# Council Budget and Finance - March 19, 2013 > Auto-transcribed civic record · March 19, 2013 - **Permalink**: https://meetings.lexingtonky.news/meeting/2922 - **Source video**: https://lfucg.granicus.com/player/clip/2922?view_id=14&redirect=true - **Date**: 2013-03-19 - **Last revised**: July 16, 2026 - **Length**: 15,858 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 19, 2013, at 1:00 p.m., with Ellinger presiding. The committee addressed five agenda items during the session, including approval of the Committee Meeting Summary and a motion to temporarily suspend fire equipment from service through brownouts. One motion was voted on during the meeting. The committee heard 13 public comments and received an informational presentation on the Monthly Financial Report. Two items—the Fund Balance Discussion and Items Referred to Committee—were deferred for future consideration. ## Attendance **Present:** Ellinger, Stinnett, Gorton, Kay, Ford, Beard, Farmer, Scutchfield, Mossotti, Henson, O'Mara, Lueker, Barberie, Lane, Mayor Gray, Chief Jackson, Assistant Chief Hoskins, Chief Kiltner, Dr. Kay, and Dr. K. **Absent:** Myers **Late:** None ## Votes and Decisions **Firefighter Recruitment and Overtime Funding** [timestamp: 01:41:56] Council Member Massadi moved to approve $637,530 in overtime and $42,000 in staffing for two firefighter recruit classes to eliminate fire station brownouts by November 2013. The motion passed by voice vote with all council members voting in favor. The following council members voted for the motion: - Council Member Massadi - Council Member Ford - Council Member Rosati - Council Member Gorton - Council Member Kay - Council Member Beard - Council Member Farmer - Council Member Scutchfield - Council Member Mossotti - Council Member Henson - Vice Chair Stinnett - Chair Ellinger No council members voted against the motion, and there were no abstentions. **Conditions and Next Steps** The approval included the following conditions: - A budget amendment will be submitted for second reading on April 11, 2013 - The hiring process will proceed immediately, with a list of 60–71 candidates to be provided on Thursday ## Budget and Financial Actions The meeting included several appropriations and fund transfers totaling approximately $4.7 million for fire department operations and urban services. **Fire Department Appropriations** The Fire Department received three separate appropriations: * **Overtime pay**: $637,530 appropriated to eliminate brownouts in fire department staffing * **Safer Grant staffing**: $42,000 appropriated for staffing 35 firefighter recruits funded by the Safer Grant * **Fiscal year 2014 recruits**: $1.5 million appropriated for funding 30 new firefighter recruits in fiscal year 2014 **Fund Transfer** A $2.5 million amendment was approved to transfer funds from the General Fund to the Urban Services Fund. ## Public Comment [timestamp: 00:01:09] Thirteen members of the public spoke during the comment period, with all remarks focused on the Homelessness Commission Report. **In Support of the Report** Ten speakers expressed support for the Commission's recommendations: - **Harry Richart** spoke in favor of the report, supporting its recommendations for funding and implementation. - **Mark Davis** emphasized the need for a comprehensive funding approach to address homelessness. - **Adam Jones** advocated for funding the Commission's recommendations to improve housing and support services. - **Kate Savage** highlighted the plan's potential to reduce homelessness through targeted interventions. - **Laura Babbage** stressed the importance of immediate action to address the city's homelessness crisis. - **Rachel Childress** called for a sustainable funding model to support housing initiatives. - **Jenny Puccini** emphasized the plan's role in creating long-term solutions for homelessness. - **Mike Scanlon** urged the council to act on the recommendations to improve community well-being. - **Janice James** called for increased investment in affordable housing and prevention programs. - **Mary Heath** highlighted the need for coordinated efforts to reduce homelessness. **In Opposition to the Report** Three speakers opposed the funding proposal: - **Ike Lawrence** argued the recommended funding option was not fiscally responsible. - **John Kemper** expressed concern about budgetary impacts of the proposal. - **Darlene Thomas** stated the funding approach would strain city resources. ## Contested Items The March 19, 2013 meeting included two significant areas of disagreement among council members. **Fund Balance Allocation** Council members debated how to allocate $2 million in available funds, with a central dispute over whether the money should be directed toward an economic development fund or other priorities. The discussion reflected deeper concerns about equity and effectiveness. Some council members questioned whether an economic development fund would benefit the most vulnerable populations, raising concerns that the allocation might not address the needs of those most in need of support. This disagreement resulted in a split vote, indicating that council members were divided on the appropriate use of these funds. **Fire Brownouts** A heated discussion emerged regarding fire station brownouts that had persisted since 2008. Council members expressed frustration over the prolonged duration of these service reductions and raised concerns about the impact on public safety. The discussion also touched on accountability issues related to the extended brownout period. Council members emphasized the urgency of implementing a hiring plan to address the staffing shortages that had necessitated the brownouts, indicating that there was consensus on the need for action, though the discussion itself was contentious in tone. ## Committee Meeting Summary The January 29, 2013 Committee Summary was presented for approval [timestamp: 00:00:00]. Key speakers on this item included Ellinger, Henson, and Beard. The summary was approved unanimously by voice vote. ## Monthly Financial Report Bill O'Mara and Melissa Lueker presented the February 2013 financial report to the board. [timestamp: 00:00:00] **Key Findings** The report highlighted significant revenue and expense variances for the period: - General Fund revenue showed a $1.6 million shortfall - Favorable expense variances totaled $5 million year-to-date - Forecasting indicated a potential $6.4 million revenue shortfall by June 30, 2013 **Outcome** This item was presented for informational purposes only, with no formal action required. ## Fund Balance Discussion The committee engaged in a detailed discussion of the fund balance structure, examining unrestricted, assigned, and unassigned balances. [timestamp: 00:20:56] **Key Presenters and Participants** The discussion involved Farmer, O'Mara, Mayor Gray, Stinnett, Ford, Gorton, and Akers. **Topics Reviewed** The committee reviewed the $3.3 million unassigned fund balance and examined proposed reallocations across three areas: * Economic development: $2 million * Grant match: $1.34 million * Fire overtime: $640,000 **Outcome** The discussion was deferred, with a follow-up workshop proposed for April 2013 to allow for further review and deliberation on the fund balance structure and proposed reallocations. ## Temporarily Suspending Fire Equipment from Service (Brownouts) The Fire Department presented an accelerated hiring plan designed to eliminate brownouts by November 2013. [timestamp: 01:36:40] **Plan Overview** The department's proposal included two recruit classes and $1.08 million in overtime costs to address the temporary suspension of fire equipment from service. **Key Participants** Chief Jackson and Assistant Chief Hoskins presented the plan, while Council Members Massadi, Ford, and Gorton participated in the discussion. **Action Taken** A motion to approve funding passed unanimously. The approved allocation included: - $637,530 in overtime - $42,000 in staffing **Outcome** The proposal was approved. ## Items Referred to Committee [timestamp: 01:47:21] Several items were referred to the committee for future review and consideration. The items discussed included: * Affordable Housing Trust Fund * Homelessness Commission * Financial Efficiency Ordinance * Franchise fee discussions Key speakers Ellinger and Schoeniger participated in the discussion of these referred items. The committee agreed to retain these matters for ongoing review rather than resolving them immediately. **Outcome:** The items were deferred for future committee consideration. --- ## Decisions - **Motion** — passed: Approve $637,530 in overtime and $42,000 in staffing for two firefighter recruit classes to eliminate fire station brownouts by November 2013 --- ## Full transcript I was opposed. That passes. The next item on the agenda is the monthly finance report that was disseminated the last couple minutes. And we have our Commissioner of Finance, Mr. O'Mara. Welcome. Thank you, Chair. This is the monthly financial update through March, and I apologize for my voice. My family is sharing over and over again the bugs that seem to be traveling around our community right now. The first slide is our comparative unemployment rates. And if I may draw your attention to right here at the very end. and an anomaly that happened once before last year where the federal and the state unemployment rates matched. Usually the state of Kentucky's unemployment rate is above the national average, but in January both were 7.9%. Now the federal has come out with February. It's the only one we have more recently, and you can see there was a drop in the federal unemployment from 7.9 to 7.7. As is usual, the Lexington MSA is below both the federal and the state, with Fayette County being lower than that. The MSA for January was 6.8, and Lexington was 6.5. you will see that everything but the Kentucky all increased December over January, and that is not uncommon. If you come back to other places in the presentation, you see that there is a seasonal increase in unemployment from December to January. This is the three-month moving average that kind of shows the trend. And as you can see, we are trending down, but it's not a straight line. There seems to still be bumps in our unemployment. So that, as well as at the federal level, is what we continue to monitor. Next slide is a comparison of selected economic indicators. We've talked about unemployment, so I'd draw your attention to permits issued. And for January and February, we're trending above same period last year. The next category is new business license. and while January we were above the same period last year, we're below for the month of February, so mixed results with the new business license. Home sales are showing strong rebound, as we have heard was going to happen, up almost 100 over the same period in January and February. And even better news on the home front is the drop in foreclosures between January and February, hoping that that is a trend rather than just a one-month statistic. So we'll be watching that closely. Moving on to the four largest revenue sources in the general fund, the employee withholding, the net profit, the insurance, and the franchise fees. Here are the results for the month of February compared to the budget, and we're virtually meeting budget for employee withholdings. We are slightly ahead for the month only for net profits. Insurance is 2.5 compared to 3.5 budget. However, there was a payment in January of 1.8 that was received last year in February, So normalizing will show you that effect at the year-to-date. And then in franchise fees, we have a similar occurrence. We show a positive in franchise fees, but that, again, if you normalize that, there's a $2 million payment that showed up in February of this year that was not received until March of last year. So, again, we always like to look at the year-to-date as a better indicator. For the eight months ending, February