Budget Committee - Regular Meeting

And as a thank you to the city of Louisville and the neighborhood, we're going to be giving them away. There's one stipulation. You have to present a receipt that shows that you purchased a piece of art. And those people that catch Mark there can get a signed print. So this is something different and something that we gave a lot of thought about and thought that what can we give back to the community besides a great art show? And this is just one small gift.

Ready? Three, two, one. There!

It's great to be standing on a brand new road. This is the official opening for the Hall Place Boulevard Connector. This new 1100 foot roadway directly connects Beulah Church Road to Cedar Creek Road, and this connector provides a direct alternative route cutting down commute times and easing daily frustrations. Construction began in mid-January and just seven months later, we're here celebrating the opening.

This is an example of how government should work for its constituents. We have a lot of examples of reasons why people hate government, but this is not one of them. This is a day to celebrate how government serves.

While this project may look simple, building a new road is a complex process. Unlike resurfacing an existing roadway, we started with a blank slate. Every foot of this 1,100-foot connector from the ground beneath it to the pavement you see today had to be built from scratch. The long-term benefits will be felt for years to come.

You can see the Belvedere in all its 50 plus years of glory right behind us. And for more than 50 years, the Belvedere has been one of our city's most iconic gathering spaces. But for too long, This landmark has been left without proper attention, without investment, and without needed repairs. We have to repair and rebuild this nearly 1 million square feet of aging concrete and ensure it can safely serve Louisville for generations to come. And today, I'm excited to offer a first look at the next chapter of the Belvedere. We're reimagining this space on the Belvedere as a welcoming, green, vibrant destination in the heart of downtown Louisville.

I've done a lot of traveling, a lot of research, and I have seen revitalized civic spaces like this absolutely transform other cities. And I have no doubt that we can make the Belvedere a place where everyone in our community...

Metro TV, we will start in 30 seconds.

Good afternoon.

It is 4.32 on Thursday afternoon, September 3rd. i'm kevin kramer chair of the budget committee i'm joined by councilman marcus winkler the vice chair i'm joined online by councilwoman parker joined in chambers by councilman piagentini councilwoman woolridge councilman joseph and councilman herndon okay um a couple items on the agenda today the first item is ordinance 24326 it's an ordinance concerning the levy Just joined also by Councilman Wright. And actually, thank you for that. We should read into the record, please, as the clerk would.

This meeting is being held pursuant to KRS 61.826 and Council Rule 5A, read in full.

Thank you. Now, we're going to start with Ordinance 24326. It is an ordinance concerning the levy of taxes within the Louisville-Jefferson County Metro Government and the Louisville Urban Services District for fiscal year ending June 30th, 2027.

Second.

It's properly before us. Thank you. If you'll introduce yourself for the record.

Good afternoon. I'm Angela Dunn, Chief Financial Officer. The ordinance you have before you establishes the property tax rates for both real and personal property. The proposed real property rate for Metro represents a decrease from last year, while the Urban Services District real property will increase slightly. This is in keeping with the FY27 budget that was introduced and adopted in April and June. I'm gonna throw some numbers at you, so bear with me. The metro area real property tax is proposed to be 11.64 cents per $100 of assessed value, which is greater than the newly defined compensating rate of 11.20 cents and less than last year's adopted rate of 11.80 cents per $100 of assessed value. The Urban Services District real property tax rate is increasing to 32.76 cents per $100 of assessed value, which is greater than the newly defined compensating rate of 31.5 cents and slightly more than last year's adopted rate of 31.9 cents per $100 of assessed value. The real property tax rates for FY27 represent the allowable 4% tax revenue growth on the existing property tax base under House Bill 44 and are not subject to voter recall. The proposed personal property tax rates of 16.6 cents per $100 of assessed valuation for countywide property and 56.6 cents per $100 assessed value for urban services district property are the same as last year. These rates cannot be increased as both the countywide assessments and the urban service district assessments grew by more than the 4% and thus will yield the more than 4% revenue growth as both the proposed countywide and USD real property tax rates will yield in FY27. The proposed tax rates for both bank deposits and life insurance shares are not changing and are being levied at the allowable statutory maximum. A notice of public hearing on the FY27 proposed property tax rates is posted on Louisville Metro's website. The notice will announce that there is a public hearing on the proposed property tax rates at 11 o'clock on Wednesday, September 9th in room 106 at Metro Hall. The public hearing is a chance for citizens to comment on the proposed rates. Just a couple of other important notes. The overall real property valuation for Louisville Metro was 106.2 billion, an increase of 6.8 billion or 6.9% from prior year. Net new property additions for Louisville Metro totaled 568 million. The FY27 budget and the council approved plans for a combined total of 209,200,000 in real and personal property taxes. Early estimates are that this tax levy will leave us likely to achieve that total in aggregate with these rates. The amount of final assessments after appeals along with the actual payment rate once the sheriff mails the tax bills this fall will ultimately determine our collections. And that's it, if you have any questions. That's a lot.

