The LEO Interview
Mayor Greg Fischer has spent the better part of 2012 under the cloud of a bleak economic forecast. But on a recent sunny, Friday afternoon, Fischer took a break from wrangling with the city’s unwieldy, unbalanced budget to participate in one of the easier aspects of being mayor: the grand opening of a local business.
With a pair of gigantic scissors fit for a photo op, Fischer cut a red ribbon outside the black wrought iron entrance to Taco Punk, the latest restaurant to move in along East Market. Following the event, Fischer agreed to sit down with LEO Weekly for an interview.
Over a couple of hot teas at Please & Thank You, Fischer talked about the challenges that lie ahead: from attracting retail downtown and increasing affordable housing to, first and foremost, balancing the city’s budget. (Last Friday — one week after this interview — Fischer unveiled plans to fill the current $12 million deficit, but warned that more cuts will be necessary to fix the budget’s structural imbalance.) During our interview, the mayor also shed light on some of the hurdles faced during his first year in office, how he’s adjusted to life in the public eye, and how a year as mayor is “like a dog year.”
LEO: The city is facing an estimated $42 million budget deficit over the next 17 months. Can you describe the process of deciding where to make the necessary cuts?
Greg Fischer: We have two different budget challenges: One is filling the gap for this fiscal year, which is over June 30. That’s about a $12 million gap. And then we have another problem with the fiscal year ’13 budget, which will be somewhere in the $20- to $30- to $40 million range …
The problem is: We have a structural imbalance. Our expenses are growing a lot faster than our revenue. That’s a problem all over the country right now. It’s primarily being driven in large part by pension costs and health-care costs, and then we have unplanned overtime costs that are a contributing factor here, too.
The pension cost is a state issue, so we can’t affect that immediately. But hopefully there are other issues, like overtime, that we can address.
LEO: On the topic of overtime: Metro Council recently approved union contracts that will continue to allow those city employees to use vacation and sick leave toward overtime.
GF: We have 26 different bargaining contracts. These four contracts you mention had been in the bargaining process — some as long as 18 months — and they have a combined total of about 100 people. Since the contracts had been in the pipeline for so long, if we’d stopped that from going forward we probably would have had an unfair labor practice issue presented against us. Given it was a small number (of employees), we said let’s move on, and in future contracts we’ll address this overtime issue the best we can. I mean, it’s a negotiating process.
Yesterday, I had a meeting with all of the large unions that represent the city and gave them a picture of where the city sits right now financially — what’s going to happen if we don’t address this situation, what’s happening around the country in other cities already: Birmingham, Ala., declared bankruptcy. A few other cities — Detroit, Vegas — have said they’re close to it. My message to them was let’s get ahead of this. They’ve been great partners in the city, so my first step with them is to get a common understanding of the challenge.
LEO: Was there any discussion at this meeting, and if so, did you get the sense that they were receptive and might be willing to negotiate this point?
GF: I got the sense that they definitely understand it and that we need to be having more conversations around it. They know they are an important piece of the puzzle, but they aren’t the only piece. That’s one of the things I wanted to emphasize with them. While they’re a great partner and a big part of our labor force, we also need to be looking at any type of special projects that we can address to help the city’s revenue or expense figure. One of those would be what we’re looking at with the Louisville Water Co. and MSD and Public Works. We can potentially drive down some costs there or increase revenue through the efficiency of all of them coming together (as one agency).
Then we’ve got to grow the top line as well with revenue. The best way for us to do that is through more business, through more jobs. So we’ve got about six or seven different issues that we’re working that are all around the wheel we call sustainable city government.
LEO: Might you consider raising taxes or fees?
GF: We don’t hear a great outcry from the citizens for more taxes.
LEO: I wouldn’t think so, but given the situation …
GF: That’s not on the plate right now.
LEO: Council President Jim King recently delivered a list of recommendations that he estimated would yield between $10-$20 million for the city. One of the proposals was to cut ties with Greater Louisville Inc. Is that something you’re considering?
GF: The list that the Metro Council presented to us, we appreciate that. We want good ideas from everywhere. As a matter of fact — I don’t know if you saw it — but we put it up on our Facebook page and got 300 or so responses to that. We’re looking for good ideas from everybody.
GLI certainly has played a valuable role in the city. Last year, Louisville was named as the location of the economic deal of the year, and that was the Ford expansion — 3,100 new jobs, $1.2 billion investment. That was a result of the partnership of Ford, the UAW (United Auto Workers), the state, the city, and GLI was the central conduit that helped pull that all together, so there’s a lot of value there. Now, whether or not we’re paying them too much, that’s another situation. But they certainly have distinctive value from what we do internally.
(Note: Last Friday, Fischer announced a $50,000 cut in funding to GLI, which receives $1 million from the city annually.)
LEO: Another budget recommendation from Metro Council was to possibly halt plans to begin construction on a Sixth Street pedestrian bridge connecting the Ali Center to the Belvedere.
