Louisville Plan To Use Surplus Funds For Pensions Makes Sense, Expert Says Wednesday, Nov 20 2019 

Louisville Metro had a budget surplus of about $4 million from the last fiscal year due to factors including a slowdown in spending and higher-than-expected corporate property tax payments. Now government officials say they want to put most of that money toward paying the city’s increasing pension bill, a strategy one expert said makes sense.

Some of Kentucky’s pensions are among the lowest-funded in the nation, and the state pensions Louisville participates in are less than 60 percent funded.

And city leaders expect that pension bill to rise significantly for the next several years. Some want to raise taxes, but one attempt to do that to avoid budget cuts this year failed and other some other tax options are limited by state law.

Now, with an unexpected $4 million available, there’s talk of using a chunk of those funds to offset the pension bill, which is expected to grow more than $10 million a year for the next several years. The city’s chief financial officer, Daniel Frockt, recently addressed the Metro Council’s budget committee, where he said the administration is suggesting dividing $2.7 million into payments over the next three years.

Frockt said pension payments are projected to take up more and more of the city’s budget in the future, so:

“The thought is that this offset will allow us to kind of manage the reductions needed in a little more humane manner and a little more organized manner,” he said.

Essentially, putting what may look like a drop in the bucket of estimated pension payments toward the total sum could help cushion the blow to the city’s budget later on.

But will it work?

“Using surplus budget monies is an effective way, a tried-and-true way, to deal with the problem,” said Keith Brainard with the nonprofit National Association of State Retirement Administrators.

Brainard said pension plans in Hawaii and Rhode Island, for example, have successfully used surplus money to increase their funding levels. But he thinks Louisville still needs a larger strategy for paying the required contribution while maintaining a budget for needed services.

The pension bill for this year is $100 million. City CFO Frockt projected the pension bill will reach $141 million by 2023.

Louisville Metro Government

Gerald Young, a researcher with the non-partisan, nonprofit Center for State and Local Government Excellence, said properly funding the pensions is important because the city has promised certain benefits to retirees. And if the pensions aren’t funded, it could hurt the city’s ability to attract good workers.

“It’s all part of recruiting and retaining a talented workforce,” Young said. “And with the low level of unemployment nationwide right now, that’s something that’s a real challenge for state and local employers competing with the private sector.”

Late last week, lawmakers introduced an ordinance with details of the proposal to allocate $2.7 million to a pension mitigation fund starting with the next fiscal year. They also recommended using some of the city’s surplus funds to move up a police recruit class after one was canceled amid budget cuts this year, and shore up the Rainy Day Fund. Lawmakers are expected to take a final vote on the allocations next month.

Metro Council Approves Fee Hike For Struggling Public Golf Courses Thursday, Oct 10 2019 

The Louisville Metro Council voted Thursday to increase fees for public golf courses, most of which have failed to break even or make a profit in recent years. The ordinance had more than 15 sponsors, an indication of broad support across most of the council.

The measure raises base daily fees by $5 across the city’s 10 public courses.

It also allows the golf pros who manage the city-owned courses to adjust rates up or down in response to factors including weather and low demand, a process called dynamic pricing. They may also choose to close courses from December to February, except for Seneca, Vettiner, Iroquois and Quail Chase.

The ordinance also includes new quarterly reporting and transparency requirements.  The contracts for golf pros are currently opaque, according to the Courier Journal.

Lead sponsor Cindi Fowler (D-14), addressing a question from a Parks and Sustainability Committee meeting last week, said that she has signatures of support from more than 5,000 Louisville golfers who would be willing to pay the additional $5 a day.

“I think it’s so important that we try to do what we can to keep things as normal as possible in this budget crisis that we’re in,” she said.

The fiscal sustainability of the golf courses is key to their survival as Louisville faces an increasing employee pension burden, which could result in additional budget cuts in the future.

Council members voted 22 to 1 to pass the ordinance. Bill Hollander (D-9) voted against the measure. He is the sponsor of another ordinance that would let Metro contract with outside agencies to manage the courses. The city is requesting proposals from such vendors through Oct. 15.

Metro Council Could Raise Fees To Save Unprofitable Public Golf Courses Thursday, Oct 10 2019 

Most of Louisville’s 10 public golf courses are losing money. That’s why some of them were at risk of closure as city leaders considered cost-saving measures for this year’s budget. Now, officials are considering two options to keep the courses open.

The first, a plan to allow public golf courses to raise greens fees and adjust pricing based on demand, will likely face a Metro Council vote Thursday evening. That’s despite a deadline next week for a request for proposals from outside management companies that the mayor’s office put out in September.

The ordinance suggests raising daily fees by $5.

With employee pension costs expected to continue rising for several years, officials are looking for new sources of revenue in general. And raising fees could be one way to keep golf courses open.

At a recent Parks and Sustainability Committee meeting, chair Cindi Fowler (D-14) said she wants to keep golf in Louisville as close to the same as it is now.

“The green fees alone will raise $1 million,” Fowler said, calling it a conservative estimate. She said finding savings in maintenance costs could also help make up some of the losses.

A third-party report shared in August by the Louisville Parks and Sustainability Department showed that six of the city’s 10 public golf courses failed to break even or make a profit in fiscal year 2018. It said the courses lost more than $2 million that year.

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When asked by council member Bill Hollander (D-9) whether anyone has analyzed how higher rates would impact rates of play, Fowler said she did not know what the effect would be. Hollander is the sponsor of a different ordinance that would allow Metro to contract with outside management companies.

Jay Karen, the CEO of the National Golf Course Owners Association, said the proposed changes are reasonable.