Councilman Winkler.

Thank you, and Angie, thanks for being here. I just want to clarify for those that are watching, and maybe you tell me if I'm wrong, but this is sort of my general understanding, right? So we have base value of all the property, it's reassessed, right? There's some number that goes up, and then we can either increase or decrease the property tax rate to get up to 4%, after which point it could theoretically trigger a referendum, correct? correct we can't exceed a four percent revenue growth based on what the rate does on that combination right and those assessments are done separately for metro wide and then for the usd correct and so the reason that you see a reduction in the tax rate in the metro wide tax rate and an increase in the usd tax rate is that the overall property values increased outside of the usd and so we've got to reduce that tax rate to get below the four percent but that didn't happen in the usd and so we're able to increase the tax rate there so that both achieve their full four percent um allowable uh rate is that a fair that is correct i'm checking my expert

That was almost, Larry Linehan, Office of Management and Budget Analyst. What you said was almost exactly correct except the county wide rate is going down because the growth in assessments throughout the county, including the USD, were over 6%.

Yes, I didn't mean, the USD is counted twice, right? Their assessments are included in the countywide total.

Yes, it's counted, I think all the property in the county, including the USD, grew about over 6%, thus the rate goes down. The area within the USD actually only had a small area that was reassessed, the Oxmoor area, which falls within the USD. So therefore there wasn't a lot of reassessment growth in the USD, the sale price growth. contributed to the growth there. So within the USD, the assessment growth was far less than 4%, thus the rate is going up. But the countywide rate includes the USD. Thank you.

Mr. Chair, I have a question.

Okay, I'll put you in the queue. Councilman Piagentini.

Just for clarity, it's minus net new, correct? In other words, if a new property comes in, they're not added to the 4% calculation. They just are. That's new revenue, correct? Yes. So just existing property cannot increase by more than 4%. Correct. Thank you very much.

Madam Clerk, could you please cause the record to reflect that we have been joined by Councilman Chappell. Councilman Herndon.

Thank you, Mr. Chairman. Just to clarify, so the residents within the USD will have their county taxes reduced while they have their USD taxes increased? Yes. Okay, just very quickly.

That's the rate. The rate.

I'm sorry, because it's a smaller rate on a bigger base. I think it's also important to note, and I'm sorry, Mr. Chair. No, go ahead. This is a countywide average. It does not mean that any one person's property tax is capped at 4%. Correct, yes. An individual homeowner could see more than a 4% increase. It is the countywide total that is 4%. Yes. Thank you.

Councilor Herndon? Okay, Councilman Parrish-Wright.

Thank you, Mr. Chair. My question is about the, I think you called it the $6 billion growth. Is that normal for year to year, and what would you attribute most of that to?

I can't speak to what's normal for year to year necessarily. That's an assessment that comes out of the PBA.

Okay, it just seems like it's a big growth. I don't remember that last year, but that's fine.

We can look into it and see. I can maybe get some more information for you on that one. I just don't have anything in front of me.

Okay, no worries. Thank you.

Councilman, it's not uncommon that the rate goes up by more than 4% in a year.

That's true, yeah.

We have more often had to change the rate to reflect that we went over the 4%, then we have increased the rate to get us up to 4%. We have occasionally moved it up to get to 4%, but far less often. Now, to your question about the 6% versus four, I'll let Ms. Dunn get you that information. But to exceed four is not terribly, terribly uncommon. Correct. Thank you, Mr.

Chair. And it was really about the amount, too. She mentioned $6 billion. I was talking about the dollar.

The total property value. Yeah. Yeah.

Yeah.

I don't know how much that normally changes.

Thank you.

You're welcome. Councilman Piagentini, did I not take you out of the queue, or are you back in? I'm back in. Then the floor is yours.

Sorry, one more thing. You said bank deposits and life insurance shares, that's a statutory required maximum, or that's a statutory allowed maximum. We've had it for the same rate forever and ever. How about motor vehicles? I'm not making any advocacy to change anything. I'm just saying it's been 16.60 for a long time, or it's been consistent. Is that also a statutory maximum requirement, or- Yes. Thank you very much.

Councilman Winkler.

So not to get too much into the weeds here on something, I don't want to put you on the spot or whether you know a specific item of personal property whether it's taxed, but computer equipment and computer chips, what category do those fall under and are we assessing a statutory maximum on those?