of 2013, our employer withholdings are virtually meeting budget. We show the erosion in net profit that has started to be there since last fall. We're at $10.7 million against a budget of $13.2 million. We do show a year-over-year increase in insurance. and then the franchise fees look virtually flat. But again, if you normalize that for that $2 million payment, we would be behind in the budget $2.1 million. So the total for the four largest categories is $150.9 million actual against a budget of $151.96. That would be behind budget by $1 million. If you adjust for the franchise fee payment, we would be $3 million behind budget or 2% behind budget for the top four. Comparing to actual shows that we did budget increases in all of the categories. We are plussing over withholdings, 3.9. We budgeted a 3% increase. Year over year, we're still less than actual compared to net profit. But franchise fees were up, and the actual, again, is franchise fees is distorted by that $2 million payment in the current month. Comparisons of nuisance abatement. I think it was requested to compare to last year, so we've added columns so that you have comparisons for each of the months by each of the categories, 2013 versus 2012. The grand total for this year, year-to-date, is $232,000 compared to $140,000 at the same time last year. So I'll ask Melissa Luker to talk about the total revenue and expenses. Looking at the revenue side, with the exception of the Big Four, which Bill's talked about, the other license and permits. We've got a slight favorable variance there. That's due to bank franchise fees and other license fees. They're trending up right now. Also trending up is ad valorem. And then you'll see a $2 million ahead of budget in services. And that has to do with several different variances. We're housing more federal inmates, so our detention center bed fees are increasing. We increased the copays on the medical, so we've got more revenue coming in for that. And then prisoner fees are tracking, but that's due to a timing issue, so that will wash out. We got a payment earlier this year than we did last year. EMS fees, also a timing thing. We are ahead of budget, but we're still a little under where we were last year. So just some timing issues there with the services and then some where we are seeing increases. The property sale, that's sale of surplus equipment. We've sold quite a bit of vehicles this year, total vehicles, scrap vehicles, and other various pieces of equipment. And if you look down, the other income is where we have another slight variance in the favorable side. That That is just timing of the budget. Bill mentioned the franchise fee, the payment we received in February instead of March. So if you took that $2 million payment, we're basically about $757,000 ahead of budget. So basically we are at budget with revenues. I hit the wrong button. There we go. On the expense side, we've got a favorable variance in personnel. Some of this is due to timing issues. We've got a federal grant match with our Division of Emergency Management of $1.6 million. So we'll see that 5.6 drop by 1.6 by the time the year ends. We've also got variance based on when positions are being filled. There are some vacancies, so the timing difference from when a position becomes vacant to when a position is filled is some reason. Moving on to operating, you'll see we're about 1.7 ahead of budget. We have been favorable in utilities so far to date. We've had great weather. So we're about $500,000 ahead in utilities, favorable in fuel, although we've had a recent spike in the last month. That's about $350,000. And we're also favorable in things like SALT, software maintenance, and grant match. But some of these are timing differences that will come out at the end of the year. The partner agencies, that's just the slight difference is the timing difference on when payments were received last year and when payments are received this year. The insurance, we make that match the budget until the end because that's a timing thing there. And then the operating capital, that's just the timing variance on when things were purchased. Does anyone have any questions on the revenue or expenses? Seeing none, no, ma'am. Okay, I'll give it back to Bill. Thank you, Melissa. So now, because of the time of the year, I would like to add these additional slides. In the process of starting the budget process, we first look at where we think we're going to be at the end of the year. So we met with Professor Bollinger from the Center for Economic and Business Research at UK. We engaged them last year to help us on forecasting as well as this year. And we reviewed several weeks ago, we reviewed the revenues through January as well as month-to-date for February at that time. we have several things that are going on I think when Dr. Bollinger if he comes when we do the mayor's revenue budget review he'll talk about the high level of uncertainty in the nation right now with the economy we have the sequester we have the federal withholding levels went up 2% in January we have a rise in gasoline costs all of those are kind of negative pressures We have the stock market that has been very robust, and we have drops in unemployment. Those are positives. So trying to predict how all this levels out between now and June 30 is our charge. So we do see through statistical analysis that the Lexington market somewhat follows the national market with a little local overlay. And in reviewing the major categories, we are forecasting that we will come in at about $283 million June 30, and that compares to the approved budget for FY13 of $289.4. That would be an erosion in our revenues of about $6.4 million. Bill, can you go back over there? If you go to the page before, or two pages before, and look at the revenues, we're up 2.75. Yes, sir. And then now you're expecting us to be a negative 6.4, so that's almost a $9 million swing in the next four months. Yes, sir. My next slide is going to kind of try to address that if I could. Thank you. All right. One thing I would like to say is this is challenging because there's lots of numbers being presented. I'd like to try to categorize them in your mind if I could. But what we've done through this slide is talk about year to date, what we've seen through eight months. This slide transfers us to talking about where we think we'll be for the full 12 months ending June 30 of this year. So why a change in the forecast, one might ask. Well, I thought you would, so I prepared this slide. So the net profits is the major driver in this. We are already behind over $2 million. This is to the budget as well as below same dollars collected last year. And the difficulty of predicting net profits is the heavy weight of activity that occurs in the fourth quarter of the year. 60% of our total net profit revenue comes in the last four months of the year. 50% of our total net profit revenue comes in the last three months of the year. So we would love to wait before predicting this, but we have to do something at this time. And so the estimated payments and the actual payments are not encouraging at this point. I will be all for when we open the mail April 15th, and there are returns with checks rather than returns with no payment. That will be wonderful. I'll love to be wrong here. And the one thing I will say about the forecast is it's not right as soon as you put it out there because actual always seems to be something different from what you forecast. But at this point in time, this is where we feel we need to be. Franchise fees, we've also talked about that. In the past, we know that there has not been a rate increase. The budget had it in in October, so we've put in that $2.5 million. Below budget is the forecast for franchise fees. The flip side is we have been exceeding the 3% budget growth in employee withholdings. Unfortunately, the last two months are more flat rather than that trend. So we thought we were going to get a trend upward, and now it seems to have flattened out. But we do feel that we'll retain. If we meet budget for the rest of the four months of the year, we should get about an uplift of $600,000. Property tax is trended ahead of budget, so we think we'll get about $300,000 there. And then there's various other categories that would be a positive $200,000 pickup. So that's where the 6.4 came from, going through forecasting, trying to predict the future, trying to predict the economy. One point that I would make I'll make in the next presentation. I've got enough notes on the other one. So how are we going to finish the year? Now, we've talked about a year-end forecast shortfall of about $6.4 million. We currently, through eight months of the year, have a favorable expense variance of $6.6. We know there's going to be some erosion to that $6.6. We talked about a $1.6 grant match. We've talked about whether fuel is going to spike up and eat some of those savings. So we have to build on this expense savings in the last four months of the year in order to have a balanced budget compensating for this predicted change in revenue. So we still think we will stay the course. We will monitor the operating and the personnel dollars and hope that the net profits exceed our new expectations. So what could make this forecast that's made today be different? The national economy? What happens locally? any future expense issues that we have between now and the end of the year, and then, of course, what actual revenue results will be, knowing that the big spike is in those last three months of the year. Thank you. We have some questions. Vice Chair Stinnett. Thank you, Chair. Bill, can we go back to your previous slide? In your February year-to-day expense variance, Does that include the $2.5 million from the fund balance to fund the lack of increase of the franchise fees that was recommended in the budget? No, sir. That is fund reserves, which is my next presentation. Right. So I know you were going to jump there, but the real forecast change if we approve the fund balance from last year, paying the $2.5 million we took from Streetlights in lieu of approving the increase in franchise fees, leaves us at $3.9 million. if you choose to use fund balance. That's right. Or we've got to do something. Well, no. Well, yes, that's one approach. Because the bigger issue in the franchise fees discussion at 3 o'clock is, what about next year? Correct. Because as of June 30th, once again, we have no more money to fund the streetlight maintenance costs that we need. I understand that's a dialogue we're going to have. What I would like to dial back, if you would allow me, is one way is pay it through fund balance. Whatever we're short, pay it through fund balance. Another way is to manage it through expense, and that's what we're hoping to do first before we look to fund balance. That's always your first option. Fund balance would be after that. Well said and well orchestrated because I think that is correct. I just don't want anyone sitting here thinking that our forecast, we're going to end this year negative, because I think you are doing everything you can to not make sure that doesn't happen. That is correct. I'm just showing that there does look like softness in our revenue, which we have to compensate for. Very good. Thank you. Thank you, Chair. Thank you. Any other questions for Mr. O'Mara? Seeing none, does that end your presentation? This one? I can sit down and get back up. Okay. Okay. I see. The next one is questions, and then you have some more slides, it looks like. Well, I do. The next is questions. We gave you so many numbers. Several months ago, you asked to compare to actual. And so I have this as reference, but I thought we had so many numbers flowing that it might get a little confusing. So I put it at the end just as a reference slide. Do you want to just give a brief description of it, what you have here? I really prepared for the fund balance presentation