Issue January 13, 2009

Jerry Abramson: The LEO Interview

(Go all the way to the bottom to listen to audio excerpts from the interview.)

Mayor Jerry Abramson had just learned he’d been invited to appear with President-elect Barack Obama for the unveiling of his major public works initiative last week. He was sitting at his desk, trying to pull himself away from the chair while putting the finishing touches on an e-mail, and confirming with his communications director — who was standing in the room — that the flight to D.C. was arranged.

After a hellish 2008 for Louisville, Kentucky and beyond, he seemed grounded.

Abramson enters his second decade as mayor with a projected $20 million revenue shortfall on his back and almost certainly another around the corner. The city needs a bailout, as it were, and he’s asked the Obama administration to fund some $600 million in public projects, including rebuilding public schools and modernizing the city’s sewer system, which would stimulate the local economy to the tune of 18,000 jobs. While this level of federal investment remains unlikely, at this point anything helps.

Abramson has faced severe criticism for what he chose to cut from this year’s budget, including Otter Creek Park and Engine Company 7, touted as the country’s longest continually operating firehouse. Both have closed in the last month.

For the third straight year, Abramson sat down with LEO Weekly last week for an extended interview.  

LEO: What kind of effect do you think the recession is going to have on Louisville in 2009?

Jerry Abramson: I see no growth in our revenues, I see continued increase in our expenses, I see continued cuts by the federal and state government, which will create even more burden on local governments, since we’re the end of the food chain, the bottom of the food chain.

Look, I’m a glass-half-full kind of guy. I think if you asked 10 people in town they’d say I’m an optimist. So I’m excited about the hundreds of jobs that are created over at the arena, and that that’s going forward. I’m excited about the hundreds and hundreds of jobs that are being created out at Fort Knox, and what all that means in terms of the HR [human resources] command for the world coming to Louisville. I’m excited about MetroSafe coming online, ready to ensure the entire region of the appropriate interactivity or connectivity of all of our first responders — police, fire, EMS. I’m positive about those things. I’m positive about ZirMed coming in and growing its business. I’m hopeful as we look at Rohm & Haas, with the Dow Chemical merger, that maybe there’s an option there in terms of keeping that facility open, and we’re working through that.

I’m optimistic that 2009 will be a year that — I spoke with the developer of Museum Plaza, I spoke with the folks that are looking to triple the size of Fourth Street Live, all of which are hoping that the financial markets will open up, will release some funds, some credit opportunities into the market, so that construction loans can be obtained for Museum Plaza and jobs can be created, in terms of building that facility.

If you said to me, what’s the most important thing that’s going to happen in the year 2009, I would say to you the next four or five months, dealing with the President-elect’s stimulus package, and the effect that could have on Louisville and metropolitan areas like Louisville throughout the United States is probably the most positive thing I see on the horizon, and I say that in the context of — he’s asked us to submit projects that can be started in 90-120 days, and can be finished in 24 months. We have submitted over $600 million worth of projects — water lines, sewer lines, modernization of schools, rural road widenings, rural bridge investment, the green jobs of going into every public building, doing a full analysis of what needs to be done to be able to use less energy and then invest with private companies to decrease the amount of energy that we use — all of those kinds of things that he’s talked about would mean, in terms of our community, $600 million-plus of investment, which all would be private businesses that we would put out requests for proposals ….

That would create 18,000 jobs in a two-year period. And 18,000 jobs may not sound like a lot, until you put it in the context of, it could decrease our unemployment rate, which is around 6.4 percent, by two-and-a-half percentage points. And then the ripple effect, let’s put that in perspective: That’s 18,000 people doing stuff, and then they go to the cleaners, and then they buy groceries, and then they go to restaurants, and then they buy clothes.

LEO: Tell me about your process when you’re going through trying to cover a $20 million shortfall.

JA: You start with saying you’re going to do everything you can to protect the core reason a local government exists, which first and foremost is public safety. And then you begin to reach out to the outer concentric circles. As I told my directors, bring me the list of every program you have, top to bottom. I’m going to start at the bottom and go up until I’ve reached the point where I’ve got enough money.

… Here’s the way I always frame it: You’ve got the stuff you’ve got to do, you’ve got the stuff you want to do, and you’ve got the stuff you wish you can do. This last budget did away with the wish-you-can-dos. We focus now on the want-to-dos, and we try not to get into gotta-dos, because if we don’t do it, who would? We also said, going in, I was going to do everything I could not to touch social services, because now more than ever, families in this community needed the community ministry support, the Dare-To-Care, the food kitchens — the kind of support that people in difficult times have to reach out for and use.