I'm not, that's... Personal property. That is personal property. That's the category. I don't know if there's a stop sign.

Yes. Okay, thank you.

Yeah.

Councilwoman Chappell.

Will the proposed rate of 3.327 cents in the Urban Services District rate pay 100% for all exclusive services expenditures such as fire, garbage, trash pickup, and lighting that's proposed in this budget? And what is the estimated cost of those services in fiscal year 27 for the Urban Services District?

So the 32.76 cents is estimated to, and I'm making sure I'm looking at this is the right year, 26-27, is estimated to generate revenues of around 99 million, that is an estimate. And the projected cost for 26-27 of those services is about 93 million. Now keeping in mind, we do exclude certain expenditures related to the Central Business District. So that 93 million reflects that central business district expenses excluded from that calculation.

So by those numbers, if I am correct, there's $6 million that is coming in in revenue from urban services district tax.

It's an estimate, yes. So based on actual collections, that number could fluctuate. And that goes into the general budget? It's all reflected in the general fund, but we carve out the urban service district calculation and we always present that as part of the budget hearing.

Sure, I guess what justification is given? I understand that there's the 4%, but that's the maximum allowed. It doesn't mean we have to be at 4%. So I'm just wondering if the Urban Service District is, I mean, would you want it to balance out? Obviously you want revenue so we can invest in other things, but is it responsible to tax the Urban Services District more under that? understanding?

Well, it's built into the budget for 27, for one, so we've already accounted for that and it's built in. These are estimates that we're looking at, so I think six million is a fairly conservative, fairly conservative, I guess, difference between the two because, again, those expenditures, could go up or down depending on how the year goes. The revenues also could go up or down depending on how the year goes. So we're dealing sort of with future monies as we're making, as we're projecting these estimates. So I think what the big concern is that we wanna make sure there is enough money to cover the services in the Urban Service District. And I think these rates project that there will be enough to cover that this year. But there is still some unanswered, it's not a, a defined amount because we're projecting sort of ahead of time.

And so we get an annual letter from the state that dictates these rates? Correct. And we got that on August 11th, but we have to factor this into our budget, which we approve in June?

Correct. I mean, we're basing it based on, we're forecasting it and projecting it based on what we typically see, right? That's how we do any of the budget, really. It's based on what we typically expect to see

And I think the rates, I don't know if Erin wants to add a little bit to that in terms of the actual forecasting.

Sure. I'm just trying to understand, like, is it because other governments work on calendar years and we're on a fiscal year?

It's just our general cycle.

it just seems backwards, the process. And so I know that this is a state thing and not an us thing, but I'm just trying to wrap my head around the purpose of the backwardness.

Aaron Jackson, OMB. So when we do our forecast, we forecast based on that 4% growth that we anticipate receiving and we anticipate the council approving around this time each year. So that's the estimate that we make when we're building the budget. Now, obviously that obviously affects the rates for countywide and USD, but that's the basic assumption that we're using when we're building the budget for property tax purposes.

Sure, absolutely. And I get the 4% thing. I guess I'm just... as someone that's in the USD and they're being taxed higher than people that are outside of the USD under this for real property, not personal property, that makes my curiosity go, we anticipate a 4% because obviously we are going over. So it's usually dialing it back. But I'm just interested in how that's decided and who's paying. That's it.

Councilman Winkler.

Yeah, so not to belabor this point, but I just want to clarify. The $99 million projection includes the Central Business District or no?

The 99 is just the revenues generated from the property tax in the USC. So that's the revenue side.

Correct, which includes the CBD.

Correct.

Yeah, so.

I'm trying to do some quick math here. If we didn't have the CBD, exclusions, we'd have a different calculation.

Correct. So the only point I'm making is you do have the CBD in on the revenue side, you do not have it in on the expense side. Correct. As is allowed through state law because the CBD is shared, but I think if you're saying that the USD is overpaying by six million, that's not exactly correct because the revenue number- No, it's a calculation. Correct, and that revenue number includes on the revenue side, but doesn't include on the expense side. Correct. I think like anything, it'd be very difficult to do a dollar for dollar because just like I might live out east, but I also drive downtown. If I get in a car wreck downtown, I expect Louisville Fire to respond, a Louisville ambulance to take me to the hospital. When I walk to my car, I want the streetlights to be on down here. I mean, it is a shared service that we consume across the county. We don't just live, eat, and play in the portion of the city that we reside in.

Correct.

