LOUISVILLE, Ky. (WDRB) -- The budget Louisville Metro Council will soon have to pass might not be as tough as the Council and Mayor Greg Fischer originally thought it might be.
Monday afternoon, after a presentation by Louisville Chief Financial Officer Daniel Frockt, both Council Democrats and Republicans were delighted by the unexpected news.
“I think it’s very good news," stressed Councilmember Anthony Piagentini, R-19. "Very good news.”
In his April budget presentation, Fischer painted a distressing picture.
“(This budget) is the tenth and, in many ways, most difficult budget proposal that I’ve had to present to you as our city, commonwealth, country, and planet struggle with the devastating COVID-19 pandemic,” he wrote in a letter to council members.
Louisville Mayor Greg Fischer
Fischer had warned of cuts to city services and possible furloughs or layoffs as COVID-19 squeezed the city's finances. He said increased unemployment had stymied payroll taxes, which account for 47% of the city’s budget.
Businesses were seeing fewer profits, and 11% of the budget is funded by taxes that businesses pay on profits. Additionally, the city was bringing in less revenue from fees charged by services such as EMS, the Louisville Water Co. and the Louisville Zoo.
Ultimately, Fischer predicted a $46 million decline in revenue for the current fiscal year and another shortfall of $69 million during the next fiscal year, which begins on July 1.
Now, the forecast has changed.
“This is less negative than we originally thought in April," Frockt said Monday.
According to Frockt, COVID-19 didn’t stymie the city’s tax revenues as much as originally projected.
Additionally, Frockt said Louisville now has better guidance from from the U.S. Treasury Department about how it can spend the $133.8 million the city received as part of the CARES Act, which was passed by Congress in March. Frockt said the city can now use some stimulus funds to offset some of its budget pains.
Frockt said the estimated general fund revenue for fiscal year 2019-20 is $610 million, which is an increase from $596 million when Mayor Fischer delivered his budget address in April. The estimated general fund revenue for fiscal year 2020-21 is also $610 million, revised from $594 million in April.
Councilman Bill Hollander, D-9, the chair of the budget committee, said, “When you put all that together, while we’re still certainly not out of the woods and we’re not flush with money, it looks like we’re going to be dipping into the rainy day fund less this year."
Hollander now thinks it possible to pass the upcoming budget without calling for deep cuts or layoffs to city employees.
"We think we’ll be able to get through this," he said.
Piagentini, meanwhile, said Fischer, in the future, should avoid "pushing a narrative" full of "wild claims" that scare city employees and the public.
“This shows that the original statements from the mayor that claimed things like we would have to lay off a thousand workers — all that is completely incorrect," he said. “And at this point, I think the mayor has done bordering on irreparable damage to his credibility.”
Hollander, however, cautioned against being a "Monday morning quarterback," especially after something as unpredictable as a pandemic.
He and the mayor’s office reiterated that, despite the good news, the city would face more budget challenges. Additionally, Hollander said the sudden good news also doesn't mean there's now enough money available to fund new programs and initiatives, since the current proposal is still a continuation of the current year's lean budget.
“The forecast continues to be extremely tenuous, as we’ve seen one fourth of the national workforce file for unemployment, and one third of the Kentucky workforce," Frockt said. “While the May totals were not as negative as anticipated, we still face structural budget challenges. We will continue to update monthly until we feel there is more certainty in the economy.”
Council is expected to pass the budget for next fiscal year on June 25.
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