# Budget Committee of the Whole (COW) - April 23, 2013 > Auto-transcribed civic record · April 23, 2013 - **Permalink**: https://meetings.lexingtonky.news/meeting/2961 - **Source video**: https://lfucg.granicus.com/player/clip/2961?view_id=14&redirect=true - **Date**: 2013-04-23 - **Last revised**: July 16, 2026 - **Length**: 14,924 words > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed with OpenAI's open-source Whisper large-v3-turbo model, run locally by The Lexington Times. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude. Verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Lexington-Fayette Urban County Council met on April 23, 2013, at 10:00 a.m. in Chambers, with the Vice Mayor presiding. The council addressed six agenda items focused primarily on fiscal matters, including fund balance discussions, economic contingency calculations, fund balance assignments and uses, and reserve accounts policy. The council took six motions and votes during the meeting, with five of the six agenda items approved. One item—the Explorium Agreement—failed to pass. The council also heard four public comments during the session. ## Attendance **Present:** Council Members Akers, Beard, Clark, Ellinger, Farmer, Henson, Kay, Lane, Lawless, Massadi, Scutchfield, Stenet, Ford, and Lomas. **Absent:** Council Member Myers. **Late:** None. ## Votes and Decisions **Fund Balance Assignments and Uses** [timestamp: 01:05:36] Council approved fund balance assignments and uses as tentatively agreed upon in council retreat, including economic contingency, health insurance reserve, home match, capital projects, and streetlights. Motion by Council Member Stenet, seconded by Council Member Ellinger. The motion passed by voice vote with 14 ayes and 0 nays. **Fire Overtime and Grant Match Funding** [timestamp: 01:09:51] Council approved $640,000 for fire overtime and $700,000 for grant match from remaining fund balance. Motion by Council Member Stenet, seconded by Council Member Ellinger. The motion passed by voice vote with 15 ayes and 0 nays. **Explorium In-Kind Service Agreement** [timestamp: 01:15:54] Council considered approval of $45,906 for Explorium in-kind service agreement, contingent on fulfillment of obligations. Motion by Council Member Kay, seconded by Council Member Lane. The motion failed with 7 ayes and 8 nays. Those voting in favor were Council Members Akers, Clark, Ellinger, Farmer, Kay, Lawless, and Lomas. Those voting against were Council Members Beard, Henson, Lane, Massadi, Myers, Scutchfield, Stenet, and Ford. **Economic Contingency Fund Amendment** [timestamp: 01:44:05] Council considered an amendment to increase the Economic Contingency Fund by $2.7 million, above and beyond existing fund balance allocations. Motion by Council Member Massadi, seconded by Council Member Meyer. The motion passed by voice vote with 8 ayes and 6 nays. Those voting in favor were Council Members Akers, Clark, Ellinger, Kay, Lane, Lawless, Lomas, and Myers. Those voting against were Council Members Beard, Farmer, Henson, Massadi, Scutchfield, and Stenet. **Original Economic Contingency Fund Motion** [timestamp: 01:44:38] Council approved an original motion to add $1 million to the Economic Contingency Fund, above and beyond existing fund balance allocations. Motion by Council Member Massadi, seconded by Council Member Ford. The motion passed by voice vote with 9 ayes and 6 nays. Those voting in favor were Council Members Akers, Clark, Ellinger, Kay, Lane, Lawless, Lomas, Myers, and Stenet. Those voting against were Council Members Beard, Farmer, Henson, Massadi, Scutchfield, and Ford. **Reserve Accounts Policy Referral** [timestamp: 01:08:44] Council approved a motion to refer reserve accounts policy discussion to the Budget and Finance Committee. Motion by Council Member Farmer, seconded by Council Member Massadi. The motion passed by voice vote with 15 ayes and 0 nays. ## Budget and Financial Actions The following financial actions were approved during the meeting: **Appropriations** - Fire ladder truck replacement using vehicle replacement reserve: $750,000 - Fire overtime for remainder of fiscal year 2013: $640,000 **Purchases** - Police radios for infrastructure burn-in period: $1,600,000 **Amendments** - Capital projects for council renovation: $45,000 - Grant match for fiscal year 2013: $700,000 - Economic contingency fund increase: $2,700,000 **Contracts** - Explorium in-kind service agreement: $45,906 The total financial actions approved amounted to $6,480,906. The largest single amendment was the $2.7 million increase to the economic contingency fund. Capital and equipment purchases included the police radio infrastructure investment of $1.6 million and the fire department ladder truck replacement of $750,000. Additional fire department funding of $640,000 was allocated for overtime costs through the end of fiscal year 2013. The council renovation project received $45,000 in capital project funding, and a $700,000 grant match was approved for fiscal year 2013. Explorium was contracted for in-kind services valued at $45,906. ## Public Comment Council members raised several questions and concerns regarding the fund balance and reserve allocations during the meeting. **Litigation and Refund Reserves** Council Member Stenet discussed the approach to litigation and refund reserves, noting that council members preferred to leave these reserves unassigned within the fund balance rather than formally earmarking them as designated reserves. This approach was intended to maintain flexibility in how these funds could be used. [timestamp: 01:26:51] **Economic Contingency Fund** Council Member Stenet emphasized the intended purpose and governance of the economic contingency fund, stating that it is designated for use during economic downturns and emergencies. The council member noted that withdrawals from this fund are governed by a strict formula. [timestamp: 01:31:02] **Explorium Agreement** Council Member Lane raised concerns about the informality of an existing Explorium agreement. The council member questioned the lack of formal documentation and urged that any future similar arrangements be properly formalized and require council approval before implementation. [timestamp: 01:34:11] **Health Insurance Reserve** Council Member Henson requested clarification regarding how the $250,000 health insurance reserve amount was determined. The council member noted that the city had experienced significant payouts in the past, raising questions about whether the reserve level was adequate. [timestamp: 01:43:01] ## Contested Items **Explorium Agreement** Council members disputed the timing and conditions of a $45,906 allocation to the Explorium. The disagreement centered on whether the funds should be approved before the Explorium fulfilled its in-kind service obligations. Some council members raised concerns about the informality of the arrangement and the lack of proper council approval for the commitment, suggesting that the allocation should not proceed until the organization had completed its required obligations. **Economic Contingency Fund Increase** The council voted 8-6 to add $2.7 million to the economic contingency fund, a narrow margin that reflected significant division among members. The dispute involved competing priorities: some council members advocated for holding the funds in reserve as a contingency measure, while others argued the money should be deployed immediately to address capital needs. The close vote demonstrated that council members were nearly evenly split on the appropriate use of these funds. ## Fund Balance Discussion O'Mara Council discussed fund balance matters, including the economic contingency calculation, fund balance assignments, and proposed uses of fund balance. [timestamp: 00:00:00] **Key Speakers** The discussion involved Mr. O'Mara, Council Member Stenet, and Council Member Kay. **Topics Discussed** The council addressed several fund balance-related items: - Economic contingency calculation - Fund balance assignments - Proposed uses of fund balance **Key Decisions** The council approved the following actions: - Reclassification of the capital reserve into the economic contingency fund - Several reserve allocations **Outcome** The fund balance discussion was approved. ## Economic Contingency Calculation [timestamp: 00:04:54] The Council discussed the methodology for calculating the economic contingency fund, specifically whether the capital reserve should be included in the calculation. **Discussion and Debate** Mr. O'Mara and Council Member Stenet led the discussion on this agenda item. The Council debated the appropriate treatment of the capital reserve in determining the size of the economic contingency fund. **Outcome** The Council reached consensus to include the capital reserve in the economic contingency fund calculation. This decision resulted in an increase to the fund of approximately $1.3 million. The item was approved. ## Fund Balance Assignments [timestamp: 00:08:15] The Council reviewed and tentatively approved several fund balance assignments during this agenda item. Key speakers in this discussion included Mr. O'Mara and Council Member Stenet. The assignments under consideration included: - Health insurance reserve - Home match - Capital projects - Streetlights The discussion focused on policy considerations and future planning related to these fund allocations. The Council's review emphasized the importance of these assignments in supporting the municipality's financial planning and operational needs. The outcome of this agenda item was approval of the fund balance assignments as presented. ## Uses of Fund Balance The Council discussed capital and operating uses of fund balance during this agenda item [timestamp: 00:12:20]. Mr. O'Mara and Council Member Stenet were the key speakers during this portion of the meeting. The discussion covered several proposed expenditures from fund balance, including: * Fire overtime * Grant match funding * Police radios Several motions were brought forward and passed by the Council to approve these expenditures from the fund balance. The outcome of this agenda item was approval of the proposed uses of fund balance. ## Explorium Agreement The Council discussed a proposed $45,906 allocation to the Explorium during this agenda item [timestamp: 01:12:03]. The allocation was contingent upon the Explorium's fulfillment of in-kind service obligations. Key participants in the debate included Mr. O'Mara, Council Member Kay, and Council Member Scutchfield. The discussion centered on concerns regarding whether the Explorium had met the conditions required for the funding to be approved. The primary issue raised was that certain in-kind service obligations had not been fulfilled. This contingency became the focal point of the Council's deliberation, with members expressing concerns about approving funds when the agreed-upon conditions had not been satisfied. The motion to approve the $45,906 allocation failed. The Council did not move forward with the funding at this time due to these unmet conditions. ## Reserve Accounts Policy The Council discussed the Reserve Accounts Policy as agenda item VI. [timestamp: 01:06:39] Council Member Farmer and Council Member Massadi were the key speakers on this matter. The discussion centered on the need to establish a comprehensive policy framework for reserve accounts. Rather than resolving the matter immediately, the Council agreed to refer the broader policy on reserve accounts to the Budget and Finance Committee for future discussion. The referral encompasses several key policy areas, including funding mechanisms, capping limits, and