# Urban County Council Meeting - Mayor's Budget Address - April 12, 2011 > Auto-transcribed civic record · April 12, 2011 - **Permalink**: https://meetings.lexingtonky.news/meeting/1955 - **Source video**: https://lfucg.granicus.com/player/clip/1955?view_id=14&redirect=true - **Date**: 2011-04-12 - **Last revised**: July 17, 2026 - **Length**: 3,996 words > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed with OpenAI's open-source Whisper large-v3-turbo model, run locally by The Lexington Times. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude. Verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Lexington-Fayette Urban County Government Council met on April 12, 2011, at 3:00 p.m. in Lexington, Kentucky, with Mayor Jim Gray presiding. The meeting included one agenda item: the Mayor's Budget Address, which was presented for informational purposes. During the session, the Council heard one public comment and took one vote. The meeting focused on the Mayor's budget presentation to the legislative body. ## Attendance The following individuals were present at the meeting on April 12, 2011: * McChord * Myers * Stinnett * Beard * Blues * Crosbie * Ellinger * Farmer * Ford * Gorton * Henson * Kay * Lane * Lawless * Martin No absences or late arrivals were recorded. ## Votes and Decisions The meeting concluded with a motion for adjournment of the regular meeting. Mr. Ford moved for adjournment, and Mr. Farmer seconded the motion [timestamp: 0:36:04]. The motion passed unanimously. ## Budget and Financial Actions The meeting on April 12, 2011 included several appropriations and financial amendments: **Land Preservation** The government approved $1,000,000 in funding for the Purchase of Development Rights (PDR) program to support land preservation efforts. **Life-Safety Improvements** An appropriation of $850,000 was allocated for life-safety improvements at three facilities: the Kentucky Theatre, Phoenix Building, and Police Headquarters. **Parks Accessibility** The Parks Department received $60,000 in funding designated to ensure parks are accessible to all citizens. **Economic Development** A $1,000,000 appropriation was approved for economic development initiatives and matching funds for LexArts. **Capital Projects** An amendment was adopted to use $2,900,000 in unspent bond funds for various capital projects. ## Public Comment Mayor Jim Gray delivered a budget address at approximately [timestamp: 04:00] outlining the city's financial situation and proposed fiscal measures. **Budget Shortfall and Proposed Actions** The mayor addressed a $27 million shortfall in the budget. His remarks included discussion of proposed layoffs and health care cost reforms as part of the city's response to the financial challenge. **Fiscal Approach** Mayor Gray emphasized a commitment to fiscal responsibility and stated that the proposed measures would be implemented without new taxes. He framed the city's approach by comparing government operations to business practices, indicating an intention to transform government management with an emphasis on restoring financial integrity. ## Contested Items **Budget Cuts to Partner Agencies and Arts Funding** A proposed reduction in funding to partner agencies and arts programming generated significant debate during the meeting. The proposal included a 10% reduction in funding to partner agencies, specifically affecting the Salvation Army and Hope Center, alongside a more substantial 22% cut to LexArts funding. The primary concern centered on the potential impacts of these cuts on essential community services and cultural programming. The reduction to partner agencies like the Salvation Army and Hope Center raised questions about the ability of these organizations to maintain critical services to the community. The arts funding cut was particularly contentious, with the 22% reduction to LexArts drawing focused attention. However, LexArts responded constructively to the proposed cut by agreeing to mitigate its impact through private fundraising efforts, which helped address some of the concerns raised about the severity of the reduction. The item resulted in a split vote, indicating that council members were divided on whether to approve the proposed budget cuts. ## Mayor's Budget Address Mayor Jim Gray presented the FY2012 budget proposal to the council [timestamp: 00:04:00]. The presentation was informational in nature. **Key Points Presented:** The mayor highlighted a $27 million shortfall in the proposed budget. He outlined several priorities for addressing this fiscal challenge: - Fundamental government restructuring - Personnel reductions - Health care cost reforms - A commitment to living within means without implementing new taxes **Mayor's Emphasis:** Mayor Gray stressed three core principles guiding the budget proposal: transparency in the budgeting process, efficiency in government operations, and long-term sustainability of city finances. **Outcome:** The presentation served to inform the council of the budget proposal and the administration's approach to managing the significant shortfall while maintaining fiscal responsibility. --- ## Decisions - **Motion** — passed: Adjournment of the regular meeting --- ## Full transcript The Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Welcome. It's April 12th and it's Budget Day. And ever since the merger of our city and our county, this day has come every year. And we have the mayor present our budget and then the council does its work through the rest of the year. So it's my pleasure today to introduce our mayor, Jim Gray. Oh, Lordy. Oh, Lordy. Thank you all. A hundred days into this, that's no longer ordinary or expected for