The more modest tax-hike plan moving through Metro Council is “far from a perfect solution,” Mayor Greg Fischer said Friday, less than a week from a final showdown.
Fischer, who wants taxes to fill the entire $35 million budget hole, stressed that the amount of cuts expected in the Democratic counter-proposal would hurt the city and that its lower revenue would create “self-inflicted uncertainty” for metro government.
“I take no delight in telling people that your taxes need to increase, but I did that because I believe that citizens deserve a basic level of city services. They deserve that,” Fischer said.
Fischer’s goal to triple insurance premium taxes and avoid any cuts to city service, though, seems like a stretch in a council where there’s bipartisan support for combining any new revenue with budget cuts.
The mayor’s original allies crafted the new counter-plan, which doubles instead of triples the insurance premium tax and expects $15 million in cuts in the immediate budget and roughly $20 million more in coming years.
Others on the council, both Democrat and Republican, insist that the hole can be filled in the upcoming budget without any new taxes.
Still, Fischer is making a final push for his plan, emphasizing that “cuts have consequences,” in the waning days before a strict deadline at the end of next week to pass any insurance premium tax hike.
“A lot of these cuts, behind them, it’s just a strategy of hope: I hope we don’t need these police officers. I hope we don’t need the fire department. I hope we don’t need an ambulance to show up,” Fischer said. “Hope is not a good strategy to run any operation. And particularly one that provides basic city services to our citizens.”
Fischer’s team has said there’s a $35 million hole in the upcoming budget, about $20 million of which stems from increased pension payments and $15 million that comes from increased health care costs and lower-than-expected revenue.
The hole is projected to grow by roughly $10 million in each budget for the next four years, as a pension payment increase is phased in by about 12 percent from year to year, until it grows to $65 million in fiscal year 2023 and begins to plateau.
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To fill the part of the hole created by pension payments, the Democratic counter-proposal increases the insurance premium tax, on policies other than health and vehicle insurance, from 5 to 9.5 percent in the upcoming fiscal year. It would rise to 9.75 percent in fiscal year 2020-21, then to 10 percent the next year, where it would stay.
The plan, unveiled by first-time Councilman Markus Winkler, D-17th District, originally included an increase of 1.5 percent on vehicle insurance premium taxes, but that language was stripped to lure more supporters to back the plan.
The $15 million related to a structural budget gap would instead need budget cuts under Winkler’s plan. And it would expect millions of dollars in additional cuts in fiscal year 2022-23.
“It’s $15 (million) right now, but then the other $20 (million) … coming later. The further you get into this, the further cuts you have. That makes it more and more difficult,” Fischer said Friday. “… If it was $15 million total, we could figure that out.”
Fischer declined to say what level of cuts he could live with, other than to say he’s happy to work with the council to find efficiencies that aren’t “too deep.”
He called on the council to specify which cuts they are comfortable making to fill the shortfall — whichleaders have suggested isn’t likely to happen until after the mayor presents his budget to council on April 25.
And, to those who have called his approach to selling the tax proposal “scare tactics,” Fischer said the tactics aren’t what’s scary, it’s reality that’s scary.
“This is a real problem for our city,” Fischer said. “People have to be very real with their constituents about what the possible impacts are. … This is what will happen if we don’t have the revenue to deal with it.”
This story will be updated.
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