usage guidelines for reserve accounts. The outcome of this agenda item was approved, with the Council moving forward with the decision to have the Budget and Finance Committee conduct further review and analysis of the reserve accounts policy before bringing recommendations back to the full Council. --- ## Decisions - **Motion** — passed (14-0): Approval of fund balance assignments and uses as tentatively agreed upon in council retreat, including economic contingency, health insurance reserve, home match, capital projects, and streetlights - **Motion** — passed (15-0): Approval of $640,000 for fire overtime and $700,000 for grant match from remaining fund balance - **Motion** — failed (7-8): Approval of $45,906 for Explorium in-kind service agreement, contingent on fulfillment of obligations - **Motion** — passed (8-6): Amendment to increase Economic Contingency Fund by $2.7 million (from original $1 million motion) - **Motion** — passed (9-6): Original motion to add $1 million to Economic Contingency Fund - **Motion** — passed (15-0): Motion to refer reserve accounts policy discussion to Budget and Finance Committee --- ## Full transcript This is the Council's Committee of the Whole for looking at and perhaps dealing with the Fiscal Year 12 fund balance. And, Council members, we can approach this in a couple different ways, and I'd like your input. it. Mr. O'Meara is prepared to present what he had sent us. He's also willing to defer to the council, which during its retreat yesterday worked with the fund balance and came up with some items of consensus. So what would be your pleasure? Do you want to hear from Mr. O'Mara first and then go to what Connie prepared for us from our retreat yesterday? Okay, some people can't log in. To request to speak. Do you wish to speak, Mr. Farmer? Yes, ma'am. Oh, I thought so. Okay. Mr. Farmer. In your description of Mr. Romero's presentation, what did you say, that he would come forward and give us what? He has sent a presentation at our request. Yes. And would be happy to come to the podium and go through it. and it probably is 10 minutes, 15 minutes short, or would you prefer to go straight to what we did yesterday? I think it might be actually nice to give Mr. O'Meara a few moments, but I'd like the council to weigh in on it. Yes, Council Member Kaye. Thank you, Vice Mayor. I guess I'm not clear from the packages in front of me what is different, if anything, from what was presented to Council previously in this unbalanced review. Yes. And so I'd like just quickly, and then I've got a suggestion about procedures. Please. The information, the numbers are the same. The presentation I tried to make a little less complex at Ural's direction. So this was an attempt to try to layer it down so that there weren't so many layers. That was the attempt. That was what we requested. So thank you. Okay, Mr. Kay. Okay, so given that, I think it might be useful to hear from Mr. O'Mara what is different in this presentation, and then I think it would be helpful to talk a little bit about this one-page sheet that was distributed and explain what the thinking of Council was up to this point in this tentative set of decisions. Thank you. So, Mr. O'Mara. Excuse me one second. Council Member Clark is logged in. Well, I was just going to agree with Council Member Kay. I would like to hear from Mr. O'Mara first. Great. Thank you. Thank you, Vice Mayor and Council. The presentation that I sent out tried to distill three areas of focus based on the previous conversations. The first would be the discussion of the economic contingency calculation. The second would be talking about fund balance assignments. separated from, then once those two items had been discussed, then would flow into a discussion of the actual wishes of the council to use the fund balance. So those are the three items. The actual dollar amounts are the same as what was presented before, but I thought that those would be the stair steps in order to get to the final decisions that the council was wishing to make. Would you want me to proceed? Yes, please. Okay. So the first item would be the economic contingency. Well, I guess the other comment that I wanted to make at this slide was based on listening to counsel. In order to move forward for future financial reports and future assignments of fund balance, the estimated fund balance would be needed to be presented to counsel, and then Council have discussion on recommendations of fund balance before the CAFR was finalized and published. So in talking to staff, we wanted to bring before Council the commitment to bring forward an estimated fund balance by October 1st. That would be after we close the books for July and August, which actually has an impact on the June 30 books for backward-looking accruals. And so by the 10th working day of September, we would then know how much those dollar amounts would be. and they can actually be very small or could be major swings to increase or decrease fund balance, depending on how revenues compare in that July and August period to the previous year for the revenue accruals. That would then give us time to work on an estimated fund balance and recommendations for assignments by the 1st of October. then that would give us October, then, to finalize the audit as well as finalize fund balance assignments. So that seemed to be the message we were receiving. That is what we wanted to convey to the council and to try it on for size this summer and fall and see how that works. Okay, having said that, back to last week, we talked about the economic contingency calculation. And so this is the calculation that was presented and published in the CAFR. and basically the focus that I understood was whether the capital reserve was an appropriate part of that calculation and it was included in the calculation that we had in the CAFR. There was discussion that the capital reserve was not a true reappropriation of capital as the term was used in the ordinance. It makes a difference of about $1.3 million. If that is not included, that would be an increase in the economic contingency designation of about $1.3 million and a decrease in either assigned or unassigned fund balance. of about that amount. So I don't know if you want to further discuss that, or I just keep going. But that was a point of discussion. My sense is that the council would just like kind of a brief piece from you because of the work that it did yesterday, if you don't mind. Does that suit the council members? All right. So then the second point of discussion, as we saw it, was the discussion of fund balance assignments. And just to recap, they are for possible future use. They can be one time in nature or ongoing. And they are not an appropriation of themselves. They still need council approval to actually apply and spend fund balance assignments. So this is where we come into presentations similar to before. tried to organize that by saying these are the fund balance assignments that are either contractual or ordinance-driven. First of all, the 1.2 is if you want to talk only general service district and not total general fund balance, you would take the 1.2 off. The non-spendable or contract-related, things we've already committed to at 1.5. The current calculation balance of the economic contingency is 18.5. The current balance with the 27th payroll calculation is 4.5. And the second year I think this has shown up is the ordinance related to the efficiency reimbursement is 200,000, and that would bring you to a subtotal of 18.4. And then I organized the next ones as to recommended assignments. These are things that we think need to be done, a litigation reserve of $3.5, a refund reserve of $1 million, the one-time reserve for home match of $250 because the CDBG funds were already assigned to other projects, and then the discussion about the streetlight transfer to subsidize the urban service fund is an additional $2.5. That would bring a subtotal down to $11,150,000, which would then migrate to recommended assignments that we recommend that we would want to do. We talked about the capital project reserve being a one-time event. This was a cleanup of capital projects. It was correcting either incorrect mapping when those project module was instituted into PeopleSoft or misclassifications where the expenditure was expensed to the wrong project fund. It also clears out do-tos and do-froms. This would reflect where some of the projects were pre-funded with general fund dollars before the bond was sold and funding the project. So actually that project fund owes the general fund money back after they got the dollars. And that came up to a positive $5.65 million that came in that was due to the general fund from these bond projects. There was a recommendation for a fleet replacement reserve, a health fund reserve, and an economic development reserve. After taking all of those out, that would come up with an unassigned general service district balance of $2,160,000. So that would be the discussion of fund balance assignments. Then we would migrate to the discussion of the actual uses of fund balance, where they are an appropriation approved by council and have listed the administration recommendations and the council recommendations as communicated to us last week. This would not reflect your discussions of yesterday. So we had the fire ladder truck at $750,000 that we recommended using the vehicle replacement reserve. That was actually a budget amendment that was approved last fall by council. Then the accident with fire engine number eight, where it's been assessed to be a total, we would recommend the remaining part of that vehicle replacement go toward the insurance proceeds so that fire engine number eight could be replaced. The police radios of $1.6 million. The infrastructure was expected to be finished this summer, and the actual purchase of radios to be a 2014 expenditure, so it was not included in the 2013 capital. But the actual infrastructure is now ready to go live before June 30, actually the May and June period. And so in order for us to sign off and say that the infrastructure has been installed properly, we need to test it. And so we need those radios in place to actually put what they call a burn-in period for the infrastructure. So we're asking for $1.6 million to get the police radios purchased. That's actually not the total purchase price. There are some dollars from the bond funds for the infrastructure that they are using to purchase police radios, and this would complete those purchases for both handhelds as well as ones in the vehicles. The last one is the $45,000, which is capital projects for council renovation, which either is in the first or second budget amendment read on your all's docket. So that would be a total of $2,645,000 that are capital-related. And then the next would be operating-related. The first one is the fire overtime, the $640,000, which the council has directed, needs to be done for the remainder of fiscal year 2013. In the mayor's proposed budget, the additional dollars that would fall for that overtime is included in in that 2014 mayor's proposed budget and then the the second part is grant match when we closed out fiscal 2013 grant match dollars were not rolled into 2014 so they should have been we did not do that so we've got that on our list of things to do differently when we when we do the po role for the end of 2013 but in order to match the dollars that have been granted us through existing grants these aren't new grants we need 700,000 from the general fund that would be a million 340 because that they have an operating nature to them we were recommending using the