Revenue forecast improved for FY20 & FY21, requiring less use of Rainy Day Fund

June 15, 2020

The latest Louisville Metro Government budget forecasts for the current fiscal year and the fiscal year starting July 1 have improved by about 2.5 percent, meaning that fewer funds will need to be accessed from the Rainy Day Fund, Chief Financial Officer Daniel Frockt announced today. 

In testimony to the Metro Council Budget Committee, Frockt said the estimated general fund revenue for Fiscal Year 2019-20 is $610 million, revised up from $596 million when Mayor Fischer delivered his budget address in April. The estimated general fund revenue for Fiscal Year 2020-21 is also $610 million, revised up from $594 million in April.

The Fiscal Year 2019-20 figure is $32 million less than the $642 million forecasted in the winter, prior to the COVID-19 pandemic, which required the sudden closure of businesses and led to an unprecedented spike in unemployment in the city and across the nation. But wage earnings and profits within the city decreased less than Metro revenue officials had feared.

Frockt cautioned however, that, “The forecast continues to be extremely tenuous, as we’ve seen one fourth of the national workforce file for unemployment and one third of the Kentucky workforce.

“While the May totals were not as negative as anticipated, we still face structural budget challenges. We will continue to update monthly until we feel there is more certainty in the economy.”

While drastic cuts to vital services are not required immediately, Frockt said that without intervention by Congress, the structural budget challenges will lead to difficult decisions about in the current fiscal year. Mayor Fischer has joined mayors from across the country in calling on Congress to provide flexible financial support for local government budgets hobbled by the sudden drop in tax revenue because of the pandemic.

Louisville Metro Government will access $7.6 million of non-recurring funding and shift $5.8 million of Municipal Aid funding (road funds) from the capital budget into the operating budget to makeup a combined $13.4 million shortfall, Frockt said. He added that the pandemic-forced shift in the tax collection calendar this year will create an additional $11.5 million structural shortfall in Fiscal Year 2021-22. And this comes as the city faces additional and costly public health and community services needs because of the pandemic.

“While we expect to manage this sudden drop in revenue in the coming months, we will not be able to avoid cuts to vital services in the long-term, without additional revenue,” Frockt said.

 In June 2019, the Mayor and Metro Council budgeted $623 million for the Fiscal Year 2019-20 general fund.