2013-14 Budget Address -- May 20, 2013

Good Afternoon!

It’s always an honor to visit with the Metro Council to discuss the future of our great city.

Among Louisville’s many strengths, I am fortunate to be working with men and women who give of themselves, work together, and avoid the partisan bickering and shenanigans that stifle progress in so many other places.

Our ability to work together – almost all the time – is part of what makes Louisville strong! I thank each of you for your service!

Today, we are here to discuss how we will continue to build our beautiful community. The budget is a reflection of our values, our priorities, and our fiscal health – and it is the blueprint for our future; our pathway to progress!

For the third year in a row, I’m presenting you with a balanced budget that creates no new taxes or tax increases. This is a $716 million budget, with $528 million in general fund revenue.

But before we get into the details, I’d like to reflect on my prior two budgets and how we got here.

When I took office, we had a structural budget imbalance of $22 million – we were scrambling, no doubt about it.

It’s as if we were running the Derby, but our horse had to start a furlong back. We made prudent moves like settling lawsuits and selling parking lots to keep the city operating while we addressed the underlying expense problem.

But fixing the underlying structural budget imbalance has always been the goal – as is clearly articulated in the strategic plan my staff and I created last year.

That meant three things needed to happen.

1. We needed to increase operational efficiency,

2. reduce expenses,

3. and we needed to foster a growing economy so our revenue would grow.

I’m pleased to report that we’ve made progress on all three fronts – although new challenges have arisen as well.

At the federal level, none of us yet know what issues, including sequestration, will mean later this year or in future budgets.

At the state level, we will continue to struggle with pension funding. Despite reforms in Frankfort, pensions will continue to be a major component of our commitment for years to come, slowing us down as we strive for structural balance.

Nevertheless, this budget is less painful than the first two – so to use the horseracing analogy, we are at least beginning the race from the starting gate.

First and foremost, the economy is growing again.

A recent Brookings report said we were the fourth fastest growing metro economy in the United States, as it relates to job growth.

This growth is reflected in our tax receipts. Our revenue from withholding taxes on wages are expected to grow by 3 percent. Taxes from profits from corporations doing business in Metro Louisville are expected to increase by 6.1 percent. Insurance premium revenues are projected to grow by 2.5 percent.

We’re also reducing some expense categories and slowing the rate of growth in other areas. We also continue to do a better job recouping money owed us.

· We’ve cut overtime $1.46 million, year over year. That’s a 14 percent savings, thanks to continuous improvement practices and LouieStat, our data-driven, goal-orientated approach to management.

· We’ll see a yearly savings of about $1 million through the attrition that happened this year, when we chose not to automatically refill vacated positions. This is part of a long term trend. When the city and county merged, we had approximately 6,400 employees. We are now at about 5,400.

· We also have a good cooperative relationship with all our Labor leaders – the new contracts we’ve negotiated better reflect current fiscal projections. No one is taking a pay cut. Raises over time will better match realistic budget projections. We’ve got a great workforce and their win-win, good-faith negotiations show that!

· The budget also reflects $2.4 million in revenue from money we’re finally recouping, after years of maintaining Vacant and Abandoned Property. We’ve worked to change state law to give our abatement costs priority over other mortgages and liens. We’re now recouping more than $200,000 per month, four times what we were when I took office. The taxpayers deserve to get that money back! Of course, our main interest in Vacant and Abandoned properties is to have fewer of them! We’ll talk more about this later.

We’re also looking for every opportunity to be fiscally innovative. I believe we can do a better job with our health care costs. We’ll be opening our first Employee Wellness Center at First and Liberty to promote better health and disease prevention, by encouraging physicals, biometric evaluations, better nutrition, exercise and other proactive measures.

Science tells us that tobacco use is the top public health issue. We care about our employees as well as wanting to reduce health-care costs so we’ve instituted a tobacco surcharge so that tobacco users pay more for health insurance. We’re offering smoking cessation classes for those who want to quit, to improve their health and that of those around them - and to avoid this charge!

Through all kinds of expense reduction and innovative fiscal strategies, we have taken a structural imbalance that started at $22 million and reduced it to about $7 million. This progress is creating the better fiscal health we need to pursue other key city goals, to keep us on a pathway to progress.

This improvement is a direct result of strategic, systemic, data-based decision-making. I am pleased to serve with a great group of leaders and I thank them for their hard work. We look at every item on the budget and ask: How does this expenditure align with our five city goals?

