# Council Budget & Finance Committee - March 20, 2012 > Auto-transcribed civic record · March 20, 2012 - **Permalink**: https://meetings.lexingtonky.news/meeting/2440 - **Source video**: https://lfucg.granicus.com/player/clip/2440?view_id=14&redirect=true - **Date**: 2012-03-20 - **Last revised**: July 17, 2026 - **Length**: 10,344 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 Budget & Finance Committee met on March 20, 2012, at 1:00 p.m., presided over by the Chair. The committee addressed five agenda items during the session, including reports on the monthly budget, hotel/motel tax considerations, and fiscal year 2013 budget priorities. Two motions were voted on during the meeting, and three members of the public provided comments. Of the five items discussed, two were approved—the FY 13 Budget Priorities and Items Referred to Committee—while three items, including the Monthly Budget Report, Hotel/Motel Tax discussion, and CAFR Timetable, were presented for informational purposes. ## Attendance The following individuals were present at the meeting on March 20, 2012: * Stinnett * Lane * Farmer * Beard * Gordon * Driscoll * Browder * Schoninger * Barberte * Ryan * Bill * Phyllis No absences or late arrivals were recorded. ## Votes and Decisions **Motion to Pass Budget Priorities Ranking** [timestamp: 00:48:09] Vice Mayor Gordon moved to formally pass along the ranking of budget priorities from the joint budget workshop to the administration. Mr. Farmer seconded the motion. The motion passed by voice vote with no opposition. All members present voted in favor: Stinnett, Lane, Farmer, Beard, and Gordon. **Motion to Adjourn** [timestamp: 01:08:55] The Chair moved to adjourn the meeting. Mr. Farmer seconded the motion. The motion passed by voice vote with no opposition. All members present voted in favor: Stinnett, Lane, Farmer, Beard, and Gordon. ## Budget and Financial Actions The meeting addressed funding allocations related to tourism and hospitality revenue for Lexington-Fayette Urban County Government. **Lexington Convention and Visitors Bureau Appropriation** The Lexington Convention and Visitors Bureau received an appropriation of $3.5 to $4 million for operations. **Hotel-Motel Tax Revenue** Hotel-motel tax revenue for fiscal year 2012 totaled $7.5 million, allocated to Lexington-Fayette Urban County Government. ## Public Comment Three speakers addressed the council during the public comment period. **Mr. Lane** [timestamp: 00:13:29] raised concerns about the impact of mild weather on franchise fees. He noted that reduced utility usage due to warm temperatures has lowered revenue and asked whether a better reading on franchise fees would be available in the next month or two. **Mr. Stinnett** [timestamp: 00:43:18] requested clarification on the legal ability to implement a 1% PDR tax via voter referendum. He asked for a synopsis of the process should the council wish to pursue this option for the hotel-motel tax. **Mr. Beard** [timestamp: 01:05:50] questioned whether offering a completion bonus to the audit firm could incentivize earlier delivery of the CAFR. He noted that such practices are common in construction and suggested this approach could be considered for future contracts. ## Contested Items **Timing of CAFR Submission** A heated discussion arose regarding the timing of the Comprehensive Annual Financial Report (CAFR) submission. Council members expressed significant concern over the late delivery of the CAFR, with some noting that delays have persisted since the implementation of PeopleSoft. The administration defended the extended timeline, attributing the delays to increased accounting standards and audit complexity. However, the administration acknowledged the need for improvement in meeting submission deadlines going forward. ## Monthly Budget Report The committee reviewed the February 2012 monthly budget report during this agenda item. [timestamp: 00:02:00] **Key Presenters and Participants** Bill, Ryan, and Jane Driskell led the discussion on the monthly budget findings. **Report Highlights** The February 2012 budget report identified timing differences in several key revenue sources, including withholdings, net profits, insurance, and franchise fees. After adjusting for these timing variations, the report showed a year-to-date surplus of 0.8%. However, personnel expenses were noted as running slightly over budget. **Key Discussion Points** A significant emphasis of the discussion was the importance of analyzing quarterly trends rather than relying solely on monthly data for forecasting purposes. This approach was highlighted as more reliable for understanding the budget's overall trajectory and making accurate projections. **Outcome** This agenda item was presented as informational, providing the committee with an overview of the current budget status and financial trends without requiring a formal decision or action at this time. ## Hotel/Motel Tax [timestamp: 00:25:13] The committee discussed the legal authority governing the use of transient room tax revenues, which consist of two components: a 4% tax dedicated to the Lexington Convention and Visitors Bureau (LCVB) and a 2% tax allocated for the convention center. **Key Presentations and Findings** The law department confirmed the legal parameters for using these tax revenues. Funds from the 4% tax can be used for tourism-related facilities, provided the LCVB consents to such use. The committee also learned that implementing an additional 1% Prepared Destination Resort (PDR) tax would require approval through a voter referendum. The LCVB president, identified as one of the key speakers, provided information on the bureau's funding and operations during the discussion. **Speakers** David Barberte and Jim Browder were the primary speakers on this agenda item. **Outcome** This agenda item was informational in nature, with no formal action taken. The discussion served to clarify the legal framework and restrictions surrounding transient room tax revenues for committee members. ## FY 13 Budget Priorities [timestamp: 00:43:53] The committee reviewed budget priorities that had been ranked during a joint budget workshop. The discussion focused on identifying and formalizing the most critical funding needs for the upcoming fiscal year. **Key Priorities Identified** The ranked priorities from the workshop included pension issues and infrastructure needs, which were identified as the highest priorities for the budget cycle. **Committee Action** Paul Schoninger and Vice Mayor Gordon led the discussion on this agenda item. Following the review of the ranked priorities, a motion was made to formally forward these priorities to the administration for consideration in the upcoming budget process. The motion passed. **Outcome** The committee approved the motion to submit the FY 13 budget priorities—with pension issues and infrastructure needs at the top of the list—to the administration for incorporation into the budget development process. ## CAFR Timetable The committee discussed the timing of the Comprehensive Annual Financial Report (CAFR) submission, addressing concerns about delays in the process. [timestamp: 00:49:14] **Key Participants** The discussion involved Jane Driskell, Vice Mayor Gordon, Mr. Lane, and Mr. Farmer. **Issues Discussed** The administration explained that the audit process has become more complex due to two primary factors: updated accounting standards and the implementation of PeopleSoft, a new financial management system. These changes have contributed to delays in completing the CAFR. The committee expressed concern about the timing of CAFR delivery and emphasized the need for earlier submission. Members indicated that an ideal delivery timeline would be November or December, rather than the current schedule. **Outcome** The discussion was informational in nature. The audit firm was asked to provide a finalized schedule for CAFR completion that would address the committee's concerns about earlier delivery. ## Items Referred to Committee During this agenda item, the committee addressed a motion to remove the hotel-motel tax item from the agenda. The motion