prior to that. I'd be glad to answer questions. We can get back to you if you have any questions. Vice Chair, Stenet has a question. Okay. Council Member Akers. Thank you, Chair. Bill, the water fees that we collect, they're LexServe now. Do those fall under the services category? They do not. This is general fund, and those are in three dedicated funds, landfill, water quality, and Sanitary Sewer Fund. So LexServe is not part of this analysis. Okay, great. Thank you. So that ends that discussion. We'll move on to number three then, the fund balance discussion that Council Member Farmer put in. Council Member Farmer, do you want to start with this, or do you want to go right to Mr. Romare? I think he's prepared a fine part of the program for us. It will raise many questions. Okay, sounds good. Commissioner? Thank you, Chair. Welcome back. Thank you. Glad to be back. This is in response to a discussion of fund balance, and I guess I would like to preface it that any time we talk with rating agencies, they zero in, obsess may be too strong a word, but they put a lot of attention to two things. Fund balance, especially compared to our peers, and we have been criticized that our fund balances in the past have been below our peer group in a AA bond rating. The other thing they look at is to see, do you have a structurally balanced budget? Now, what does that mean? That means recurring revenues are greater than or equal to your expenses, which is what we're trying to accomplish by the end of the year. So those are the two things that are the focus of any rating agency and any financial analysis that we have been a part of. So with that background, these are the slides that were presented in the November Budget and Finance Committee, which went through the fund balances from the 2012 financial statements. The Urban Fund has an unrestricted fund balance of 22.8. Sanitary sewer has a capital reserve of 56.2, and then an unrestricted fund balance of $4.8 million. Before you go on, I think Vice Chair Stinnett had a question on this slide. All right. When we're going through these, can we have the real fund balance, what the total, not unrestricted only, but the total amount is in each fund balance? Because I think we're going to get to a point in this conversation later. There's a difference in meaning of what's unrestricted, what's restricted, what's fund balanced, what's not fund balanced. So I think we all need to be clear what we're operating in. And I know, for instance, the urban fund is $31 million. But I think we need to put that up there and put why there's a difference there for the new council members, especially because you and I have been around a while. We understand what's going on. But I think we need to keep updated about why we're spending some of that money. Well, if you all want to go to the next presentation, I can try to update it. But I did not come prepared for these funds. I focused that conversation on general fund. Okay. Fair enough. but if we could get the real numbers either in an e-mail or something. Okay, I'd be glad to do it that way. Sure. Thank you. Okay. Councilman Farmer, did you want to follow up on this? Sure. So what is the meaning of the term unrestricted? It has not been my choice of words may not be officially correct, but I will use them pledged, promised, set aside for a specific purpose by either the council or the administration? Council or? Well, I'll go through the hierarchy in just a minute on how that occurs. I mean, I would agree to get to the heart of what you're talking about and what Council Member Stenet brought up. We're trying to get the complete picture, not the version that is restricted around. Go ahead. If I could suggest, I think all those discussions will be two slides down when we talk about fund balance, and then we could circle back and get you any reference information that you'd like. Would that be our approach okay? Thank you. Please continue. Okay. The landfill, unrestricted, 11.1. Water quality, 7.2. This was the slide from November. General fund total, which is what you're looking for, 44.3, and that's made up of three designated non-spendable, assigned, and unassigned. And I will go through in my next slides components and based on how they got there. So I look at it as a hierarchy. We have legally required reserves. These are all ordinance-driven. And the first is non-spendable, which are prepaid things that we have already committed to we have to finish paying for. The economic contingency or the rainy day fund is ordinance-driven. It's 18.5. The 27th payroll accrual, which I think happens once over 10 years, 7 years, 10 years, is 4.5. Then we have this energy efficiency reinvestment ordinance, where the monies you save one year are then reserved to be spent the next year. That's .2. So after you take all of those ordinance, legal dictated reserves, you're now at 19.6. Then you go to things that are required by either general accepted accounting principles or government accounting standards. These are things that are required in order to have an accurately prepared financial statement. These are things that our auditors review for reasonableness and actually talk to you when they came and gave their management report about this category. We have $5 million in that contingent liability. Types of things that it's for are litigation, health care fund, refund, reserve, home care match, risk fund, those type of things. So after taking that off, we're now at 14.6. And then you move to what I have used the term prudent financial management. These strengthen your financial management by planning for future needs. It is a best practice. It's where governments try to have either plans for things they know are coming up or try to get onto a term as pay-as-you-go rather than putting everything on a borrowing or a credit card. So you would save on a personal level. You would save for an expense instead of going out and charging it. And the assignments for this year was capital projects reserve of $5.7 million, a fleet replacement reserve of a million. We did, again, planning for future. By the time we were closing the financial statements, It was known that the franchise fees would not be ready by October, and so we reserved $2.5 million to make sure that that funding was covered for one year. Then there is the economic development reserve of $2.2, and after taking those out, you come to the unassigned of $3.3. And I would relate that in my simplistic mind as the balance in your checkbook. If you have a zero balance in your checkbook and you have to pay something before your paycheck comes, it might bounce. So you need to have a balance in your checkbook for cash flow and unexpected expenses. One clarification I would make for everything that I have listed is all uses of fund balance require a budget amendment that go through the budget approval process. So did the mayor want to comment at this time? Excuse me. Sorry. So I wanted to put before you immediate needs and requests that have come to us. We had the fire ladder truck that needed to be replaced. That $750,000 actually was approved by council in December. to come out of that million dollar vehicle reserve fire engine eight has had an accident i understand that it has been totaled so it now needs to be replaced we wanted to put before you for consideration using the other 250 000 in the vehicle reserve along with insurance proceeds to use to replace fire engine number eight the next is police radios i think you know that we've had an ongoing emergency radio plan and the infrastructure was what was being built this year in the budget we anticipated that being finished in the first quarter of 2014 and that the actual purchase of the radios would be a 2014 capital they are ahead of schedule they actually have I think what's called a burn-in period that starts this spring, and so we need police radios to test the system and make sure that it works before releasing the contractor who's put it in place. So this $1.6 million, which we thought would be a 2014 capital expense, has moved up to be in 2013. And then I guess later today there's the request for the council renovation at $45,000. So if these, oh, excuse me, I'm not finished. I'm trying to jump ahead. After this presentation and discussion, there will be the discussion of fire overtime and staffing. And I believe the number that they're going to be presented to you is 640K, so we put that in there. that's the 2013 estimate Mr. Mayor could you go back to the the radios the police radios thank you and give that why that's moved up here I think there was a question on that it's because the infrastructure the towers the bandwidth I'm not sure the proper term he is I'm not As you remember, at the end of 2011, we decided to procure the radio system in a different path. That path was broken into two parts, the system and then the radios. The system that we drew up and developed is one that we're using currently standing towers. We're leasing space on TV and radio towers instead of constructing a $1.5 million tower standalone in a certain part of town to handle the system. So there's less time involved, and that system is already being installed on towers around town. And so we're at the point now that we need to order the radios now. There's about a six-week time. We've already got $1 million built in to the budget for the radios themselves. We need another 1.6 to finish out the order so we can get them all here in time to do the complete system implementation. On a good note, the system and the radios that we're looking at for police is about $7.2 million versus what we had originally estimated of $9.68 because of a couple of things. One is we're using already existing towers. And secondly, Todd Slayton, the purchasing director, opted to use a reverse auction to lock in the prices of the radios themselves. And instead of us using a traditional bid process, that auction dropped the prices per unit dramatically. So we saved quite a bit of money that way. Thank you. Anybody have questions for the commissioner? No. Thank you, Mr. Mayor. Okay, so these were the capital requests that are at our door. There are others, such as the fire training tower, that type of thing, that we felt needed to be considered in the 2014 budget. But the fire overtime presentation after. The other one is we have grant match that needs to be expended that did not make the 2013 budget. The grant match budget and the actual commitment, there is a gap. For the general fund, that's $700,000. So those are the two things that need to be done between now and the end of the year in what I'm calling an operating category. I would say that the guideline that I personally embrace and that I would encourage anytime you're talking about using fund balance, remember that structurally balanced budget focus of recurring revenues are greater than or equal operating expenses. So proper use of fund balance is one-time expenses, non-recurring expenses, capital expenses, those things that do not have an ongoing cost after the use of the fund balance. It's always best to use it for capital because that is a capitalized item, has a life of its own past the time of purchase. operating if they're one-time dollars can be used for fund balance. So if these items would be considered by council, this would be an update on those reserves. The capital project reserve would go from 5.7 to 4.05. The fleet replacement reserve would be used. The streetlight transfer would be held, seeing if it was needed between now and the end of the year. The economic development would be there, and the 1.34 would be used of the unassigned, which would be an unassigned balance of 1.96. Again, all of this requires approval by council through budget amendments. Could you explain the $2 million economic development again? And I see the mayor's here. Is there a list for speakers in the back? Okay. I said, is there a list in the back for speakers? I was