Kentucky lawmaker calls out MSD for salary increases after recent rate hikes

LOUISVILLE, Ky. (WDRB) -- A Kentucky lawmaker has taken to social media to call out what he believes are excessive salaries and pay raises for top executives at Louisville's Metropolitan Sewer District.

Rep. Jason Nemes (R-Middletown), vented his frustration in a Sept. 13 Facebook post.

Nemes said in the post that MSD CEO Tony Parrott is now the second highest paid official in Louisville, citing a recent article in Business First. He now makes $330,000 per year after a 17 percent increase, and other executives received similar pay bumps.

Nemes also said the MSD Chief Operating Officer and Chief of Staff each earn close to $300,000, and are among the city's highest paid public officials.

"I should have also mentioned that MSD’s COO got an 11 percent pay raise, going from $264,451 to $293,592, and its Chief of Staff makes $293,592."

The salary increases come on the heels of a 6.9 rate increase from the utility.

"I understand that running the MSD is a big job and there may be some reasons to support the higher pay," Nemes said in the post. "But a 16.8 percent increase in pay while simultaneously raising rates 6.9 percent on struggling families is unacceptable."

Rep. Jared Bauman, a Republican, announced on social media in June that he has begun drafting legislation to give the Kentucky Public Service Commission rate setting power over the public wastewater corporation.

"My constituents are sick of the rising rates without oversight and accountability for the leaders imposing rate increases," adding that MSD's decision makers "are not elected and there is very little oversight in their decision process."

Appointed by Louisville's mayor and approved by the Metro Council, the MSD board can raise annual rates by up to 6.9% on its own but must get council permission for increases above that amount.

Nemes suggested a moratorium on salary increases, and offered several suggestions to overhaul the utility, including: prohibiting MSD from raising rates for a certain period of time; disbanding MSD and replacing it with a different governing board; reversing the recent raises while and making it more difficult to issue substantial pay raises in the future; and requiring the board to receive approval from a separate agency like the Public Service Commission for future salary hikes.

Nemes closed his post by saying he appreciates the hard work of MSD employees, but believes the public is owed an explanation for the simultaneous pay increases and rate hikes.

"Every time I’ve called MSD, their staff and leadership has been very responsive and professional. I support their work and, especially, the hard-working men and women who go to work out in the community and those in the office who support those workers. And I know the job is huge and the issues are complex. But such a large salary increase at the same time there is such a large rate increase must be explained."

Nemes is not the first Kentucky lawmaker to propose oversight from the Kentucky Public Service Commission: Rep. Jared Bauman (R-Louisville) began drafting legislation to make that happen over the summer.

"I'm envisioning them being regulated just like any of the other utilities that fall under the PSC," Bauman said, with a goal of setting "fair and just rates for the ratepayers."

MSD Response

MSD spokesperson Sheryl Lauder released the following statement in response to Nemes' post:

MSD’s scope is broader than a typical community wastewater utility and is vital to the health, safety and wellbeing of the Louisville region. The agency’s work combines wastewater treatment, stormwater management and Ohio River flood protection for Jefferson County residents, plus wastewater services in Bullitt and Oldham counties. This three-utilities model is not found in most other cities, where multiple organizations, with separate management and operations budgets, provide these critical services.

With this extensive and critical scope of services protecting communities comprising more than 800,000 residents, it is vital for MSD to attract and retain skilled and qualified staff and leadership. MSD relies on market data and a third-party human resources consultant, Mercer, in setting executive compensation that is competitive with comparable roles and functions in other markets and utilities. In 2021, the MSD Board identified talent attraction and retention as a critical need of the agency. To address those needs, pay equity studies were performed for non-union and executive staff salaries, including for the Executive Director position. As the information was reviewed and approved, MSD adjusted staff salaries based on the pay equity studies.

Mercer’s recent study found that the commensurate compensation for a chief executive of an organization with MSD’s scope and services would range between $324,000 and $535,000 annually. James A. "Tony" Parrott is the first African American to serve as MSD’s executive director in nearly 70 years of the organization’s history, and Louisville Business First recognized him as a "Most Admired CEO" in 2022.

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