sure. First things first, thank you, Vice Mayor, and thanks to all of you, all the members of the council, for not only today, but for all the work that you do on an everyday basis. And thanks to members of the audience who are here today and to our community for tuning in today. Today is the day to face facts. Our city has serious financial problems. Problems that are hard to fix. Problems that are painful to fix. Problems we were convinced a year ago would have disappeared by now because the economy would have recovered by now. But it hasn't. A year ago, we were presented with a budget that relied on one-time revenue to balance that budget. That budget envisioned a multi-million dollar withdrawal from the Rainy Day Fund and selling major assets at what amounts to fire sale prices. We started this year, we started earlier this calendar year with a $9 million hole in this year's budget. So Finance and Administration Commissioner Jane Driscoll, who's here today, and really a great team that I've had the chance to work together now just for about 100 days, 100 days today exactly. Director of Revenue Bill O'Meara and Director of Budgeting Ryan Barrow. They've been whittling down with that gap, And I think we all appreciate the leadership they provided on this year's budget and on the plan for next year that I'm presenting today. The economic meltdown that hit three years ago is now affecting national, state, and local governments more than ever because it's still affecting businesses around the world. And it is still affecting businesses right here at home. Now, Lexington has largely lived with the illusion that the recession wasn't really all that bad here. You know, we may not be recession-proof, you've heard it, we may not be recession-proof, but we're recession-resistant. But good businessmen and women in our own town knew better. They've already made the cuts that ultimately will strengthen their companies and enable them to come out better on the other side. And we at City Hall can't ignore this reality any longer. Now, I confess I see the city's budget through the lens, through the eyes of a businessman. Like the businesses that have made tough decisions to make cuts with an eye on long-term health, We need a budget that positions our city to come out better and stronger on the other side. The budget I'm proposing today is a blueprint for transforming government. It strips away the rose-colored glasses and exposes our city's financial condition to the bright light of day and deals with it responsibly. A few weeks ago, the Council, we all heard a presentation from UK economist Ken Trosky, who pointed out a very inconvenient truth, that our city is losing jobs in the higher paying professional, management, and real estate sectors, as you can see right here. That's this top line. That presentation confirmed what many already knew, but it was a wake-up call for us. It underscored what I feel is my own top priority as mayor, using what I've learned in almost 40 years in business, and that is to create good jobs. For our citizens, it highlights the need to understand our financial and economic problems and what it's going to take to solve them. This budget is a first step toward that solution. It's a first step toward sustained, responsible management. And no surprise, it was a tough budget to put together. We had to make up a $27 million shortfall. a shortfall. That's 10% of our general fund budget. We were determined to make cuts in a meaningful way, and I thank all the directors who worked on this budget. But we were determined to make them in a meaningful way, so the same thing doesn't happen year after year. This This budget resizes government through fundamental change. And of course, no surprise, it will be a tough budget for the Council to pass. It includes hardships in the form of employee layoffs and funding cuts for important programs. And in making your decisions as council members, you'll need to make tough choices between cutting programs and expenses and laying off more employees. But as the council wrestles with these tough and difficult decisions, I want you to know that I want to hear your ideas. That's what this is about. Passage of this budget, yep, it will take strong leadership and courage and that's what you're all about. Implementation of this budget will require extraordinary management within our government. It's essential to improve our management systems, which ensure the delivery of critical services. So let me talk a little bit now about some specifics in the budget by setting actually the economic stage. We came into office in January at a time when our country was deeply in debt and battling back from years of policies that benefited Wall Street at the expense of Main Street. Federal and state funding that cities had relied upon for years was rapidly drying up. And we took over after three consecutive years of flat or declining city revenue, the longest recessionary period in the history of our merged government here in Lexington. And now, make that four years. We are expecting flat revenue again this year. And that's the chart right here. Those inconvenient bars in red. When faced with this decline, our leadership failed to accept this was more than just waiting for revenue and the economy to rebound, but that government needed fundamental change. Yes, we have made convenient cuts, like reductions in operating funds. Reductions in employee numbers were made through attrition. But the tough management decisions to really right-size government, or to outsource when appropriate, were not made. government's subsidy of the true cost of employee health care was not addressed at all. The