LOUISVILLE, KY (WAVE) - A plan that would triple the taxes Louisville residents pay on most types of insurance went before Metro Council for the first time Thursday night.
This plan is meant to fill in the $65 million shortfall in Louisville’s budget. Mayor Greg Fischer said it’s the only way to avoid devastating budget cuts as the city struggles to meet pension obligations.
Right now, insurance is taxed at five percent. That would more than double in the next two fiscal years, up to 12 and a half percent, if the insurance tax is raised. Then, it would shoot up to 15 percent in the 2023 fiscal year.
The city said this tax increase would raise the costs for an average homeowner policy to $150 per year, but an insurance agent WAVE 3 News spoke with said it’s going to be much more than that.
With increases to marine, life and home insurance, it could be an extra $300 to $400 a year.
“You’re going after the most important thing that family has, and that is their insurance," insurance agent Jeff Klusmeier, with the JMI agency, said. “The only thing that’s going to keep them off the streets and a catastrophic event.”
He said Kentucky already has one of the highest insurance rates in the country, and now one of the biggest expenses families have is about to get a lot bigger.
“People are going to get lower coverage to save money and when they do that everybody is going to be at risk," Klusmeier said. "So it’s going to cost everybody money.”
Klusmeier said premiums will increase along with the tax.
“You’re probably looking at another 10 to 15 percent in raising the premium," he said. "you’re gonna have a lot of people uninsured or underinsured and I think it’s cruel.”
Klusmeier -- who’s active in government and political circles, including forming a “Young Professionals for Trump” group -- said this tax is misguided and unfair.
“The people who live in the West End and the people living in Shively and the South End -- they’re gonna bear the brunt of this tax," he said. "A lot of people won’t be able to even get insurance. Watch what happens. And then it goes back to the state of the Kentucky fair plan -- they’re going to have to have non-standard carriers and they’re gonna be paying even more.”
He also said it will force small businesses away, and while the city says it won’t include car insurance, Klusmeier said a lot of people combine home and auto.
At the Metro Council budget committee meeting, members said they don’t feel there’s enough time for discussions to take place.
The mayor insists it’s the only option.
“We’re talking about a couple hundred police officers, closing four fire stations, libraries, things like that -- or raising some new tax revenue to stop that,” Fischer said.
Metro Council has to vote on this tax increase by March 21.
They want the public’s input. WAVE 3 News will keep everyone posted on the upcoming public hearings where they can weigh in.