GF: Well, some projects are still ongoing, others are on hold. We want to remember that we have a $500 million general fund for the city; it’s not like we’re stopping everything. Certain projects will move forward, others won’t. Obviously projects have got to be prioritized, and where commitments have been made, we’re certainly going to try and meet those.
LEO: Is the pedestrian bridge an instance where you believe a commitment has been made that cannot be postponed?
GF: That commitment goes back now eight or nine years. There were conditions put in place in order for it to move forward, and those conditions have been met, so that contract is out and it’s moving forward.
The Ali Center is an important institution for this city. I mean, this is one of the most famous guys in the world. So, not only is it part of the whole vision of connecting the Yum! Center to the Ali Center, but you get a lot of people coming to town for Ali. It’s a commitment, and we’re proud to have him here as a favorite son.
LEO: Do you anticipate that layoffs and/or furloughs might be something you have to consider, particularly in balancing the larger fiscal ’13 shortfall?
GF: It could be. About 75 percent of the city’s budget is personnel related, so when we talk about areas we’ve got to hit to have an effect, unfortunately people are part of that. But that is what we try to avoid at all costs. (Note: No layoffs were necessary to balance this fiscal year’s $12 million shortfall, the mayor announced last week, though several vacant positions have been eliminated from various departments.)
LEO: Would you consider tapping into the city’s rainy day fund to help balance the budget?
GF: The rainy day fund should not be used for recurring expenses. In other words, that’s for one-time events that are unanticipated. So the central issue with the budget is we have to reset the budget so it’s sustainable.
We need to keep that rainy day fund to keep our bond ratings in place. When that starts depleting, we get riskier as an investment and that drives our interest costs up.
LEO: Regarding the Yum! Center: It’s been reported that the 6-square-mile (Tax Increment Financing) district surrounding the arena has not generated as much tax revenue as projected. Is that a concern, and is the city doing anything to help spur business along in that area?
GF: The economy has been slowly improving. The question is, has it improved enough to be the revenue generator that we hope it will be to satisfy what the city’s bond obligations are? We’re watching that with great interest, obviously.
LEO: So you think this failure to meet expectations is the result of the economy as opposed to an overestimation of the sales tax revenue that could be produced in what some considered a risky, oversized TIF district?
GF: It’s primarily recession-driven, in my mind. Ultimately, what we need to do is get more dates at the Yum! Center so there’s more people coming downtown at different times.
LEO: Do you think an occupational tax on performers (as recommended by Metro Councilman Jim King) might deter acts from coming through town?
GF: We’ll take a look at what other cities do and how common that practice is. Again, it’s a good idea that’s worth exploring, and we’ll see how much it would generate for us.
LEO: Later this month, the Downtown Development Corp. is scheduled to meet with local businesses from various neighborhoods as part of their effort to attract retail downtown. So far, however, they haven’t had much luck on this front, particularly in the Fourth Street Live area. What are your thoughts on these efforts and whether they will be successful in the near future?
GF: We’re sitting in an area right now that’s resurging. There’s certainly an increased presence of retail along East Market here. It’s different from the vision on South Fourth Street, where that would be more of a shopping mecca, if you will. There are a lot of complicating factors in this: Who owns the properties? What type of retail is going to be located there? Does the city need to provide incentives to locate there? If so, where does that money come from?
DDC has done a nice job of putting together a vision of what that’s going to be, but most of these things take years to implement — years and money. But we need more retail downtown; that is a critical piece missing right now.
LEO: Switching gears to housing: Do you think this might finally be the year the city dedicates a revenue stream to its affordable housing trust fund?
GF: The challenge for that is what’s happening with the rest of our budget, because anything that’s dedicated and goes to that is going to come out of something else.
LEO: So given the circumstances, probably not this year?
GF: It’s hard. We’re working on the vacant and abandoned property initiative and the land-banking issues associated with that in an attempt to earn some revenue. That’s going to take several years, also, because of the legislative hurdles.
I’m very sensitive to the needs of affordable housing; it’s just right now, if you fund that, something else is going to happen with that money that goes into that. It’s one of the many unpleasant choices we get to make.
LEO: On the topic of Metro Animal Services: How would you gauge the conditions of that agency now compared to a year ago?
GF: Significantly improved, particularly as it relates to protocols and sanitation. We don’t have the same controversy swirling around that we had when I took office. We were able to get a very good executive director in place in Justin Scally. We’ve built a very good team. This is one of those areas that will take us years to ultimately reach our goal, which is to be a no-kill city.
LEO: What would you consider a realistic time frame in which to achieve that goal?
GF: Take a look at Austin, which has done a good job in this area: They were on an 8-10-year journey. This is a multi-, multi-year journey, because your adoptions have to go up, spaying and neutering has to become a common practice in the city, your rescue groups have to be more fleshed out. While we’ve got a lot of good, passionate people in the community relative to animal services, we need more, and it’s just going to take time.
We’re very focused on it every day, and what people’s best contribution could be is to help it, not criticize it. I mean, make improvement suggestions, but we’re certainly making progress there.