was seconded and subsequently passed. [timestamp: 01:08:55] Key participants in this discussion included Mr. Stinnett and Mr. Farmer. No additional items were referred to committee for consideration beyond the hotel-motel tax matter that was removed from the agenda. The outcome of this agenda item was approval of the motion to remove the hotel-motel tax item. --- ## Decisions - **Motion** — passed: Formally pass along the ranking of budget priorities from the joint budget workshop to the administration - **Motion** — passed: Motion to adjourn the meeting --- ## Full transcript Thank you. Thank you. Thank you. The next item is on the agenda. The first one is the monthly budget report, Commissioner. We'll go ahead and start with the financial update. Chair. Does everybody? Mr. Stinnett. I don't think everyone has it because it wasn't in the packet. And was there an issue with not getting it to us by Thursday this month? Yes, I did send a note along with it yesterday apologizing for it not being complete to include in the packet. But I talked to Paul. There are a couple of things going on. We've been in budget hearings. That was part of our reason in terms of being able to review the information in terms of timing. But more importantly, we told you last time as we presented the January numbers that we were anticipating a lot of timing differences in our most significant revenue sources. And that indeed did happen or shows, you'll see in this report, and we just wanted to make sure we understood those in terms of trending the numbers forward. So I did talk to Paul, and he indicated that we would be able to present it to you today, so not to put Paul on the spot, but we did tell him that we were looking into the numbers more extensively. I understand. I just want to be fair across the board. We ask everyone to have their stuff in 72 hours in advance of the meetings on Tuesday. So if we can hold ourselves to our own standard, that would be great, too. But thank you for the explanation. Sure. Commissioner. Well, actually, that was going to be my opening remarks, just, again, apologizing. We did get the information to you as soon as we were able to in terms of obviously wanting to provide you the best information. The, again, we did, when we presented the January numbers, anticipate some pretty significant timing differences. And Bill and Ryan are going to go through those numbers, but I would be remiss to say that as we look month to month and comparing year-to-date numbers on a monthly basis, I think that looking at quarterly trends is a much more significant way to look at your budget numbers when you're talking about doing projections for year-end. Month-to-month revenue forecasts are significantly affected by timing. And when you look at the quarter as a whole, I think it's a much better indication moving forward and being able to forecast from there. So I did just want to say that by way of introduction. I will always, again, caution you as we go through our reports is that we do still have a lot of challenges, significant challenges to address moving forward. And as we've gotten into this budget season and to the budget requests from agencies, departments that we are trying to look at what we're going to be able to do in terms of moving forward. in the mayor's presentation to you. So I'll let Bill talk about revenues and Ryan on the expense side, and then I'll do a summary. Thank you. Welcome, Mr. Mayor. Good afternoon. Following the layout that we have had for many months, the first thing we look at is the unemployment rates. in comparison to the U.S., the state as a whole, the Lexington Metropolitan Service area, and then Fayette County itself. And as you can see, we do have a seasonal increase between December and January, but that happens each December and January, so that can be expected. and again the trend continues that Fayette County at 7.3% in January is less than the regional unemployment rate of 7.9. The United States as a whole of 8.3 and the state of Kentucky at 8.8. We do have February USA unemployment and it was flat. It stayed at 8.3. The rest will be released later. the next side is a three month moving average just kind of takes a little bit of that seasonality bump out of it and then the next comparison of selected economic indicators we just went over the unemployment rates we're tracking the quarterly employment and that next quarter has not been released yet The Fayette County permits issued is trending up over the last two months. The new business license is mixed one month below, same time last year, the next month above, same time last year. We do have year-over-year trends up in home sales, and as anticipated, we also have a trend up in foreclosures with, I guess, the settlements and the stopping of processing now over and that backlog being processed. For the top four revenues, as Commissioner Driscoll talked about, we did anticipate some timing differences looking at the numbers last month, and they did show up in withholdings and insurance. We anticipated those. net profits is somewhat depressed due to a large amount of refunds that were processed last month. And as you can remember, we've talked about the estimated payments as a significant part of our net profit revenues and not knowing if those estimated payments were true reflections of actual profitability or might be overstated. and some of that refund activity occurred last month. Insurance is that timing difference, and franchise fees is a timing difference as well. So if you look at year-to-date, we're at $105.8 million in withholdings to a budget of $104.4. That's a 1.3% over budget. Net profits were at $11.7. The budget is standing at 11.5, so we're ahead of budget about $200,000 or 1.8%. Insurance is $16.9 against a budget of $16.3, a little over half a million or 3.4%. And the franchise fees are sitting at $10. million with a budget of $12.9. That variance of $12.8 is mitigated by a $1.9 million payment that was processed in the first week of March. So to compare to same time last year, we would be under budget $900,000. The actual results are $144.5 million for the four selected revenues against the $145.2 or a half percent below budget. If you compensate for that franchise fee payment, we would be ahead of budget 0.8% year-to-date through February. The next slide is looking, those two slides we're comparing to the current year budget, both the month and year-to-date. This is comparisons to year-to-date actual, same time last year, distilling out any amnesty activity that was in last year's numbers. And so actual withholdings year-over-year is up 2.4. Net profits, 5.5 increase. Insurance is up 3.3. And with that timing difference, franchise fees are behind. But as you can tell from the previous slide, we had incorporated increases in our FY11 budget. And that's the revenue report year-to-date for February. Mr. Stennett, did you have a question? Mr. Stennett? Thank you, Chair. I guess I'm trying to figure out the difference in your amnesty slide and your original slide, why there's a difference in franchise fees. Do we give them amnesty or something? Because why is it lower? I have to say I'm a little confused. If you look at the actual franchise fees, it's $10 million. And on the previous slide, it's $10 million. Okay. Then last month in January, you said franchise fees were budgeted at $9,187,000. I know you don't have that slide in front of you, but I have it from last meeting. And this month, we jumped up to $12,931,000. We budgeted a $3 million bump for the month of February. Is that a timing? No, that's actually reflective that some major franchises are paid quarterly. Others are paid monthly. And that's anticipating those quarterly payments coming in. I'm trying to figure out why February. When do they pay them? January sometime for the year-end quarter? Well, the quarter would end December 31st. The report is then due January 31st. Okay. Postmark 31st received in February. That makes sense. So $3 million per quarter bump? I'd have to look at it, but that's what it reflects, yes. Okay. Thank you, sir. All right. Mr. Lane? Thank you, Mr. Chairman. My question