Louisville faces $20 million shortfall
Business First of Louisville - by Brent Adams Staff Writer
Louisville Metro Mayor Jerry Abramson today said Louisville-Jefferson County Metro Government officials will “explore all options” to deal with an anticipated $20 million budget shortfall for the current fiscal year.
That could include salary cuts, a hiring freeze, layoffs and a reduction in office and travel expenses, Abramson told the media during a morning news conference at Metro Hall.
Abramson said he did not anticipate raising taxes or fees to help offset the deficit.
Through the first quarter of the current fiscal year, which began July 1, revenue was down 1 percent, compared with a projected 2.9 percent increase, Abramson said. The city has a general fund budget of $497 million for the current fiscal year.
The budget shortfall is larger than the General Fund budget for Metro Parks and twice as large as the budget for the city’s Health and Wellness department, Abramson said.
“The bottom line is, the global economic downturn is finally hitting Main Street and finally hitting Louisville, Kentucky and city government,” Abramson said.
He added that he will collaborate with Metro Council members, city department heads and employees and union officials that represent various city employee groups to devise cost-cutting measures.
“A spending reduction of this magnitude will require a united effort with shared sacrifice across all our government agencies,” Abramson said.
Final decisions about how much will need to be trimmed from the budget cannot be made until city officials have more information on three factors.
The first is a possible loss of funding from the state budget in light of the state’s projected $300 million budget shortfall.
The second is the city’s required contribution to the state pension plan, which covers city employees. The Kentucky Retirement Board is expected to meet in the coming days to decide the rate that cities must pay into the retirement trust.
Although there was no increase in the past fiscal year, the mayor said he anticipated an increase that could be in excess of $10 million.
The city currently pays between $60 million and $65 million into the plan each fiscal year, Abramson said;
The third factor is congressional debate about giving additional aid to the automotive industry.
Ford Motor Co. is one of Louisville’s largest employers, with a combined employment of about 6,000 between two plants. Ford suppliers in the area also provide thousands of jobs that could be in jeopardy if the automaker falters.
The loss of occupational tax revenue paid by auto workers could put the city further in a financial bind, Abramson said.
Looking to other cities
The budget cuts come on the heels of $13 million of cuts that came in the previous fiscal year that cut out many of what Abramson called “wish we could do” expenditures by metro government.
In trying to cut another $20 million in expenditures, Abramson said, city officials will look to counterparts in other cities, such as New York City, Philadelphia, Washington, D.C., Chicago, Cincinnati, Indianapolis, Nashville, and Lexington, that also have had to implement belt-tightening measures.
One area where Abramson will be challenged to cut costs is in the public service sector. More than 55 percent of the current fiscal budget is dedicated to police, fire, corrections and emergency medical services.
“Our priority is to continue to focus on public safety and the delivery of public services,” Abramson said.
He added that future police and firefighter training courses might be put on hold, but the city will do all it can to avoid laying off, police, fire and EMS workers.
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