Once you get through that, you begin to balance this versus that. The fire station [Engine 7] is an example. That was going to be closed in the next budget; July 1 it would’ve been closed. That was in our proposal; it was in our game plan, it had been proposed by outside consultants who had done a report two-and-a-half years ago. Why didn’t we close it when they said to close it? Because we wanted to get a software package that was used by Dallas and Fort Worth and Chicago and New York to run for two years the number of runs and how it works out so that we could confidently look at folks and say, we’re going to close this house that was built when Ulysses S. Grant was president. It’s surrounded by six other firehouses, all within less than two miles.

… We’re going to save unscheduled overtime because I’m going to be able to take those 12 firefighters — and oh, by the way, the 12 that drive majors around in their Explorers, we’re taking those 12 out and asking the majors to drive themselves — that’s 24 firefighters that I now can redeploy throughout the urban fire system, and thereby decrease, to the tune of $900,000, unscheduled overtime.

LEO: Another group that is getting louder by the day—

JA: Otter Creek.

LEO: Yes, the Friends of Otter Creek.

JA: It is very simple to explain to you why we moved in that direction. For many years, I’ve had this discussion with six governors — I’ve been mayor a long time — we have thought that this magnificent park, this very, very unique jewel of a wilderness setting and just gorgeous landscape, needed to be a state park. Because we don’t do a very good job running it, because we know how to run municipal parks — we can handle Cherokee Park, we know how to do Iroquois Park, we can handle Shawnee Park, we know how to handle Hays Kennedy Park or Long Run Park, etc. — but we don’t do very well in terms of a park that has cabins and hookups for RVs, for electricity and water.

So we have said we lose money every year; we used to lose $500,000 a year. We’ve tried to get governors to take it over. There was always a reason not to. I tried to work with the federal government, to have Fort Knox take it over; there was always a reason not to. We talked with the Meade County judge — it’s in Meade County — several judges ago, and asked him if we could serve wine. Maybe if we could serve wine and champagne, there might be an opportunity to host more events, which would help cover some of the expenses to defray the cost — because if you’re spending $500,000 out there, you could’ve spent the $500,000 at … parks within Louisville-Jefferson County. We tried to get the liquor license; the county judge made a commitment they would vote it wet, and then at the fiscal court meeting, he voted no.

… At this point in time, when you’re looking for a half a million dollars, and you’re also looking for money that you can save for these six months that will roll forward because this next budget’s going to be even tougher, we said we’re going to close it, and see if that would generate interest.

And you know what? The state parks are going out there, the state Fish & Wildlife [department is] going out there, I met with the garrison commander of Fort Knox — they’ve been out there twice. So all of a sudden, there’s a lot of energy around in terms of what can we do to ensure that the park is open as soon as possible? The county judge in Meade County is interested, he’s said, in making it an industrial park, or a residential area. Well, we’re not going to allow it to be developed into an industrial facility. We want it to be what it is: a beautiful wildlife preserve, an opportunity for folks to commune with nature. We’ve also got nonprofits that have contacted us: the Y[MCA] has a facility out there, [Boy] Scouts, saying what role can we play?

LEO: There are a lot of people — some council members, unions, etc. — asking to see more details about the revenue shortfall from you, and haven’t seen them yet.

JA: I would disagree. Every request we have received, in terms of a request for information, we have responded. We have the budgets online, we have shown the projections for the future as well as the most recent financial quarter in terms of every line item of revenues that come into the community versus the very conservative figure that we originally set in hopes that we could at least get that much.

So in terms of the unions, we have responded fully. In terms of several council members who have been concerned, all I can say is that last year, when we projected a $9 million shortfall, last November, I had council members — many of them the same that are complaining today — say that that was a bogus figure. And ultimately it ended up being $13 million. They didn’t say it was a bogus figure based on it being too low; they questioned the figure completely.

… We have yet to feel the second shoe drop on us, and that shoe being the state, because you have to assume as they try to make up half a billion dollars in this one year, they’re going to cut social services and other financial support items that they used to provide the 120 counties and the 435 cities. When we begin to understand that, there could be additional cuts we’ll have to make.

LEO: I’ve also heard talk about the tax structure post-merger. For instance, every council member gets the same amount of discretionary funds, yet taxing is different in the old county and the old city. Is it possible to think, looking forward and facing another revenue shortfall, that there may be some tax increase?

JA: Haven’t heard anybody propose that yet. In terms of how they divide up their money, you’ll have to ask the council members.

LEO: Sure.

JA: In terms of the money that’s spent in the urban service district, only the money generated by those who pay a higher tax — and you pay a higher tax if you live in the urban service district — those are the dollars that pay for the extra services.

From time to time you have people asking, why do people who live in the urban service district get free garbage [pickup]? The reason is they pay two-and-a-half times the property tax. Nothing’s free. As more and more folks want more and more services, then we’ll be in a position to be able to say, this is what it costs, and this is what we could deliver. There’s a mechanism in the statute that allows that to happen.

