LOUISVILLE, KY (WAVE) - Just hours after Kentucky Gov. Matt Bevin blasted Louisville Mayor Greg Fischer about budget issues and the state’s crumbling pension, Fischer, surrounded by Metro Council members, struck back as he presented a plan to avoid massive budget cuts.
Bevin wrote a 2.5-page letter to Fischer on Wednesday, claiming the mayor is “oblivious” to Kentucky’s ongoing pension crisis, and adding that Fischer must “report the facts as they exist and not as you would wish them to be.”
That second jab was in response to Fischer’s blaming the “increased pension obligation by Frankfort,” as Bevin pointed out in the opening sentence of his letter.
Also in the letter, Bevin claimed the Annual Required Contribution payments made to the County Employees Retirement System are “based on assumptions for investment returns, payroll growth, inflation and life expectancy of retirees.” Bevin wrote that Metro Louisville’s ARC payments “were significantly less than they should have been due to gross mismanagement of the actuarial and investment processes.”
But at a late-afternoon news conference, Fischer said the ARC payments have been made as they should have been. He directly hit back at the governor.
“It was ill-informed and political,” Fischer said of the letter. “We agree we have a problem on budgets. And let’s stop the play time and stop the distractions and get to work on the problem.”
Watch the full press conference below. (Story continues after video)
“Metro Government has paid its pension bill to the Kentucky Retirement Systems 100 percent of the time, every year, as mandated by Kentucky state statute,” he said. “CERS is not in crisis, unlike several of the retirement systems across the state.”
Still, a major tax hike might loom for Louisvillians in order to account for the city’s rising pension requirements and avoid significant cuts to the budget.
“Frankfort has not provided us the tools and flexibility we need,” Fischer said. “We should have the ability ... to have a restaurant tax. We don’t have that. We should have the ability to have a local option sales tax, like 80 percent of the cities around the country already have. We should have proportional representation on the Kentucky Employee Retirement Systems Board.”
Fischer laid out some specifics of his new revenue plan. Residents would pay more for home, marine and life insurance, but auto insurance rates would not increase, a sticking point for many.
That would mean the average family’s home insurance bill could increase by about $12 to $13 a month, according to Fischer. He admitted it would be a difficult ask for those struggling to pay their bills.
“My team and I have managed difficult budget challenges these past eight years without having to ask for a tax increase,” Fischer said. “But this mandate from the Kentucky retirement system is out of our control.”
Should such a revenue plan pass, the city would avoid staff cuts in almost every department, most notably police and fire.
“There’s no way to address a $65 million shortfall without impacting public safety,” Fischer said, adding that the biggest piece of the city’s budget is personnel -- $485 million worth. One hundred police officers would be cut in the first year of the budget if the new revenue plan isn’t passed, and a total of 250 over the next four years. “That’s where the money is."
Other possible cuts, should the revenue plan fall short, include the closures of several libraries, community centers, neighborhood places and city pools, among others.
When trying to convey how his city budget has performed compared to 19 peer cities, Fischer painted a pretty picture:
“Louisville has the fourth-fewest city government employees, per capita,” he said, adding that St. Louis has one city worker per 46 residents, Nashville has one per 74 residents and Louisville has one per 123 residents. “We’re delivering our city services with far-fewer employees, per capita, than 15 of our 19 peer cities.”