LOUISVILLE, Ky. (WHAS11) -- Appearing before the Louisville Metro Council on Thursday, Mayor Greg Fischer pitched his proposal for the city to fund big projects by increasing the sales tax charged within city limits.
"Imagine having the resources every year to be building projects the scope of Waterfront Park," Fischer (D) told the council.
The mayor's office estimates a one percent increase in the sales tax, from six percent to seven percent, would generate about $90 million in extra revenue per year.
In meetings with council members and influential citizens, the mayor and his staff have cited a variety of potential projects which could be funded by the "local option sales tax," such as a $30 million improvement plan to transform Riverview Park into the Southwest Louisville version of downtown's Waterfront Park.
Other potential projects include a forensic crime lab for Louisville Metro Police and a new public transportation system.
Council Republicans, however, warn a sales tax increase would make Louisville less competitive with peer cities to recruit businesses, and would drive big ticket purchases to other counties. They say a nearly $100 million increase in revenue represents about a 20 percent tax increase on Louisville citizens.
"People are going to first react, 'We have an additional tax,' Republican Caucus Chairman Ken Fleming predicted. "So you're going to tax me more in order to try to get something that we believe you can go in and accomplish with what we currently have in terms of inflow into this government.
"I have a feeling there is going to be some resistance in terms of having a new tax," Fleming added.
"With the economy the way it is and people without jobs, to burden them more with a tax, I can't see it," said Bobby Goatley of Louisville.
"Taxpayers have the power to vote either yes or no on the tax to help pay for special projects in the city," Fischer said.
The sales tax increase comes as Kentucky's Tax Reform Commission is advocating additional tax revenues and federal tax rate increases are due to take effect at the end of the year.
"It's the best time for people to choose on how they want to invest in roads, bridges, sidewalks, infrastructure," Fischer insisted. "This is about giving people the choice to invest in the quality of place that they have. In their neighborhoods, in their parks, in their public transportation, whatever it is that people want to decide to make their investments in."
The mayor said the city underfunds infrastructure improvements and needs the extra revenue to make critical investments.
Council Republicans say elected leaders should do a better job of budgeting before raising any taxes.
After Fischer suggested that Louisville taxes are on the low end of national rankings of cities with more than 200,000 citizens, critics said the mayor's calculations do not account for other taxes paid by city residents.
"The mayor is naive because he is not looking at the total tax burden of the citizens," Fleming said
Fleming said when all taxes are factored, Louisvillians are already paying more than taxpayers in most other cities.
"And now he wants to come in and add an additional tax? Well, we might as well be the most heavily taxed community in the country," Fleming said.
"We're not plowing new ground here," Fischer said. "We're just trying to be competitive."
In 2007, voters resoundingly rejected a hike of the city's occupational tax to fund libraries, but Fischer explained the sales tax proposal is different - the increase from 6 percent to 7 percent would be temporary.
"It would not go into the General Fund," Fischer told WHAS11, "That's what torpedoed the Library Tax. This is very different. People decide - groups of citizens and elected officials - what the collection of projects will be. It will be across the city and many different ways. we have roads and bridges and infrastructure things that people see are clearly not being invested in right now."
Opponents are referring to the Local Option Sales Tax by its acronym, LOST.
Fischer invented a new acronym that more closely matches his vision for the tax, Local Investments for Transformation, LIFT.
The local option sales tax would have to clear several major hurdles:
- approval by 60 percent of the Kentucky General Assembly
- a statewide vote to amend the Kentucky Constitution
- city leaders agreeing on what projects would be funded and
- Louisville citizens voting to approve the tax increase.
WHAS11's Joe Arnold has the full story, click on the video player above.