unassigned fund balance to fund these dollars which would come to if these recommendations for both fund balance assignments and then uses of fund balance were adopted then the capital reserve would go from 5.65 to 4 million the fleet reserve million nine nine thousand ninety thousand would be a million dollars of that would be used and then the unassigned 1.34 million would come out of the unassigned balance so that is the recommendation for council to consider i understand you all had meeting yesterday and have an alternate assignments and fund balance uses to discuss. And we're here to add however we might. And we greatly appreciate that. Thank you so much. A couple of things I wanted to point out from your presentation to council members that we did not deal with yesterday page 11 of mr. O'Mara's yes presentation we still need to deal with the fire over time which we have directed and the grant match items and then back on page Page 7 of your presentation. Council members, you'll remember, and I'll just, I could say this as I go through our worksheet from yesterday, but the litigation reserve, you will remember we did not assign it. We wanted to leave the money in the fund balance in the event that we needed it. Okay, so how about if, thank you so much. We really appreciate it. How about if I take a stab at working us through our document from our retreat yesterday, and I would welcome Council and Connie to add anything that they want. I want to just give a basic run-through of this, and you have two copies of it. But Connie Underwood emailed us a copy last night, and then Councilmember Akers has taken it and added some color to it and some zeros. Did you get a copy to Connie of your, if you have an extra copy? None of the numbers are different. And it's the same document with just some color added and some zeros to the things that we left zero. So, okay, this is the document on the overhead that we'll be going through. And the council, keep in mind, the council didn't actually take any votes. We were in a council retreat, but we did get some consensus on some items. And the first consensus was that the council wanted to put the capital reserve back into the fund balance for purposes of calculating the 25% number to go into the economic contingency fund. We felt that that appropriately followed the ordinance. I'm just going to be real quick on these things, and then you all can chime in. The Council discussed whether to put additional funds into our economic contingency fund, our rainy day fund. and there was no consensus on a number, but there was a lot of discussion over the fact that our rainy day fund, our economic contingency fund, is still not funded at the level it should be. And there was discussion of need for us to bump those funds up to get our economic contingency fund fully funded. The refund reserve, which the request from the administration was $1 million, and the council decided at this point, not knowing whether we need it or not, to leave that as a potential but not to assign anything to it. Health insurance reserve, the council felt that $250,000 was probably not going to be adequate, and so discussed putting $1 million into that as opposed to $250,000. The home match, the council discussed staying with the $250,000 and a 2013 budget amendment would need to follow. The economic development fund, which the administration has requested at $2 million. The council is very interested in how that would be used and would like to see plans for its use and policies which would guide how money could be used from that fund. So did not intentionally put anything there yet. The Explorium, the council would like more information about why this $45,906 was recommended to come from the fund balance, since other partner agencies are generally not funded through the fund balance. And so the Council is requesting more information on that with a possible 2013 budget amendment to fund it. Capital projects. Okay. The request was $5,653,709. Now, what the consensus was yesterday in the budget retreat was to roll fleet into that and to include the radios. Now, y'all will pipe up if I need some help. So the council has tentatively put in $2.6 million and requests a budget amendment to follow with more information on the remainder of the items. And so that $2.6 million is about what it would take to fund the fleet replacement and the radios. And then the streetlights, we had a rather animated discussion and enlightening over funding the streetlights, putting money into the streetlight fund, which is a dedicated fund. putting $2.5 million from the general fund into that urban services fund. And so Council did come to some consensus that we would want to do that with a plan to follow up for looking at the tax that funds the streetlights. And we can do that as we come into the fall and set our tax rates. and looking at changing it to a fee. We're open to looking at anything that would enable us to fund our streetlights properly the way they're supposed to be funded. And then so the fund balance number per council would be $7.101 million. And then this $1.5 million fund balance used for fiscal year 13, that's the number that is in the current budget. With the balance, you see the balance. And so I would just again say the litigation reserve at $3.5 million requested and the fire overtime and grant match, which total $1.34 million, are still out there. and council could determine whether to take that $1.34 million, fire overtime, and grant match from the assignment to the fund balance. Now, council members, what have I, council members, you look ready to pounce. Was there anything that I left out? This is a very brief overview of about four hours' worth of council budget retreat yesterday, and I appreciate Connie's help, Paul's help, Jennifer Benningfield, Jonathan Hollinger, all the folks who helped us with this. And I would ask Connie, is there anything you want to add or council members? That was kind of a brief summary. Council Member Farmer. Thank you, Vice Mayor. and thank you for giving us line by line on that. Go back to the change in economic contingency to ordinance to explain that figure, if you would, because I have forgotten the ilk of that part of the discussion. Do you want me to explain it or someone with budgeting experience? You will remember the discussion that the Council felt that taking the capital reserve out of the fund balance before the 25% calculation was not how the council wanted to do it. The council felt that that capital reserve should be in the fund balance for calculating how much rainy day fund, based on the ordinance, we put in. So the 1.3 reflects that increase? Yes. And that would, this total, yes. Yes, that would be the minimal. and then the 19.855598 number would be the new total of the Economic Contingency Fund based on that number. With that addition? Yes. I got it. Thank you. Thank you very much. Okay. Council Member Stenet. Thank you, Vice Mayor, and I appreciate the brief explanation from what Council went over yesterday. I think a couple things need to be said, too, to the litigation reserve and the refund reserve. I think the council's feeling yesterday was not to create the funds, but to leave it in fund balance so that when we do have a real amount, a real situation, that the fund balance we can easily go into. There was a lot of discussion just for the administration to know about using the economic contingency fund as our backup for the litigation or the refund for tax refund reserve. And I think the issue there is, as we all know, is there's a calculation that has to be done as to how much we can actually take out per fiscal year, and it has to be budgeted. We can't just go in that fund and take money out at any time we feel like it. So I think the sentiment was to remain flexible and that we had real tangible needs for both a refund and a litigation that we would leave it in fund balance and go get it there. So it's not that we've done away with it or aren't planning for that, but we want to keep the flexibility there and earmark it that way so that going forward if we do need it we have that day it could be six months from now it could be two years from now a couple of them but that's the sentiment behind that on the Explorium I'm still trying to understand it wasn't in Commissioner O'Mara's presentation but it was in our retreat for the first time yesterday and I hadn't seen it before then so Mr. O'Mara do you know what that is and where it's coming from and why it wasn't in today's presentation? But it was in the initial information we received. It's gone now, so I want to. Well, let me explain two things. At 45,000, I was rounding to the nearest 100,000, so it didn't make the list. I thought it was small enough, but it was included in the total numbers. But let me explain the detail behind that where it's not the same thing as any other outside agency. In prior years, and I don't have my dates right, but I think it was either two years ago, we shifted from doing all the books and all of the banking support for Explorium to them standing on their own. It might have been more than two years ago, but anyway. And there is a bank account that is in LFUCG's name that has $90,000 in it. And to remind you of other activities, back in 2005, we actually paid more expenses while we were doing the books for them than their approved allotment. And so they have an amount of money that is due to us that is in excess of the $90,000 in their bank account that they had but was in LFUCG's name. So we've got $90,000 of their money. They owe us, and I can look up $300,000, $200,000, something like that, from almost 10 years ago. And so last spring, I think, we met with the interim director and said, what can we do to resolve this? And they went forward, and I believe Commissioner Driscoll talked to you all about this, with a program to do programs with parks to the public to pay us back with in-kind services to try to relieve that money that is due to us, and that we would split the $90,000 in the bank account. that when they finished their service buy-down, that we would release half of that money, and then we would sweep the other half into our bank account. So that is in your fund balance, that whole $90,000. And so we had, through that agreement, said that when you got finished buying that down, we would give you half of the money. we would keep half of the money. That's the story behind the $45,000. Now, we thought that that would be completed by now. I'm not sure that all of the community in-kind services have been completed, so I'm not sure that we would need to do that last piece between now and June 30, or maybe it would be an FY14 piece. But at the time we need to do that, we would need to come to council with a budget amendment to release that fund balance and basically close that bank account. Okay, that answers. So that's a long-winded story, but that's the background. I know. I'll be glad to pause, Vice Mayor, if there's other questions about that issue before I move on. I have another question. Well, okay, there may be more about this one issue, but that does explain it, and so there's not certainty that they've completed their end of the agreement yet. Correct. And so this could be taken off and come to us as a budget amendment when it's okay. When it's needed. Okay. Does anyone else want to speak to the Explorium? Council Member Massadi and then Council Member Lane. Thank you, Bill. I appreciate the explanation. Now I understand it. I'm just wondering if this sets the precedent in any way with other agencies. If we do this for the Explorium, does that allow us to do this for other agencies