LEO: Looking forward at the next fiscal year, what can you do to try and get ahead of the curve on a revenue shortfall?

JA: … We have to be planting seeds — and watering and fertilizing those seeds — so that when the economy turns, we’re teed up and ready to go. That’s why the purchase of the Water Company block, as an example, for the expansion of Fourth Street Live — this next year you’ll see a lot of design, you won’t see anything move, because we still own the block. We receive the revenues from the parking on the block. So there has been no exchange of anything, other than we own the block instead of the private owners who previously owned it.

The hope is, as we frame up with Cordish the approach for the expansion; as we work with the gentleman that bought the old Stewart’s building, the Hilliard Lyons building, for the Embassy Suites; as we focus on — I continue to go through the dominoes — that as the financial markets turn … we want to be teed up, we want to be ready for Museum Plaza and ensure that we have the area around it ready to go. We want to be sure the arena, when it opens in 2010, has the connectivity to parking, has the connectivity to restaurants and amenities, has the ability to have the proper lighting in the downtown, the proper security in the downtown, as those events occur.

All that interconnects. We’ve got new restaurants opening up, new housing — both rental and condos — coming online. All that has to continue to happen, while at the same time, we work on Riverview Park’s expansion out in the Pleasure Ridge Park/Valley Station area, while at the same time we look at McNeely Lake and try to ensure that the 27-mile first phase of our bike path ultimately goes and continues over to McNeely Lake, and then continues into the Floyd’s Fork development, while we still look for expanding our parks, while we still look for widening the roads that we can appropriately do and put bike lanes on them.

On the one hand, I am restructuring or I am contracting government, because the revenues demand that; but on the other hand, we’re looking for every opportunity to plant seeds and to keep nurturing them as best we can until that credit crunch ends and, when there’s light at the end of the tunnel, we’re ready to rock and roll.

LEO: One thing you and I have talked about in the past is housing downtown, and the infrastructure that needs to come along with it. Things like a grocery store downtown, a major grocery store downtown, a Kroger for instance, because they’re big here.

JA: Where do you live?

LEO: I live in Germantown, near the Goss—

JA: Can you walk to a — to what?

LEO: The Kroger that’s on Goss, it’s a three-minute walk from my house.

JA: So you can walk to a supermarket.

LEO: It’s very nice, yes.

JA: Do you know a lot of people who can?

LEO: No.

JA: Neither do I. … I live in Crescent Hill. When I want to go to a supermarket, I get in my car. My concern in the downtown is not a supermarket for the expanded residential units; it is to ensure that milk and bread and juice, things of that nature, in a convenience store situation is available for those families as they move into that community. The question always is, which comes first, the chicken or the egg? And retailers will tell you that the rooftops come first.

The momentum in the downtown was moving in such a way that two small convenience stores had opened: one on Market, which is unfortunately closed, right next to Primo; and the other one next to Melillo’s over on Main, which is still open. I know for a fact that there’s at least once convenience store/gas station looking to develop in a close-in area.

… The economy, once again, plays a major role in terms of people’s willingness to take a risk. Until there’s some more positive feeling that things are going to get better, I think people right now are putting their money under their mattress, waiting for the word that it’s OK, you can come out.

LEO: What about the $17 million for the firefighters, in back pay that they’re owed, and possibly that could double? Where does that money come from?

JA: You know, we have a rainy day fund, and that’s available. The hope is that we would not be called on to draw all that out, and that we could work out an arrangement for some sort of payout over time that would give us a chance to financially stay on our feet with the appropriate savings account, should we need it for delivering tomorrow’s services.

The rule of thumb is two months of money in the bank [to provide full city services without revenue, in the case of some catastrophe] and we’re at six weeks, six-to-seven weeks. Meaning six weeks until bankruptcy — if the whole world goes to hell, whaddya got? Well, we can keep this place running for six weeks, maybe seven. So that’s why we haven’t dipped into it.

LEO: With all the turmoil in the auto industry, with the Big Three, how is the city’s relationship with Ford?

JA: Well, let’s start from where Ford fits in terms of taxpayer: It’s one of the five largest taxpayers in this community. I received a call before Christmas from the senior vice president of manufacturing, that I have visited with often in Dearborn [Mich.], who said we’re still on track, we’re still focused, our game plan’s in place, we still plan to invest several hundreds of millions of dollars, we still plan to make the small car at the [Louisville] Assembly Plant, which is the one that everybody thought was in jeopardy, and all systems are go — assuming there’s a Ford Motor Company in 2010.

LEO: Do you think that — and this has come up on a national stage as well — unions are operating in a dated model?

JA: If you’re talking about our public sector unions, I’m not prepared to say they’re operating in a dated model. I would say they’re operating without a great deal of perspective on the real crisis that this country, and this state, and this community is going through in terms of finances.

