LOUISVILLE, Ky. (WDRB) -- Louisville's transit agency is eyeing a tax increase to fund a more robust public transportation system, according to the agency's director.
The Transit Authority of the River City, or TARC, floated the plan in a statement Wednesday evening following a negotiating session with the union representing the agency's bus drivers and maintenance workers.
The union and the agency are at odds over wages, working conditions and other considerations.
As part of a negotiation that extended into the evening hours Wednesday, TARC said it made a verbal offer to the union that included "a commitment to jointly explore additional long-term operational funding needed for TARC to maintain a strong workforce and expand service, which may include a ballot referendum for the community to decide."
TARC Executive Director Carrie Butler said the agency would likely pursue an increase in the paycheck tax paid by Jefferson County workers to fund the bus agency.
"TARC has recognized and has known for many years that we needed to secure additional operational funding dollars that we can use for operations here locally to meet the needs of our community and of our region," Butler told WDRB News in an interview Thursday. "… We see a need for it in the community because of the amount of requests we get for service to expand to new workplaces."
There would be many political hurdles ahead for such a proposal, including a vote by the agency's board, followed by a vote of the Metro Council — after which Jefferson County voters would have to approve the measure on a ballot.
It would be the first time in 15 years that Louisville voters have been asked to approve an increase in paycheck taxes. A plan to fund public libraries through those taxes was rejected by a 2-to-1 margin in 2007.
Butler said she recognizes tax increases are not popular, but she said ballot measures to fund public transit have a track record of success.
"It is about selling the value … communicating the value to the community, that it's going to help people get where they need to go (and) it's going to be a benefit to invest your tax dollars this way," she said.
Currently, every paycheck for work performed in Jefferson County is taxed at 0.2% for TARC, a rate that has hasn't changed since the agency was created in 1974.
A worker making the average annual pay in Jefferson County in 2021, $63,317, would contribute about $127 to TARC through paycheck taxes.Â
In the 2021 fiscal year, the taxes — or "occupational license fees" — generated $63.7 million for the agency, or about 72% of its $87.9 million operating expense.
While TARC may have the power to levy other local taxes, Butler said raising the .2% rate on paychecks is the agency's most likely path to increased funding. While the agency hasn't formed a proposal, Butler said TARC would like to double its local funding.
"What we would like to see is an ability to have really strong service on main corridors that's really fast, that's really reliable, that is seen as a preferred choice for people to commute," Butler said. "Imagine going down Shelbyville Road or Dixie Highway and you got there faster on the bus than you did in your personal car. That's when things really become a preferred choice."
But lately, TARC is not winning over nearly as many riders as it used to. Like other city transit agencies, TARC's ridership plummeted during the pandemic, a trend that began even before COVID-19 arrived.
Ridership has rebounded about 17% through the first six months of 2022, but remains 57% lower than in the same period in 2017, according to WDRB's analysis of figures obtained in a public records request.
Butler acknowledged the drop in ridership, which she attributed to people commuting at different times or not at all, but she said more robust service would win riders back.
"We have an opportunity now, with the recognition that our ridership and commute patterns have changed, to restructure our system, restructure our routes," she said. "That will help meet how people travel more, now."
While TARC's funding model hasn't changed since 1974, the revenue the agency receives from the paycheck tax grows in line with the overall payroll of Jefferson County.
The problem, Butler said, is that TARC's expenses are growing faster than its main source of revenue, forcing the agency to rely increasingly on federal grants and one-time funds from the federal COVID-relief packages.
"The rate of increase, that hasn't kept pace with the rate of increase of all our other expenses … We have seen this gap between revenues coming in and our expenses going out," she said.
However, figures the agency shared with WDRB News seem to show the opposite: In 1994, paycheck taxes represented 61% of TARC's total operating expense. In 2021, that percentage was 72%.
"What needs to be considered is the rate of increase for costs and expenses over time," TARC spokesman Jeremy Priddy said in an email. "... If we continue to make incremental service reductions, or rely on grant funding or other marginal improvements to fill the gap, it will continue to hinder our ability to make significant improvements for our community and the region."
It's not clear how much support TARC would have for its plan, which likely wouldn't be considered until next year.
Spokespeople for the two major mayoral candidates — Democrat Craig Greenberg and Republican Bill Dieruf — did not respond to requests for comment on Thursday.
Metro Council President David James did not immediately return a call for comment.
Greater Louisville Inc., the metro-area chamber of commerce, declined to comment because the plan has not been formalized.
TARC and the union have made progress but remain far apart on a new labor contract, said Lillian Brents, president of ATU Local 1447, which represents rank-and-file TARC workers.
Brents said it was too soon to comment on a proposed tax increase.
"That conversation is premature when you don't have the (agency) leadership who is committed to making the employees and the public the priority," she said. "A lot of things is needed for TARC in regards to money and maintaining the agency. They definitely need a lot and we are open to doing our part."
Butler said the union contract wouldn't force the agency to pursue a tax increase, but it would likely obligate the agency to renegotiate wages if it obtains the additional funding.