that may have issues with, you know, not having enough money? Well, this is looking backwards, not looking forwards. We had two instances where agencies owed us money. The one was the Explorium, and we talked about them trying to pay us through in-kind services. The other was with LexTran, which dates back to prior to their dedicated tax. And for them taking over the LexVan program is how we were resolving that. So all of those are looking backwards of things that happened in the past and the way to work with those community entities to resolve those receivables that are on our books. So you don't anticipate we would do this looking forward? I don't, no. Okay. Thank you. Okay. Did you have an Explorium question? Council Member Lane. Mr. O'Meara, you probably didn't handle the negotiations on the Explorium arrangement, but do you feel it would have been more appropriate if the executive branch of the government wanted to work out a deal like this that perhaps they should have submitted the plan to the council for approval before you enter in some type of an agreement? Because it really puts us in a very awkward situation that if you've agreed, if somebody's agreed, I'm not saying you, but the administration, it could have been a prior administration, I don't know who agreed to do what, But if we've agreed to do this, then it seems like we have a moral obligation to do it. But on the other hand, it's up to the council really to spend the money and set the policy on issues like that. So do you think that's something we should be concerned about? I think council should always be involved and always be the ultimate approver. in this case i'm not familiar with anything in writing this was a proposal for discussions and then the proposal was then verbally presented to council by my recollection by the commissioner of finance so at that point i guess would have been the time to decide whether to formalize it in writing with a written agreement or whether it was a work down of a receivable through a verbal agreement. Okay. Well, I think it's just something we should discuss in the future because if we're going to make arrangements with entities to do some kind of a workout, I think it should be formalized and should get some kind of council approval. So then it's a record, and then this would not be an issue that just pops up. that i was not familiar with this and i think some of the other council members weren't familiar with it either um but i'm not trying to be critical i'm just just a constructive comment of what we need to do in the future thank you council member k has an explorium okay thank you vice mayor um yeah comment first on on the background um i think people are aware that the explorium went through a change in its board and its management and that a part of that was trying to clear up this issue, which I would have to, well, I think the fairest way to explain it is that the people who are now responsible did not incur that obligation. And so the question was how to resolve it in a way that would leave the Explorium as whole as possible and not have them in a significant debt situation. And I believe that that was discussed before Council, at least in principle, if not in detail and that we understood that this was one way to resolve the issue that seemed fair. So we'd have to look back. And frankly, I don't remember. I might have gotten this information outside of Council, but I believe it came before Council at some point. And other Council members may or may not remember this, but we could check that. But I believe it did. If it didn't, it should have. certainly going forward anything like this should come to council but this is one of those unusual situations that i think required a resolution that was somewhat unusual and that we should go forward and support it thank you vice mayor you're welcome we have a couple more explorium folks councilmember beard Thank you, Vice Mayor. Just to put some icing on the cake, Leo and Martin called my office today and is seeking a one-on-one, interestingly enough, one-on-one meeting with me. Now, that kind of tells me that there maybe is some issue again with them. They have some problem. I really am looking for guidance, and we probably ought to have the meeting, and then we'll see really what it is, what the detail is. But it's interesting that this happened today, after the meeting yesterday. Thank you. You're welcome. Council Member Henson, is yours Explorium? No. Okay, well, let's go back to Council Member Stennett. Hold on, Mr. Amara, just one final question. I know we're talking a lot about $45,000. Quick question. who is tracking the in-kind and what price tag do we put on is it per hour per child who is tracking that it's uh coming through uh finance into accounting because that we would have to have that in order to relieve the receivable okay and it is market rate so in other words i know one of the um there was a free day and so however many admissions for that day were counted at at the Okay, so it's per child admission. Okay. And then there were some things with parks, and I think there's some more things planned with parks. And I'm not remembering specifics other than those two. Okay, very good. Got another question for you. My last question is on the total ending balance on your column, 536, if we include the $1.5 million fund balance that we needed for this fiscal year, you all did not include that in your presentation. and if we do include it and also the overtime and the grant match, you're actually at a negative on the fund balance. So what are your thoughts on including the 1.5 for FY 2013, given the fact that a month ago we talked about a $4 million shortfall in this year? Where are we going to get the 1.5 million then to balance this year's budget that we anticipate coming from fund balance? Well, if I remember correctly, the revenues and expenses were structurally balanced in the FY13 budget and that the fund balance was then applied to the operating capital expenses. So we have that to review as well as operating expenses in order to have a balanced budget in 2013. So you don't feel like we should earmark it in the fund balance from FY12 that we anticipate carrying over to 2013? Well, I appreciate you wording it that way. I would love for you to include it. I want fund balance as high as possible. I think it's prudent, and I think it's what the outside entities are watching to see that we do manage our fund balance and make it larger than it has been in the past. One of the slides in a previous presentation showed that we, before the financial distress that came upon us, we had built up a total fund balance, not an economic contingency. That balance is targeted to build to 10 percent, but that if you looked at all fund balance and all sources, we were in the 14 percent range. we got down to 7% and 8%, and that with this year, we're finally up above the double digits where the peers and the rating agencies feel is appropriate for our city. So as a financial person, I feel it's prudent to have a total fund balance of all sources in the 12% to 15% range. So the answer is no. Don't include it in our discussion for FY12. And I would also, I don't want to steal Councilman Lane's thunder, but if we had issued the pension bond in this FY2013, as Council budgeted and passed, we would not be structurally balanced because we'd be paying, once again, operating costs with bonds. But seeing that we're not, I think it is a fair statement to say it is now structurally balanced, assuming we don't do the pension bond going forward. So going back to the reserve accounts, I don't think the Council disagrees with the concept of reserve accounts, but I think on the economic development, the health care, health insurance, the fleet replacement reserve, I think there needs to be more discussion and a framework given of how much money we're going to put in monthly or how we're going to build these things up. Because fleet, if we create a reserve now, we're going to spend it all. So it doesn't make a lot of sense to create it if we're going to take everything out in one fell swoop. But if we want to create it for 2014 and put something in there, I think that's a good discussion that we need to start having. And I think everyone was open to it. Thank you, Vice Mayor. You're quite welcome. Council Member Henson. Thank you, Vice Mayor. Mr. O'Meara, I guess I had a similar question as to Council Member Stenet. It's definitely more clarification on the need for these reserve funds. and how you arrived at health insurance reserve of $250,000 when we know in the past that there's been some pretty significant balances left to pay. So I would like to have a better understanding of how we arrived at, how the administration arrived at these amounts. I don't have that experience. I wasn't involved in the calculation of these reserves, so I'm not sure that I can give you a logic for the dollars. But if I could, I could give you the logic for building some of these reserves. And the term I use, and it's one that I use to keep it clear in my mind, is if you start a policy of trying to pay as you go for certain expenses, then you have revolving reserves. So you have a program to build up so many millions of dollars for fleet, because we know that we have fleet demands that come every year. And so when you can replace it, you can spend it. When you can replace it, you can spend it. And you try to not bond or borrow for all of your known, ongoing, recurring capital needs. now we have structures that need to be repaired we have a request for new buildings those are large capital needs that would warrant bonding and paying over the life of 20 years for that new structure or that or 10 years over a repaired structure but when you get to golf carts when you get to body armor, when you get to police cruisers, when you get to light pickups, that type of thing, that we know that we need to be on a rotating replacement, then a good place to go to, it doesn't happen overnight, is to try to look at those type of things as cash-funded each year, operating capital versus bonded and long-term capital. We will, regardless if we have to borrow, we structure the bond based on the life of the asset that we're borrowing. So if we're borrowing $2 million for vehicles and vehicles have a five-year life, then we structure payments so that two million dollars gets paid off principle in the first five years But if we're bonding five million dollars for a 20 year life Then we structure it so that five million principle is paid off of 20 So we layer the bond to reflect the the useful life of the of the items And that will be why you see some of our bonds heavy Payments in the first years lighter payments in the out years I advocate to try to adopt a policy and build up to that policy so that we have some revolving reserves for these ongoing capital needs with short life. I think I just confused some of you. No, don't you think that was very clear? Yeah. I guess I would like, I want a real good understanding of the reserve funds, how you arrived at the amounts, and, you know, over a history. It takes so much to replace our fleet. The health insurance costs, I know, you know, we've made significant changes. But how did, you know, is $250,000 sufficient? or is a million a better number? Well, I can comment on that. And then also are we going to put caps on these reserve funds or so? Well, again, I don't have the basis to explain the actual dollars that were assigned at year-end. I do know that at year end we have not gotten a whole 12 months of history of our new health insurance rates and returns. I do know that since then, which