thinking, yes, come on in. Give your name and address in three minutes, please. welcome there goodness three minute rule on me already i'll work on it i'll tell you what i'll tell you what y'all mr mayor i assume you were finished um did you were you thank you welcome mayor thank you mr chairman council members thank you all uh i will say just parenthetically it's it's fascinating to sit in the chambers and sort of it's necessary to have a real peripheral vision to take in the full breadth and width and the wisdom of the Council. And Mr. O'Mara, Bill, hearing your first presentation and then your second presentation, it reminds me of how inconvenient you can be with being so straightforward about these numbers. but it's the same way that he is with me, and that's a good thing. Bill has talked about the recommended utilization of fund balance, and he's also mentioned the economic development recommended fund balance reserve. Let me talk a little bit about that. I sort of go back to the journalism's five W's and one H, and I would add a second H to the who, what, where, when, why, how, and add the how much. And what this proposal represents, and noting the asterisk clearly, all uses of fund balance require council approval. What we've recommended here is a fund to incentivize job creation in Lexington through business startups, expansion, and attraction. Basically, job creation. That is a simple two words. This became attractive through conversations that I and others have had. I think I've had conversations with several of you. We can't escape conversations, of course, about economic development. I remember former Council Member Andrew James would say, you know at the end of the day it's really all about creating jobs. For example, former Finance Commissioner Jane Driscoll, Jane recommended this. I had meetings, Jamie Emmons had meetings with David Cohen, who was Philadelphia's Mayor Ed Rendell's Chief of Staff 15 years ago. Today, Cohen is the Chief Operating Officer at Comcast. in Philadelphia. And Cohen is sort of a legendary figure in Philadelphia. He's sort of the indispensable figure there. He shared with us and then recommended to Jane that Philadelphia's City Economic Development Loan Program was the most useful tool in Philadelphia's job creation toolbox, and really it's recovery in the last 15 years. And so that's the what? But the why we propose this, such a program funded annually, would enable us to act quickly and purposefully when opportunities arise, as we were able to do last year when our fund balance enabled the Administration Council to provide some key funding components, for example, for a 21C project. Bingham McCutcheon had inquired and asked about resources. As a government, we were able to leverage private debt because funds were available. But we can't always depend on serendipity or good fortune to seize opportunities. So how, the how, how we might structure the program. The structure might include a short-term loan cycle, perhaps 12 months to seven years, with a published set of guidelines and an application system. The program could take a couple of different shapes. but regardless, it should be funded annually rather than a one-time allocation. This annual amount will depend on all our needs as a government. So developing a framework that protects each of the city's investments, including an objective review of business plans, financing package for proposals, and a projected economic impact study, all of those would be important in this framework. and, in addition, building flexibility for larger signature projects. Now, I'm recognizing this is the beginning of this conversation. I have said in the chairs where you all are, I understand anxiety whenever there's a new proposal, but this is a new proposal, yes, admittedly. How much will we need to get started, and why? So considering the financial results of fiscal year 2012, but also the forecast for 2013 and 2014, after assignments were made for other demands, we settled on the $2 million figure. This was Jane's recommendation. First, this is an initiative we've been looking for as an opportunity to pursue, and in developing this reserve, the goal would be to give this issue the significance it deserves creating jobs, the significance it deserves by applying adequate seed funding to the initiative. Already we have had one promising inquiry which has asked for gap financing. This is just recently, and I've been told, and they were taking a shot in the dark, actually not knowing that a fund might be proposed. Thinking hypothetically again, after we establish the fund and it is promoted, we believe it could become a popular and helpful and competitive tool for creating jobs in our city. Now, in terms of the next steps, as I said, we recognize this is the beginning of a conversation. In terms of where we go from here, there have been some admittedly casual conversations, because this is a council engagement, but there have been some conversations with the Downtown Development Authority simply to gauge, to test interest, to test the likelihood, probability. How often are we getting inquiries? Jeff Fugate is here today. We've had conversations the same, trying to collect data on how often it occurs with inquiries to Commerce Lexington. So we would be then working together with the council. we would be developing some specific recommendations in terms of guidelines and usage. At a time in the near future, we would like to continue this either through a workshop or a budget and finance or economic development committee meeting, whichever the council feels best. All right. So, Chairman, thank you, sir. That has a long list of council members on the list. I don't know if they want to speak with yourself or Mr. Amara, but I'll introduce them. First, Vice Chair. I'm not a know-it-all, so I don't mind asking for help. Okay, certainly. Vice Chair Stenet. Thank you. Mayor, thank you. We always know it's a big topic when you show up to address the council. But we appreciate it. I think you should do it more often because even though we're discussing money today, we discuss a lot of important topics throughout our deliberations of the committee. So thank you for coming. I just want to go back to a couple of other slides. the litigation reserve, the health fund reserve, reserve refund reserve, and the home attribute. We haven't voted on those yet either. So, you know, that also needs to be discussed. Those have not been set in stone. So some of us may disagree with that. Some of us may agree with it. For instance, the health care fund reserve. I mean, that's something we all know that, as Melissa pointed out, we balance a level budget. At the end of the year, we see what our pony up is, basically. Sometimes claims are higher. Sometimes they're lower. And we have never had a lower claim, I don't think. But I think we need to have that discussion, too, at a meeting. I'm not sure if we want to get into every one of those today, Chair, or on all these. But I think we need to flush a lot of these out. Because I think there's some good opportunity here to really get us on financial sound footing going forward. To the Economic Development Fund, you know, I do think it's something needed. I wouldn't disagree with what the mayor commented on. I think there's other tools we as a council have that we haven't explored. One such that I was going to put into budget and finance shortly is the abatement of payroll tax for every new job created for a certain number of years. That's a tool we already can do without spending money, to encourage local businesses to create jobs and foster that by abating the payroll tax, which would help that. So there's a lot of other tools in addition to this that we can also explore. So, Chair, I would think we would need another meeting, a special meeting, to actually dive into all this, because I don't think we're going to get through it all today. And when you say you want a special meeting, you want one in the interim between now and the next budget and finance? I think they need some direction because our next budget and finance is not until June. Because the budget starts in April, we don't have a meeting. But I think the quicker we can get some of these resolved, the better off the direction is going to be and we can move forward. Are you considering one before or after the budget? I would say the day of the budget address. We could do it that morning or that day. Well, I'll entertain a motion if anybody wants to make that. I'll hold on. I'll continue. Yes, certainly. But thank you all for the explanation. I know I spoke to the CAO a couple weeks ago, but the process with fund balance has always been sensitive to the council. And years pass, and I'm not saying I agree with this process, but we were just giving a blank check saying it was $22 million, go spend it. And we all sat in here like it was Christmas in November. Vice mayor remembers, Councilman Farmer, Councilman Ellinger, you remember how that used to work. And I don't think that was a great process either, because what it left us with the hose that we're trying to plug now and identify what our true priorities are and where we should have reserves. And I think we do need some type of reserve system because I don't want to be back where we were three years ago cutting social service agencies again, cutting parks again. I don't think we have any more to cut. So going forward, I appreciate the transparency, and if we could just have a list of what you all would like to do and have this opportunity going forward. This is the way we should do it, not behind closed doors, not just the council. We all need to do it together. Thank you, Mayor. Thank you, Mr. Vice Chairman. And, you know, the challenge that you just acknowledged and the benefits of it, we all know that in the system that we've got, the checks and balances system, sometimes it can be challenging. But I've had these conversations with many of you all where that level of accountability and dialing up expectations is a good thing. That's when we actually engage the debate and the outcomes are often much better than we anticipated at the very beginning. We saw some of that earlier today with the conversation about process and our partner agencies. So, Mr. O'Meara, do you want to add anything right now? Okay. Thank you all very much. Don't go far. You can sit down, but don't go far. There you go. Thank you. If I could make a comment on Vice Chair Stenet's comment about further discussion, absolutely. I tried to list this in hierarchical order. We're ordinance-driven for the first section. The contingent liabilities, the auditors have already signed off on that. So allocating less than that, I don't know, is an appropriate discussion. talking about more is wonderful. Repeat that, what you just said, please. Sure. The auditors have signed off on it. They signed off on our consolidated annual financial statements. One of their reviews is to see if contingent liabilities are adequately covered. That's what part of that $5 million is talking about. So in hierarchy, there's an ordinance. there is GAAP, generally accepted accounting principles, and government accounting standards that have to have adequate contingent liabilities. And I don't disagree with you. All I'm saying is the council hasn't approved that. So I'm a little disturbed that the auditor would be presented that until we've all said that's what we want to do. That's all. I'll leave it at that. None of it is spendable until you allow us. Okay. Mr. Farmer. Thank you, Mr. Chair. And thank you for putting this in. This is a very well-needed discussion. We're going to make the most out of it. I appreciate that. Mayor, thank you for your time today. Was the last line of your presentation, other meeting or committee work on this, that is what you said, isn't it? The very last line of what you were saying was? Let me take a look. I think it mentioned further committee work. Oh, yeah. Yeah, I