is regarding refunds. Can you tell us how much refunds you've already paid back compared to last year? Do you have any kind of comparative information on that? Yes. Net profit refunds are a little over $2 million so far this year, and that's about $50,000 more than the same period of last year. The significant activity, however, occurred in February. A whole lot of refunds were submitted and processed in February of this year. Okay. But you're only $50,000 difference from the previous year? Okay. And then on the franchise fees, Is it too early to determine the impact of weather on that, or do you still have some indications? Because we've had very mild weather, which would mean gas and electric costs for all the people using utilities in Fayette County will be reduced, and then we get a percentage of that as our franchise fee. So are we hoping for really warm weather now to help make that up? Well, to answer your question, so far this year the weather has been moderate, and it has definitely impacted our franchise fee revenue. And that is one of the explanations of why we are not meeting budget is because of the extremely mild weather. Now, whether we have a very hot spring may mitigate that, or if we have a mild spring, then that shortfall would probably continue through year end. Are you a little disappointed that our economy in Fayette County doesn't seem to be going a little faster growth than it is? I know you estimated these numbers, and you're pretty close to your estimate, but I'm sure having dealt with you guys in the past, you're not. You try to be conservative on the income, and I understand that, but I am a little disappointed that our revenues haven't been increasing as much as I expected, particularly with the significant increase in automotive activity. Well, it's something that, as Commissioner Driscoll said, we tried to kind of parse through this information and try to analyze it. You have to understand that we get lump sum payments, so we try to interpret those from the employers as best we can. And, yes, we had hoped that the acceleration of recovery would be more pronounced. And through the holiday season, we were very hopeful that that would continue. It seems to have kind of slacked off a little bit or mitigated some since the Christmas season. Do you think within the next month or two we would have a better reading on the franchise fees because there's a lagging indicator because they pay after the fact and we might have a better read on that? Well, it will actually be May, 1st of June, before we get that next quarterly payment that will be significant. So franchise fees and net profits are always fourth quarter results. We just don't know until those dollars come in in April and May. Is only one company pay quarterly and the rest pay monthly? You have me on that. but I can go and answer that question afterwards. All right. Thank you. Thank you. Any other questions for Mr. Mayor? Seeing none, thank you. Thank you. Ryan? Rounding out the balance of the revenue accounts, obviously Bill went into detail in the top four. As he said, his crystal ball seems to be working this year. We're within eight-tenths of 1% right on in the large four categories when you adjust for timing. I'd like to draw your attention to the third circle on the screen, the services category. We talk about that every month. The timing variations attributable to the fees and collections from the sheriff, early prepayment, as well as the detention center bed fees as a result of the House bill that passed. We received both of those in the beginning of the year. That was not estimated in the budget, so there is essentially $800,000 higher year-to-date due to timing that we did want to point out to you as well. Transferring over to the expense side of the equation, it's a similar story that we've talked about the last several months on personnel. We had about a $300,000 over budget in February, which is actually a smaller amount of money than we've seen historically, bringing us to about $4.5 million over budget in the personnel category. And again, we've talked at length what are the contributing factors to the over budget in the personnel category. The operating, we have seen trending. We're slightly trending below year-to-date budgeted figures. However, those are appropriated and available to spend, so we do adjust for that timing variance as well. So I think in terms of the picture, we had talked last time roughly about a $600,000 impact. Given the break of the trend and the timing variations panning out in the large four categories that Bill talked about, We're not as strong. We don't do monthly projections, but I did want to equate that from last month to what we said to this month. Is there any questions on the expense side? Mr. Stinnett? Thank you, Chair. Ryan, on the insurance expenses, again, our budget only increased about $900 from last month. Do we pay it once a year, most of our insurance? How are we budgeting that? That is one category that we do tinker with to take the timing variations out on the sheet. Phyllis may be able to shed some additional light. Historically, we've seen large increases at the end of the year when we self-insure. So the actuarial calculations come in that you should have this much in the fund, and then we make that appropriation and transfer it in the fund. But there is some minor expenditures that come throughout the year. In reality, we won't know that category until the end of the year when the actuarial calculations come in on what we need to have in our self-insurance fund for future claims. And is this where health insurance is also paid out? No, this is property and casualty and general insurance and excess insurance that we have with excess carriers. So do we keep the $787 every month until the end of the year and then we adjust it? Is that what you're saying? No, it's booked sporadically, smaller amounts of money throughout the year. I don't know on the accounting side what's the result. The big expenditure comes in the end of the fiscal year when the books are closed, and we receive that actuarial study. Yeah, that's what I'm trying to figure out how we're going to avoid that big paycheck if we have one sometimes at the end of the year and account for it. Because obviously, if we come in even, we're going to be in the hole if that doesn't pan out. So as long as you're tracking it, I'm comfortable. The other issue is on debt service. You're saying we're tracking almost even, but this council, we approved a $30 million bond at a $250,000 a month debt service payment starting January 1, a total of $1.5 million, but we haven't bonded that yet. So how come we're not reflecting in debt service a surplus of $500,000 when January and February's payment hasn't come out because we haven't bonded it? I'm sorry, are you talking about the pension bonds? Yes. Okay, the pension bonds. What other bond did we put in the budget? Was there another one? But that's $1.5 million that we obviously had a lot of discussion on during the budget process. Beginning January 1, if we didn't bond it, obviously there are savings there, so it should be reflected in that budget. The budget assumed the debt service payment at the end of the year, and I think that still will hold true. We've put together, I think Council Member Beard sat in on the committee, we put together a finance committee, procured bond, council procured FAA, and we're going to start that process here soon. We'll still have that debt service payment. This is projected this fiscal year. and we'll just have a short maturity in the bonds to utilize that funding. So originally you said $3 million for a whole year. Now we've changed it to $1.5 million. Now you're saying you're going to use all $1.5 million, regardless of whether we're bonded today or at the end of the year. That's the plan that the budget put into place. Now obviously you can change that course, but that appropriation will be made to service that debt. And tell me how that benefits us through your work on this committee. Why would we still want to pay $1.5 million for only four months of debt service in this calendar