we're now in April, we have met with our health consultants and do have a first-year result, as well as projections for the unknown, which is going to happen January of 2014. I mean, PAPACA, is that the terminology that they're using for the Affordable Care Act, I believe. So the million dollars looks good to me standing here today. Thank you. Well, and just to, I want to put a ditto under something that Council Member Stenet said earlier. In our discussions yesterday, there was no discussion that we thought reserves were a bad idea. The council, I think, in general, thinks that's a really good idea. What we wanted is some structure to those reserves to say how they can be used, what kind of policies drive their use, and that sort of thing. So I think we're sort of all on a similar page, if not the same page, but the Council just would like to see some of that policy and planning fleshed out. So next we have Council Member Farmer. Thank you, Vice Mayor. I think that I guess this is the first time that this mayor has had an opportunity to present a budget where we actually had a little something left over and could look at how we do things or maybe doing them a little bit differently, which I think gets us into these reserve account conversations. What I was going to try to do until the wheels fall off was... They're not going to fall off. Thank you, ma'am. ...was to look at the worksheet that we have up there, which I think a lot of us have relative comfort about, the numbers and where they're placed, coming down to that 7101,904. But I think there's some things that have been part of this discussion that we need to take out of that based on the assumptions that we made. The first one would be if we're going to keep the litigation reserve in at $3.5 million, that would impact that 7.1 fairly significantly. No. That's why I said the wheels would come off. Can Connie respond to you with your microphone, please? The 14.8 in the beginning has the 3.5 already taken out, along with the 27th pay, the investment in the energy, and the economic contingency that was in the mayor's caper. We already did that before the 14.8 number. Well, then let me just rotate to you then, because I was looking at this trying to come with what I would call a new number. So you're saying that the $3.5 million is already calculated in at the top, so we don't have to take it out at the bottom. You do not. All right. Then what about the fire over time in the match grant for $1.34? Those have not been dealt with yet. So that would still need to come out. Yes, sir. All right. And then what was the contemplation of the refund reserve for a million dollars? Where did we leave it or did we not take it out? It's at zero at this moment. So we would still potentially need to take it out. If you want to put some in for that, you would need to take it out, yes. And then I guess based on the earlier in-depth $45,000 discussion, we would need to take it out. Yes, you would. It strikes like to me. And so the 7.1 comes down to what, around 2? Do you have a number? If you take out a million, then you're at 6.1. If you take out 50,000 roughly for Explorium, you're at 6,050,000 roughly. And then if you take out the fire and the match grant, you're at 5 point, or I guess 4.8, I guess-ish. That's what I was trying to get to. Thank you, Vice Mayor. You're welcome. Council Member Stenet. I'm just to piggyback on that and what I said earlier. I'll reiterate it. We are not saying we don't want to do a reserve or pay our tax bill. If we do it, what we're saying is we don't want to earmark it and call it a reserve fund today. Until we actually see a bill, then it wouldn't come out of the 7.1. But we know where we would go get it if we had that need today. We don't know when that need will be brought to the council. We don't know if it's next month. We may. But we have that fund balance. It can sit there as long as we want it to sit there at 7.1 until we make a change. I would, Vice Mayor, I would just, for discussion purposes, so we can have something tangible to report out at work session, I'll go ahead and make a motion to approve what's on that we've already all in consensus yesterday agreed upon in the right-hand column, the 1.3 on down to the 2.5 for streetlights. Second. So moved. Okay. Okay, we have a motion by Council Member Stennett, second by Council Member Ellinger, to approve basically what's on this list on the right-hand column that we came to consensus about yesterday. Now, is there discussion? I know some of you are on the list to speak, but I don't know if you're on to speak to the motion. So if you'll just raise your hand. Council Member Kay. Thank you, Vice Mayor. Actually, it's to speak to the motion, and it's why I was up anyway. I have a question for Mr. O'Mara about the language. What difference does it make if the litigation reserve is called the litigation reserve or the health insurance reserve? What happens to that money? Is it earmarked? If we have it in the fund balance and we say we want to earmark $3.5 million for litigation reserve, does that mean that we can't use that money for anything else? My understanding is you can appropriate any of the fund balance so that it does not restrict your use. It only makes a statement for your intent, nothing more. Okay, so with each of these reserve items, whether we actually name it or not, and really no matter how much we put in it or not, all it's signifying is our intention to hold that money if possible in case we need it for that particular use. Is that correct? That's correct. Okay, so some of what we've been talking about, we've got some litigation reserve funds over per council. We've got some per CAFR. It does not seem to make a difference. what we want to do is signal our intention to hold a certain amount of money in those categories. It does not bind us to use them that way or not. So to the motion to approve the right-hand column, which doesn't mean we're not finished working, are you to speak to your... I would like to have the right-hand column either have all the reserve stuff over there that we want to signify our intention or none of it. Just so that I get confused. about how much money we really have and what we have left to expend. So I'd like to have a single column that says, here's everything, and here's our intention for what's left in the fund balance. So, well, the motion on the floor is to approve the numbers in the right-hand column. That's the first motion that we will deal with. We can have other motions. This is not the end of the discussion. I would like to amend, move to amend, that we either have the reserve items that indicate our intention in one column or the other. Right now, the reserve for health is in the right-hand column. The refund reserve is in the left-hand column. The litigation reserve. Excuse me? The left-hand column is not our column. May I say something just to your point? We can have a discussion if you choose to amend the motion, which is certainly your right. Then we will need to have the discussion of how much money to put into each of those reserves. And I guess I'm thinking it might be cleaner to vote on the motion at hand and then take up what would have been your amendments. It's just my perception of what we're trying to do here. Okay, so my difficulty with that is right now, as I said, the refund reserve, we have indicated zero for that. And for the health insurance reserve, we've indicated a million dollars. But the intention in both those instances is to hold money in reserve in the fund balance. Is that not? No. Help me understand what we're doing. Would you feel more comfortable removing those from the motion, those zeros, and then having a separate discussion? I'm not sure. I'd like to. Vice Mayor, can I clarify my motion? Yes, please do. The motion is simply not addressing the refund reserve at all. It's only addressing those things that have a dollar amount at this point. If we want to come back and do the refund reserve, the grant, the fire overtime, that can be done later. I'm just addressing the ones that have dollar amounts in them to approve those dollar amounts only. I'm not addressing the zeros. So your motion is to approve $1.372627 million for economic contingency, $1 million for health insurance reserve, $250,000 for home match, $2.6 million for capital projects including radios and fleet, $2.5 million for street lights. That's correct. That is your motion. If somebody wants to add to it later, they can. Okay. And there's still much discussion. So I'm going to start with Mr. Ford and work my way up this side of the council, and then we'll go back down this side. Thank you, Vice Mayor. Thank you, Council Member Stinnett, for bringing us this motion as a follow-up to our work and retreat yesterday. And just to give us a starting point, my interpretation of the motion is basically all you're asking us, All we're doing is we're reclassifying the assignments that were listed in the CAFR, but they are not actually defined. We don't have an ordinance that defines any of those reserves on the left-hand side of the screen. But those are the reserves that were listed in the CAFR by the administration. And the only action that we're taking now as a starting point, again, Council Member Stenet, is to reassign dollar amounts in the CAFR fund balance reserves. And as a starting point, I'll support that motion. Thank you, Vice Mayor. You're welcome. I think I saw Council Member Massadi. My question is we will have the ability to either increase or decrease these numbers at another time. That's my answer. I support the motion then. Council Member Lane. Okay. I have two thoughts. One is the insurance reserve generally, or the litigation reserve I meant to say, generally what happens if somebody enters into litigation with the Irvin County Government, the law department would evaluate the case if they would have an outside claims expert look at it, and then they would reserve what they thought might be a tentative cost to the government to settle that case. I was always under the impression those were placed on the books and they remained on there. So I would like some clarification if we're carrying that forward or we're going to be, this reserve we're putting in would be a new reserve. Mr. Lane, the litigation reserve is not included in the motion. Well, I thought it was already above the number, the $14,828,000. Okay, it's in the $14 million. Right. Okay. Okay, the other thought that I had, and this is not directly in the motion, but if we're doing reserves, we have a lot of real estate, and we're not reserving any money for repairs and maintenance in the budget. I don't know whether we should be addressing that issue also. Okay, thank you. Mr. Farmer. First off, we've got a voting screen up here, and we need a sign-up screen instead because we're not voting right now. to the point of the motion. I think there's relative comfort here on all of our parts with the motion itself. I realize that inside that there is some initial imprecision about what is placed in reserve and what is defined in reserve, and I think that's something that the Budget and Finance Committee should take up in its wisdom. But for the purposes of this discussion at this time to get us to a new sum total, I think this is very accurate. and we can have follow-up motions and discussions on individual items that I think we all will agree on. But this is our first best choice, and I'm very supportive. Thank you, Vice Mayor. You're welcome. Now, is there anyone on this side who wishes to speak to the motion? Council Member Beard. Thank you, Vice Mayor. I only have like six different