said whatever the council's preference workshop that we need to explore and examine. All right. I appreciate that. You closed faster than I could listen, and I appreciate it very much. When is the budget address? April 9th. All right. Well, I think kind of in the cut-to-it variety. What time, Mayor? Now, that is a detail. It's 3 o'clock. It's 3 o'clock. It's 3 o'clock at the general. You've got a public safety. It's usually here in the chambers before our work session starts. Well, what if we had this discussion at 11 a.m. that day? Before or after. Well, I don't know. I don't care. Before or after. Well, we have a general government meeting at 11 o'clock. Oh, is it? I don't have it on mine. Sorry. We could do it on April 16th if we wanted a week after that. Well, let's finish our conversation and then we'll roll it. Mayor, thank you. I didn't mean to keep you standing there for that minutia. Mr. O'Mara, then. All right. Thank you, Mayor. At the beginning of your presentation, and I guess I'm just going to ask these kind of for follow-up, all right? Because you referenced structural, whether we structurally balance. Yes, sir. And I would like just to see some examples over the last three or four or five years of where we have or have not structurally balanced, just so I can see how we are doing it in relation to ourselves. Then you mentioned that our peer group and the AA bond rating and what their fund balances have been in relation to ours. I would like to see some of that information, too, because if others are looking at those, I would like to look at those two in terms of that conversation point. Those are the two things you brought up as you began. That's correct, and I can definitely comply with you first. I don't know if Moody's and S&P will share with me their data for your second request, but I'll see what is out there in the public domain. Pick some cities in our peer group, and let's see if we can define what they're. I mean, now I'm not trying to get an encyclopedia there. I'm trying to get a pamphlet. All right. And then to Councilmember Stenet's point about unrestricted versus restricted, I guess that's still you made it clear you were not prepared to make that presentation today. I think when we have our follow-up opportunity, I'd like for you to be prepared to make that presentation. I can do that right now if you'd like. Let's get on down through here because time is ticking on all of us. All right. Then, gosh, how can we have so much, and it seems like so little? I don't know. On the general fund assignments on page, I guess it's page 5 or page 8, I can't tell. You said all of these are ordinance-driven. I believe is what you said. Economic contingency, 27th payroll, and efficiency are all payroll-driven assignments? Is that what I got from you? Ordinance-driven assignments. All ordinance-driven, that's right. Yes, sir. So then, just by way of operation, why would they, for my information, why would they remain in the fund balance rather than being assigned to the budget for which they are a part? It's a generally accepted accounting principles reporting standards to handle it this way. And it was updated, I think, two years ago, given the way we are reporting it. So we're reporting it according to general accepted government accounting standard board standards. It just reminds me of those current commercials out where people can't spend the pink dollars because they're for something else. If I could make another point, if this is the time to make it, they're also required to be done every year. So next year, we will calculate what the economic contingency should be. It's not additive. we will reserve the total amount per the ordinance for the economic contingency. We will calculate what is necessary for the 27th pay period. We won't add to it. We will have to reserve the whole amount. So when we close the books, part of our responsibility is to do reserves from zero and build them up because we're legally required to pay debt service before we pay payroll. We have to comply with all of our requirements and see what's left and then assign them according to this hierarchy. So we start over every year, even though in reality it's iterative, but in the legal requirements of us compiling the financial statements, we assign them all every year over again. It just is to muddy the water more, I guess. All right. And then on the next page, on the general fund assignments, the contingent liabilities, You indicated that there was a sign-off by our reviewing partner in the CAFR about that. They opined that this was sufficient. It could be higher. Okay. That was my point. That's fine. And I would just like to see that opinion and some of the genesis for these figures. It was in their slide presentation at two budget and finance meetings ago. When they came from Louisville and made the presentation, it was one of the slides. I can tell you I would remember that, but I don't. I can print it out and send it to you. That would be fine. And then I know others have questions, and I want to kind of wrap up anyway, but so many of these slides have FY2012 on them. What's the method to that? FY2013 wasn't ready? FY2013 is not finished until June 30. Right. One of the reasons we're having this discussion is to be as current as we can. And I understand we're in the middle. In fact, your previous presentation talked about where we're going to get to at the end of this fiscal year. And I would just think there might be a way to blend those so we see our current picture, which is the point of the questioning. Because I think that we all want to make, as you pointed out here, prudent financial management decisions. and I think we need something that's a sum up to whatever that point is as close as you can get. And I know that's probably something that... I'm sorry to disagree with you, Council Member, but we have seasonality in our cash flows. We have seasonality in our expenses. And so we need to look at one point in time, which is when we officially close our financial statements at June 30. The best example I can give you is we get 80% of our property tax revenue in 60 days. We're cash-starved in the urban service, and then we're cash-rich, and then we spend it down for another 12 months before that infusion. So if you want to look at the month right before those funds come in or the month that they do come in, it's not going to give you a good, clear picture as to the health of the fund. So I would advocate that the June 30 dollars are the proper ones to have this discussion. It's just that they're 2012 dollars. We're in 2013 and we're talking about a discussion where the mayor is going to have made his presentation of the 2014 budget. And it just seems like that's, on the surface of it, it would seem like it's a two-year disconnect. I know that it's not that. It actually all blends one right into the other. Well, your approved financial management conversation is one we'll need to continue, I think. But I appreciate the time that you put into this today, and we'll look forward to, I think, fielding other comments and questions and setting a time for us to gather again. Mr. Chair, thank you. Thank you. Vice Chair Gorton. I'm sorry, Vice Mayor Gorton. Thank you, Mr. Chair. Mayor, thank you for your comments, and I, too, look forward to the workshop or meeting however we choose to structure it. Bill, a couple things. Just a quick point on slide 9, page 12. You mentioned the, it's not on here, but you mentioned the fire training tower. And last year, Council Member Henson, Council Member Myers, and I sat on the public safety link, and we were told that you were looking at private money for the fire training tower. So can you relate that to your comment about the fire training tower expense? I'm sorry, I don't recall that discussion, so my memory is going blank. Does anyone recall that from our link? Commissioner? That was me in links. Very good. Thank you. And we are still evaluating a potential partnership with an outside group. It has taken longer than we wish. The General Assembly had given them some money to do some studies, and it has taken them longer to evaluate the process. They are now doing some site surveys to look at some comparables around the country to see if it would be a fit here in Lexington. And as a matter of fact, Friday afternoon, is that right? Friday afternoon, they're looking at our fire training facility to see how the concept that they have would fit on that property. So it's still in process. It's still alive. Yes, ma'am. Okay, thank you. And then, Mr. O'Meara, I have a lot of questions, but I think I'm going to focus my remaining time on slide 6, page 9 of our packet, the contingent liabilities. and Mr. Farmer started this conversation and I think one of the things that this all highlights is how important it is for council to get information earlier in the CAFR season. And I know Commissioner Driscoll worked really hard on getting information and we were presented the CAFR information I think at our November meeting. if I recall, at the end of November. And I think it just highlights how important it is to get our information early as possible. The home match reserve, have we not ever budgeted that? Is there anybody here who knows? I thought we put those kinds of funds in our budget. That was budgeted from the UDAG funds, but during the presentation of how the UDAG funds were being spent, that $250 was spent, so we said we would use the fund balance to pay for that. So previous to last year, we've never budgeted home match? Last year, I know we budgeted in UDAG funds, and I'm not sure as far as before that, but I know at least last year they were in UDAG funds. Do we have a need every year for a match? I believe we do. I'd have to check with Irene. And I guess the litigation reserve. I know you said that this page is driven by good accounting standards, and I'd like to understand a little bit about why it's not a good idea to budget litigation reserve when we know every year we have litigation. and why we would put it in the fund balance, and that would be a better idea. I guess try to do a clarification. Excuse me. Okay. We have an insurance fund, separate from the general fund, for medical insurance. We also have it for general liability. So that has money going into it from all the funds to fund, yes, Every year we have claims. Every year we have litigation. This is a reserve to supplement that fund if needed. Does that help clarify? And is this a new fund, this new allocation from the fund balance? No, I believe I'm safe to say that as long as I've been here, we have had a litigation reserve in the general fund. Okay, and it's been budgeted? It's been in the assignments of the fund balance, the reserve part. Okay. I guess that is one of the things I would like to understand more about when we have our workshop or our meeting because it seems that there are a lot of items in this presentation that are now listed as fund balance, and I'd like to see the historical presence of those in the budget and where they were in the fund balance as opposed to the budgeted items outside of the fund balance. Does that make sense? It does. I'll see what I can do. And the health fund reserve, is that above and beyond the health fund reserve that we have in the budget? It is beyond the health fund. It's an extra supplement. Yes, just like litigation is to the risk fund, risk insurance fund, we have a health insurance fund, and this is a reserve in addition to 20-some-odd million cost of our health fund. So can you show me or show us these historically, where they have been taken from the fund balance or where they have been in the budget. I'll ask you to do that, yes. Okay. I appreciate it very much. Sure. Thank you. Thank you. Council Member Ford. Thank you, Chair. Oh, I'm sorry. Commissioner, did you want to add something? Well, I just wanted to follow up on the fire training tower. I just wanted to add that