The administration of Mayor Greg Fischer has already spent over $121,000 on tickets, lodging and transportation for prospective business guests who will come to Louisville for the Kentucky Derby this May, according to records obtained by Insider Louisville through an open records request.
The continuation of annual spending exceeding $100,000 on Derby guests — the identities of which are likely to remain secret — is occurring despite the looming budget crunch of Metro Government, which faces a $35 million shortfall in the next fiscal year beginning July 1.
In recent years, Fischer and Mary Ellen Wiederwohl, the chief of the administration’s economic development team at Louisville Forward, have defended such Derby spending as a vital component of their strategy to lure prospective businesses to invest or expand in Louisville, which ends up paying for itself many times over in new jobs and tax revenue.
Despite refusing to reveal the identity of prospective business guests — as well as specifics on subsequent investments made in Louisville by the businesses of such guests — Wiederwohl said last year that their 2017 Derby guests had already located over a dozen expansion or attraction projects with $911 million in new investment and 125 new jobs in Louisville, with 11 actively pursuing expansion projects.
Asked about the decision to continue such spending on Derby guests this year, Wiederwohl told Insider Louisville on Wednesday that with increased pension obligations and the council’s recent rejection of new tax revenue, “it is important, now more than ever, to invest in revenue producing activities like Derby and other economic development work because it helps grow our economy and ultimately our tax base.”
Wiederwohl added that the money for these Derby expenses was allocated for this use and approved by Metro Council back in June 2018 and planning for Derby events began in the fall, with save the dates sent out, tickets purchased and contracts for hotel rooms signed before the end of last year. Like last year, the Derby Eve party at Metro Hall will be privately funded through corporate sponsors.
A proposed ordinance that would have forced the administration to reveal the names of its Derby guests within five years was rejected by a 12-12 vote of Metro Council in December, which Wiederwohl said at the time would have a “chilling effect” on the administration’s ability to attract such prospective business guests.
According to city records, the following purchases have already been made for Derby weekend:
- $76,042 on 32 tickets to “Millionaire’s Row” at Churchill Downs for both the Kentucky Oaks and Kentucky Derby
- $39,103 on a block of 10 rooms at the Omni Hotel for Thursday, Friday and Saturday night
- $5,200 on transportation for Friday and Saturday
- $1,037 on parking for Friday and Saturday at Churchill Downs
Last year, the administration spent nearly $111,000 on Derby-related expenses for guests, including $72,441 on Churchill Downs tickets and nearly $30,000 on Omni Hotel rooms. The total bill for entertaining guests came to $108,618, as the city took in $20,000 of sponsorships for the mayor’s Derby Eve party at Metro Hall.
Wiederwohl signed an agreement to reserve the hotel rooms for this year’s Derby in December, while the city’s invoice for the Derby tickets indicates a payment was due by Jan. 18. The invoice for parking indicates that a payment was due last Friday, while the invoice to reserve transportation for guests is dated Feb. 11.
On Feb. 7, Fischer first warned of “devastating” cuts to city services that would be needed if new tax revenue was not created, citing a $35 million budget shortfall in the next fiscal year and $65 million shortfall over the next four years, mostly due to rapidly increasing pension payments mandated by the board of the Kentucky Retirement System.
While Fischer supported the eventual tripling of the tax rate on most types of insurance premiums to cover the shortfall without any cuts or layoffs, a compromise ordinance that would have nearly doubled those tax rates next year — but still requiring $15 million in cuts — was rejected by an 11-15 vote of Metro Council last month.
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.
When announcing the shortfall in February, Fischer released a spreadsheet listing the potential budget cuts he may propose if Metro Council did not raise new tax revenue, which included 317 layoffs of city workers and 246 positions lost through attrition across many departments in the next fiscal year alone. It also included the possible closure of libraries, community centers, swimming pools and golf courses, in addition to privatizing the Louisville Zoo and ceasing the operation of the Belle of Louisville.
While Louisville Tourism announced last week that it is kicking in $500,000 to keep the Belle of Louisville open, Fischer is already taking cost-cutting measures to prepare for the budget shortfall, including canceling the new recruiting class of the Louisville Metro Police Department, increasing the health insurance premiums for city workers by 3% and closing the city’s four outdoor pools this summer.
Fischer is also considering ending the city’s contract with ShotSpotter — a new technology that LMPD has used in recent years to detect and quickly respond to possible gunshots — and asked the unions representing city workers to agree to a pay freeze next year to avoid layoffs. Leaders of those local unions have already rejected that request.
The mayor’s original spreadsheet of potential cuts for Louisville Forward listed $146,300 in savings created by one position lost through attrition, in addition to $600,000 in reduced funding for SummerWorks and external agency grants for the arts, which are both distributed through that economic development department.
While the Fischer administration has spent just shy of $400,000 on prospective business guests at the Derby over the last four years, state records show that the administration of Gov. Matt Bevin has been an even more prodigious spender, totaling $529,528 in the last three years alone. The governor’s administration also withholds the names of such guests, citing an exemption in the Kentucky Open Records Act regarding prospective business.
In December, the Fischer administration released the names of 14 Derby guests over the past two years who were called “cheerleaders” for the city, as they were local business leaders who spoke to prospective business guests about the positives of operating in Louisville.
Wiederwohl also told Insider on Wednesday that while the administration “will release the names of industry hosts and economic development staff after Derby, as we did last year,” they “will not be releasing the names of our business guests.” She added that Derby guests “have an expectation of privacy when attending,” with some requiring a non-disclosure agreement.
“Privacy during the cultivation phase is fundamental to economic development,” stated Wiederwohl. “We want to continue to attract guests, but more importantly expose them to Louisville, introduce them to other business leaders, and give mayor and staff the opportunity to show them our top level customer service.”
Noting that Metro Council has already approved the funding used for this year’s Derby in the budget for the current fiscal year, Wiederwohl added that when it comes to decisions about such funding in next year’s budget, “no decisions have been made, but everything is on the table.”
This story has been updated with comments from Wiederwohl.