1. Does this change bring balance to the budget?

2. Does this initiative deliver excellent city services?

3. Does this investment help people and neighborhoods?

4. Does this project take job creation to the next level?

5. And do these plans help us prepare for a vibrant future?

For goal 1, the budget improvement is clear. Let’s look at the other four city goals and see how this budget supports them.

Our primary goal always has to be to “deliver excellent city services.”

Starting right now – in the construction season of our current fiscal year – we will improve our infrastructure by dedicating $6.4 million to street paving projects throughout Louisville and create 28 miles of bike lanes, shared lanes, and bike paths. This doesn’t count the $1.2 million we intend to spend on the Urton Lane corridor or our continued work to improve traffic light coordination. On Urton Lane, we’ll use $700,000 of system development bonds, along with $500,000 of CIF funds.

Since merger, Louisville has averaged spending $2.5 million a year on paving. This will mark a big step forward, though we know continued improvement is needed.

For bike lanes - they will be added throughout the county AND there will be a concentration of lanes connecting U of L, Old Louisville and Downtown.

This central area of our community is a place where we can put a critical mass of bike lanes that connect schools, neighborhoods, recreation and jobs – from the dorms of U of L, to Old Louisville, to campuses of Spalding and JCTC, to downtown offices and the recreational opportunities on the Waterfront.

Developing a highly-connected inner core –in addition to well-thought-out spokes and hubs in other parts of the community – is an approach based on the priorities established in conversations with community bike advocates. Throughout the county, we will particularly be focused on where bike lanes can tie into parks or the Louisville Loop – and we’ll be sure to get adequate public input on this issue as well.

Of course, roads are only one part of city services. Our commitment to maintaining and improving all city services means that in this budget we will also:

o Buy 15 ambulances.

o Pay for recruit classes for police, corrections, fire, and enhance the paramedic training academy.

o Purchase a new body scanner at Community Corrections Center.

o Improve our great city website. The Center for Digital Government named our city website the best in America last year. And a University of Illinois-Chicago study found that we’re a top ten city for social media. But we also all know this is an area that’s constantly evolving and changing – as we put more and more services online, we have to make it more organized and easier to use at the same time. So we’ll totally redesign our city website, making it easier and faster to find the tools and information residents and businesses need on any device – desktop, tablet or smart phone 24/7!!

o We’ll install self-service check-out stations at five libraries, Bon Air, Iroquois, Shively, Westport, and Highlands-Shelby Park.

o And we’re adding new tornado sirens outside the Watterson, near I-71 and US 42, near Bardstown and Beulah Church roads and near Shelbyville Road and the county line.

Of course, to continue moving forward, we must continue growing the economy. That’s the reason the third goal of our strategic plan is to take job creation to the next level.

o This budget continues to fund Metropolitan College at $975,000. This is a great partnership with UPS that has helped 13,000 college students since it was developed. Earlier this month, it was recognized as one of the Top 25 programs in the nation by the Innovations in American Government award program.

o This budget continues to fund GLI, at $956,000. GLI continues to focus on our four strongest economic clusters to build our entire economy. The recent Brookings report data about our economic growth validates this approach of focusing on Logistics, Advanced Manufacturing, Lifelong Wellness and Aging Care, and Food and Beverage clusters. In fact, last week Forbes listed us as one of America’s manufacturing “boomtowns.” We were number 2 on that list!

o We’re also excited about the Ohio River Bridges Project. My office is committed to facilitating that work in every way possible, leveraging it for maximum benefit to the economy. We’ve cooperated with state government on land acquisition issues that will benefit taxpayers and create more opportunity for economic growth.

o Last year, we spent $500,000 on streetscaping Fourth Street, resulting in 8 local retailers opening there this spring. This year, we’re investing an additional $1.5 million in streetscape improvements, because retail development downtown is vital to remain a top-notch destination for conventions as well as helping the arena TIF district.

o We are very focused on boosting the entrepreneurial culture in Louisville and further developing our growing reputation for innovation. This runs the gamut from city-sponsored Hack-A-Thons to our BEAM partnership with Lexington. We’re working to grow exports, and grow start-ups. This budget continues pushing us forward on all fronts.

o We’re also dedicating $500,000 to assembling land in West Louisville for economic development. This has long been identified as an important part of drawing employers to our city. We bought a prime 30 acre plot last year – we want to add other options this year.