that is part of our 2014 discussions or the 2014 budget. That's all. Thank you. Council Member Ford. Thank you, Chair. Bill, thank you for your work. In regards to fund balance, and I've been here, this is my third year, and this is really the first time that we've talked about fund balance. And I know Council Member Sennett talked about years past where fund balance was really discussed in November, following the end of the fiscal year in June. And we're nowhere near a season of Christmas financially as we've been in years past. I understand that. The question I have is, right now, from the perspective of a district council member, and all of our districts have needs, all of our districts have parks, all of our districts have capital developments that we would like to support, what is the number that the council is being asked to decide how to reallocate? And that's what you do with fund balance. You reallocate. What is that number? And secondly, what is the number being proposed to us from the administration that we can afford to dedicate, perhaps, in capital projects and improvements? I'm one of 15, as has been alluded to earlier. I'm interested in being able to respond to some of the requests and ideas that have been presented by constituents. What is that number, if you're at liberty to share? It's not a matter of liberty, Council Member Ford. I need to make sure I'm understanding your question. What is the unassigned fund balance? The unassigned, unassigned, unassigned. What is the free and clear fund balance that has no intentive allocation right now? $3.3 million. Now, we've made a proposal to reallocate your terms, $1.34. That's for the? That was for the? Overtime. Overtime. And the grant match. Yes, sir. What is that grant match for, quickly? Is it various granting opportunities, or is it something that we have in the pike right now? No, it is commitments that need to be paid this year. Grants that we, okay, I understand. Let's go back to the next slide. So the number is $2 million? $2 million if you accept these suggested uses. Side question, and I don't want to have to make the mayor come way back up, But the proposal that the mayor alluded to, where is that coming out of? Is that coming out of the economic development fund balance or economic development fund balance? Okay. So the question right now is really $1.96, roughly $2 million, that's unassigned that we have an opportunity as a council to address how we reallocate that. Is that safe to say? Not for my world, but I understand where you're coming from. I would, again, use the analogy of your checkbook balance, that you don't want to have a zero balance in your checkbook. You need to have a balance in your checkbook. Is 1.96 too much? From my perspective, it is not. From your perspective, you may have a different opinion. Thank you, Bia. Thank you. Thank you. Council Member Akers. Thank you, Chair. I'm probably more confused than I was a few minutes ago, but I'm trying to make sense of this. So can I just ask a couple questions as far as, I mean, if we have $2 million potentially to allocate elsewhere, I'm sure that there are, or 3.3 or 44, you know, whatever the number is, I'm sure that there are lots of departments and divisions within government who would love to have $2 million or whatever the excess is to spend. So I guess it probably is to the mayor. How did we determine that two should go to economic development? And then if we can maybe talk a little bit, and maybe this is for later, but clearly define the differences between how this $2 million will be allocated differently than the money we already give to Commerce Lex and the money that the DDA, I assume, you know, they have a budget, and how those three pieces fit together, and maybe that's for another time. I don't know, but that was just one thought I had. I think the mayor's here. If you keep it to a couple minutes, you might be able to, or Jamie, I think you're. And I just sat in social services as well, and, you know, there were agencies, obviously, that were cut, and so, you know, we could use money over there, and parks, I think, certainly could use an upgrade. And so, you know, thank you. Yes, ma'am. And there's some speculation that the requests for next year are $20 million or so more than we have forecast as revenue. So some things that are not new, we're still having to deal with needs and wants that are perhaps greater than our resources. but that's not really unusual. So your question, Council Member Akers, related to economic development, this was a target number that Commissioner Driscoll recommended. That's for the Economic Development Fund. And I think what was the rest of your question? I think this is the kind of question that we need to have a conversation about, the suggestions, how it relates to Commerce Lexington, how it relates to the needs and the potential. The common theme, I think, that all of us share is creating jobs and creating the opportunity so that we can then use a great brand, a great city, to actually do just that and have some capacity for doing that. I think part of this is to examine what other cities have done, how they have utilized similar resources, and what kind of opportunity that presents for us. And so that's the kind of homework that we'll provide as we go forward, and I ask others to contribute to that. So would these funds, and maybe you don't, I'm sure that you know, would these funds be used for funding like a new business, a new startup, entrepreneurship, or is it more to incentivize, that I think was a word that you used, businesses that are already planning to locate here that Commerce Lex has brought in, and it's just additional incentives that we could provide to secure the deal? I think potentially, hypothetically, guidelines could include all of the above. I suspect that all of us know opportunities that would fit into the profiles that you're mentioning. I know that, for example, there's a startup conference that Awesome Inc. has now sponsored for three years. I'm not using this. I just happen to think of it just now as you ask that question. Well, Boulder has been funding that project now, a similar project, where Awesome Inc. actually used it as a template and spent in more than a million dollars. Awesome Inc. is going to do a similar model for less than $150. They have asked for support and funding. I think it was, you know, but not available. Now, I'm only using that because I happen to just think of that one. But I mentioned in my remarks earlier that a company already established, a startup, I believe employing about 20 people, had asked could the city help, is there opportunity. They actually, this firm, moved to Lexington as a result of state incentives, but they're trying to expand now. They're wanting to expand is what I'm being told. So, again, only using these as examples. And to illustrate that competitor cities have adopted models that have been effective in this respect. Thank you. Yes, ma'am. Thank you. Council Member Massani. I was going to ask you, Mayor, please, if you have a moment to finish, I was going to follow up on what Council Member Aker said. Basically, this seems like a seed money type of it, almost, for potential businesses, job creation. Would we ask for any type of interest payment on that? So we would recoup our basic amount plus interest or whatever on that so we would? I think many of the models do have that as a component of them. Yes, Council Member Massadi. Okay, thank you. Yes, ma'am. And, Commissioner O'Mara, I have one quick question just to follow up. Thank you, Mayor. On what Vice Mayor Gorton was asking about the contingent liabilities that you said the auditor had already basically put in place, was that the number they determined or who determined that number for that $5 million? Was it the audit? LFUCG recommends they just review. And I'm just wondering, how was that number determined, that $5 million? Well, there's different processes depending on which fund you're talking about supporting. So we talked to law about litigation. We talked to HR. So it was a combination of each one of these difference, and then $5 million was the total. I guess I would ask, just as my other fellow council members have inquired, I think we've got the outline here, but I would like A, B, and C, a little bit more detail on each as far as when we talked about unrestricted funds and a little bit more detail as to each one of those funds so we know specifically where the money is being spent. None of it's being spent without bringing it toward council for a budget. Okay. Strike that just so we understand what your proposals are. Okay. And a little bit more definition so I can understand that. That would be helpful. Thank you. Any further questions? Oh, Council Member Ford. Thanks, Chair. I'd be remissed, and I don't mean to seem skeptical at all. And I think we're on the right track. Bill, I paused because I think you are financially kind of leading us on the right track. And I believe we started to the mayor's proposal on economic development. Government, of course, we need to focus on creating jobs. But I have a concern that there may be some other ways to do it that will really impact the folks who really need the most help in having the jobs created. We just spent a great deal of time in our previous committee talking about workforce development, talking about job training and those kind of things. I share concern, not skepticism just yet, but I share concern when our government takes these precious resources and we loan them to people or businesses or entities who it very well could be argued don't need the loan or the resource from us. 21C is an example. I'll just be very honest and say that. But we do it in the sake of creating jobs. And we sit here around this horseshoe and have a tough time of really being able to aggregate at what level are jobs being created. They're really top-heavy for the leadership that comes in, but they're really below living wage for the mass of the numbers that go into that calculation. So I look forward to really studying and working with the administration, if we could, to redefine our services and what we truly intend to do as far as helping folks when it comes to economic development and job creation. Thank you, Mr. Chair. Thank you. Any further questions? I think the mayor, he's working on his ped miles here. Yes. My fuel band is working, Council Member Ellington. I appreciate everybody's comments today and the engagement and the dialogue. And, Council Member Ford, I appreciate what you had to say. I appreciate the point of view, of course. And we've had this discussion. And I wanted to just speak because I think it's important when we do stretch and when we do take risks as a government, Clearly, there's more constraints than it is in the private sector, and clearly there are more points of view on how limited resources can be utilized appropriately. And do they actually do what you asked? Do they create jobs? I actually, and the reason I decided to speak out about this, because I do think that 21C, if we see it from one lens, it may look one way. If we see it from another lens, it may look another way. So what are the facts actually telling us? Well, the 21C is, I think, about as good a model as we could discover that is actually creating the jobs for what have traditionally been described as blue-collar, that jobs are given to people who may not otherwise find good jobs, but more importantly, with a company that is growing. So what I have been able to see and hear firsthand is people who have those jobs, who got the job 70 years ago at that firm in Louisville, at that company, when it only had maybe 100 employees and now more than 500. And they have not only just gotten a job, but they have gotten a career opportunity. And I think that's really what we're talking about with all of these opportunities that we have. Sometimes they're fragile. They're very fragile. They may