I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry, I'm sorry Thank you. Thank you. Thank you. I'm going to go ahead and put it in the middle of the day. Thank you. Welcome. I'm Vice Mayor Linda Gorton, and it is my distinct honor today to introduce our mayor. Now, I could tell you his favorite color, which is blue, or his favorite food, chocolate. But what I'd like to say is that this is now your second budget address, so you're now an experienced person at this. and nothing evokes more fear or excitement among council members than to hear the mayor's budget address. So, Mayor Gray, we welcome you and appreciate your presenting your budget to the council and to the public. Thank you. Thank you. Thank you, Vice Mayor Gordon. And council members and friends. I often say about this job that even on a bad day, it's a great job. And that's the way that each of our council members feel as well, because they all say it to me routinely. Yes, even on a day when we're presenting the tough and challenging news of a budget, it's a great job because this is such a great city. We were, of course, reminded of that just last week when our team won the national championship, confirming the gold standard for college basketball. Today, yeah, there we go. Today, I'm outlining our budget plan for next year. This plan provides steps to claiming Lexington's gold standard, to hanging our city's banner. Just like the newest banner hanging from the giant structural joists of Rupp Arena proclaims UK as the NCAA champion 2012, our city's banners proclaim Lexington as the next great American city. We all know the Big Blue Nation demands the gold standard from its coach and from its players. Fans are uncompromising and unforgiving. And getting to the gold standard, achieving excellence, requires sacrifice, dreaming big, careful planning, and passionate execution. Our citizens demand the gold standard from us. They're city leaders. And each of you council members knows that they can be just as uncompromising and unforgiving. For good reasons, citizens expect economic opportunity that's wrapped around a high quality of life, a safe city, a rich arts and cultural tapestry, a vibrant urban core, and neighborhoods that preserve our extraordinary rural landscape, the bluegrass heritage. our citizens expect us to preserve our history and use it to leverage our future to become the city imagined by henry clay and our founders not just a hamlet or a town or a village but a great american city creating that great american city often requires sacrifice as many have made and And it requires that we think big, we start small, we move swiftly. And that we plan well, inclusively, as a team, as we work to implement and execute flawlessly every step of the way. So here's our budget plan. It represents the steps we're taking to build our great city, the investments we're making, many at the recommendation of council members. And it focuses on the administration's top three goals. Create jobs, the environment for jobs. Run government efficiently, and build a great American city. This budget includes cost reductions and organizational efficiencies expected of an institution living within its means, plans to build on our strengths and successes, and adequate provisions for the challenges ahead. budget from the family checkbook to the payroll of the biggest company begins with a revenue projection. What do we have to spend? We've got some good news here. For the first time in several years, we're expecting revenues to grow. Now, I said good news, not great news. Our revenue growth is based on a consensus forecast involving respected University of Kentucky Economists, headed by Dr. Kenneth Trosky, and with our Director of Budget and Revenue, Ryan Barrow and Bill O'Meara. This year we expect growth of 3 percent in employee withholding and 4 percent in net profits. As you can see from the chart on my far left, An improvement over recent years is predicted. But we're not out of the woods. There's a long ways yet to go. While we may be seeing the beginnings, the bare beginnings of economic recovery, our revenue growth is offset by increases in many recurring costs. So we will need to continue to be conservative and demand accountability for every dollar spent. Jane Driscoll, our Commissioner of Finance, and members of our finance team are doing just that, closely reviewing spending year-round with city divisions at the ground level, a first for our city and a big improvement in financial management. But the modest growth we predict in revenue, the emphasis we're putting on good management, good financial management, and the structural balance and efficiency in last year's budget will allow us to make some targeted investments this year, and that is a very big deal. Last year, we exposed our city's difficult financial condition to the bright light of day, and we dealt with it responsibly. We knew we needed a budget that positioned our city to come out better and stronger on the other side of the recession, that made progress toward a real balance to our city's finances. So, last year, we kept borrowing to a minimum and reallocated existing bond dollars to new needs. And we're doing the same thing this year. Last year, we did not raise taxes, and we're not raising taxes this year. We are proposing only an increase in the franchise fee, a plan proposed to Council earlier in the year to allow us to support our neighborhoods by shoring up our streetlight