city was over budget in its health care account $9.9 million in 2010. This year we project a $12 million loss, and without changes to employee insurance, We project we would be looking at $14 million over budget in 2012. Did any council member know about these enormous cost overruns? I confess, I didn't. Now something else that's driven up our costs are our union contracts. Our negotiations with unions just didn't adequately factor in the long-term financial health of the city. But I don't blame at all the unions for aggressively negotiating. That is their job, doing their job. It's our job to be represented at the bargaining table effectively. And we've also failed to persuade, adequately persuade our unions, our colleagues in our unions, and our state legislators, that we just must adjust pension benefits for future police and fire employees. So just a little information on this. Despite the investment of over $100 million in the last two years, the unfunded liability still adds up to more than $200 million. The rate of growth is not sustainable. Now, we are including bonding in this budget for about $30 million more as we continue to whittle away at this liability. But without permanent changes in the benefits we offer future employees, we will not catch up. Now, I'm talking about public safety a lot today, and it may sound like I don't care enough about public safety. Not. No, I do. You do. We all do. But we've got to fix our financial house so we can continue to improve on our great public safety system. Let me tell you about someone who's here today who represents that great public safety system and its spirit. John Tucker. He's in the back of the room. I ran into John last Sunday morning. He joined our police department in 2006 at the age of 41 after working at Toyota for 13 years. When I asked John how he was doing, whether he still liked the patrol job, even at age 46, he said with a smile, I love it. Still can't believe I get a paycheck for this job. It's like having a front row seat to the best show in America. John's smiling comment makes us all smile and reminds us that public safety, that public service is part challenge and part inspiration with a good dose of humor in the mix. And nowhere is that more true than in public safety. Okay, now what should we learn from the financial management of recent years? Clearly, we're not going to get out of the hole we're in if we keep on digging. Now, you know, I admit I feel like I was hired to make a fresh start and to run government more responsibly, more like a good business, to restore financial responsibility. To do that, we must address the brutal facts of the current reality, distribute the pain proportionately, and rebuild our capacity as a city. So we come out stronger on the other side. Of this great recession, as a great American city, with a quality of life that's a spark plug for economic prosperity, for attracting and creating good jobs. This means we'll have to dig in and tackle complex problems, gang up on them, and overwhelm them with good management. That won't happen overnight. We've got lots of problems. Unlike the budgets we've passed in recent years, this is an opportunity for a responsibly and financially sound budget. It's transparent. It addresses problems. It doesn't hide them. Citizens can take a look at the budget online by the end of the speech today. Go online, lexingtonky.gov. It's a significant step toward becoming a great American city. It includes no new taxes and one fee increase. Of course, there was pressure from everywhere to increase this or that fee. They come up in all shapes and sizes. More taxes or fees would not fix our real financial problems. It would only continue to kick the can down the road. Raising taxes and growing government at the local level while they're shrinking at the state and federal level won't work. And it would severely compromise our competitive position. The one fee increase I've included in this plan is fair and responsible. Today, the city is reimbursed often by insurance when someone calls 911 and is taken to the hospital. But we're not charging or getting reimbursed if the ambulance treats the patient but doesn't take the patient to the hospital. Now, clearly, there are big costs whenever an ambulance is dispatched. So, in my view, the city should be reimbursed fairly. Unlike last year's budget, the 2012 budget, this plan does not depend on one-time sources of revenue to meet recurring costs, like the fire sale of a parking garage or property, or worst of all, withdrawing funds from our already inadequate rainy day fund. Rainy day funds from other cities are shown here as, or on the right, are shown here as a percentage of each city's budget, and it shows that we are far behind in red. Our rainy day fund amounts to just over 5% of our budget, and in my view that's inadequate and arguably dangerous. It's just not financially responsible. My budget plan proposes that we protect the balance of our fund and we restore contributions to it. And by ordinance, these contributions, as all you all know, the council members know, by ordinance, these contributions should be about $50,000 a month. The size of our rainy day fund affects more than just our ability to handle an emergency. And you guys know that too. you know that it can affect the rates we pay to borrow money. This budget takes an honest step toward living within our means by actually addressing the cost of government and restoring financial responsibility. So running government-like a business is reflected throughout this budget. First in personnel. Now, in my business experience, and many of you share the same experience, the most difficult