not materialize, believe it or not. You know, they are on the cusp of either happening or not happening often. It didn't just happen that Bingham McCutcheon wasn't just luck, blind luck, that they landed here. they saw something about Lexington, and then they saw us reaching and stretching. Now, in that case, they didn't need so much from Lexington, fortunately. So we didn't have to stretch. But there are other ones that we may need to stretch on. I think that's really then where this proposal, this recommendation is headed. And I surely appreciate what you had to say. I know your concerns and anxieties about a model like a 21C, but looking forward with the benefit of hindsight and having seen some of the people impacted by these jobs and actually having career opportunities where they perhaps might not have had them otherwise is simply the point of view that I wanted to offer. Mr. Chair and again, Mayor, thank you for this opportunity of being in chambers and a dialogue. I will say this is don't take my comments as an attack on 21C as an example, but I will say that there is evidence in this government not very well highlighted, and I'm not saying that it should be, where we have revolving funds where it doesn't pan out. Yeah. And we'll lose a half a million dollars that very well could have been lost on the market as opposed to lost through the coffers of local government because we really could have used those funds somewhere else. So I just wanted to highlight that, and I look forward to working with you. And digging on those issues and working on those that you're describing, where there may be opportunities either not seized or missed or mismanaged perhaps, is something that I think that's exactly what we ought to be focused on. So thank you very much, Councilmember. Thank you, Mayor. Thank you, Chair. Thank you. I see no more further questions. The vice mayor and I were talking, and probably in work session today, we'll probably come up with a time to have a workshop in April to go over fund balance so we can further vet this discussion and make it part of the council's decisions here. With that, we'll move on to the fourth item, which is temporary suspending fire equipment from service brownouts that Council Member Massadi put in, and I'll let Council Member Sadi start off the discussion. I think if we could have the presentation from fire, that would be how I'd like to start. Okay. Commissioner, Chief, and all in attendance, welcome. Thank you. I'm just going to tee it up for a great proposal and a lot of hard work that's been done by the fire staff to take a look at this issue again, really look at it on a continual basis. but try and come up with another innovative approach to resolving this. So I'll turn it over to Chief Jackson. Good afternoon, Chair, Council members. Today we'll be as brief as we can as we all hear you. What we'll do today is lay out our presentation. I'll do the first four slides, turn it over to Chief Hoskins, and if we have any questions in reference to the hiring process, I have Chief Kiltner here who can give an overview of the process and how we have it laid out. As you see, this just gives an overview of the history, the SAPA plan that we implemented, and how we have gone through the brownout situation. This kind of gives you an overview of the history. Next, we'll have a perspective in reference to our growth from 1970 into where we are today. As you see, the population has grown close to 70%, and our department, our division, has only grown about 28%. Our civilian staff that we use for support has decreased. Our fire runs and EMS runs have increased a great deal, whereas the department engine companies have grown slightly to support that. And our ladder companies have grown at a zero percent. And as we go through this, you'll see that in a 1976 report, we were already lacking in the number of ladder companies that we had when they did the ISO report at that time period. Our proposal has been consistent over the last 24 months now that we need to hire personnel. And in reference to that, getting our authorized student back to where it was in 2009 and then fulfilling that. and then what we're going to propose to you through the hard work of this staff is an aggressive hiring plan that will get us back by November to that authorized rent plus so that we go into 2014 fiscal year, not fiscal year, but fiscal year, with the number of firefighters being around 557. So at this point, I will turn it over to Assistant Chief Hoskins, who has done some extensive work in preparing this presentation for you. So, Chief Hoskins. Okay. I think we all know that firefighters are hired, but we have to spend some time training them. so there will be a time that we will have to pay some overtime in order to get to that mid-November time frame where we will eliminate our brownouts. For fiscal year 2013, with our staffing number at 496, that's going to take us a little under $640,000 of overtime to completely eliminate our brownout companies. Moving into the next fiscal year, July through August, we're projecting about $230,000 to get us through that time period until we get the graduation of the recruit class that we intend to start in May. That will be 35 firefighters. Once we get those 35 on the line, obviously the need should be reduced. August through November, with our staffing at 531, we're guessing a little less than $215,000 to get us through for the recruit class number 58, which we were projecting at 30 firefighters. and then by Thanksgiving, I'm hoping the Thanksgiving gift will be that we're done with brownouts and we're done with needing overtime to keep fire trucks on duty. That totals up to be just under $1.1 million in overtime between now and Thanksgiving in order to keep every fire company in town on duty every day. So the way we're going to do this is through a couple of recruit classes. We'll start with this. currently when our class graduated back in on march 1st that brought our our current strengths to 496 firefighters we need to get to 545 545 is a good number to staff the number of fire companies that we currently staff try to staff every day so to do that we want to hire 35 people beginning in may now 35 is not obviously the 49 we need however there is a limit as to how many people you can can put through a training class and still get quality instruction and get people that come out from recruit school who can not only positively contribute but can do so without risk to themselves. So with a maximum of 35 recruits, we went through our hiring list just recently and we picked out candidates who were already certified emergency medical technicians. That should remove four weeks of training or a month of training from the length of the recruit school. puts those people out on the street a little quicker. 28 of those 35 positions are the Safer Grant-funded firefighting positions. So it's a fairly minimal impact on our budget for this year to bring those 35 people on board, just a little under $42,000. Okay. In fiscal year 2014, we're still striving to reach that 545 goal, but we should be at about 531. Numbers on our first aid runs, if you look back on one of the earlier slides, you saw that from the 1970s until now our emergency medical runs have grown by about 300%. The number of ambulances we have has grown by 200%. It doesn't take much of a mathematician to figure out we've got a problem there. We desperately need EC-11 on duty. We're going to put EC-10 on duty within the next few weeks. we still need EC-11 to come on to ease the burden on our emergency medical crews. If we're going to increase services, we've got to increase staffing. If you want to go back to brownouts, the way you do that is you don't increase your staff when you increase your service. Population in Fayette County grew 70% since the 1970s. Fire department staffing has only grown about 28-29%. So in fiscal year 2014, we want to add enough people to put EC-11 on duty. That would be 12 people. The 14 we need to get to 545 obviously adds up to 26. We're projecting that in that time frame between now and July, we'll lose four people, be it through service or disability retirement. So we want to do a class of 30 people that will run from July through November. Obviously, those are new positions. New positions are going to cost us, and that's going to put on our personnel budget another $1.5 million. When this class graduates in November, we should have accomplished a couple of things. One is EC-11 should have enough people to put EC-11 on duty and start easing that, bringing our numbers of how many first aid runs per year one of our ambulance crews makes down to a much better and acceptable level. It will also, we think, eliminate brownouts. As I've said, and I'll say again, once you get brownouts over with, The only way to keep them from coming back is as you grow your service, you must grow your staffing. We want to get to 557 with EC11. We can do that with these two recruit classes, and we feel like we can get it done by November. A couple of other things to think about as you move on down the road is the growth of the community, we're still a little behind. We have a tremendous number of households and people that live in the Masterson Station area that are fairly far removed from a fire station. We know the projected growth in the Polo Club area and the Hayes Boulevard area is going to mean we're going to have to expand. So as the city grows, we must grow with it or we're going to go back to brownouts. There's no other way to look at it. I mentioned the runs by our medical units. Based on the trends that I see from the last six or eight years, about fiscal year 2015, we will have to have EC12. We'll be back having several units making over 4,000 runs a year, and that's just a little too many. So the meat and the bones, here it is. If we don't do this accelerated hiring, we could probably catch up by about 2014 with hiring enough classes, but you're going to pay about $2.2 million in overtime in addition to your increased staffing costs, or we're guessing just a little under $3.5 million. If we get with this accelerated hiring proposal, and that's a class of 35 in May and a class of 30 in July, our overtime is going to drop by half or better. Obviously, we're adding some personnel costs, but in the long run, we're going to eliminate brownouts in November instead of February, and we're going to save you $810,000. Thank you. Do I have questions from Councilmembers? And I'll start with Councilmember Massadi. Thank you so much for the presentation. I really appreciate it. So I'm clear in my mind the elimination of brownouts will be ended by November of this year, 2013, or November of 2014. November of 2013, if we can hire the two classes that we have planned, and you're going to have the opportunity to have your input on that Thursday, I believe, to approve those two classes. So we've got approximately eight months or so of continued brownouts then? A little less than $1.1 million in overtime in that plan will take that away, unless we have some very unusually high demands or loss of people due to disabilities, whatever. The $1.1 million should also eliminate them April when you tell us to do it. By this April, you're talking about next month? Yes. Very good. I like that information. We've been in this community, I have a little timeline that I put together. We've been dealing with brownouts since November of 2008, and I think that's a long time to have been dealing with brownouts. All I can say is we've been lucky that someone hasn't gotten seriously injured or died as a result of one of these brownouts. And I know you all have done your best with the least amount of personnel to take care of these situations. But I think that most of us here on the council feel, as we discussed last time, that it's a situation that it's unacceptable. And if we can somehow, either through hiring of personnel or overtime, stop the practice