You’ve got to be living in a cave to not understand what’s going on in this country. I’m not doing anything different, as the CEO of this city, than the CEO of any business is doing. The only difference is, I’m on the front page of your paper, or on the six o’clock news, doing it.

LEO: I was at a community meeting [last] week in the southwestern part of the city. It’s been my experience at some of these meetings, including some where you’ve been there, that they start off on issues — and this one was about Otter Creek Park — and they get derailed into criticism of you, conspiracy theories about you and your administration. It seems to me this is the only part of the city where this happens with such regularity and drama.

JA: Citizen engagement is great. The fact that there are individuals pulling together to set up a Friends of Otter Creek, to look at options, to work with me ultimately on how we can keep it open. I think citizen engagement is great.

What troubles me are those that are involved in citizen enragement, and I’m afraid that in the area you’re referencing, there are two or three individuals who take much more pride in involving themselves in citizen enragement rather than citizen engagement.

… Citizen enragement, with sometimes not sharing the facts, framing the issues in a way that enrage rather than involve — unfortunately there have been a couple of folks out there in that area that have done that more than once, on more than one issue. And so it is what it is: We work with the folks who want to work with us.

LEO: I want to ask you about libraries.

JA: I’m pulling for them. I voted for them. Speaking of enragement as compared to engagement: Where are the individuals who said, don’t worry about the libraries?

If you give a person an option, and they believe it, that the money’s already in the budget, there’s plenty of money to do everything that needs to be done, why should I tax myself? Why should they? And they said, we won’t.

LEO: And now, predictably, it falls on you.

JA: Who?

LEO: Right?

JA: I don’t know. Have you asked those who were leading the civic enragement, in terms of, OK guys, you were successful, you enraged the community to the level of saying there was plenty of money inside the budget, no need for additional revenues — where are they? I never said there was.

LEO: I know. That’s not what I was insinuating. What I mean is that now—

JA: Nobody holds anybody accountable.

LEO: Now you have to—

JA: I have to try, in an incremental way — we’re going to build a new, 21st century library branch in Newburg. There’s going to be a lot more computers and a lot less books. And we’re going to see how that works.

Now, that’s one small library investment, and we’re going to do that. Had we gone forward with the comprehensive master plan that had been passed by the council … it would have put in three new regional libraries, it would have put a new library in Pleasure Ridge Park, a new library in Fairdale, a new library in Middletown — I could go through the upgrades, etc. None of which happened.

So where’s the media, going back to those who said it can all be done by, I don’t know, by magic? I never said we had the money.

What am I doing at this point? We’ve had to downsize the master plan, we’ve had to extend it out for decades, and when and if funds are available, we will incrementally move forward.

LEO: What about another ballot initiative?

JA: I’ve been involved in three. I’m 0-3 [the two others, both involving libraries, were in the 1980s]. I think I’m done.

LEO: What about your political future?

JA: I have the opportunity to run for one additional four-year term, and I’m going to make a decision on that sometime in late summer-early fall, so that if I run, I be able to begin to prepare the campaign for the May primary, and if I don’t, it’ll give others six, eight months to get their at together and be ready.

LEO: You have to balance the two personalities in play here, the one where you have to see out into the future, in terms of development you have to keep things moving forward, but you also have to be realistic, you have to keep things going. How do you find that balance?

JA: The good thing is I’ve had 19 years of experience, I’m starting my 20th year as mayor. I ought to be prepared, and I’ve certainly got the team around me that I’ve been able to attract into public service, to be able to work through these difficult times and assure that this community is teed up for when the economy turns.

It is difficult. Is it the most difficult issue I’ve dealt with in my 19 years as mayor? It’s certainly close. I would put it right at the airport expansion, when I had to relocate 4,000 people, 187 businesses, 14 churches and two schools, and I went out every night to the communities and met with neighbors. That was really an emotional, difficult time. But we said what it would mean, and it has meant that in terms of jobs and then some.

It ranks, in terms of an emotional day, the shooting that I was involved with at Standard Gravure, when [Joseph] Wesbecker went in there and began shooting everything in sight. That was tough, when we were carrying bodies out on stretchers.

Certainly the snowstorms in the ’90s, the floods in the ’90s, the windstorm this past year.

But this is probably, all things considered, has been intellectually the most difficult, and emotionally probably the most extended period of difficulty, because, it seems very clear to me that to be able to make it through, everybody in city government’s got to work together. … My hope was, and continues to be, that this family of 6,000-plus employees … is willing to work together to ensure that we get through this as a team.

Unfortunately, I have found significant resistance from several of the unions, who seem very focused on themselves and only themselves. … That’s probably been the most disappointing aspect of the last several months.