deficit instead of cutting streetlights or other services. And most importantly, last year the Council showed leadership and the courage to make some tough choices that allowed us to save $8.3 million in employee health insurance, eliminate over 200 vacant positions and achieve $3 million in savings through union contracts and fire and corrections in the first year alone. I want to thank employees across government, particularly our civil servants and those in fire and corrections, who sacrificed and supported our city in its need to reduce costs and live within our means. We have some employees who have gone years now without a real raise, while seeing health care costs rise and numbers shrink. And while for many it hasn't been easy, these employees understand shared sacrifice. But, yet, even in these lean times, public safety has been our top priority. What is the evidence of this? Over the ten years since 2002, nine out of every ten dollars of the city's increased revenues have gone to public safety. $63.5 million of $70 million. Clearly, insisting upon financial discipline and pushing for reasonable union contracts is essential in supporting public safety. Public safety today accounts for 55% of the general fund budget I'm proposing today. A full 10% more, or almost $30 million more, than it was 10 years ago. This budget includes two new police classes and two new fire classes, adding to the classes already underway. While there is some funding for new positions, our focus is on keeping pace with retirements and attrition, which results in a measurable increase in the number of officers on the street. And remember, in addition to the money we spend on active duty public safety needs, since 2009, $232.5 million has been put into the police and fire pension to shore it up. And that includes the funding I'm proposing for next year. For some perspective, $232.5 million is equivalent to almost a year's general fund revenue, 80%. That confirms top priority for public service, for public safety. As we continue to work toward a long-term solution for the pension, we are taking the fiscally responsible approach, the financially responsible approach. we are increasing the amount of cash we are using, plus the bonds. Our administration and the Council and our local pension task force, led by Tim Kelly and Gene Vance, are anxious to work with our Lexington State Legislative Delegation to address this major financial crisis. It grows worse each year as efforts to reach solutions stall, But by working together, I am hopeful. I want to recognize and thank the leadership of our firefighters and corrections officers for showing the kind of leadership of our Final Four team, the champions. Leadership that arises from shared sacrifice all across America and right here in Lexington. These difficult economic times created the opportunity for sharing and contributing, for sacrificing. Thank you. Now a word about the economy. We have reasons to be optimistic, but cautiously so, about the strength of this recovery. The jobs report on Friday came with a message. Don't get ahead of yourself. The country's employers added a disappointing 120,000 jobs in March, about half the net gains posted in each of the preceding three months. Economists suggest employers remain cautious about hiring as they digest the impact of rising gas prices, especially on consumers, and they face uncertainty about health care and the economy in Europe. Our city's general fund budget is directly tied to our city's economy. It's pretty simple. When employment goes up, so do our revenues. When employment goes down, so do our revenues. So even though our unemployment has come down to 7.1%, finding and hanging on to a good job remains a challenge in Lexington just like in the rest of the nation. And that's illustrated by the chart at my far right. The slow improvement in job growth nationwide is a clear reminder of the importance of creating an atmosphere that helps Lexington attract and retain good jobs. As you can see from the orange line on the chart at my right, right here, we are moving in the right direction. But there's still unfinished business. Our primary focus over the past year has been on jobs. Lexington's unemployment peaked in June 2009 at 8.7 percent. That's almost three times its low point of 3 percent. By January of this year, we'd made progress, a 7.1 percent unemployment rate. Working with Commerce Lexington and the University of Kentucky, we've created over 1,000 new jobs, and it includes three headquarters operations, Florida Tile, Tempur-Pedic, and A&W Brands. We're looking, too, at job creation over the long term through our partnership with Louisville, Mayor Greg Fisher. Our BEAM project is working with the Brookings Institution and our state's leaders to position Central Kentucky as a world-class advanced manufacturing and technology center, a galvanizing force for jobs and investment. Now, despite these successes, we all know a lot of people who still need jobs or better jobs, and that demands improved investment in economic development. Lexington's economic development budget is just over $800,000 a year. Compare it to Louisville's at almost $3 million a year. We've made progress with our modest staff, but we need more resources. So we'll continue to expand our focus on economic development within the mayor's office and working with Commerce Lexington. So how about some good news? Well, this morning, 21C, a big deal. Or