worksheets in front of me. So I'm going to come down on the side of Councilmember Kay. Why not have two or three columns across so that we can see the whole picture at the same time? And that's what all of us are looking at because I'm sure that if I'm looking at a bunch of them, everybody else is looking at a bunch at the same time, and it just gets overwhelming. and to get it all on one page. And then we can have a final column, which could be best case or worst case. We can do as many columns as... I mean, they come in... It's litigation industry. On spreadsheets, they come in... God knows how many. 18 columns, 16 columns, whatever. but it would just clear things up for me and I think I'm sure some of the others thank you you're welcome is there anyone else here who wishes to speak to the motion council member acres thank you vice mayor I just wanted to sort of help clarify for council members Kay and Beard and and and so what council member Stenet is proposing is that we yes accept what is in the right column, that's what we discussed yesterday. These are amounts that we think are good to put into those specific funds and allocate them according to the numbers on the screen in the right column. However, we did also discuss the refund reserve and the fire and grant match, and those are additional holdings that are not necessarily allocated yet, but they're there for when we need them. So it's a savings account that's unallocated specifically, if that helps at all. So it does actually leave us of like 1.2 left, but we can get to that later. Does anyone else wish to speak to the motion on the floor? Council Member Stennett? Once again, I want to clarify the motion. The motion is just to agree on those numbered items. It's not saying we disagree on the overtime. We're not addressing that yet. The vehicles, we're not addressing that yet. We're not addressing the refund reserve. This is just getting to a point where what we can agree on first, and then we can have discussions about how to do the rest of the 7.1. That's all it is. Thank you, Vice Mayor. You're welcome. And this is very typical for a fund balance discussion, which we used to have when we had fund balances. Now, Mr. Kay wants to speak again to the motion. Thank you, Vice Mayor. just briefly in terms of understanding everything I agree with the comment the councilmember beard it would be nice to have a set of columns where we could see all of the information kind of side by side and have an idea of exactly what we're dealing with I also find myself flipping through various sheets and trying to figure out what's in and what's out having said that I understand that the majority of council is comfortable with this initial motion, and I will withdraw my objections and support it. Thank you. Thank you. Is there any other comment to the motion? And I think Connie might be prepared for any motions that we do have to change numbers up there. So with that said, and there's no other comment, all those in favor of the motion, please say aye. Aye. Anyone opposed? So that motion passed 14-0. We're missing Council Member Myers. Okay. Now, are there any other... Council Member, I have four Council Members listed to speak. Council Member Lane, did you wish to speak again? That was already spoken. Thank you. Okay. Council Member Farmer. So Vice Mayor, since we've taken action, I think that is relative to our meeting yesterday, if it's proper, I was just going to make a motion at this time to place in the Budget and Finance Committee the issue of reserve accounts, how we define them and how we fund them, and then let that process work on what would happen with any or all of the rest of the things in the fund balance. So that would be my motion to move reserve accounts, their usefulness, and how they're funded and capped into the Budget and Finance Committee. So move. Second. So if I understand correctly, Mr. Farmer moved and Council Member Massadi seconded the item of discussion of fund reserves. Reserve accounts. Reserve accounts. That's a general. In broad form. I agree with Council Member Kaye and Council Member Beer. There's five or six different issues or sub-accounts potentially, but I think we should take it up from a policy standpoint before we try to populate those, with the exception, of course, of the fact that the motion already does replace a million dollars for the health care reserve, but we can work backwards on that, too. Okay. So the issue of reserve accounts, placing it into budget and finance. Now, I have a few people signed up to speak. Are you signed up to speak to the motion? we haven't voted on the second motion yet we have not voted Council Member Farmer moved and Council Member Massadi seconded to place the issue of reserve accounts into budget and finance for policy discussion is there anyone who wishes to speak to the motion can you switch us back to the please to the speaking thank you now council member k no council member stinnett did you wish to speak to the motion does anyone council member lane i would appreciate if you'd restate the motion one more time please the motion is to place a discussion of reserve accounts into Budget and Finance Committee, and that would be a policy discussion, I believe. About establishing funding and capping? Yes. Thank you, Vice Mayor. You're welcome. Any other comment or question? Okay, seeing none, all those in favor, please say aye. Aye. Is anyone opposed? Speak now. So that passes 15-0. All right. Now, Connie, do you have the ability to show us what we've done so far? I think what you've done so far is the 7.5. Is exactly what you have. Okay. Now, council members, we still have, let's see. If there are other motions to come before us, we can still deal with those. Council Member Stennett. Thank you, Vice Mayor. I'll go ahead and make a motion to approve the fire overtime in the amount of $640,000 and then the grant match in the amount of $700,000 for a total of $1.3 million from the remaining fund balance. Okay. Okay, Council Member Stenet moved and Council Member Ellinger seconded to approve the $640,000 in fire overtime and the $700,000 in grant match for a total of $1.34 million to come out of fund balance. Is there discussion? I see none. Okay. All those in favor, please say aye. Aye. Anyone opposed? All right. That motion passed 15-0. Oh, he's back. He's back. He's back. All right. Now, are there any other motions? Is there anyone else who wishes to make any motion regarding fund balance? Yeah, Connie, are you working on the new number? It's the 7.101904 million minus 1.34 million, correct? There we go. So I think it's 1.34 on the fire overtime in the grant match. The fire overtime was 640. Yeah. If you can take it out. Our fund balance is growing by the minute. There we go. So that leaves $5,761,904. And is there any other motion that you wish to attend to today? If not, I'll ask. Pardon me? Explorium, is it in the motion? The Explorium, there's been no motion about the Explorium. Councilmember Kaye. I will make that motion that we approve the $45,000 that I believe we've already committed to the Explorium. $45,906. $45,906. Thank you. Councilmember Kaye moved and Councilmember Lane seconded. Now we'll have discussion on that. Councilmember Scutchfield. At this time, I'm opposed to this motion only because they have not fulfilled what they're supposed to do at this point. I think this is a budget amendment issue once it's been completed. Councilmember Stennett. Just to echo what Councilmember Scutchfield said, I think until we have a final invoice, I'm not sure we need to appropriate it at this time. Thank you. Any other council members wish to speak? Council Member Lane? All right. I don't have a problem having a contingency of fulfilling their obligation to be paid, but this would be just as if any other organization had a contract with us to receive funding based on their performance of whatever the service they're providing. And I think if we put that contingency on there, that would solve that. And, you know, I don't like the way this was handled. I think it should have been more formalized, being more in writing. But it appears that, you know, we've made a commitment over the long-term period here, and I think we need to consider honoring that agreement. Anyone else wish to speak? I'd like to pass the chair to Council Member Ellinger. Certainly. Vice Mayor? Thank you. I would like to speak against the motion. I believe I heard Commissioner O'Mara say that the Explorium, there was not confirmation that they have fulfilled their commitment yet. And so I'm not willing to release this money until they have fulfilled their commitment. That's the agreement we apparently made. And I'm certainly supportive of the agreement and the $45,000 going back to them, but not until they fulfill their side of the agreement. Thank you. Thank you. Go ahead, Vice Mayor. Okay, thank you. Council Member Kay. Thank you, Vice Mayor. Just to be clear, this does not send any money to the Explorium. It holds the money in the fund balance on the contingency that they will complete their obligation. They're in the process of doing that. They have done some of it. They will be doing more. So it doesn't send any money anywhere. If they don't fulfill our obligation, that money stays in the fund balance. I don't see why we wouldn't just go ahead and approve it at this point. Thank you, Vice Mayor. You're welcome. Any other comment? Council Member Lawless. I agree with Council Member Kay that we should leave it in there, not send them a check, but leave it in there. They are in the process of fulfilling that and have come a long way. and it was something that we did commit to them. So for that reason, thank you. Council Member Myers. Thank you, Vice Mayor. I believe that we need to wait on this motion until actually fulfilled the contract. Thank you. You're welcome. Anyone else wish to speak to the motion? Okay. If not, I think we'll take a voice as well as a log-in vote. If you can get us there, Steve. Okay, all those in favor, please say aye. Aye. Aye. And nays. Nay. So has everyone logged in? And there's one, do we have one person? Two people haven't logged in. There we go, 15 votes, and that vote fails 7 to 8. Are there any other motions? Yes, ma'am. Council Member Massadi. I'd like to move that we put an extra $1 million in the Economic Contingency Fund. I didn't hear that. okay the motion by council member massadi is to put an extra one million dollars into the economic contingency fund and the second was council member ford so now we'll have discussion council member ford no council member scutchfield i'm absolutely in favor of this but i'd like to see it be increased. I think... You're saying more than a million? Yes. I mean, I think one of the things that we had talked about yesterday is four million. So, yes, I'm going to make a motion to amend it from the one million to, I think, 2.7 that takes a total to four million. I'd accept your motion. Second. So, please state your amendment one more time. I'm sorry. It would take... Thank you. amend from $1 million to $2.7 million, which would take the total. Okay, let's not talk about the total. Let's talk about your amendment to the $1 million to go into the economic. Which would amend it to $2.7 million. $2.7 million. And who seconded that? Council Member Meyer seconded that. Now, is there discussion? Council Member Ford? Yes, Vice Mayor. I think I'm supportive of this effort, and this, I think, was a discussion that we had. I want to be clear is that what's being proposed is the council's intent and recognition of us getting to where we need to be as far as having that rainy day fund. And this