LOUISVILLE, Ky. – Louisville's budget will be hard-hit by the coronavirus pandemic — likely wiping out the city's projected $19 million boost in revenue this fiscal year and then some, the city's chief financial officer said in a call Thursday.

Daniel Frockt said the city is still finalizing figures ahead of Mayor Greg Fischer's scheduled budget address in three weeks and didn't share any concrete numbers. But, he said, the city can expect that revenue won't be exceeding expenses.

"It is fair to say it is likely to be under budget," Frockt said. "We're still working on the estimates."

The city has already spent about $3 million on unplanned expenses related to the coronavirus pandemic, such as overtime for public safety and public health employees; personal protective equipment, also known as PPE; and human services, including the expanded Meals on Wheels program for seniors.

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That spending will likely continue unpredictably through the end of the fiscal year on June 30, as the city continues to fight against the spread of the deadly virus.

Frockt said it's likely the city will be forced to tap into its "rainy day fund" to balance this fiscal year's budget and to make ends meet after July 1.

It's possible the city will also turn to budget cuts for the upcoming fiscal year 2020-21 budget — as Frockt said, to "size our budget to the revenue resources we have."

Forecasting that revenue, challenging even in normal years, has many unknowns thanks to the pandemic sweeping across Kentucky and the nation. It's led to an economic downturn and drastic shutdowns in Louisville.

It's not clear, Frockt explained, what the "floor" of the downturn will be, or how long we'll be there.

It's also not clear when those parts of the economy might reopen because it's not clear when something — more widespread testing, or a vaccine, for example — will allow for greater, freer movement.

State lawmakers, in a nod to the uncertainty, passed a one-year budget (rather than the customary two-year plan) on Wednesday and planned to conduct another revenue forecast, which Louisville officials will be watching closely.

Kentucky coronavirus live updates:Follow along for the latest news

"I imagine that the state will have to revisit their budget, as well, once the reforecast comes in," Frockt said. "Louisville's likely going to be doing that. And, like I said, there's a great deal of uncertainty.

"We don't know the economics of it, we don't know the science of when we might be able to move about and kind of resume normal business and leisure activities," he added.

Another added complication: The federal and state governments have pushed back tax filing deadlines to July 15, meaning that revenue will come to Louisville in fiscal year 2020-21, rather than fiscal year 2019-20, as anticipated.

A final "unknown," Frockt said, is whether the federal government will pass another round of stimulus funding, perhaps to help bail out city governments.

Cities across the country are beginning to provide estimates of how hard budgets will be hit by the COVID-19 pandemic, including Baltimore officials' prediction that their city will face a $42.3 million deficit and about $100 million less in revenue than projected, and San Francisco's estimated two-year budget shortfall of $1 billion (in part from a prior deficit).

In Frankfort:General Assembly passes one-year state budget

Cincinnati officials predict a shortfall this fiscal year and expect the fiscal year that begins July 1 will be short between $60 million and $80 million. The mayor this week announced the city would furlough 1,700 workers, roughly a quarter of its total employees.

Less than two months ago, Louisville officials had projected nearly $19 million more in revenue than anticipated in this fiscal year and hoped it meant no repeat of last year's painful budget cuts.

Things aren't looking so rosy now.

Asked whether Louisville was considering furloughs like Cincinnati, Fischer said earlier this week that the city was "not at this time."

"Obviously, our tax revenues are taking a massive hit right now. That, obviously, is how we make our money at Metro, is to collect taxes so that we can then expend the necessary services to protect our city, keep our city clean.

"Right now, we have adequate work for everybody," he added. "We've got a very healthy rainy day fund, if we need to use that."

More news:Kentucky schools need to be closed until at least May, Beshear says

Why will Louisville's budget be especially hard-hit?

An analysis conducted by the nonprofit Brookings Institution, which examines public policy at the local, national and global level, found Louisville to be among the cities that would see the most immediate fiscal impact from COVID-19.

The article examined where local governments generated revenue and how much of the regional economy is made up of industries vulnerable to coronavirus-related declines.

Louisville, it found, relies on roughly 60% of general fund revenues from "elastic" sources and has roughly 16% of its employment in high-risk industries, such as hospitality.

About 45% of Louisville's typical general fund revenues come from occupational license fees, which are levied on the wage base that people earn in the city, much like an income tax but also including people who commute into Louisville for work.

Those types of taxes, along with the net profit tax on business profits that make up roughly 11% of Louisville's budget, are very sensitive to an economic downturn.

The less that Louisville's workers and businesses make, in essence, the less city government can collect.

The authors of the Brookings study went on to recommend that states should allow local governments to "modify tax structures."

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Cities would have the tools they need to respond with a mix of sales, income and property taxes, it said, which will become "especially important in the months ahead, as state revenues and aid to cities begin to take a hit."

Unfortunately for Louisville, local governments in Kentucky are sharply restricted in what types of revenue streams they can access.

An effort to loosen those restrictions and "uncuff" the General Assembly in order to let local governments create different taxation frameworks hit a roadblock in the form of a protest by House Democrats earlier this session.

The bill's main sponsor, Rep. Michael Meredith, told The Courier Journal he expected to reintroduce the measure next session, but that still means that any modernization to local governments' tax framework could be a long way off.

The change would require a constitutional amendment, which would have to be approved by voters in a referendum. But there's no ballot in 2021, so that pushes back a potential ballot question until 2022.

Lawmakers would still need to come back and create a taxation framework in the following 2023 session.

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What's the good news about pension payments?

A small bright spot in the news around Louisville's budget is that the General Assembly paused the scheduled pension payment increase for the upcoming fiscal year.

That means the 12% increase in Louisville's bill from the state won't be phased in as scheduled, granting some temporary relief to local governments that have been struggling to make ends meet with the mounting payments.

Frockt said the legislation will freeze the fiscal year 2020-21 pension payment rate at the fiscal year 2019-20 level. That will likely keep the payment at roughly $100 million, rather than about $112 million, he said.

How will federal money help the city's budget?

The exact benefits aren't yet clear.

Frockt said Thursday that federal agencies are still writing the rules to guide governments on what expenses could be reimbursed under the stimulus packages passed by Congress.

It's fairly clear that direct COVID-19 expenses, like the PPE or senior meals, will be covered, but it's less clear as time passes what would be covered, or if expenses could be reimbursed under another section of legislation.

Kentucky is expected to get about $1.7 billion in funding for local and state government relief to cover resources to cope with the coronavirus pandemic. It's not yet clear how much will flow to Louisville.

It's also possible that there will be a fourth round of federal stabilization funds or that cities could find themselves on the receiving end of federal money to cover revenue losses or some other relief.

Fischer said Tuesday that local governments need to be "made whole, the best they can," with funding from the federal government to replace revenues lost from the economic slowdown.

"Obviously, we've got to be healthy as a city government to deliver the services that are required to keep our city safe from the COVID virus," he said.

Related:Here's what Kentucky will get out of the $2T COVID-19 relief bill

Darcy Costello: 502-582-4834; dcostello@courier-journal.com; Twitter: @dctello. Support strong local journalism by subscribing today: courier-journal.com/darcyc.

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