Rookie Council A Year Wiser?

It was a rookie mistake.

The Metro Council rejected an insurance premium tax last year that would have closed the city’s budget deficit — a gap caused by rising, unavoidable state pension costs. Fifteen council members — four of them newly elected — voted against raising revenue and, instead, chose a $25 million budget cut.

It was a mistake.

The tax increases would have meant $12 per month for the average property owner — more for the wealthy who own more properties. 

Instead, fire and EMS services were cut. 

Police were forced to eliminate recruiting and training.

Libraries were closed.

Sanitation services were reduced.

Street violence interrupter programs were cut. 

And now this year, as Mayor Greg Fischer warned, Louisville faces another budget shortfall because of increasing state pension costs. The seven Democratic council members, in particular the four freshmen members, who voted against raising revenues have a chance to show they’ve learned from their mistakes.

We as a city have the same options — a premium insurance tax or more budget cuts. But there is also a new one: a restaurant tax.

Fischer said his administration would lobby the General Assembly to allow Louisville to impose a 3% restaurant tax, which he says could generate $30 million to $40 million. Smaller Kentucky cities have a restaurant tax option, but Louisville does not.

Fischer called the restaurant tax, “low-hanging fruit,” saying that part of its appeal is that tourists would generate as much as 25% of the increased revenue. 

A restaurant tax in Louisville would be a mistake.

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Restaurants cannot shoulder more taxes. They already operate with slim margins — the line between success and closure razor thin. Success means making a living, not getting rich. Last year, 50 Louisville restaurants closed, according to Louisville Business First, an improvement from 72 in 2018. (To be fair, The Courier Journal says more than 60 Louisville-area bars and restaurants opened in 2019.)

Chef John Varanese, chairman of the Kentucky Restaurant Association, put it best: “If I could raise my prices by 3% and know it wouldn’t hurt my business, I would have already,” Varanese said in a letter to KRA members.

Further, Louisville’s restaurant scene has become part our national identity, and it’s not worth jeopardizing. Investments in the bourbon industry, downtown development and hotels have helped make Louisville a national destination. Part of that has been great restaurants, which national media and even the James Beard Foundation have recognized.

So-called pro-business Republicans, as Councilman Tony Piagentini describes himself, should know that a restaurant tax would threaten a vital, local industry and the city’s reputation.

As Varanese wrote, “This is just going to hurt disposable income in the long run. People are going to spend less and tip less, which means servers get less hours. It’ll have a ripple effect.”

Perhaps a restaurant tax is better than cuts, but this is not the thread officials should pull.

There is hope that the council has learned.

Last year, some said they didn’t believe Fischer when he had described the budget deficit and provided a list of proposed cuts as an alternative to the insurance tax. Some thought they could vote down the tax and close the spending gap without risking public safety and quality of life. Some thought they knew better.

They included Piagentini, one of the mistaken freshmen, and Councilman Brent Ackerson, a Democrat who sounds like a Republican:

 “This shortfall we face is a blessing in disguise,” Ackerson said, “because it should force your government to fully examine each dollar we spend, decide to make that expense, and be able to tell you, the public, why that expenditure is necessary. That is simply what good government does.”

We hope they realize that they simply were wrong and now should vote in the premium tax.

Here is my message for the freshmen: It is understandable that last year you did not want your first big decision to be to raise taxes. But you are a year wiser. By now, you understand that sometimes there are no easy options… only bad and worse ones.

In the coming months, you will have a second opportunity to make the right decision: Don’t risk the restaurant industry and the jobs of hospitality employees, and definitely don’t force more cuts in services. 

Instead, ask property owners to pitch in less than 50 cents a day to help keep our city a place where we want to live but also where people will want to visit. •

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