During his annual State of the City address on Thursday, Louisville Mayor Greg Fischer made a point of urging state legislators in Frankfort to couple tax reform along with their expected work on pension reform in this year’s session — as Louisville and other cities are preparing for increased pension costs that could lead to cuts in services.
Fischer’s address at the South Central Regional Library in Okolona largely painted a rosy picture of a city that is on the rise with billions of dollars worth of development projects dotting across Louisville, while acknowledging the many challenges lay in its way, such as the opioid epidemic, violent crime, and the public pension crisis that looms over government budgets.
Noting that Louisville Metro Government’s pension costs for city workers is expected to increase by $38 million in the coming fiscal year “unless Frankfort acts differently,” Fischer said this might lead to reductions of existing government services.
Stating that “a sustainable solution” to pension must be found in Frankfort “without threatening the prosperity that we have worked so hard to create here in our city,” Fischer said that could not be done without also reforming Kentucky’s outdated tax code.
“While I applaud Frankfort for taking on pension reform, we must acknowledge that it is the result of historical underfunding and one symptom of a larger problem: Our state’s tax code was designed to support the economy of the last century, not this one,” said Fischer. “For our commonwealth to succeed in a global, modern economy, pension reform must be coupled with tax reform.”
In early 2017, Gov. Matt Bevin had suggested that pension reform should be coupled with tax reform, but since last fall he and other Republican leaders in the Kentucky General Assembly have said that taxes would take a backseat to pensions — which legislators are expected to devote the opening weeks of the 2018 session to.
Stating that Louisville and other local communities have critical education, health, social services and infrastructure needs to address, Fischer added that to meet them, Frankfort must “broaden the tax base” and “reform an outdated system that exempts as much as it taxes.”
“We need to take a hard look at a tax code that exempts luxury items,” said Fischer. “It doesn’t make any sense to consider cuts to your child’s classroom, law enforcement, drug treatment, or our justice system, when we don’t even tax country club memberships or limousine rides. That’s just not right.”
Noting that this is also a budget session in Frankfort, Fischer stated that it was common sense to “never create a two-year budget without knowing both our pension and tax reform solutions.” He also urged the audience to contact state legislators with this tax reform strategy, adding that more control over taxes should be given to local governments and raising the cigarette tax by a dollar would create $266 million in new revenue.
Fischer called Louisville “the economic engine” of Kentucky, saying that it accounts for a fifth of its population, a fourth of its workers and a third of its total GDP. Asked in a Q&A session after his speech about so-called War on Louisville legislation, Fischer stated that the city’s economy functions best when Frankfort butts out.
“In our talks with the governor’s team, they know the importance of a strong economy in Louisville,” said Fischer. “Last year, when this so-called War on Louisville started, the business community in Louisville rallied very strongly and spoke to the legislators in Frankfort on how we need less control from Frankfort, not more.”
Prosperity and Equity
Fischer led his address by proclaiming that Louisville has gained 70,000 private sector jobs and 2,500 new businesses since he took office in 2011, with the unemployment rate now plunging to 3.5 percent. He also touted what he calls an unprecedented amount of economic development projects, saying that the city has attracted $12.5 billion in capital investment since 2014.
Along with the scheduled opening this year of the new Omni Hotel and completed renovation of the convention center in downtown, Fischer said there are now 25 hotel projects that had either been announced or were under construction, which he thought was more “than any city in the world right now.”
Declaring that “prosperity is only real when everybody feels it,” Fischer said that wages had also increased, as “in the last two years, 11,000 Louisvillians lifted themselves out of poverty, and 8,300 Louisville families joined the middle class.”
Fischer also praised Louisville as a “community of equity” and compassion that companies will want to expand to, where “there is no place for discrimination of any kind.” Saying that the current stock market boom mostly benefits just the top 20 to 30 percent in wealth across the country, he said more focus should be placed on making sure that everyone has the tools and training to participate in that economic success.
“People seem to be more interested than ever before in equity and community,” said Fischer. “That’s not socialism, that means just addressing these record levels of inequality that we see in our country right now.”
Fischer also praised the city’s efforts to train workers in rising fields, adding that “I am proud to say to anyone in Louisville who is struggling to get ahead, you have more opportunities to develop the skills you need to thrive in careers of tomorrow than ever before.”
Overdoses and Murders
Fischer acknowledged that the opioid epidemic and violent crime remained two challenges for the city, but asserted that his administration had plans in place to keep them under control.
Despite an all-time high in fatal drug overdoses in 2017, Fischer noted his administration’s efforts to sue major pharmaceutical distributors and praised its opioid action plan. And while there were 110 homicides in Jefferson County last year — tied for the second-most in the county’s history — Fischer said this was a decrease from 2016’s all-time high, in addition to decreases in other types of crime from that record year.
“Crime is down,” said Fischer. “Property crime down. Robbery down over 14 percent. Violent crime down. Shootings are down 18 percent. Homicides down 9 percent.”
Fischer added that “we will keep working our plan and always seek new, good ideas to improve all of the results I just talked about.”
Fischer hinted at a major educational initiative in the coming year, saying that Louisville will join other cities that have recently provided scholarships or free tuition for two years of community college to local high school graduates.
Just as he called Kentucky’s tax code outdated, Fischer said that “America’s education system was designed for another era,” as “our schools cannot meet the needs of our future unless we embrace reform at every level.”
In addition to moving toward universal pre-K, Fischer said that college must be made more affordable, as the steep rise in tuition had either priced out students or left them with crippling debt, saying “that’s unacceptable, it’s unsustainable, and, frankly, it’s un-American.”
Noting that cities like Detroit, Boston and Pittsburgh have pushed through recent initiatives to provide scholarships for high school graduates to attend two years of a community or technical college, Fischer said that “2018 will be the year for Louisville to join these communities.”
“This year, you will be hearing exciting announcements from major funders, as we work to make these scholarships happen, and we open wide the gates of a prosperous future for more Louisvillians than ever before,” said Fischer.
Fischer’s spokesman Chris Poynter later told IL that he did not know if any city tax dollars would be involved in this initiative, as they are still working through the details, but they “already have large financial commitments” from private sources.
Leet bullish on Louisville, but not Fischer
Republican Councilwoman Angela Leet, who is challenging Fischer in this year’s mayoral election, told reporters after Fischer’s address that she shares the mayor’s optimism about Louisville and the city’s importance to the state economy, but felt that he heavily glossed over the city’s two-year spike in homicides.
“I think saying the statistics are down when you’re making those comparisons to a record-high year of violent crime is not a genuine response,” said Leet, adding that the morale of LMPD officers is low and there should be more officers on the streets.
Leet said that Fischer’s speech “sounds like we’ve got a lot of great things coming for tourists for our town, but what are we doing for the average, everyday working citizen?”
“We have to make more changes,” said Leet. “We haven’t dealt with the crumbling infrastructure in our community. We have city buildings were we can’t even keep inmates warm.”
Leet said that she hasn’t read the entire pension legislation that Gov. Bevin unveiled last fall and hasn’t formed an opinion on it, but agreed with Fischer that pension reform “needs to come with tax reform.”
“We have to leave no stone unturned, and we have to look at all the different sources, all of the different exemptions,” said Leet on tax reform, though she added that “we are one of the most heavily taxed cities in the country, and I think that is something that we still have to keep in mind as we focus on tax reform.”