LEO: Last month, Louisville businessman Ed Hart joined a complaint accusing your campaign of misleading donors. Specifically, he claims that money he intended to go toward a campaign gala instead went to help pay down personal campaign debt. What’s your response to those accusations?
GF: Obviously we have a disagreement on that, and the Registry of Election Finance in Frankfort is going to settle that.
LEO: Do you intend to return the money contributed by Mr. Hart, per his request?
GF: You know, that’s really all I want to say at this point.
LEO: I also wanted to talk about Kentucky Kingdom. Last year, there were plans in motion to get the amusement park running again — it’s been idle since 2009. At that time, you mentioned the possibility of the city issuing bonds to help make that happen, but those plans fell through. Now that Holiday World has shown an interest in the park, has your administration been in negotiations with them at all, and would the city again entertain the idea of issuing bonds?
GF: Kentucky Kingdom is a state property, that’s who handles all this. All the city can really do is use some of the occupational taxes as an incentive — forgive the occupational taxes. That’s what we were ready to do with the earlier deal. We’ll be ready to do that in future deals as well.
The city’s actual role in that is very minimal. It’s a state issue. I mean, we want it to be open, obviously, especially when it comes to summer jobs.
LEO: But last spring, there was talk of the city actually issuing more than $17 million in bonds to help make this happen.
GF: Well, external folks made that suggestion to the city. That’s like me saying it’d be good for you to spend $5,000 to put a new roof on your home.
(Note: Numerous media reports, as well as a press release from the mayor’s office, indicate that on May 4, 2011, Fischer unveiled a proposal that called for the city to issue $17.5 million in general obligation bonds to help reopen Kentucky Kingdom.)
LEO: So you did not agree with this “external” suggestion?
GF: We ran some numbers to see if it would make any sense, and it just didn’t make any sense for the city to do that.
LEO: Is it safe to say the city will not be making such an offer in the future?
GF: No. The revenue coming off that thing goes to the state. All the city gets is a little occupational tax from it. The state is the one that really has the financial tools to make that work there. You do follow me on that, right?
LEO: Yes. But occupational taxes aside, it would benefit the city to have the park reopen …
GF: There’s no return on investment to the city. So if I’m investing a citizen’s tax dollars in something, they need to get a return on that. It doesn’t make any sense for the city to be the lead on that. We can supplement it by forgiving the occupational taxes, but the state is the one that gets all the tax revenue off of it.
LEO: How does running a city compare to running a business in the private sector?
GF: It requires the same type of leadership and management skills, so that’s the same. There’s just a much more public aspect to running a city, which is good on one hand, because you’ve got a lot of people wanting to help. You’ve also got a lot of people giving you ideas on how things can be run better. That’s the main difference — the public aspect of what’s going on.
LEO: That said, do you feel like the media has been fair?
GF: (laughs) The media is normally fair. Largely fair. Any public official is a human being, too, so you’d like for things to be reported as factually as possible. That normally happens.
LEO: Of course, LEO is always fair, right?
GF: I think LEO’s been OK (laughs). We like LEO.
LEO: How would you describe your first year serving as mayor of Louisville? Is it what you expected?
GF: It’s been a very good experience. People say, “Is it fun?” Fun seems like an unusual way to describe it. It’s a very rewarding, worthwhile thing to do. It’s 24/7. If there was such a thing as 48 or 72/7, that’s what it is. So you’ve got to like that type of stimulation, and I’ve always liked to be busy. The best thing about it is you have a platform to help raise the city’s potential and help within the city. We’re at a time where business needs to be stimulated, and that draws on my entrepreneurial background. I say you need the brain of an entrepreneur and the heart of a social worker …
A year as mayor is like a dog year. That’s what it feels like. You get a lot of experience in a relatively short period of time. There’s a lot going on. You know something is going to happen tomorrow, you’re just not quite sure what it is, but something always happens. The challenge is being proactive and moving forward with your strategy and reacting to the unknowns that are inevitably going to happen in a city our size.
In the first year, I also wanted to see how we were seen on the national scene in terms of some of the programs we have. That’s one of the reasons we looked to the Brookings Institution to help with our idea for a regional economic development plan between Louisville and Lexington. We were one of four cities that they chose to work with in that. Likewise, with the Bloomberg Foundation, Mayor Bloomberg was looking for five cities where he felt like innovation could take place. So we got a $4.8 million grant from them. I think we’re taking care of business from a day-to-day standpoint, and that’s the feedback we get …
I think for year one we’re off to a real good start, but we can always get better.
LEO: What’s your primary goal for your second year in office?
GF: It’s going to be continuing to recover from the recession. We’re in relatively good shape to do that because Ford is going to be fully up to speed. That’s 3,100 jobs there, plus spin-off jobs. That alone will be enough to bring our unemployment rate down more than a percent. It’s getting people back to work. In the long term, it’s about creating an educational pipeline where we have one of the most educated cities in the country.
In terms of day-to-day, it’s about delivering excellent city services…
We’re identifying what the national benchmarks are, and if we’re not best in the country, we’re figuring out what we need to do to get there.