as Council Member Steve Kaye put it, a game changer. Tom Blues, fantastic. Chuck Ellinger, that's awesome. Council Member Bill Farmer. Farmer's jewelry may just need an outpost down there. One hundred years ago this month, April 1912, the Fayette National Bank announced plans for the tallest building in the south outside of Louisville to be designed by McKim, Mead, and White, perhaps the leading architects in the world at the turn of the 20th century. with buildings in their portfolio like the Pennsylvania Station and the Brooklyn Museum in New York and the Boston Public Library. For preservationists, this is a win. For the downtown and historic neighborhoods, it's a win. For those who value our bluegrass brand and recognize that preserving the rural landscape and creating a world-class urban business center, this is a win. for creating jobs, not just through the 150 jobs at 21C itself, but through the power of the 21C brand, a brand that announces to the nation, Lexington is a great American city. This is a home run. It's all about connecting the dots. Steve Jobs, in his now famous Stanford University graduation speech in 2005, said, you can't connect the dots looking forward. You can only connect them looking backwards. You have to trust that the dots will somehow connect in your future. You have to trust in something, your gut, destiny, life, whatever. This approach has never let me down and has made all the difference in my life. Going forward requires courage, risk, and imagination, audacity, determination, often dogged determination. Now, connecting the dots, looking back, as a city, we set the stage for 21C by taking risks, making public investments, investments in our downtown, new streetscapes, for example, and private sector investments like the Fifth Third Pavilion at Cheapside. Private investments, too, like the Rupp District Task Force and the extraordinary plan that's emerged from it. And not to forget investments in the purchase of development rights program that's preserved the rural countryside that represents our brand to the nation and the world. Going forward, what does 21C represent? Well, as Council Member Kaye said, it's a game changer. It stimulates and activates. Even across the street, CenterPoint's developer, Dudley Webb, said just yesterday, it's a great project that lifts our spirits. It's a giant tide that raises all boats. Can't be said better. 21C is moving into a downtown where outstanding architecture and excellence in urban planning are already having an enormous impact. The exciting plans announced earlier this year by the Rupp Arena Arts and Entertainment District Task Force, Brent Rice and Master Planner Gary Bates convinced Governor Beshear to call the district one of the top economic development projects in the state and to include it in his budget. Fortunately, the Senate and the House agreed, and many thanks to Majority Floor Leader Rocky Adkins, who is with us today. Rocky, thank you, sir. I'd also like to thank Speaker of the House Greg Stumbo, House Majority Caucus Chair Bob Danman, House Appropriations and Revenue Chair Rick Rand, Senate President David Williams, and Senate Minority Floor Leader R.J. Palmer. And thanks, too, for the support from our local delegation. Today I'm asking you to allocate $1.25 million, $1,250,000 in existing bond proceeds to leverage the state dollars we've been offered. If anyone had questions about the importance and significance of investing in RUP to bring it up to the gold standard, they were answered by the economic activity surrounding the NCAA championship. The economic impact of the Final Four in New Orleans was $135 million. With the sea of blue that overtook the Superdome, imagine how much of that total must have come from U.K. fans. We've really only begun to grasp the potential of the Rupp District to create economic potential for our city. Many of you know from your business and professional experience that it's all about playing to your strengths, leveraging competitive advantage. With this investment, we link the historic tradition and legacy of our city with that of the University of Kentucky Wildcats basketball brand. It makes all the business sense in the world. It is all about building a great American city. We have a unique asset. Fans are crazy about it. It's the anchor of a vibrant downtown. Now I want to stop for just a minute and speak to the council members. Many of you have been on the council since the revitalized downtown was first imagined, some 5, 10, 15 years ago. Like retiring council members Blues and Crosby and Martin and McCord, You have been the architects of this plan. So I'd like to offer, as just a modest little gift of commemoration, on 2012's newly announced projects, this little photograph that includes the images of the Fayette Bank and of the Rupp District and of the Arena, and it is entitled Lexington 1912-2012, A Century of Building a Great American City. And these will be with Stephanie when the council meeting starts. So thank you all very much. All right. Thank you, Council Member Farmer. these projects clearly illustrate the importance of design excellence. And in this budget, I'm asking you to support the work of Council Member Chair Tom Blues, Diane Lawless, Ed Lane, Julian Beard, and Vice Mayor Gordon, and the Downtown Design Task Force to develop design excellence guidelines for our city. I'm also asking you to support this commitment to design excellence through the