is above and beyond what the ordinance calls for, that this is additional funds that the council is taking the prerogative to put in a rainy day fund. I support the motion and all those that support it. Thank you, Vice Mayor. You're welcome. Council Member Ellinger. Thank you, Vice Mayor. I support the motion. I think she used the 2.7. I think the number you're really looking for is 2.6373 because you want to have $4 million less than $1,372,627. Right. So I think the real number would be 2,627,373. The motion is to amend to 2.7 million extra. And that's fine. I mean, it's just... Okay. We have several more. Council Member Lane? I just would like to say that I strongly support the motion. I encourage all the council members to also vote for it. Thank you. Council Member Stenet? Thank you, Vice Mayor. Mr. O'Mara, can you or someone from my county tell me in the economic contingency fund where it's invested and what kind of interest it earns or has earned? We're going to do a little math lesson today maybe. Not on your end, on our end. Where is it currently invested? I would have to get the details, but I can tell you our investment policy is safety, liquidity, yield. and we have very limited approved investments, and that's not my forte, so I might not use the correct terms of government securities and that type of thing. But we have put some into longer-term yields because of the nature of that versus our operating are more in. We could invest today and take it out tomorrow. But what the total yield is for that, I don't have that for you. Well, anytime someone says in today's economy, safety, principle, and yield, you're looking at less than 1% sometimes, most of the time, in today's economy. And I think I agree with the effort that we always want to save more money. We want to get to that magical $30 million level. But I think if we're looking at our true need in government And if we're looking at, as we work on our FY14 budget, we have some major capital items in our FY14 budget that can actually be paid out of this fund balance, such as the courthouse repairs. How much does that really cost on us per day? I can guarantee you those things that we are looking to bond cost us a lot more than what we're earning on this money by putting it into this rainy day fund. The second issue is on the rainy day fund, you can only take out a certain amount each year. In some years, you can't take out any by formula. This year we can take out up to $3.2 million max, and that has to be budgeted before we balance the budget. So putting extra money in here doesn't help us for a rainy day in the next 12 months or maybe even in quite some time if our economy keeps improving, because there were years when we couldn't take any withdrawal out based on the formula of the ordinance the council passed. Now, if the council wants to redo our ordinance and resend it and start all over, that's a whole other discussion. But I don't think that helps us today when we can earn more interest, because we're talking about bonding in this next budget, bonds, which we're going to get 1% to 2%, which is a great rate, but we can pay cash and get those things done today out of this fund balance. And we're not going to earn 1% or 2% on that money this year. We're not. So it doesn't make any sense to put additional money outside of what we're legally required by our own ordinance unless we're going to repeal our ordinance to do so. Thank you. Councilmember Kay. Thank you, Vice Mayor. I agree with Councilmember Stinnett. I think the question of savings is not simply a matter of putting money in the bank. It's a question of what your obligations are and what your needs are. And if we have needs for capital improvement that we can't meet, and we're paying repair bills and repairs on fleet and so on, that it's costing us more than it would if we had money to invest in either new equipment or upgrading our facilities, we're making a mistake. There's a very low yield, as Council Member Stinnett has said, for that money at this point and there is a higher cost of bonding so while this looks on the surface like a savings i believe in fact it's a cost to government and so i will not support the motion thank you vice mayor and and just to be clear the motion on the floor is the amendment of placing 2.7 million as opposed to the original motion which had 1 million extra so now we have Council Member Farmer. Thank you for reminding us of where we stand there. I appreciate that. I appreciate certainly the emotion and the feeling behind the original motion and the amendment, but I also think that we're also entering into a reserve account conversation, and this, I think, can play into that. I think both Council Member Kay and Council Member Stenet have given other background to it. I just think we need to remain. Let's keep our options open before we hone it too quickly. While I appreciate both the amendment and the motion, I believe that they're just a little bit premature to the process I believe that we all crave for. So I'll be voting against. Thank you. Council Member Ford. I'm not speaking to this motion. Thanks, Vice Mayor. Council Member Akers. Thank you, Vice Mayor. As I mentioned in a previous work session discussing the fund balance, that this is a good problem to have. And dealing with the surplus, I guess you could say, I agree with Council Member Stenet in that we have an opportunity to invest in our aging parks and to invest in streetlights that we still don't have in our neighborhoods, to replace cars and equipment that is costing us more money, and to repair and upgrade buildings that are owned by the city and that are in dire need of repair. So I would also not support this motion. Thank you. Council Member Masati. Thank you, Vice Mayor. I guess I just would like to reiterate that if I thought revenues were going to come in as high as anticipated, I would have not made the motion. But my concern is that revenues are going to be flat this year. And if we have some kind of a disaster or a need that we need to use this economic contingency front for, we would have that ability to do so. And I understand the interest rates. I mean, I know that your yield on your savings is minimal as opposed to what you're spending when you would get a loan. But I think you have to have a reserve in there, whether it be an extra million or an extra $2.7 million, to have a better cushion because we don't know our revenue picture. And I don't think it's going to be increasing that much that we're going to feel comfortable. Councilmember Clark. Thank you, Vice Mayor. I am convinced that this is a good motion. I think it's smart. But at the same time, I think we, at this point, I think we have probably better ways to spend this money. And I'm going to agree with Council Member Stenet that probably there's a better way to do this. And at the same time, I think the intention is very good. But I'm going to vote against this. Thank you. Council Member Lawless. I share the same sentiments, I believe, as Councilmember Clark and others. I think because this fund is so restricted and should be, that we would be better off having those funds available for situations that would not fall under the ordinance that would allow us to take it out, not spend it willy-nilly at all, but to make it less restricted. It's kind of the difference between a money market and, personally, for people to buy, put their money in a money market where they can withdraw it, or a long-term investment that there's penalties for withdrawing or you can't get to. So for that reason, I'm not going to support the motion, but I do think we need to keep the fund balance as high as possible and as liquid as possible because we don't know what we're going to be hit with. Thank you. Council Member Lane. All right. The $19 million that we currently have in the budget for the economic contingency account is equivalent to operating the city for about 30 days. So that's not very much money in comparison to our total operating expenses. And if you look at our budgetary information, our revenues have been static for the last four years. They've barely gone up and gone down, but have not really increased much over that period of time. and we have been operating at a deficit of our operating expenses being greater than our revenues received, and we've been able to cover that through borrowing in order to cover our operating expenses. So I feel it's really important that we do the increase on that. And if there's consideration or concern about whether or not we can get the money out, all we have to do is have an ordinance revision to structure the way we can use the money or not use the money. And as I mentioned at our meeting yesterday, one of the biggest complaints about contingency funds is that people are hesitant to take money out, and they should take money out when the economy is bad and put it in when the economy is good. And so, you know, I think when we have the money available, we ought to put it in. Thank you. Thank you. Council Member Ellinger. Thank you, Vice Mayor. I had three points, and I think it was ditto, ditto, ditto that you just said, but I will kind of rephrase those. when we created this economic contingency, what was not in the chapter was a product created by ordinance and by this council or by a council that was led by Dr. Stevens a few years ago. It was something that we wanted to attain a goal of 10% of revenues. We're slowly entering our way up there. We've done a good job of getting closer. But when we talk about bonding, one of the issues they look at bonding is going to be at this economic contingency. And we were downgraded a couple years ago. I think if we do a better job of getting to that 10%, I think that will help us overall in the long run. We are having an issue with revenues. When we came to budget finance in February, it showed that this last quarter is not going to come in as well as it has in the first three quarters of the year, of the fiscal year. So we need to be a little concerned about that. So I think if we put this money in the economic contingency, it is a byproduct of council. We did create it, and if we need to look at the ordinance and we need to change it, if there's a reason for that, we can always go back and do that. But I think this is being fiscally responsible by doing this. Council Member Stennett. Thank you, Vice Mayor. I just want to point out a couple other points. First of all, we put $600,000 a year into this fund out of our budget. So we're putting money in there every month, $50,000 a month in the budget. That is prudent. That's by ordinance as well. The radio agencies also look at any time a legislative body changes the ordinance in order to go spend money. So it would look even worse if we put money in this account and decided, you know what, we need it now. We didn't budget it. By ordinance, we can't take it out. We're just going to repeal the ordinance and go get it. That looks even worse. So there's a better way to accomplish the same thing by leaving the flexibility in the fund balance. It's the same thing. We're saving the money. I agree with Councilman Rolales. We're not going to go out and spend all $5.7 million. I think we should save some of that, of course. But putting in that fund, that fund was specifically designed for budget purposes, to balance the budget in an event we know we're going to have a down year. That's what it's meant for. It's not meant to, if we have a roof leak, go get the money out of that. That's not what it's meant for. And if we don't budget it in here by the end of June, we can't use it this year, period. But we can repeal the ordinance, and