insurance policies, both individual and business alike.