Gov. Matt Bevin weighed into Louisville’s looming budget shortfall in a radio appearance on Wednesday, criticizing the leadership of Mayor Greg Fischer and praising Metro Council’s rejection of a proposed ordinance last month that would have nearly doubled the tax rate on most kinds of insurance premiums.
Asked to give advice for Fischer on the city’s $35 million budget shortfall in the next fiscal year, Bevin told Terry Meiners of WHAS: “Welcome to financial reality, my friend.”
“At the end of the day, you have to make hard decisions when it comes to leadership positions, and sometimes the appropriate thing to do is the difficult right as opposed to the easy wrong,” said Bevin. “And the easy wrong is to just say we’ll stick it to the people who are here, we’ll take more taxes, we’ll squeeze the stone a little harder. That’s not always the right answer.”
In February, Fischer first proposed tripling the tax rate on certain types of insurance premiums within four years, which he said would allow the city to fill a $65 million hole in the budget over that time period without “devastating” cuts to city services and hundreds of layoffs. A compromise ordinance was filed that nearly doubled the tax rate next year — requiring $15 million in cuts instead of $35 million — but Metro Council rejected it by a 11-15 vote.
Bevin went on to praise the council for that vote, saying “I applaud the Metro Council for recognizing the fact that that wasn’t the right answer and holding this mayor to a higher standard of responsibility.”
The governor also mocked Fischer for his support of expanding bike lanes in Louisville, which make up a tiny fraction of the city’s budget.
“The good news is we have bike paths, Terry,” said Bevin. “We have lots of bike paths so we can take a ride and feel better about ourselves.”
Metro Council unanimously passed last year’s fiscal budget that included $250,000 for expanding bike lanes, which was three one-hundredths of 1 percent of the $839 million in spending approved in the budget. The budget for the current fiscal year ending June 30 included $500,000 of capital bonds to expand bike lanes.
In the radio appearance, Bevin also attacked the University of Louisville women’s basketball coach Jeff Walz for losing against Connecticut last week, Republican leadership in the General Assembly who criticized his veto of a recently passed pension bill and teachers who participated in recent “sickouts” during the legislative session.
Lexington’s city government also is dealing with increased pension costs and a budget shortfall in the next fiscal year, with Mayor Linda Gorton proposing a budget this week that does not raise taxes or layoff city workers, but does include 15 percent cuts for certain departments, closing a pool, furloughs for her top staffers and pay freezes for most city employees.
Bevin said that Gorton, in contrast to Fischer, took “a very prudent approach” with her budget, as leaders should look to shrink government.
“What a remarkable approach,” said Bevin. “How about less government? How about shrinking the size of government that we clearly can’t afford, which is why we have this deficit in the first place?”
When announcing the budget shortfall in February, Fischer outlined potential budget cuts he may have to propose if Metro Council did not raise new tax revenue, which included 317 layoffs of city workers and 246 positions lost through attrition in the next fiscal year, the possible closure of libraries, community centers, swimming pools and golf courses, privatizing the Louisville Zoo and ceasing the operation of the Belle of Louisville.
Fischer is already implementing cost-cutting measures to prepare for the shortfall, including the cancellation of the new recruiting class of Louisville Metro Police Department officers, increasing the health insurance premiums for city workers by 3 percent and closing the city’s four outdoor pools this summer. He has also asked unions representing city workers to agree to a pay freeze next year to avoid further layoffs, thought their leaders have already rejected that request.
The mayor is scheduled to present his proposed budget for the next fiscal year to Metro Council at its meeting on April 25, and the council must pass a final budget on June 25.
Fischer’s spokeswoman Jean Porter told Insider Louisville in a statement that what the people of Louisville “want, and deserve, are thoughtful leaders who make statements based in fact,” as the mayor and his team “have spent months doing very careful analysis to find ways to address the $35 million bill handed to us by Kentucky Retirement Systems.”
She added that the administration would welcome Bevin’s assistance in modernizing the tax structure and revenue streams of the city, which must come through Frankfort.
“Given the rejection of a plan for new revenue, we’re now working to lessen the impact of millions of dollars in budget cuts on our most vulnerable,” said Porter. “If the Governor has any sound ideas for addressing the challenge facing a city that is the economic engine of this state – or is ready to act on tax reform that removes outdated restrictions that keep us from creating new revenue and avoiding cuts — we look forward to hearing from him.”
This story has been updated with comments from Porter.