Mayor Jerry Abramson has announced an immediate hiring freeze and restrictions on travel and discretionary spending as the first steps to manage an expected $20 million budget shortfall for the fiscal year.
Abramson says more spending restrictions will be required to balance the budget, and employee layoffs and unpaid furloughs are among the options being considered.
"The global economic downturn is hitting Louisville and city government," Abramson said. "You cannot have a breath-taking decline on Wall Street without it affecting Main streets across America - and Louisville is no exception."
The $20 million shortfall represents 4 percent of the General Fund budget - and Abramson warned that amount could increase if the economic situation does not improve.
"To put it in perspective, this estimated $20 million shortfall is bigger than the entire General Fund budget for Metro Parks and twice as large as the budget for our Health and Wellness department," Abramson said. "We face serious challenges, and we will have to make serious cuts."
Abramson will be meeting with city department directors in the coming days and weeks to examine other ways to cut expenses. Abramson said he expects to announce additional spending restrictions next month.
"Over the next few weeks, we will make decisions about additional cost-cutting measures - just like our citizens and families are doing - to ensure that we live within our budget," Abramson said. "I will put the priority on public safety and basic services. But a spending reduction of this magnitude will require a united effort and shared sacrifice across all our government agencies."
Trends across the country are contributing to the shortfall in Louisville, Abramson said.
Since the city's budget was proposed in May, the stock market has dropped 4,000 points - losing one-third of its value. Over the same period, the unemployment rate in Louisville has risen significantly and now stands at 7 percent.The Commonwealth of Kentucky is projecting a $300 million shortfall. And all five of the state's economic indicators are trending down.
Louisville is better prepared than many communities to weather the economic storm because of the diversity of the local economy, Abramson said. And city government is better positioned than most because we have built a more efficient, well-run government in the past six years.
Abramson briefed Metro Council President Jim King and Budget Committee leaders on the situation, and he invited their input as he makes decisions on budget cuts. The administration will also talk with union leaders and seek employee suggestions for cost reductions, Abramson said.
"Now is the time to work together for the good of our community," he said. "It's not the time to divide along personal, partisan or parochial lines."