year? Well, if you want to bond it, essentially you're going to stretch out that payment. So if you have the cash now and it's in the budget, we would make that appropriation. If you elect to not, then you have to pay interest on that $1.5 million that is currently in the budget. It's just do you want to pay interest or not on the $1.5 million? Over 20 years or 10 years or whatever it ends up being. There's an associated cost to that interest. So what is our plan to bond that? Are we waiting on a timing factor? Because rates right now keep dropping in the bond market. So sooner to me is better than waiting. Yes. We had a little bit of a delay in confirming the services, but actually we're starting on that work right now. And hopefully we'll reap the benefits of the depressed capital markets. So on debt service alone, we don't budget it on a month-to-month basis on everything. some payments you structure different times a year? Because I see it's changed about $8 million from last month to this month. Yeah, we have large debt service payments in January. We actually make the monthly budget to affect when debt service payments are due. So it would jump substantially from January to February because we have large outlays of cash for debt-to-service debt in January. So for the pension bond, for budget purposes, you didn't put it in there until June? Exactly, yes. So in June, we'll see a $1.5 million bump in our debt service just for that bond? As projected now, yes. Okay. Because I think we were all under the impression you do it, split it up, equal months, you know, six-month bond, get $250,000 a month. It would be another way to do it. And why we don't do it, I'm not sure why would we wait until the end of the year to budget it. Most of my clients did one-twelfth principal, one-sixth interest. We actually pay when the debt service is due here. Right. So we should issue January 1 that way $250 is due for the first payment, first month, or however we structure it. But I still think that there's a surplus in that account right now because we haven't bonded it based on our original plan. And I'll just leave it up to you all to bring it to us when you're ready. Thank you. Thank you. Thank you. Thank you, Mr. Lane. Thank you, Mr. Chair. Could you go back to page 8 on the revenue, please? Okay. My question had to do with intergovernmental, and it shows that our variance here is about $640,000. Since we control intergovernmental, I guess that's intergovernmental money we control, is there something going on there that we need to know about, or is that intergovernmental from some outside governmental agency? I believe that's internal. I would have to look at the roll-up of those various accounts. We don't do a hard close every month, so there would be some ebb and flow associated with timing. It's grants. Grants, sorry. That is grants. So that's grant money coming that we haven't received yet, is what you're saying? Okay. Thank you. Thank you. Any other questions? I see none. Mr. Burroughs? Commissioner, do you want to go over our challenges? Our challenges remain the same. I just did, again, want to highlight that as to be responsible in terms of always putting to you what continue to be our challenges. So there wasn't any additional new items, just the continuation of, obviously, we still have a lot of long-term issues to deal with as we finish this year and move forward into future years. So I just wanted to like to know if you all have any additional questions regarding this month's report. I see none. We'll move on to item number two, the hotel-motel tax. Thank you. Mr. Stinnett, you put this one in. Would you like to start? Yeah, I think it was a good opportunity for the council to become educated. There's been a lot of talk in the last several months about what taxes we're charging and where our surpluses are, what our ability is to raise additional revenues. if there is a need out there in the future. So this was one of the taxes. There's a couple other ones I'm going to be bringing forward. But Mr. Barber in our law department has formulated an opinion, which is in everyone's packet. And if you can walk us through it, David, for two minutes, kind of give us the overview of where the tax is currently going, what we're charging, and what our options are with that tax. Sure. It'll be pretty short, just like in the memo. You have two different types of transient room taxes that you're allowed to assess by law. We are assessing both of them at the maximum amount. The first one goes to the Tourist and Convention Commission, which in Lexington is the Lexington Convention and Visitors Bureau. That's a 4% tax. I've laid out in the memo the statutory language and the limitations. That's primarily, I believe, currently used to fund them directly. I don't know how often we have used that, for instance, to fund specific facilities, but there would be the ability to fund facilities out of that as well. I deferred a bill on how much the amount was. I think you may have put that in the packet last month maybe. And then in addition to that, we charge specifically for, as a convention center tax, in order to defray the operating costs of the current RUP structure, we assess an additional 2% tax, which is the legal maximum as well. And what was our tax revenue from both of those? That's 6%? 6% and do we have the amount bill? It's in our packet but it's not on the screen for the public. $7.5 million. That's for both of them, Bill? That's for both of them. Okay. And legally, because of the way these taxes work, you have to have the statutory authority to do it. There are other jurisdictions in Kentucky that have additional taxing authority. There are jurisdictions in Kentucky that have restaurant tax authority. We don't have a restaurant tax authority. I believe the Young Center in Louisville is financed like this, plus I think they may have an additional 1% or 2% that they're allowed by law to add on to that. So you would pretty much have to go through the legislative route in Frankfurt in order to increase what you have on the books right now in this area. With the exception of PDR? The PDR one, the complication there is I believe it's tied to having a voter referendum, and we did not do a voter referendum when we adopted PDR. So the question then would be, could you go back and re-adopt PDR through a voter referendum? I think if you did, you would have the legal ability to raise that type of 1% to fund PDR. So the law department's opinion is we can't do a 1% PDR through the hotel-motel tax statute? The PDR wants to tie to a voter referendum, but we didn't do it. Yeah. So I missed that boat. Thank you, Chair. Thank you. Any questions for Mr. Barber? Vice Mayor Gordon. Thank you, David. So the PDR portion of the KRS, so the voter referendum, did it have to be done at the time? That's what we'd have to go back and look at. I know factually we did not do it that way. The question would be, could you do it now? And we've never looked at that specific issue. Okay. But I don't, unless there's something specifically that said you couldn't, we could probably re-adopt it in that type of manner, and that would probably be okay to do it that way. You mean re-adopt? Go through a PDR process that's been adopted through voter referendum, and if you did, and I think there's another, I'm trying to remember what it was, But I think in addition to that tax, there may also be an additional voter referendum type financing mechanism for the PDR, which we also don't utilize because we didn't go through the voter referendum process. If memory serves, I think it's like the one you did for LexTran. I think there may be a standalone ad valorem tax statute for PDR if you go through a voter referendum process that would allow you to finance it through an extra ad valorem tax on your real property. So it might still be a possibility as far as the mechanics are. I suspect that they probably are. If you all would like to have us look at that, that would be appropriate. And I guess that was discussed by the PDR committee back at the time. I went back and did some digging. I could not exactly piece together