Council Member Piagentini. Okay, thanks. So just add one more to you. There are expenses that Metro Louisville takes on that the state has accepted don't have to be included in there, but that are directly related to the Urban Service District. Fire apparatus. public works trucks that are used both for salt and for garbage collection, because if we're salting, we don't just salt in the urban service district, we salt everywhere, and those trucks are used in a variety of different ways. So there are several expenses that Metro Louisville takes on that don't count towards that, the urban service district. But again, to Mark's point, it's almost impossible to get to a dollar for dollar kind of thing. And at some point we'll look at it and say, we know that we're not covering the entire expense of the Urban Service District. We know that people who live outside the Urban Service District come in. We know that without the Urban Service District, Louisville wouldn't be Louisville, right? So the state allows that we carve out some things. We also recognize on the council side that there are things included in that. But it would be a mistake to walk out of this room thinking that folks in the urban service district are paying every bit of their expense and paying an additional $3 million so that those of us who live outside this urban service district can have a lower tax rate. That would be a mistake. We're just trying to balance this as best we can. And to your point, the 4%, the way that this is calculated, it really was about the value of the property that was, that was assessed and where that property was.

That's correct.

Councilman Chappell.

Thank you. I feel like the mansplaining has led to the guys that I'm not understanding what we're talking about. However, I won't be leaving this room feeling mistaken because I think that when we talk about economic development, a pillar of that economic development, or at least what I'm fed over and over again, is that it is tourism-based. I hear of the investment being made in the Urban Services District and the wonderful services that we get. I'm very appreciative of that, but I don't think that we're going to have hundreds of thousands of people coming in for Bourbon and Beyond and Louder Than Life and going into Anchorage and tearing that up. I don't think the Kentucky Derby happens in Fern Creek. So I can't help but sit here and be a fierce advocate for the Urban Services District when we are a very large economic driver beyond what we pay in our property taxes. And I think that there's a larger picture that needs to be considered. And I'm just trying to piece together that larger picture. But a lot of this is based in philosophy. So I think it's just waxing poetic at this point. Thank you.

we will count on your support when we go to Frankfort and ask for changes to tax law because we agree with you entirely. If we're gonna move our economy so far into tourism, our tax structure, the way that the current state tax structure is established, doesn't allow for local governments to benefit very much from tourism. So hey, we're there with you. We'll go to Frankfurt together and beg for them to change that state statute. Any other comments about, or questions about this budget item? Seeing none, this is an ordinance that calls for a roll call vote. Madam Clerk, please open the voting.

Committee Member Parrish-Wright.

Yes.

Committee member Parker? Yes. Committee member Reno-Weber?

Yes. It goes to old business because of one present vote. Okay. We've been joined on, well, Nevermind. Nevermind. Moving on to item number two. Ah, there we go. We are joined by Councilman Reno Weber, online. Samanth Clerk, if you please call the record to reflect that. Item number two is a resolution. It's resolution 11826, a resolution authorizing the mayor to accept up to $1,882,400 from the Kentucky Heritage Council, state of Kentucky, for the sale of Kentucky Historic Preservation and IRA tax credits to support the main library renovations project to be administered by the Louisville Free Public Library. It's properly before us as we want to hear from the library to speak to this. If you would please introduce yourself for the record.

Thank you. I'm Heather Lowe, Executive Director of the Louisville Free Public Library. So this is historic tax credits that we have earned from the existing investment in the main library and we are asking for them to be available for us to complete the project.

Great, thank you. Councilman Herndon, you are the primary sponsor, if you'd like the floor.

Sure, self-explanatory what we're doing here, and I'm honored to have the main library in my district and look forward to seeing the results. It's been quite a while and long anticipated.

Thank you.

Great, thank you.

Councilman Winkler. I just want to, we've done this once before, and so I just want to clarify for the public and for my audience, because it's not for receiving the tax credits, but for selling the tax credits, right? If I'm not mistaken, we can't directly receive the tax credits, right? We essentially are selling the right to the tax credits to a third party. Is that...

That is correct. The total historic tax credit comes in at like 1.8 and we, the estimated cost to us is about 1.424 after we have a contracted agency that does that work for Louisville Metro. And then the IRA tax credits come directly to LMG.

Right, so it is a way for Metro to realize these tax credits because otherwise we would, as a government agency, we would be ineligible, I think, to receive them directly, right? So we sell them to a third party who then benefits and we benefit from being able to participate in the program.

That is my understanding. We received these in the Portland Library Project as well.

Correct, that's it. Thank you very much.

Anyone else? Seeing no one else in the queue, this is a resolution calling for a voice vote. All those in favor, signify by saying aye. Aye. Any opposed? The ayes have it. It seemed unanimous to me, so without objection, this will go to the consent calendar. Item two is the last item on the agenda, unless there are questions or concerns from members of the committee. I don't see any. Without objection, we are adjourned.