# Budget Committee of the Whole (COW) - June 11, 2013 > Auto-transcribed civic record · June 11, 2013 - **Permalink**: https://meetings.lexingtonky.news/meeting/3020 - **Source video**: https://lfucg.granicus.com/player/clip/3020?view_id=14&redirect=true - **Date**: 2013-06-11 - **Last revised**: July 15, 2026 - **Length**: 8,255 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 June 11, 2013, at 9:00 a.m. in the Council Chambers, with the Vice Mayor presiding. The council addressed three agenda items during the session, including a Commissioner O'Mara Report that was approved, along with two informational presentations covering Link Recommendations (items 1-8) and Council Member Recommendations (items 9-11). The body took one motion to a vote during the meeting and heard eight public comments from members of the community. ## Attendance The following individuals were present at the meeting on June 11, 2013: * Commissioner O'Mara * Council Member Ellinger * Council Member Farmer * Council Member Lane * Council Member Massadi * Council Member Kaye * Council Member Ford * Council Member Stenet * Council Member Myers * Council Member Clark * Council Member Akers * Council Member Henson No members were absent or late. ## Votes and Decisions **Revised Revenue Estimate Approval** [timestamp: 00:37:36] Council Member Farmer moved to approve a revised revenue estimate of $297,211,180 based on Commissioner O'Mara's updated assumptions for the Big Four revenue categories. Council Member Lane seconded the motion. The motion passed by voice vote. Six council members voted in favor: - Council Member Farmer - Council Member Clark - Council Member Akers - Council Member Henson - Council Member Stenet - Council Member Kay Two council members voted against: - Council Member Ellinger - Council Member Myers The approved estimate assumes a franchise fee rate increase will occur in the second quarter of FY14, though the vote does not lock in the funding mechanism. ## Budget and Financial Actions The meeting addressed a significant funding gap in the Urban Service Fund through the following action: **Streetlight Program Supplemental Revenue** The body approved supplemental revenue of $2,500,000 for the Streetlight Program to address a shortfall in the Urban Service Fund. This appropriation was necessary to cover the $2.5 million deficit and ensure continued funding for streetlight operations and maintenance. ## Public Comment Council members discussed a motion regarding budget revenue assumptions, with particular focus on a proposed franchise fee increase. [timestamp: 00:50:03] Council Member Ellinger expressed concern that the motion assumes a franchise fee increase will occur, despite the Council previously tabling this decision and not having approved it. He characterized the assumption as unreliable. [timestamp: 00:50:03] Council Member Stenet countered that the Council has the authority to act on the franchise fee in August, consistent with its actions in the previous year, and argued the assumption aligns with established budgeting practices. [timestamp: 00:52:14] Council Member Kay supported the motion as a conservative placeholder, emphasizing that the Council retains flexibility to address any revenue gap through various funding mechanisms. [timestamp: 00:53:49] Council Member Myers opposed the motion, arguing it precludes other potential revenue solutions such as property tax or fund balance adjustments by locking in the franchise fee assumption. [timestamp: 00:54:53] Council Member Clark backed the motion, citing confidence in the Council's ability to resolve the funding gap later and noting that it uses a lower, more conservative revenue estimate. [timestamp: 00:55:25] Council Member Farmer supported the motion as a practical approach to move forward with other budget decisions without becoming delayed by revenue assumption debates. [timestamp: 00:56:27] Council Member Akers agreed with the motion, noting that the Council is not bound to specific category breakdowns and can adjust allocations later based on actual outcomes. [timestamp: 00:57:03] Council Member Henson provided clarification, confirming that the motion assumes a franchise fee increase later in the year but does not specify the mechanism, thereby allowing for future decisions on implementation. [timestamp: 00:59:57] ## Contested Items **Assumption of Franchise Fee Increase in Budget** A split vote occurred over the motion to approve the revised revenue estimate, with disagreement centered on whether to assume a franchise fee increase in the budget projections. The contention arose from differing interpretations of the Council's prior actions on this issue. Some members opposed including the franchise fee increase assumption, pointing to the fact that the Council had previously tabled the matter. They argued this prior decision should preclude the assumption from being incorporated into the budget. Other members supported proceeding with the franchise fee increase assumption, contending it represented a reasonable and prudent approach for budgeting purposes despite the earlier tabling of the issue itself. The motion to approve the revised revenue estimate ultimately passed despite the divided opinion on this assumption, indicating that the supporters of the franchise fee increase assumption held the majority vote. ## Commissioner O'Mara Report Commissioner O'Mara presented revised revenue assumptions for the FY14 budget during this agenda item. [timestamp: 00:02:07] **Presentation Details** The Commissioner presented adjustments to several revenue categories: - Employee withholdings - Net profits - Insurance - Franchise fees **Revenue Recommendation** Commissioner O'Mara recommended a total revenue estimate of $297,211,180 