exactly why we went that route. But at the time we were doing it, some of this stuff was on the books, and I don't know whether we had other. I think we had some other funding that was made available to us. at that point in time, either through the state or the federal government. And I don't know if they did not want to go through the process of doing the voter referendum because obviously you may have a different outcome if you do that. But I think the money was there to do it, I think, was one of the driving forces in going ahead and setting it up without the voter referendum. Okay. And then, Mr. Chair, are we holding off on the numbers, questions, the amounts? I was just curious on page, I guess it's 10 of the packet. Correct. If anyone knows what calendar year, calendar years 07 and 08 were bigger years than 09 and 11. And I wondered, we know that the World Equestrian Games were in 2010, but does anyone have history to know why 2007 and 2008 were bigger revenues? Downturn in the economy, I would have to say. It's about 2008 is when the economy turned and less people were. No other reason. Okay, thank you very much. Mr. Lane. Yeah, my question was, if we wanted to finance some type of a downtown development, could we allocate like 2% or 3% of the hotel tax that comes in for that application, assuming that we had paid off the debt on the convention center? the statute for the 4% tax specifically the 2% is specific to the current project down there or probably a like project the 4% specifically allows a portion of the money as determined by you all but it has to be upon the advice and consent of the LCVB may be used to finance the cost of acquisition construction, operation, or maintenance of facilities, as long as those are tied to the promotion of tourism or convention business. And I think that's a very broad definition. So as long as the LCVB is on board with it, you all could use a portion of that 4% to do some sort of facility funding, I think. Well, I think the Convention and Business Bureau does a very good job, and I'm not recommending that we cut their budget. But on the other hand, no, the reason I ask is I was under the understanding that maybe in Louisville, in order to do the financing for the Yums Center, that the Convention and Visitors Bureau agreed to give up a percent so that 3 percent of the rate. Do you have any information on that, Mr. Browder? Mr. Browder, if you would come to the microphone, please, and give your name and your address. I'm Jim Browder, President of Lexington Convention Visitors Bureau. And I don't know the exact situation in Louisville, but we currently do give money out of our 4% towards the Convention Center. Right now, if you were looking at the percentages, it's a 4-2 split. It actually is closer to a 3-3 split. Last year, the Convention Visitors Bureau gave $948,000 to the Convention Center for operating costs. And in addition, we spent another $228,000 in Convention Development Fund. So you have a full 3-3 split right now. That money does start declining as the bond continues to decline next year. In addition to the 3-3 split, the Convention Visitors Bureau, 65% of our direct sales efforts go to citywide conventions at the convention center. We also handle all the trade show and travel related to citywide visits. So we absorb all those costs as well. So there's more than 50 percent of the CVB budget, or the total 6 percent, actually goes towards the current project. And we are in discussions right now with our commission how to support the matching funds from the governor. So there's an ongoing support relationship that exists today. That's good. Well, I understand I'm very impressed you have those numbers available so quickly. He's got a good job on that. Would you like to just take one second and comment on your move to your new facilities? I think it might be an interest here. Well, we're fortunate that my predecessor, David Lord, had only extended the lease on our current building by one year so that anybody that came in, whether it was me or somebody else, had the opportunity to look and see whether or not we should move or stay. and quite frankly staying in the current location was a primary consideration at the time. The value that we saw in a relocation and the relocation we're discussing happened last October I believe when the DeVosa Bar left Victorian Square and that street front space directly across from Triangle Park opened up a pretty big opportunity for us. We currently see 10,000 people a year at our existing space in the visitor center. In the new location, and I'm using some of the statistics that we got from the Lexington Art League and some of the things when they've done some research, we anticipate that we'll probably be able to see 40,000 people over the course of time. The big opportunity that we have with the 10,000 is that a lot of times they're already in town and on vacation. They're in their cars, and quite frankly, we're sending them to Shaker Village and out of town, whereas we can actually take more of a sales mode when we get into the Victorian Square location by connecting directly with the business travelers and the conventioneers and hopefully enticing them to come back with their families and make a second trip out of it. So we see it as a huge, huge opportunity for us. We did look at the possibility of putting our offices directly into Victorian Square, and because of the age of the building and the restrictions, it just wasn't feasible financially for us to try and put offices there. So we worked out a situation up the street with the financial center to go in there for the offices. So we still have that four- to five-minute walking distance where we can give support to the center. And it's not really unusual for the offices to be separate from a visitor center in most locations. But we think it's really going to be a good quality move for us. Okay. Thank you very much. Thank you. Thank you. Mr. Stinnett. Yeah, Mr. Browder, before you leave, while you're here, if you could just take 30 seconds to give the public kind of an idea of what you spend that $3.5 to $4 million on each year. Does it fund 100% of your operation? Does it fund employees, marketing? Just kind of give us a nutshell for people watching. I don't want to get the numbers too far off base, but our vice president of finance is here as well. They don't have to be exact, but you say roughly half. Yeah, I don't have the exact percentage, but of course we have 24 employees in the building. A few of them are part-time, but a full 20 of them are full-time employees. It is broken into a marketing department which focuses on tourism-related marketing and a group sales department which focuses on convention business. So our responsibility from a group standpoint is to send leads directly to the hotels that are anywhere from 10 to 250 rooms per night and allow them to try and book business into their hotels. Another component of it is citywide component, which we try to book business directly through the convention center on conventions that use multiple properties. From a marketing standpoint, we work not only within Fayette County, but we also work within the region as well. Lexington is a wonderful city, but the addition of some of the resources around us really make it a phenomenal destination. So we do a lot of advertising and marketing to try and bring people specifically the drive market. 85% of our visitors actually drive. So we focus heavily on the interstate corridors and the surrounding states to try and get people to visit the community. There's a – I refer to the beauty of what we do is that we bring in non-voting taxpayers. We don't have to pick up their trash. We just take their money and they leave. Well, when we see other states on our airways, cabbage our own people to get them there. So it's good to hear we're bringing – trying to get people here too. And so do we fund 100% of your budget through this tax? Is this what funds 100% of your operation? Yes, sir. Okay. And then who collects this for you? We collect it. City collects it. And then we give it to you. And do we charge you a fee to do that? I believe it's a small fee, yes. We charge? The answer is yes. But I don't know. 1%? 