decision I've ever had to make was layoffs. And if it ever gets easy, we've got a problem. Our employees have my respect and appreciation. They make an enormous contribution to our city. Yet government is a service business, and like any service business, most of the cost of our general fund, we estimate some 65% in this budget plan, are in personnel. And it's the chart here on the right, the lower right. By law, we don't have options like mandated furloughs for civil service employees that allow us the flexibility to reduce personnel costs without layoffs. When our cost of doing business isn't competitive, when it is excessive, it's just not in my own DNA to look the other way and ignore it. because it's not financially responsible, it's unsound, and it's a path to a city in decline, not to recovery. It's not what makes a great American city. Our citizens rightly expect that we consider the larger whole, the well-managed, efficient operation of our government, the responsible approach. It sometimes affects the individual, a citizen, an employee. That's regrettably the case today. Today, we are proposing laying off 28 employees who work in four government divisions, communications, building security, parks, and social services. We had to examine where we were overstaffed as compared to other cities. Our Division of Government Communications, for example, is almost twice as large as the same office in Louisville. We had to examine cost savings through outsourcing and staff reductions. For example, here we have proposed outsourcing building security. Now, where there are openings in government that might be appropriate for some of these employees, they will, of course, be considered. Additionally, salaries for the mayor's team will be cut. Commissioners and senior level staff will furlough for two weeks. I will suspend my own salary for six months. Now, there's nothing self-righteous in this. I'm just taking a page from experience like we all do. 31 years ago, when our family business was flat on its back broke, my mother didn't take a salary. She said, when the business is suffering, you've got to suffer along with it. Leadership ought to take the first hit. I propose using the value of my suspended salary for needed additional citywide development funds, half to economic development initiatives and half to LexArts to encourage its fundraising. I'm also proposing that we eliminate 215 unfilled or vacant positions throughout government, thereby ensuring that our workforce remains lean. We are leaving in place a handful of vacancies we view as essential. Now, with these changes, City Hall will have a workforce of 2,835 budgeted jobs, and that's the lowest since 1999. That's right here. While that sounds like big change in city staffing, it won't be the last. As a percentage, consider, for example, that our staffing in Lexington City Hall is today still higher than Louisville's. Louisville has one city employee for every 120 residents. Lexington, one employee for every 104 citizens. That's a 15% higher ratio than Louisville. Now, while there are no layoffs in police or fire, there are no new hires in this plan. I'm asking their leadership and their unions to work together with us. through the collective bargaining process to make a $5.6 million cut in their collective budgets. We've already reduced $3.1 million from these budgets through no unscheduled overtime in fire, no position vacancies, and no fire station brownouts. To sum it up here, through layoffs, elimination of unfilled positions, and other savings, we've reduced annual general fund personnel costs by $11.8 million. The cost of employee health care is also an area we must address, we can't avoid. When I myself first learned last November about the enormity of these costs, I called for hiring a consultant to review the cost of employee health care and propose solutions. The consultants have been hard at work along with our staff since March. Earlier today in my remarks, I mentioned the numbers we're struggling with here, $9.9 million in 2010, $12 million over budget this year, And next year, without any changes to our plans, projections show $14 million over budget. That's the chart right here. That's this year projected, if we don't change $14 million additionally in the whole. This is unsustainable. It's unfair to the community, not responsible. And according to our consultants, in terms of being generous, the city's health insurance plan today falls into the top 1% of plans nationwide. We'll propose a system that is in line with plans offered by other cities and by Kentucky's state government. A plan that offers more insurance options to employees, that offers savings in prescription and primary care. Although the city will continue to pay a portion of health insurance costs for each employee, employees will also be expected to shoulder more of the true cost of health care. Now, today's no time, not the time, to go into the details of these plans, which are still being developed. But in this budget, we estimate we include a projected savings of $3.5 million to the general fund as a beginning point, a first step toward developing a responsible plan. There will be plenty of opportunities over the next several months for council members and employees to ask questions and better understand these options. I've been talking about running government like a business. That means aggressively seeking out efficiencies, continuous improvement. You know, if we keep doing what we've always done, we'll keep getting what we've always got. Through an efficiency review, I'm committed to saving an additional $250,000 as a start, and that's included in this budget. Now, just