University of Kentucky's design center that's proposed for a new location on 3rd Street in the East End. Now, admittedly, that's a lot of conversation about our downtown. But most of the investments I'm proposing today are citywide and neighborhood broad. Public safety demands that we improve our emergency operations center. And this year, Commissioner Mason and I are proposing an investment of $800,000. We will be leveraging federal dollars and reusing a city building for this facility. Now this investment compares to asking for more than $40 million for a new building a few years ago, an approach that council backed away from, and several of you will remember that plan. Now again, 800,000 versus 40 million. This is all about one common goal, to run government efficiently. We expect this building will house the Division of Emergency Management, Lex Call, and 911. We will find efficiencies by centralizing these services. Despite the slow economic recovery and the many needs we must balance, we are including a 2% raise for non-union employees in the budget. It's been three years since these employees received a raise, and that was 1% in 2009. Employees who are paid less than the city's median salary will receive a 2.5 percent raise. I won't be taking a raise myself. My chief of staff, commissioners, and others at the commissioner level, and the CAO, won't get a raise. Lead from the front, we're not out of the woods yet. On another employee matter, the supplement for employee health care will remain in place in the budget through this year. Now let's talk about senior citizens. Work is progressing on a new Senior Citizens Center plan. And thanks so much to so many who are helping us get this project moving, including Vice Mayor Gorton, Commissioners Mills, and Hamilton, as well as members of our Senior Service Commission. The Senior Citizens Center is a major priority. To protect our farms, I've allocated a million dollars of existing bond proceeds to continue our purchase of development rights program, again, leveraging federal investment. For a second year in a row, we are investing $600,000 in our rainy day fund. And we continue to invest in infrastructure. As Council members heard earlier today from Commissioner Hamilton, transferring our parking garages to the Lexington Parking Authority will allow for proper repair, maintenance, and management of our garage system. This budget includes funds to pay for employee parking, which will be reinvested in our garages. Our jail requires capital maintenance as well. We listen to employees and to our new director, Rodney Ballard. This budget includes funding for improvements, for example, in the jail's kitchen. Other than pensions, the only debt in our budget is a short-term note focused on life safety, basic maintenance, repairs, and ADA compliance. Requests from council members have also been included. Now let me say that twice. Requests from council members have also been included. $3.9 million, almost $4 million in funds for paving across their districts in downtown and in the neighborhoods and in rural areas. To improve our parks, we have included $388,000 for parks improvement funding. We will be working with council, administration, and the community on parks reprogramming and improvements. Council members Stennett and Myers have committed to fund private sector matching support for their projects. And that's a great model. $200,000 for our corridors, as requested by Councilmember Henson and Councilmember Blues, focused on improving and beautifying the city's main arteries, the approach to the city and to our precious neighborhoods. Councilmembers Ford and Beard worked with Commissioner Mills to design a collaborative new system for allocating funds to social service partner agencies that is more performance-based and less subjective. Now, in closing, I'd like to throw out some thanks, especially to Jane Driscoll and to her team, Bill and Ryan and Melissa, for pulling together this budget. I'd also like to thank my own staff and commissioners. You guys are great. I don't say it often enough. And I also want to thank all of our directors and employees throughout the city. Employees like John Tucker, who I can't help but quote again this year. John joined our police division six years ago after working at Toyota. He, like so many others, loves his job, and he often says, I still can't believe I get a paycheck for this job. It's a front row seat on the best show in America. And thanks, too, to employees like the late Jerry Boyd, a weekend and night security guard. Jerry passed away on March 23rd, a little over two weeks ago. Jerry was a bright, shining light that everyone knew as just salt of the earth, with a big and generous spirit, always looking at the bright side, but knowing life's ups and downs. The tough and the difficult side of life as well. Whenever I'd see him, he'd look at me and say, Well now, Mayor, things will be all right. Keep smiling. It's all good. It's all good. What a spirit. I promised Jerry's mother, Catherine, and his stepdaughter, Stephanie Cunningham, who works with us here in the city in planning department, I promised them that I'd mention Jerry. And why? Because Jerry's spirit represents all that is good and uplifting and inspiring about Lexington, about this great American city. Thank you all very, very much for being with us today. Thank you. Thank you all very much, and I think now we proceed with the council meeting.