In Louisville, Suburban Dollars Fund Urban Services

by Gabe Bullard on January 21, 2010

Next month, the Metro Council will begin debating how to pay the final $30 million of the city’s settlement with firefighters over miscalculated overtime. The debt dates back to the pre-merger City of Louisville, and some council members want taxpayers in the old city, now called the Urban Services District, to pay it off. Others say the 2003 merger is a marriage, and all debts are now shared.

If merger was a marriage, then the Urban Services District was the prenuptial agreement. Residents of the old city pay Metro Government about four times more than suburban residents in property taxes. That money is used for solid waste management, street lights and fire protection within the old city limits.

But suburban dollars are going toward those services, too. For at least the last three fiscal years, urban revenues have fallen more then ten million dollars short of the cost of the urban services, and some suburban taxpayers complain they are funding services they’re not receiving.

“We have a situation where the numbers don’t match,” says Metro Councilman Kelly Downard.

Downard represents a suburban district. Old city revenues cover the cost of urban services only if you include a multi-million dollar annual payout from the water company, which was the old city’s dowry in the municipal marriage. But Downard says his constituents pay bills to the water company, too…so he doesn’t accept that reasoning.

“The argument about the water company is bogus,” he says. “But I do believe there is a legitimate argument to be made that the services provided in the Urban Services District provide the entire community benefits.”

Those combined services include occasional street cleaning in the suburbs, dead-animal pickup, junk dropoff and arson investigation. Downard says suburbanites also benefit when they visit the city.

“The city fire department keeps my building where I work from burning down. I’m happy for that. Am I willing to pay for it? If somebody wanted me to, I would.”

“Those are aspects of those contracts we have never tried to figure out the exact amount, because we have people doing multiple responsibilities in each of those departments,” says Mayor Jerry Abramson.

Abramson says the value of shared services makes up for the gap…and he says it doesn’t matter, because urban and suburban revenues and expenditures go into and come out of the same pot.

But Downard says he’d like to see proof that the benefits to suburbanites are worth the millions they pay for urban services each year. Abramson says only estimates are available…because it’s impossible to put a cash value on all the mutual benefits of urban services.

“We just don’t do that,” he says. “We’ve chosen to develop our departments’ budgets based on the community, not based on what was the old city and the old county.”

“But with the Urban Services District,” WFPL asks, “The garbage truck that picks up my trash isn’t driving all the way out to Newburg to pick something up.”

“That’s correct, but that same truck is going out once a week to the suburban drop-off locations picking up recycling,”

says Abramson. “So what part of that truck do you assess to that responsibility? And what part of the time for the people who drove it out there do you assess?”

“Here we are as a couple, sitting around the table,” says Metro Council President Tom Owen. “…And the one partner says ‘You spend more than I do, even though we have a joint checking account.”

Owen says the issue is valid, but only in the abstract. Urban services are cut when the budget is cut, and hardships are spread across the county. Before merger, the city-county compact led to millions of county dollars coming to the city for various reasons, among them the fact that suburbs benefited from a strong urban core. Dissecting the compact and the later merger down to the penny would not lead to a pleasant conclusion, Owen says.

“Does it lead to Urban Services District needs to raise its taxes further?” he says. “Then perhaps I ought to charge a toll for the residents of the non Urban Services District to use that portion of the old city street where there’s garbage collection and street cleaning if they need to get to the airport.”

Councilman Kelly Downard points out that suburban residents are already paying for their own services, in taxes to suburban fire districts and small cities like St. Matthews and in bills to private garbage collection companies. But if suburbanites aren’t feeling like the merger is mutually beneficial, Mayor Abramson says there is a solution.

“If there are areas that want to have the Urban Service District services, there is a mechanism through which they can petition the Metro Council and become a part of the Urban Service District, pay the additional tax and receive the additional services,” he says.

The Metro Council’s budget committee will resume debate next week over how the pay the rest of the money owed to firefighters for the miscalculated overtime in the pre-merger City of Louisville.

This story was researched in conjunction with Dan Klepal at the Louisville Courier-Journal.

Comments Closed

{ 2 comments }

Ken Herndon January 22, 2010 at 2:20 pm

the argument regarding the Water Co. dividends is not bogus. The old city owned it outright, took the financial risk to expand lines and facilitites and got all of the dividends. After Merger, those dollars were put into the general fund where, since two thirds of the people who live outside the Urban Services boundaries, two thirds of the annual revenues, that should have stayed within those boundaries, was distributed to people who were not paying a penny extra in taxes. Suburbanites were paying for their water before Merger without having to take any of the risk of developing the infrastructure and they continue to pay – exactly as they did before. the only thing that has changed is that the old City has lost two thirds of the money that it once relied upon – breaking the promise of Merger.

Jeff Nolin January 22, 2010 at 9:52 pm

I need for somebody to go all of the way back to the beginning with this Water Company thread.

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