of brownouts, we would be all for it. And I think you brought us today a great plan. It's just whether we have the ability to get these classes going and up and moving and eliminate these brownouts. That's what my action would be. As I said, since 2008, I think that's a long time. I know when the mayor ran for election, I mean, he said specifically, in his businessman's budget that there would be no fire station brownouts. And, again, we've had, I can list five in my district since April of last year that where there's been, you know, the engine, station 15 has been closed and there's been several incidences, either a gentleman having a heart attack that found the station closed or houses burning down where other engine companies had to answer the call. And every time, every minute that the fire burns, it doubles in size from what I've told. And I've looked at National Fire Protection Association standards and realized what the response time has to be. So this is, again, this is a public safety issue, and I think it's a very, very serious issue. So I would be supportive if my colleagues feel, as I do, that if we can continue with the proposal and implement the classes and allocate the overtime to eliminate these brownouts, I would so move. We have a motion in a second. And could you reiterate your motion, please? I guess we'd have to go back to this slide saying the specific motion as far as what can be done to eliminate these brownouts right now, if you don't mind, sir. I can get there. Right. Or to allocate the overtime and plus put in place the recruit classes in order to achieve the brownouts. That would be in the neighborhood of $680,000. $637,000 for overtime and about $42,000 for the increased staffing in the personnel budget. So that would be my motion and so moved. So if you would, just state your motion because I want to be able to know. Well, I want to make sure I have the numbers correct. So you're saying that the targeted overtime for 637, 530 plus the budgetary impact of having the candidates would be 41928. So we're at roughly around 699 or so that would have to be allocated this fiscal year in order to bring us up to the strength that's necessary and eliminate the brownouts. That's correct. as of this april yes so so that's what i would that would be my motion so moved so what what is what does that have what happens with thursday and what's going on right now how does that affect this she killed me the overview of the hiring process but thursday what we're going to do we're going to to provide 60, 71 names to you that will be the two classes that we're having, that we're projecting to have in one starting on May 6th and the second one in the first two weeks of July. And so of those names, those would be the two training classes that would be designated to end brownouts by the designated time of mid-November. So by having this motion, do we need that? Because this will probably be telling us that we're going to do that. Excuse me, Chief Jackson, you said mid-November. I thought he said April. November is where he said we would stop the brownouts. Right. That's after the two classes graduated. That's after we had to have the classes before we could stop the brownouts. But that's not with the overtime. Correct. Let me see if I can explain it again. Yes, that's not with the overtime. There's two components here. One component is overtime to staff the fire trucks between now and mid-November. Okay. Two classes, while the overtime is staffing the trucks, we're training two classes. Mid-November, no overtime to keep fire trucks on duty and no more brownouts. And so that total number would be what then? A million plus? It would be about, I think it's the last slide you want to look at. 2.6, when you look at the hiring cost and the overtime versus the 3.4 if we hire and overtime through February of next year. I think it's to do this. There's overtime involved in April through November to end the brownouts because we don't have people hired and trained yet. Yes, sir. Understood. Then you have to hire the trainees. Okay. So would your motion then basically be this summary then here? Yes, sir. You would say to accept this summary basically would be your motion? In order to end the brownouts completely, yes. By November. By November. Well, November, but you said also April, and that's why I'm getting confused. The overtime ends in November to keep the companies from being browned out. But the brownouts won't stop until November, is it? Overtime will stop the brownouts between now and overtime. Now, I'm sorry. Now, November. I'm sorry. I'm sorry. Could you come to the mic, please? I'm sorry. One more time. There's two components to this proposal. One of them is overtime, starting April through November, using overtime to eliminate brownouts. The second component is the hiring of firefighters. Two classes. Can't you? Come mid-November, we will eliminate the need for overtime to end brownouts because we have hired enough people to keep the trucks staffed. So the brownouts will stop in April is what you're saying? Yes. Okay. With overtime. With overtime, yes. So that number would be the $1 million? The $1.082 is from April into November. This fiscal year, we're talking about $640,000. So for $640,000 in overtime, you can eliminate the brownouts? This fiscal year? This fiscal year, right. Overall, it's going to be $1.082. But for this discussion right now, the overtime necessary is $610,000 to eliminate the brownouts, and then you will come to us on Thursday and ask about classes to be put into place for the future so we won't have the overtime and also to eliminate the brownouts forever. Correct. Okay. So, Chair, my motion would be that we would support the cost of, I believe the slide was $600, so I have my number correctly, $637.530 for this fiscal year and approve that overtime amount in order to eliminate brownouts beginning in April. So moved. Exactly. So in the budget that we heard earlier, in the immediate needs and requests, there was a fire overtime of $640,000, and that would be the number that you would be using for this motion. Would that be correct? Yes, sir. All right. Any further discussion on this motion? All those in favor, say aye. Aye. All those opposed, that passes. I think, Dr. K., you want to speak? Yeah, I didn't think I needed to speak directly into the motion, but I did want to thank the chief and staff for the presentation. It's the data I think we needed. I wanted to thank Council Member Masati for moving this forward. I think a part of the confusion may be that the way in which this last slide is labeled is not. I mean, I think that's part of what my confusion is. Can you show me the last slide? Okay. Okay. So under accelerated hiring proposal where it says SAP eliminated November 2013, actually that should be eliminated April if you provide the overtime and you move with this accelerated plan for... We were told we had to be brief so we didn't... So the second thing should be accelerated hiring proposal and overtime in the interim or something like that. So I think that may have been what caused the confusion. And in terms of the way the budget works, the proposal is to put the overtime money in the present fiscal year, and then we'll address accelerated planning and et cetera in the next fiscal budget. Yes, sir. Thank you. Thank you, Chair. Thank you. There's one issue I think we need to discuss, though, because I will be presenting this to the full council as a motion, and I won't have the summary to present until after the break, and then we won't have it on for second reading until probably the 11th of April. We need a second reading on Thursday. I'm sorry? We would request a second reading on Thursday of the offers. It's a budget amendment, so you can't suspend the rules. Just for the names to be, for the names of the recruits. That's something. I think we're talking about the overtime. Yeah, we need the money. If we want to stop the brownouts in April, we have to move this through expeditiously. Right. So we won't have it until after. Whatever works. I'm just saying there's some glitches here with the timing right now. We can walk it on and then get it on for the 11th for the money. The more imperative thing is the list of names so that we can go ahead and expedite the final steps of the hiring process. And we can do that on Thursday. Yes. Yes. Yeah, because we've got to get them the psychological tests and the physicals and everything scheduled so that we can get the first group on board by early May. But I'm just saying with the way that the logistics come out, we have the budget committee has passed that motion, but I'm still not going to read it out and still not going to get a second reading until after April when we want the Browns to stop. But I think Council Member Spinnett said they're still there. Like you said, we'll just have to do a reimbursement. I'm just letting Council know this is going to kind of be back-dating it. I'm just happy that this is being done. So however we can do it, let's just do it. Dr. Kay, did you have any further? I think people understand that the intention is to, as soon as possible, start paying the overtime to eliminate the brownouts and to move that class forward. Whatever we need to do logistically, we'll do. Thank you. Thank you. Council Member Ford, did you want to add something because you were on and you're off now? Quickly, Mr. Chair, thank you. I just wanted to thank Chief Jackson. I want to thank Council Member Massadi for her diligence in bringing this forth on our behalf as a council. And again, just with all these conversations, Chief, just to assure that you and your leadership team are prepared to carry forth this policy policy that the council has just passed and readjust your schedules for overtime, that shouldn't be a problem at all. No, sir. Not at all. All right. Thank you for your hard work thus far, Chief. Thank you, Chair. Thank you. Any further issues on this item? Seeing none. Council Member Rosati? I just want to thank my fellow council members for all your support. I think that's something that we talked about at our retreat, and we've gone ahead and made a milestone today. So thank you all very much. Thank you. And thank you, Chief, for all your work on this. The last item, we have a couple minutes. Did you have any further comments? No, I just want to say thank you all. Okay, thank you. There's items in committee, and Mr. Schoeniger, if you would, kind of go through these and see where we stand. And the ones that relate to the urgency, Mr. Slayton and I are working on that one. Well, the Waste Management Task Force, I think Councilman Ristanda still has a meeting or two. and the three regarding procurement, the activity-based costing from Council Member Lane. I still haven't heard back whether he wants to pursue that or not. The Affordable Housing Trust Fund from Council Member Gordon. I think it's really related to the Homelessness Commission. What was the Affordable Housing Trust Fund? A portion of it, right. And we'll keep that in committee. The financial efficiency ordinance, you folks heard a presentation at work session, but I just needed some direction if you wanted to just instill in committee. I think you do from the discussion. Maybe not. Well, we had that presentation, but we haven't done anything with it, so it's still in committee. The fund balance discussion, which you heard today, in the suspending fire equipment from service to Brown's issue, and then finally the franchise fees that was referred to the committee by Vice Mayor, although you're going to hear a franchise fee discussion at work session today. I don't know that that's in lieu of this. Okay. Well, we can leave it now. Okay. Well, we can leave these in until we have somebody make some motion to take them out. Do I have a motion to adjourn? We have a motion and a second. All those in favor? All those opposed. We stand adjourned. Thank you. Thank you.