What is causing a $20 million shortfall in the city’s budget?
The leading cause of the projected shortfall is the decline in occupational tax revenues resulting from the national economic recession. Occupational taxes, which include employee withholding and net profits revenues, account for more than 57 percent of all city General Fund revenues. The city’s budget was based on a 2.9 percent growth in overall revenues, the lowest increase in five years. Because the decline on Wall Street has hit America’s Main Streets, rather than revenues growing 2.9 percent, they will decline 1 percent – a 4 percent swing. The layoffs at local companies – from YUM to The Courier-Journal – and the shutdown of the Ford plants have a direct impact on tax collections. Also, Louisville’s unemployment rate currently stands at 6.5 percent and is likely to increase over the next few months. With more people out of work, fewer people are paying occupational taxes.