“It makes fundamental sense as a business to do that,” he said. “If they haven’t been doing it, then they’ve been missing out probably on revenue for years.”

He also said if the city decides to enter contracts with outside management firms, those companies could implement higher fees and dynamic pricing, just like what Fowler’s ordinance proposes.

“That’s what a lot of management companies do, that’s the expertise they’re hired for. So it’s just a matter of do they want to maintain full control or turn it over to a company that makes its living running golf courses,” Karen said.

The deadline for outside management companies to submit proposals to Louisville Metro is Oct. 15, 2019.

Eyeing More Cuts, Some Metro Council Members Call For More Local Taxing Options Thursday, Oct 3 2019 

Louisville leaders have about six months before Mayor Greg Fischer’s next budget proposal, which could cut another $10 million. That’s on top of the more than $25 million officials cut this year.

Those cuts are driven in large part by a growing pension bill from Frankfort that will continue rising for the next few years. Some Metro Council members are concerned about the city’s limited options for avoiding cuts for years to come.

A common complaint from local officials is the way state law constrains which taxes they can levy. For example, Louisville can’t tax restaurants or impose a local option sales tax.

Budget committee chairman Bill Hollander (D-9) said Louisville needs to raise taxes to offset another round of cuts. That’s despite the fact that earlier this year, lawmakers blocked a proposal to raise the insurance premium tax.

Hollander said he is hopeful that the Kentucky General Assembly will make some beneficial changes — especially because many cities across the state are feeling the crush of an increasing pension obligation.

“Revenue diversification, giving cities more options, is something that mayors and city council members throughout the state are talking about, and we hope for some relief from the Kentucky General Assembly beginning in January,” he said.

But city and county officials have questioned the limits on their taxing abilities before. Why would it be any different now?

“It has been an issue for awhile,” Hollander conceded. “I think it is more likely now than ever before because of the situation that cities and counties are in throughout the state.”

But Councilman Mark Fox (D-13) is not so optimistic.

“It’s not been done yet,” he said. “I don’t see an appetite for it going forward.”

He said he wants Louisville to be able to apply its own sales tax, which he said would affect everyone equally, based on their spending habits. But he doesn’t expect any imminent changes from Frankfort.

The budget priorities for Fox, a retired policeman, are police, fire, emergency medical services and street paving.

“Then when we see what we’ve got left over, then we look at everything else the government has been doing, we establish a priority list of what our citizens think is most important and we work down that list,” he said.

Both Hollander and Fox are concerned that the city’s budget shortfalls will continue to affect police and other essential departments. Hollander said there will be 70 fewer officers on the streets this year, and that trend could continue without new revenue. Officials cut one recruit class as part of the cuts to this fiscal year’s budget.

Last month, Louisville Metro Police Chief Steve Conrad addressed the Council’s public safety committee about retirements and resignations. He blamed some of these issues on pension concerns and officers seeking higher pay. He also made comments on not being responsible for officers’ low morale; these comments triggered a backlash and prompted a public apology.

Fox said the department needs to make the police department a more attractive place to work. Some, but not all of that, has to do with pay, he said.

Hollander said he is worried that communities are more concerned about the potential closing of amenities such as public golf courses, pools and libraries than about cuts to police or economic development workers who help small businesses stay afloat.

“I think it’s just so important that people understand all of these issues with the budget and not just focus on the shiny ball, the swimming pool, the library, the golf course — all those are very important,” he said. “But folks really need to understand what we did to balance this budget. And there are lots of things that I think long-term are not sustainable for the city.”

Hollander said the budget committee will hold hearings later this month to assess the city’s fiscal performance so far this year and to discuss options for next year. The schedules will be available online.

Under Budget Pressure, Metro Council Approves Property Tax Hike And Property Dispute Settlement Friday, Aug 23 2019 

As expected, property taxes will go up for Louisville homeowners this year, following a vote by the Metro Council on Thursday. That decision preceded a vote during the same session that committed the city to paying out a settlement over a bad public property deal.

With Louisville facing increased — and increasing — budget pressures, costs to taxpayers are likely to continue rising. And some Metro Council members are calling for more oversight.

Some of those higher costs will come in the form of moves like the property tax hike, a measure Mayor Greg Fischer’s office said his budget depended on to be balanced this year.

That will mean a $2.30 increase for a $100,000 house in Jefferson County, and an additional $3.90 for the same house in the Urban Services District. The change is expected to bring in another crucial $1.2 million for the city this year.

Mayor Greg Fischer accounted for that money in his budget proposal for this fiscal year, which cut more than $25 million compared to what was needed to maintain previous service and staffing levels. He said cuts would have been greater if property taxes weren’t raised to this level. Higher employee pension and healthcare costs drove the budget cuts, and are expected to continue rising in coming years.

But council members remain concerned about the cost of poorly-managed property deals to the city and taxpayers .

In a vote to declare the property at 814 Vine St. in Paristowne Point as surplus, Metro Council cleared the way for the city to pay a $150,000 settlement to a would-be developer of the land, which was previously promised to another group. The funds will come from carryover from the fiscal year 2019 budget of Louisville Forward, the city’s economic development agency, which struck the deal.

It’s the latest in a number of recent surplus properties that some Council members have criticized as costing the city, either directly through legal action or through lost revenue when properties were sold at discounts.

Councilman Anthony Piagentini (R-19) blamed Louisville Forward for improperly making a deal when there was already a lease for the property in place.

“We need to correct it and we need to take the leadership on oversight related to this department and what they’re doing so we have more visibility and more comfort to defend these decisions to our constituents,” he said.

He said the state’s economic development agency is subject to more oversight, and that Louisville Forward should get the same treatment.