1%? Of the 4% they get? No, no, no. Of the net? Of the total number. Okay. Well, there's some room to help you then, Maybe. Thank you for answering. I think the public sometimes doesn't understand everything that your group does. I know you do a remarkable job and welcome, and we're glad to see you here two weeks in a row. Well, thank you. We have a good team. Don't leave yet. I think we have more questions. Mr. Beard. Thank you, Chair. You mentioned driving and that a lot of the people, a large majority of the people, are driving to your location. Do you feel at all challenged about the fact that you're short on parking? In terms of the visitor to downtown? Yeah. Quite frankly, again, I'm new to the area. I moved here in June, and I haven't found parking to be a big challenge. I'm talking about specifically to come to your facility. Oh, to the visitor center? Yeah. Not at this point. We're working, obviously, with the parking commission to see how we can manage the situation with the new visitor center. In terms of our associates, we will absorb the cost and work with them on full payment of their parking. But the visitors themselves, what we were looking for in terms of the parking situation is to see if we can get more short-term payment parking right in front of the new visitor center, something that might be 15 or 20 minutes so that we can reroute the visitors to the parking garages. But we didn't want it to be two hours because then people will park on the meters and we can't get the visitors to the center. So we were trying to find a balance in there somewhere. It's been very comfortable to be able to pull up into your... It has been, but there are days we can't park in there because by the time the Chamber of Commerce has a meeting and then we have a meeting and then the Veterans Center has a meeting, we're having just as much difficulty sometimes finding free parking as we are anything else. So, but, yeah, in the case of parking going forward, it's all about the visitors to us. Yeah, fine. Thank you. Thank you, Chair. Thank you. Mr. Lane. Thank you. I have one more quick question for you. You volunteered to get up here, so. Not a problem. No, my question is, what do you consider maybe the three or four top attractions that we have in our community that make people want to drive in from the region to come visit us? What are the attractions that we have? It actually doesn't matter what I think. We've done enough studies on it to know that the actual surroundings and the beauty of the landscape is the number one appeal. The most visited attraction is the Kentucky Horse Park, and obviously Keeneland ranks quite highly in there as well. But more and more, and moving up quickly, is the culture of bourbon. It's gotten extremely popular. We do partner directly with, right now, seven counties between here and Louisville to promote bourbon country as a brand. And we all work collectively and get together once a month and decide how we're going to keep managing that. And it's been a very, very good cooperative effort. So we struggle a little bit because we understand the popularity of bourbon, but at the same time, from a visitor's experience, we want to be family-oriented, so you have to try and keep the two a little bit separate because you've got different demographics. But we can't overlook the popularity of it right now. I don't know if you saw the USA Today article. It was, I believe, yesterday came up, and it shows that it's getting as popular, more popular than vineyard tours. That's all I've got. Thank you so much for coming down. Thank you very much, Mr. Browner. Any further comment, Mr. Stinnett, on this one? What would you like to do with this issue? Okay. We'll make a motion at the end of the committee. I would ask, Mr. Breyer, can you send us an email if anyone else on council wanted to do, and it comes up in the report on a voter referendum for PDR, what that would entail, and how either council or the public would have to bring it forward? Can you send us a synopsis since that would be the only way to get both types of voter referendums? Yes. Okay, sure. Please. Just so everyone has the clear options that if one day we want to have in our minutes, we can understand. Sounds good. Thank you. The third issue is the fiscal year 13 budget priorities that Council Member Henson put in. And she wasn't available to be here, but I think Mr. Schoeniger is going to talk on this issue. This is going to be very short, I believe, Council Member. Thank you. Back at your budget retreat back in January, one of the exercises that you folks went through was prioritizing what your needs were. and the first thing that there are 15 council members and one mayor and a couple of these things there are more than 15 or 16 people voting so conceivably commissioners voted as well but I don't think it changed the outcomes but it's clear that the pension issue was your highest priority followed by infrastructure needs and then down the line were commitments to city parks and activity based accounting but the latter two were very low-ranked compared to the first two. And I guess what we need to know from this committee is how we want to progress with this. We have the budget hearings that are going on right now, and I guess, Commissioner, if you could, while we're talking about this, if you could give us an update on the budget hearings, because these are kind of dovetailed together in how we want to proceed with the priorities, because we're getting into the process. I think the mayor will be presenting his budget on the 10th of April. Is that correct? That is correct. We are a little more than halfway through in terms of the number of departments that we've had budget hearings, but the largest portion of the budget is towards the end of this week, which is all the public safety agencies. So we are proceeding well. I think getting clarifying information that the agencies have provided us. We have been asking them about any significant changes that are happening between the current year, existing year, and what they see for the next year. We've asked them to highlight that for us so we can make sure that that is considered. And then we've been going through understanding if there was to be a reduction, what would the impact, the implications of those would be on the agency, and also talking through any capital requests that the agency may have provided. So I will tell you personnel has been a much easier process this year. Just appreciate all the help and work that we've gotten from support from you and from HR in terms of working through getting better information to the agencies because it's a huge use of our human capital with Ryan and his folks on putting that model together for personnel. So we feel good about where we are. The crunch time comes really next week in terms of the gap that we may or may not be facing and how we make a balanced budget for the mayor to present to you. Vice Mayor Gordon. As to the question of what to do with this, it seems to me that one thing we might consider as a committee is to somehow formally pass along, whether by motion or memo or document, something, the ranking priorities, particularly the first three. And I know that it's nothing new and different that the administration doesn't know about, but it would put it on the record for the council in terms of a follow-up to the budget retreat. So often I think things don't get put on the record so they get forgotten, And maybe that's one thing that we could do with it is those top three priorities send on to the administration as a follow-up to the council's priorities in the budget. Would you like to make that in a form of a motion? Yes. I move that we forward on to the administration the ranking of budget priorities from the joint budget workshop, number one being resolution of pension issues and retiree benefits, number two being infrastructure needs such as roads, garages, sidewalks, and number three being commitment to our city parks. We have a motion and a second. Mr. Farmer, any discussion on