as we're making cuts within government, we must unfortunately reduce our funding to our partner agencies, agencies throughout the community we depend upon to provide many essential services. Altogether, we've reduced spending with partner agencies by a total of $385,000. That's a 10% reduction. It's been hard to make these reductions, particularly to these agencies like the Salvation Army or the Hope Center. that provide food or shelter and other essentials. As a believer in the power of the arts to enrich our lives and the fabric of our community, I, like many of you, will find it difficult to cut funds the city normally provides to LexArts. LexArts funding has been reduced by 22%, but LexArts has accepted this challenge. They'll be able to cut that reduction to 11% by raising private funds to match it. The funds we set aside in our budget for economic development initiatives, which currently fund operations in Commerce Lexington, have also been reduced by 10%. As we work our way out of this recession and establish ourselves as a great American city, our work in economic development must fire on all cylinders. To attract and develop the good jobs we need, we must have in our community. I've said there's room for improvement in our economic development efforts and results, but I respect and want to encourage our historic relationship with Commerce Lexington to build on it and strengthen it. In another departure from previous budgets, outside of just catching up the funding for police and the fire pension with the $30 million I've already talked about, we are not borrowing additional money for the general fund. We have identified $2.9 million in bond funds that have been borrowed in previous years, but not spent. So I just want to be clear on this, that spending these funds does not increase our debt. I proposed several options, several proposals for a portion of these funds, and these proposals include investing $1 million in our Purchase of Development Rights, our PDR land preservation program. Even though it's half of earlier years' funding, this represents a solid effort. I, like all of you, are committed to this important program and believe we can continue the program and achieve our long-term goals to preserve the Bluegrass brand while adjusting this year to recognize the enormous struggle our current financial condition is presenting. I've also proposed that we invest $60,000 in parks to ensure they are accessible to all citizens. I propose that we use $850,000 to correct necessary life safety issues at the Kentucky Theater, the Phoenix Building, and the police headquarters by improving elevators and fire protection. I've also set aside a million dollars in these funds so the Council can identify its priorities for these very limited dollars. I'm sure you'll want to know that we received a total of $74 million in capital requests for all funds. I'll be happy to share that list with you for your deliberations. I know you'll enjoy those. You may even want to look beyond these requests to projects in your district's neighborhoods, And that's one of the reasons that I felt like it was appropriate to just offer this amount directly to the council. Across government, we're proposing a variety of funding reductions to programs and to administrative and personnel costs, including closing all pools on Mondays and permanently closing two pools, Constitution and Berry Hill. Closing Meadowbrook Golf Course In the case of the pools and Meadowbrook, the attendance numbers for several years have not justified the cost of service. Closing of these facilities has been recommended in previous budgets, as you all know. Of course, there's more to this list, and they are in the budget document. Well, like so many cities across the country, we are dealing with the wreckage of the worst recession in memory. Our issues have been compounded by a government, yes, often ourselves, that has avoided the tough choices for too long. In this plan, we've worked hard to find smart and honest ways to balance the budget and live within our means. Yes, there are lots of ways to balance a budget. But how we do it does matter. Why? Because it's a reflection of our city, of our values and our aspirations, of who we are, who we want to be, and of what we want to be, what we're determined to be, a great American city. With this budget, we're not positioning ourselves just to treat our wounds or tread water. We're doing what great American cities do. We are relentlessly looking for efficiencies, insisting upon good management, imagination, and continuous improvement, building on our strengths, providing the key services that make communities thrive, attracting and growing good jobs, living within our means. We are building a city that can be the envy of the nation, Lexington, a great American city. Finally, I want you to know that just coincidentally, this is our council's 100th day in office. This is my 100th day in office. I thought I'd close with a quick reminder of what those 100 days have been like. Move to the first floor. Snow. Jail and 911. Health care costs. Snow. Pensions. No money. Salt or snow. Health department. No money. Fire department. No money. Civic center and Rupp Arena. Still no money. Wildcats. Sweet 16. Basketball. budget center point no money but some sunshine still no money no money today the sun's come out it's raining a little bit but you know I like all of you we all try our best despite the challenges to enjoy every minute of it I thank all of you for being here today thanks very much to all of you for giving me the opportunity for this address and for sharing this time with me. Thank you all. Thank you. Thank you.