LOUISVILLE, KY (WAVE) - To fill the $65 million hole in Louisville’s budget, city officials are looking at an insurance premium tax increase that they say will only add $12 to $13 onto the average family’s monthly bill.
Mayor Greg Fischer has proposed an increase on certain types of insurance, like homeowners insurance.
Jumping from 5 percent to 12.5 percent will affect family budgets, but small businesses have multiple insurance policies to look at, like life and property insurance.
“It’s going to hurt small businesses in the short term,” business owner Khalil Bashton said. “I think six, eight, 10 months down the road people will forget about it, but in the short term you have to increase prices.”
What’s due is due according to Bashton, but not without a blow to his bar, Khalil’s.
“My general liquor liability insurance will immediately increase by $1,800 by next year,” Bashton said. “That’s just one part of my insurance. I’m looking at $3,000 to $4,000 increases.”
Tripling insurance tax rates over four years would generate approximately $63 million for the city, but Bashton said he may get the short end of the stick.
“That’s losing an employee or not being able to give them a Christmas bonus,” Bashton said.
“With small businesses, there are nickels and dimes that they really have to make sure they’re dotting their ‘i’s’ and crossing their ‘t’s’, so any increase like that affects their bottom dollar,” Financial Advisor Mark Lynch said. “A 12.5-percent could be the difference between whether they are still in business or not tomorrow.”
Lynch has been asked by the city to help homeowners understand the possible increase in seminars. He said his advice for small business owners is the same he is giving to the homeowners and will almost always save some money.
“What’s the first thing you got to do? Talk to your agent. What’s the second thing? You got to talk to your agent,” Lynch said.
There are multiple plans out there right now to tackle the deficit, combining tax increases with budget cuts.
The Metro Council budget committee will meet Thursday night to decide which plans will be presented to the full council for vote on March 21.