this? Seeing none, all those in favor say aye. Aye. All those opposed, that passes. And Vice Mayor Gordon? And if I might say, if we could somehow pass it on by Thursday night, since we're going on two weeks of recess, and then when we get back, we will have the budget address. I could bring it up today in the work session. Yes, that would be excellent. Thank you, Mr. Chair. Okay, will do. And anything else on this? Seeing none, Commissioner, could you talk about the CAFR timetable, please? And that might also be Mr. Schoeniger, too. I don't know if you want to start. I think there were some questions. There were some questions raised at your last month's committee meeting about the timing of the CAFR. I think in the packet last time there was the portion of the charter that indicated it should be completed within four months of the close of the year. I've also included the request for proposal that the administration developed. They called for the CAFR, Jane, correct if I'm wrong, to be completed by November 3rd, and as well as the cover memo from the audit team that indicated they would meet that deadline. Commissioner, do you have any comment? And also, the vice mayor had requested a timing of receipt of annual financial audits, and you also included that. Yeah, I think everyone should have that, but I went back through, I think, the year 1992 and looked at audit. when when the audit was the audit and at least a preliminary fund balance was brought to council it was it's been in the november december january sometimes february time range time frame of march on occasion and one year was much later than that but uh generally in the it's it's generally in the november december time frame uh until people soft whatever if there's a connection between people PeopleSoft and the timing of the audit, that's conceivable because since PeopleSoft, it's always been January or later. I'm not drawing a dotted line between those two events. Do I have any questions? Commissioner, would you like to give a comment to that, please? Yes, I would. We did our own research, Council Member. We did go back to 1982, actually, and looked at the dates. I think we have some differences, but I think, as Mr. Schonecker indicated, his were when at least the ending fund balance was brought, maybe presented to the Council, as opposed to when the annual financial report was actually submitted, and those are what we actually did research on when the reports were completed, and those dates are still November and December with, again, a couple of exceptions. And I would like to say that we have been working with Dean Dorton, Allen, and Ford on a schedule for next year, anticipating that it would be complete. completed timely, you know, I think it just helps for everyone's understanding. The changes from back in the day in the 80s when you got a report in October, since that time there have been significant changes in the accounting standards. There have been 50-plus standards that have been implemented. You have all heard of the Sarbanes-Oxley Acts and the internal control changes. These aren't intended to be excuses by any means, but I do want you to have an appreciation for the annual financial report is more complicated in terms of meeting standards in financial reporting requirements that have changed since those 80s. So we intend to, I guess maybe working, and I spoke with the vice mayor, in terms of interpreting the literal interpretation of the language in the charter, which says close of the year, how that's interpreted. I think that you indicated that the end of November-December timetable would meet that requirement as opposed to the end of a fiscal year. We don't close the books on June 30. It takes some time to get all of that, those invoices, et cetera, processed. So I did want to get some clarification that we were comfortable with the end of November, December timeframe and clarification, fund balance versus the annual financial report, because I think those were some questions that remained outstanding. Thank you. We're having some difficulty with the granicus, so we're going to have to raise hands. Vice Mayor Gordon, Mr. Lane, Mr. Farmer, and Vice Mayor Gordon. Thank you, Mr. Chair. And, Commissioner, I want to thank you. I guess I have a couple of questions. Well, first thing is it would, I think, need to be worked through the Council how that interpretation of close of fiscal year is. my kind of the bottom line for me is it's much more helpful for the council those years we were able to get it in november or december that's much better timing for the future budget and the current budget than when we get it in march that's the first thing And the second thing is, I know you said that 50-plus standards had been implemented, and that is since which fiscal year? 1988. But I think there are two significant ones. The component units, the threshold of what needed to be included changed, as well as the post-employment benefits for pension, which is why when I arrived and that study had not been completed, that was significant. And it really had nothing to do with it. It was kind of out of our control at that point, and that delayed the first report that should have been completed prior to me getting here. Right. Okay. Well, I appreciate that you continue to work on it, that accounting continues to work, and budgeting and finance. I mean, I know it's all there have been changes. I guess in Paul's memo, he says until fiscal year 03, the audit was never submitted later than January. And then if you look at 03 through 06, there's that block. But after 06, everything's January or after. And that concerns me a great deal. So whatever we can do to move things up enough that we can meet the end of November kind of time frame, I think would be a good thing for the entire government. Okay. And the second year will probably be easier and better in that regard, would you say? Yes, we can provide you the dates, too, because there are some significant variances. Now, these are dates when the audit was submitted to the Budget and Finance Committee. For example, this current CAFR that we just got in March, February, was dated, I think, January, but we didn't get it then. So I think Paul's dates are when it comes to budget and finance. Is that correct? My only point is they couldn't have brought you the final version. They may have brought you a projected ending fund balance, but the completed audit wasn't done. I guess that's where I need clarity because you couldn't have gotten the final document because the document dates are later, and they fall in the December time frame pretty consistently. So that's why I'm asking to make sure I understand and get some clarity from you. Thank you so much. Thank you. Vice Chair Lane. Thank you, Mr. Chair. Well, I too would like to see us get the financial information a lot sooner. But at the same time, I think I want to say a word on behalf of our finance department is that I think some of the delays that we've had going back over the last five or six years are directly related to the implementation of our PeopleSoft accounting system, which I believe was not done very well in the beginning. And so I think trying to evaluate the data and compile it for the purposes of the CAFER is more complicated. And then as far as this last year, we have a new auditor, and it's been my experience when you have a new auditor. or they have to do even more due diligence to analyze the starting balances in different accounts before they carry those forward to do the New Year's accounting. But I hope that we will do a lot better because with our finances being as tight as they are, the sooner we get the information, the better off we're going to be. Thank you. Thank you. Mr. Farmer. Thank you, Mr. Chair. Commissioner, thank you for spending some time with us on this. Having served previously on the council and returning to service, the term CAFR was not in common parlance. How old of a term is that or how recognized of a document is that over the last seven to ten years versus the last three or four years? The comprehensive annual financial report has been for the last number