LOUISVILLE, Ky. — The Derby City is looking forward to turning to a new chapter once the coronavirus crisis is behind us. However, the fear is this new chapter could be Chapter 9 bankruptcy.
“When you go through a big period of unemployment like this, it takes a massive hit on revenue,” Jordan Harris, founder and contributor of the Pegasus Institute, said.
While Louisville is certainly in that boat, Mayor Greg Fischer’s office claims bankruptcy is not really on the table.
The mayor’s communications director Jean Porter emailed a statement to FOCUS saying that the mayor is banking on “the federal government to stave off severe cuts in services” due to COVID-19.
She added and emphasized that “Louisville Metro Government is not at all close to declaring bankruptcy.”
Here is her entire statement:
"The Mayor has been very clear that local governments like ours require direct flexible support from the federal government to stave off severe cuts in services because of the revenue decline related to COVID-19.
That said, Louisville Metro Government (LMG) is not at all close to “declaring bankruptcy.” We have a fundamental obligation toward our residents and our bondholders to be sound fiscal stewards of public tax dollars – and we are. We continue to fulfill this duty as evidenced by external validations from credit rating agencies (Fitch: AAA; Moody’s: Aa1; and S&P: AA+) who routinely place LMG in the top quartile of municipal issuers through their credit ratings along with current trading ranges for our existing debt which show absolutely no signs of distress or concern over non-payment."
Harris wonders what the contingency plan is, considering Republicans in Congress, led by Senator Mitch McConnell (R-Kentucky), pushed back on the idea of bailing out states and municipalities in the latest relief package.
“Louisville, Lexington and Bowling Green are going to be hit really hard,” Harris pointed out. “Whether or not it’s going to be so hard that they require bankruptcy, they’re probably not on the cusp of that, but it is going to be a significant trim down of city services.”
FOCUS asked Porter what plan B is without federal help, and she responded that the Mayor in his budget address stated that the city would have to make cuts to services and staff, including public safety, which make up 60% of the city budget.
Here is her response in full:
In his budget address, which you can find here, the Mayor stated that without direct, flexible support from the federal government, cities across the country, including Louisville, will have to cut services and staff, including those in public safety, which make up 60 percent of our city budget.
That’s very realistic Harris agrees, citing data from the Brookings Institute.
“That showed that Louisville, Lexington and Bowling Green were all three in the top 15 most vulnerable to fiscal problems during this downturn, top 15 cities in the country,” Harris said.
Contact reporter John Charlton at jcharlton@whas11.com. Follow him on Twitter (@JCharltonNews) and Facebook.
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