that's going to look even worse for our rating agency. Thank you, Vice Mayor. You're welcome. Well, I would like to, based on your comments, ask Mr. O'Meara a question. I do not believe it's only for economic downturns. It's in case there's a huge tornado that rips through Lexington, and we have a major disaster, is it not? and our government is, I mean, it's not only for economic downturn, or is it? It's my understanding it's for an emergency. I do know that there's a very structured calculation to know whether you can draw down, which is the economic contingency calculation. You look at a number of years, and if there are shortfalls, then it allows a drawdown. So if you could give me just a moment. I think it's important to clarify this because I think some of us have always operated on the premise that this is also our rainy day fund for an emergency such as a natural disaster that might destroy government payroll process and computers and that sort of thing. Well, I agree that that is a purpose and is a valid purpose of the fund. I also agree with the wording of the calculation for budgetary purposes to draw down is economic-based. Do you see the distinction? So is it not both? It's only for budgetary? Well, I don't have the wording of the ordinance in front of me, so I'm sorry. I think we created it. Pardon? I am aware in budget requirement is a multi-year calculation which looks at revenue trends. I do not have the ordinance right in front of me. Maybe I do now. Yes, and I think they're also going to try to put it up on the screen. So we'll have to go through it. It's actually a good, I think the finer point to this is if we have no fund that we can use in a real emergency, then that's a huge problem. Let me read Section 1.4. Designated monies would only be used if a shortfall. Excuse me, Mr. O'Meara has the floor. designated monies would only be used if a shortfall cannot be remedied by reasonable budget changes and or the use of the budgeted ending fund balance. So that is one, as I'm reading down, that would be a use. Then it goes through the calculation for withdrawal shall be prepared whenever a budget amendment reduces any one of the three trigger revenue accounts below the current budget adopted level. Those trigger accounts are insurance, employee withholdings, and business returns. Is there... The calculation for possible withdrawal shall be done by the Division of Budgeting using the actual revenue for the past three completed fiscal years to determine the annual average percent change in the three revenues as a group. So I guess my question, based on what you just read, is if there's an emergency, such as a natural disaster, and our budget can't handle it, that would be covered under there. Is that correct? It does state an economic contingency designation is created in the General Service District Fund to provide the Lexington-Fayette Urban County government with sufficient working capital and an ability to address emergencies without borrowing. Okay. So a natural disaster would be included in a proper use. It goes on to talk about the three-year average and the authorization of withdrawals. Okay. Very good. Now we have a few more. I wonder if CAO Hamilton carries all the ordinances with her. Evidently, she's a good resource. Council Member Kaye, and we're still speaking to the amendment to put $2.7 million into the economic contingency. Yes, so thank you, and I'm speaking to actually both the amendment, which puts more money in than the original motion, and I think that my comments are germane to both. It seems to me if the concern is for a short-term shortfall, we're better off leaving it in the fund balance where we have easy access to it. We don't lose. That money is not going away. It will be available more readily in the short term. The economic contingency fund, it seems to me, is more about longer-term issues. And so I guess I think if the concern is the short-term and making sure that we have that money, then we need to make sure that we don't allocate that money out of the fund balance, that same amount. And we could create another reserve fund and call it whatever we want and make sure that we know that the intention of council is to hold 1.0 or 2.7 in case we have a shortfall in the near term. Thank you, Vice Mayor. You're welcome. Council Member Lane. All right. Speaking to the issue of emergencies and natural disaster, if a tornado, ice storm, flooding, bomber, you don't know what might happen in our city, and it disrupted the operation of business and therefore our payroll taxes would go down. So the emergency would have an adverse effect on our income as a government, but it also would have an impact and it would probably drive up the cost of operating the government during that period of time. So I think there's not any question that an emergency would be covered by that contingency account. Council Member Ford. Thank you, Vice Mayor. A rainy day fund, an economic contingency fund, has its value and has its purpose. We're not at the 10% goal that we need to be at. Vice Mayor, I'll call for the question on the amendment at this time. Okay. We've had a call for the question. We do have three folks on the list to speak, but the question has been called. I don't think it's debatable, Mr. Parliamentarian. Okay. All right. So the question at hand is... To call the question? Yes. Do we want to call the question? Is the question at hand? All those in favor, say aye. Aye. Anybody opposed? No. Okay, let's do a hand vote, or if you can get us to the screen, Steve, there. Whoops, hang on. That's the previous vote. Now, would all those in favor of calling the question please vote aye, and those opposed please vote nay. And we are missing a vote. We are still missing a vote. Has someone not logged in? We only have 14 votes, folks. We got 15 people. Mr. Beard? Okay. The vote fails 7 to 8. So we are calling the question. So we will still have debate, and we have a few folks on the list. Council Member Lomas. I think one thing that for the general public and for a lot of folks is when we refer to this as the rainy day fund, it is not clear what that means to people. And I hear people say, well, why do we have all these problems and we have a rainy day fund? Isn't this an issue that should be dealt with? So I think we need to be very careful about how we refer to it and be clear about the restrictions. I agree with Council Member Stenet that the worst thing that could happen is for us to put money in there, have issues and then change the ordinance to go take money out of it. That would look much worse. So thank you. You're welcome. Now, our rule is speak twice. I've got three more people, and then I'm going to ask if there's anyone who hasn't spoken on the motion to amend. We've got Council Member Akers, Council Member Farmer, and Council Member Myers. Okay. Council Member Farmer. Thank you, Vice Mayor. I was just going to reiterate something I said earlier about I think there's room for process for this in budget and finance. But specifically the conversation yesterday and the way we redefined how some of the reserves were contemplated, we're already, based on motion that we've already passed, adding an extra $1.3, almost $1.4 million to the Economic Contingency Fund based on the changes we made yesterday. So we're making really good effort on this. I'd just like to provide for the opportunity of more discussion and more definition before we act. Thank you. Council Member Myers. Thank you, Vice Mayor. I would say that the sooner we can get to the 10%, the better off we're going to be, and we don't know what's around the corner. Next year, we may not have anything to put in. And secondly, I would say that when people say that if we change the ordinance to take money out in an emergency, that our funders or our agencies that look at us would look dissayerably on that, there's no evidence of that. And it would, I think, depend on why we change the ordinance. If we had the tornadoes that hit in Kentucky hit Lexington like they were supposed to, I don't think they would look down on us for changing our ordinance to take the money out to take care of that situation. So I think that's a case-by-case situation and not something that we should base our decision on today. Earlier we also heard that the decisions we make today can still be changed before we finalize everything. And so I'm going to support this motion to put as much money back as we can because now is the opportunity to do that, and the opportunity may not exist down the road. Thank you. Councilmember Ellinger. Thank you, Vice Mayor. I just want to reiterate a couple points that Councilmember Meyer just said, and that had been brought up when I said that you can change. This is a product of this council, and we created it because we felt like this was something that needed to be done. I was a big supporter when we went from the 96 rule that when it was first brought to the council, when Dr. Stevens later decided that we wanted to create at least a 10 percent. And I think the closer, the quicker we get that, the better that we're going to be in financial stead here in this government. So when we have an opportunity to add to this fund, I think it's important that we do. Council Member Clark. Yes, I think these are good arguments. I think everybody has made good points, everyone who has spoken. And I'd like to suggest that perhaps the compromise is a simple one, is that we defeat the amendment and agree to the motion, original motion. That would be a nice compromise, and that's what I'm going to do. Thank you. Is there anyone who has not spoken to the amendment who would like to speak? If not, all those in favor of amending the original motion and putting $2.7 million extra into the Economic Contingency Fund, please say aye. All those opposed? And if you'll log in, please. We need 14 votes. And there we have it. The motion passes 8 to 6. So the amendment has passed, and now we will vote on the original motion. The motion is to place $2.7 million into the Economic Contingency Fund. This is above and beyond what we've already discussed. Any final discussion? Okay. If not, all those in favor, please say aye and log in your vote. Anybody for aye? All those opposed? No. Please log in. There should be 15 votes. We need one more. I'd solicit the audience, but it wouldn't be legal. Is someone not voted? Council Member? No. No, Jim from Masadi. Council Member Masadi? No. Okay, that motion passes 9 to 6 to allocate $2.7 million from the fund balance, above and beyond what we already did, to the Economic Contingency Fund. Are there any other motions? Do I hear a motion to adjourn? Okay, excuse me. Council Member Ford, we haven't voted on that motion. Council Member Ford wanted to say something. Sorry, Vice Mayor. And I think we've made great progress today. The only thing that we haven't addressed and I would like to get some clarity on is how will we address some of the recommendations that respective Council members have brought forth for use of the remaining fund balance. We can deal with that in a future meeting. I think we'd all like to have in hard copy and email Connie's updated numbers. And if you can get that to us, and then we can determine a future meeting to deal with it. And, Council Member Kaye, is that? Yes, ma'am, that's fine. Just housekeeping, just to remind Council Members that because we have back-to-back meetings, there will be a lunch of sorts in the caucus room. Compliments of Council Member Kaye. Thank you very much. If there's nothing else, all those in favor of adjourn, say aye. Aye. Anybody opposed? We are adjourned. Thank you to... Thank you.