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Metro Council To Determine Extent Of Tax Hike Next Week

city Hall
city Hall

The Metro Council's budget committee acted quickly Thursday to pass an amended version of the mayor's tax hike plan for consideration by the full body.

In a 7-4 vote, committee members approved an amendment filed by Democrat Markus Winkler of District 17, who sponsored the original ordinance. The dissenting votes came from the committee's three Republicans and Democrat Paula McCraney, of District 7, who said she preferred not to attempt a solution for the four-year problem ahead.

"This is a tough decision that we have to make," she said. "I'm on the record for not voting for this amendment and not advocating for a four-year plan, when we need to look at a one-year plan and then take the time that we need to look at this in a real sensible way."

The tax-and-cuts plan is intended to plug the budget hole the mayor's office expects to grow to $65 million over the next four years due to increasing pension and employee health care costs. Last month, Mayor Greg Fischer proposed two options: cut the needed amount of the budget, or raise the insurance premium tax.

Council members must make a decision by March 21 in order to have the tax on insurance premiums, for which they do not need state approval, go into effect in the new fiscal year that starts in July.

Thursday's vote was fast -- the meeting was over in under 10 minutes -- but that does not necessarily mean the same will be true when the full Council considers the tax hike. There are some who are likely to oppose any tax hike at all, while others may disagree about whether to tackle the four-year problem, or handle the immediate issue to buy time for a better long-term solution.

The eventual solution could also involve levying a car rental tax, a move Council members said at a meeting earlier this week could raise revenue from tourists rather than just locals.

Fischer's proposal called for raising the insurance premium tax to 15 percent, up from 5 percent, by 2023.

The new plan calls for a smaller increase by phasing up to a 10 percent tax on premiums for insurance lines excluding health and notably, vehicle insurance. An increase on the latter would have been a dealbreaker for some Council members.

Another addition is the specification that funds raised by the tax would only be used to pay for the pension debt.

In a written response to the vote, Fischer praised Council members for their work on the issue but warned that the new plan would still require $15 million in cuts the next fiscal year. That's a figure several Council members indicated earlier this week they would be comfortable with.

Fischer called back to the cuts he proposed as an alternative to a tax hike, which were criticized for including hits to public safety departments, libraries and other services.

"I understand that the Council feels some cuts are needed, and I am willing to work with them on a reasonable solution; I am always open to ways to make our government more efficient. Still, Council must be very clear on which cuts they believe are acceptable to fill the shortfall this ordinance creates, and my priority will be to limit the impact to services that help our residents," he wrote.

Fischer is set to propose a budget for the next fiscal year in late April, after which the Council will have two months to finalize where the government will spend -- and where it won't.

Amina Elahi is LPM's City Editor. Email Amina at aelahi@lpm.org.

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