of years. We did annual statements. I've forgotten the exact title. I've gone back in the library and looked at them. They were not comprehensive annual financial statements, which basically meant you complied with a format and you included certain pieces of information that weren't included prior to that. But that really hasn't affected the most recent years, as opposed to maybe changes in the requirements over time. So we've headed to a comprehensive annual financial report, But accounting standards have changed over that same period of time. So there's different levels of diligence involved than before, and it takes longer to do it now? Well, again, I just picked some more significant ones, like the post-employment benefit is significant throughout the country for most governments. And it is more detailed actuarial analysis that are included in the financial statements. That's just one example. And I'm sure we're all appreciative of that level of detail, and we all want to be very responsible with our finances, our fiduciary responsibilities. I think that there's just a hair of a disconnect between what we would commonly think of as four months after the end of the fiscal year and what you think of as four months after, I guess, you're finished posting or something. Again, please don't view this as any excuse or being defensive about this issue. I don't get that in your tone of voice at all. It's more about if we are talking about end of November, early December, I think we are all, our goal is all the same. Okay. I do think that when it says the close of the fiscal year, as opposed to the end of a fiscal year, in financial terms, that means something different to us because we go through a process. agencies are purchasing up through a period of time in order to get invoices, et cetera, in order to post them to a general ledger, takes longer than June 30th. So that all has to happen, obviously, prior to us being able to complete our financial statements. However, we have let the agencies know, too, we have a more aggressive closing schedule than we've ever had. So we're making those changes. Another example in a change in the standards is the threshold of which a component unit, those component units that the Vice Mayor talks about, that changed. So we had to include more inclusive about who is included in our financial statements. So that obviously is additional information that's included in the CAFR. So it gets, you know, I was just trying to convey to you that, one, first and foremost, the auditors know our expectation. Good. The agencies know our expectation. At the last department head meeting and in subsequent communication with them, we've been talking about how deadlines are moving back so they aren't able to process things. They need to be planning for their purchases throughout a fiscal year and not have things happen at the end of the year as sometimes happens. I mean, I hear you saying we're all trying to arrive, I think, at the same place at the same time. I would agree with the vice mayor and other speakers. We have found great usefulness in the past of having the opportunity to make some decisions or know where we stand before the end of the calendar year or the end of the council year, if you will, or some very aggressive assumptions about where we will be when we come back in January. I think separate from that, I understand that we're performing things to a different level than we've done before, and I know that the outcome is something that is probably more important to you than anyone else in this room, and you want it to be right, and we do too. But I think that in this upcoming iteration, you're going to close the gap between when we're looking for it and when we got it this year. And some of that has to do with we'll be using the same firm for the second year in a row now, correct? That's correct. And as I said, they're very clear on what my expectations are. Well, I think after last meeting, they got some firsthand knowledge here because there was more than one question asked of the gentleman to be on point and on time. And I'm not trying to press that button with that firm. I'm just trying to make sure that at the end of this year, we'll have made our second very tough budget in a row. And I don't want either to push the responsibility off to the audit firm. It is a point that, and he stated that as they do a first audit, that that takes longer. But, you know, it is our responsibility, and I don't shy away from that responsibility. I think you've done a fine job of changing that vendor, which I think is something that, again, within the parlance of what you do, it was time for a change. You don't use the same people as often as anyone used to for that type of reporting, that type of responsibility. So it should go faster this year. I just think that more than any other time of service for any of us, each of these dollars is very important, and we want to know about them as quickly as we can because we have so many dire needs that we need to express with them. So I think that's why there's so many questions about this over previous years, is that we're having to do a whole lot more with a whole lot less, and it's just very tough. So I appreciate the background and the knowledge you're bringing to the job you're doing for us. Thank you. Thank you. Thank you, Chair. Thank you. I think the rank is working. Mr. Beard had a question. Mr. Beard? Yes, Commissioner, is it appropriate, I guess, to give the accounting firm a completion bonus or dangle a completion bonus out there? In fact, I've been sitting here now for almost six years, and it's been a topic of conversation for at least six years. You know, they can, well, a penalty two would work. I mean, it's the left hand and the right hand. But it's done in the construction industry. It's done a lot of other places, and why not there? You know, they can put more manpower on a job if they wish to do so. And a completion bonus might get that moving down the road a little bit for us. Have you ever heard of that happening? I've not heard of it, but why not, I guess is the question. I have not, personally, in this world. You're right, it's mostly on construction projects. We did put out a bid for this. We have reviewed and accepted those responses. Can I ask purchasing if there are options like that for the future? I see no reason other than some type of feeling that it might be insulting to them. But, again, they're in the business of making money just like everybody else is. and that might spur things on a little faster for us. But again, we have worked out a schedule with them that we feel good about moving forward into this year that would complete it timely. And, you know, when we have a new vendor, which we have regularly at some point, we could adjust the dates to take into consideration the work that they have to do, front-end work that they have to do. But I think it would be at least worth floating by them and seeing if their eyes might light up about it, to tell you the truth. Thank you. Thank you. Thank you, Chair. Vice Mayor Gordon. I have one final question. When you have that schedule, we won't be offering a new RFP, is that correct, since we're using them? We have the opportunity to. We do have the opportunity to. To enter into that we've been working with Dean Dorton. Okay. When your schedule is finalized, can you just simply let the council members know what that schedule is? We can send you a draft. I mean, it ebbs and flows, but we'll give you the general outline. Okay. All right. Thank you. Any further questions? Seeing none, we'll move to the last item, the items referred to committee. And I think, Mr. Stenet, you were going to make a motion to remove the hotel-motel tax. Second. We have a motion and a second. Any discussion? All those in favor say aye. Aye. All those opposed? We will remove that. Is there any others on here that somebody would like to make a comment on, make a motion? Seeing none, I'll entertain a motion to adjourn. Second. We have a motion and a second. All those in favor say aye. Aye. All those opposed? We are adjourned. Thank you. Thank you.