LOUISVILLE, Ky. (WDRB) – The Kentucky legislature was within its rights to order Metro Louisville to spend all of its mineral tax revenue on a single project, a judge has ruled in a lawsuit brought by city officials.
The legal dispute arose after state lawmakers passed a budget bill in 2018 that earmarked the funds to the Waterfront Botanical Gardens at River Road at Frankfort Avenue. Counties typically choose how to spend proceeds from taxes on mined minerals, such as limestone.
In Louisville’s case, it had budgeted as much as $430,000 in mineral tax funds recent years on projects such as roads and public safety.
But in closed-door budget negotiations last spring, legislators funneled the money to the botanical gardens – even though city and project officials say they didn’t ask for the aid to come from mineral taxes. It’s unclear how the project was added.
The city filed a lawsuit in Franklin Circuit Court last June, arguing that state law gives “local discretion” over the spending and that lawmakers discriminated against it by trying to restrict how the money is used. No other local governments were told how to spend their mineral tax funds.
Lawyers for Metro government argued in court filings that the action amounted to “special legislation” not allowed under the Kentucky constitution.
But attorneys for two state agencies contended that the earmark is permitted under an exemption because the budget bill’s purpose is to “draw tourism and revenue to the Commonwealth through the botanical garden,” according to court documents.
Franklin Circuit Judge Thomas Wingate sided with the state in a January 29 ruling. He subsequently denied Metro government’s request to reconsider the order on February 22.
Metro government plans to appeal the ruling, said Josh Abner, spokesman for Jefferson County Attorney Mike O'Connell's office, which represented the city in the lawsuit.
Among those who criticized the state legislature’s move last year was Louisville Metro Council member Bill Hollander, whose 9th District includes the botanical gardens site. While saying he supports the project, he has raised concerns about what he calls a “very bad precedent.”
“It’s really disgraceful that $350-$400,000 that we could use to pay police or firefighters or our big new pension invoice is instead going to someone’s favorite non-profit garden,” Hollander said in a text message Monday.
Hollander is an advocate of Louisville Mayor Greg Fischer’s plan to gradually raise the city’s tax on home, life and other insurance premiums from 5 percent to 15 percent over the next four years. The move is meant to help fill an estimated $65 million shortfall in the coming years mostly as a result of rising state-mandated pension costs.
Hollander also noted that it’s still not known who “slipped this diversion of Louisville Metro money into the state budget at the last minute.”