The fourth goal of our strategic plan is investing in people and our great neighborhoods. This is important not only to the citizens we already have, but is a vital part of attracting and retaining young, educated talent.

To that end,

o We’ll be investing $1 million – half from us, half from Olmsted Parks Conservancy - to finally address the crumbling Northern Overlook at Iroquois Park.

o We will also provide $750,000 matching money that will, in total, secure another $3 million of outside money for the Louisville Loop. This is another step toward completing the 100 mile Loop around Louisville.

o For the first time in many years, we’re able to increase our commitment to Community Ministries to $1.1 million, a 21 percent increase over the $931,000 we provided last year. These are organizations that know how to stretch a dollar! Whether providing Meals on Wheels, emergency food pantry help, or prescription medicine assistance, they are making lives better from Shively to Fairdale to Fern Creek to J-town. This is Compassion in Action. Louisville’s reputation as a compassionate city is becoming international – as evidenced by the Dalai Lama’s visit as we speak. But Community Ministry organizations are evidence that this is not some new fad… It’s always been who we are!

o I’m also maintaining our commitment to our other external agencies – arts and other non-profit groups – at the same rate as I recommended last year. The QCCT – the indigent health care fund at U of L, will also be maintained at the same level as the past six years.

o We have put enormous resources toward solving our VAP issue in my time as mayor. The budget allows for continued progress on addressing the vacant and abandoned housing issue that is affecting so many of our neighborhoods. We’ll hire a VAP coordinator and reorganize the Community Services and Revitalization staff to create a VAP team – making sure our various efforts to address the vacant and abandoned property issues are leveraged in one place. We’re also adding 2 new positions in the county attorney’s office to expedite foreclosures. We’ve already seen that moving these cases more quickly is not only good for the neighborhoods, but has positive budget ramifications as well. This vacant and abandoned property problem is decades in the making, but along with the help of the Council, we’re making a difference. About 100 buildings have been demolished this year; about 80 foreclosures initiated and we’ve launched the public VAPSTAT forums, so the entire community can be involved with improving the VAP situation.

The fifth goal of our strategic plan is making plans for a vibrant future.

o We’re entering the second phase of our Vision Louisville project, gathering insight from every corner of our community about how our city should look, feel and flow in 25 years! In addition to the $500,000 of private money we’ve raised for this venture, we’ve budgeted $150,000 to ensure that it’s completed in a timely and inclusive way.

o I’m committed to continuing to work for a state Constitutional Amendment that will allow Louisvillians to decide how they want to invest in their quality of place. LIFT is an important proposal, with bipartisan support, that 72 percent of Kentuckians want. LIFT will help Louisville build the infrastructure it needs for the future.

o This budget also buys the larger recycling bins for two new collection routes. The two routes we did last year had a big impact – the amount of recyclable material collected on those two routes increased by 83 percent, resulting in more than 116 TONS of material being diverted from the landfill and reused. Our Sustainability Plan is a carefully planned document that identified ways like this where we can make significant measurable differences – and save money too!

o The budget also provides for the hiring of a Property Redevelopment Specialist in our Department of Economic Growth and Innovation. This person will work to identify situations where property acquisition and redevelopment can be a catalyst for neighborhood transformation. Many areas of our community are challenged by disconnected economic corridors – which lack the energy that helps a corridor really take off. This role will help our community navigate solutions, jumping on infill opportunities when they present themselves, and improving the quality, vibrancy and livability of our neighborhoods.

o Trees are vital for healthy living and healthy infrastructure. The budget provides for an Urban Forester, provides $50,000 for a tree canopy study and another $50,000 for planting trees. I am asking the Tree Advisory Commission to help us raise additional funds for these areas.

This is the third budget I’ve presented to you. Every one of them represented the hard work, the creativity, the innovative thinking, and the fiscal responsibility of my team – and our collaboration through the process.

Every one of them represented the best we could do in the situation we were in at the time – and each represented a step toward ensuring that the next year, we’d be in a better situation.

So I’m proud of all those budgets.

But I am especially encouraged by this budget.

More than any other, this budget represents the emerging possibilities we’re creating by working together.

So let’s keep working toward an ever-brighter future – and build a pathway to progress and hope, and a better city for all of us!

Thank you!