for FY14. This recommendation assumed a franchise fee increase would be implemented in the second quarter of FY14. **Outcome** The item was approved. ## Link Recommendations (1-8) This agenda item was not addressed during the meeting. No discussion or action was taken on Link Recommendations (1-8), and the item does not appear in the meeting transcript. ## Council Member Recommendations (9-11) This agenda item was not addressed during the meeting. No discussion or action was taken on Council Member Recommendations (9-11), and the item received no substantive treatment in the meeting transcript. --- ## Decisions - **Motion** — passed: Approval of revised revenue estimate of $297,211,180 based on Commissioner O'Mara's updated assumptions for the Big Four revenue categories --- ## Full transcript Music June 11, 2013, and this is the Budgets Committee of the Whole meeting. And today we're going to deal with revenue first, and then we'll go roll on to LINCS recommendations and Councilmember recommendations. And we do have a quorum, so we'll go ahead and convene the meeting. And the first thing that we have is I'd like to call on Commissioner O'Meara, and then he has gone back and taken a relook at the revenues for us as we requested at the last meeting. So Commissioner O'Meara. Welcome. And did you have a handout or anything? I do have this I can hand out. Okay. So that council members can follow along. Thank you. Excuse me. I'm talking into thin air. Thank you, Vice Mayor. Let me go over how we got to what we're presenting today, if I could. Last Thursday, the Vice Mayor asked if we would go back and take a look at the budget and make some recommendations today or a list of options for the Council to take into consideration as they work through this year's budget. And we spent all day Friday doing that charge. and I would like to think very diligently looking at what's on the table and what type of approaches we might take in making those recommendations to you. And at the end of that process, Friday, I also said that I needed to take a second look at the information that we had on the revenue that we had gotten just Wednesday night prior to the Thursday presentation on revenues. And so I reconsidered the information, did a few more phone calls, that type of thing. And so I'd like to make this presentation to you of considerations for the revenue in the mayor's proposed budget. First, let me go through the assumptions that I made. So that's all they are, is my assumptions. But as I understand it, at the end of Thursday, the council has conveyed to us that they intend to supplement the Streetlight Program revenue in 2014. The method to fund the Streetlight Program has yet to be decided. An option has not been rejected, but an option hasn't been embraced either. And the ones that we have constantly talked about is a franchise fee, which is a general fund revenue source that would then be transferred to supplement the streetlight fee. There is a property tax option, which is an urban service fund option that would flow into the streetlight program. There is a fund balance option. That is the one that we have used in order to cover that funding in the FY13 year. That is a year-to-year thing, though. It doesn't solve the problem for future years. And there may be others, but those are the three that have gotten the most discussion to this point. And then the other assumption that I want to go over is the Urban Service Fund budget requires some sort of supplemental revenue in the range of $2.5 million for that fund to be in balance. So we've been focusing on the general fund because that was where the franchise fee is, but that transfer is the other side of the general fund expense. Our current budget has a $2.5 million expense in the general fund to transfer funds or a revenue source to the urban service fund to make the street light program whole. And so that revenue source, wherever it comes from, needs to be in our FY14 approved budget in the urban service fund. So given those assumptions, right or wrong, these are the ones that I built on, I would like for this to be under consideration. First, let's talk about the franchise fee. The original franchise fee budget had a $4 million rate increase in it, assuming that there would be a change in the rate July 1. At this stage, that's no longer a realistic expectation. There may be a rate increase in the franchise fee, but it would not be able to be effective July 1. So I'm proposing to reduce for the rate adjustment the mayor's proposed budget in the franchise fee by $1.5 million. That would assume that there would be some sort of rate increase in the second quarter of fiscal year 14. These all have to be taken into account in whole, but I had a really busy spreadsheet, so I'm trying to just kind of walk you down the spreadsheet by showing each line. So then I looked at the other major revenues. I really did. Hold on. And so let's take each one of those that are up there now. The employee withholdings, if you look at where the money in the bank through May, and then you add the June 13 budget, then that would give a base for 13 of $161.5 million. The mayor's proposed budget is currently at $168.4 million. So given the fact that we were building the 14 budget on an estimate of $163.5 million, and we could come in $2 million short of that, I'm proposing a decrease in employee withholdings of $2.1 million for a proposed budget of $166,250. The opposite, on the next line, occupational license fee on net profits. Excuse me. We projected $29 million because we saw an erosion there that came rushing back in the fourth quarter. That's the good news. Net profits have been strong in the fourth quarter. And that would come up to a base of 32.6. Well, the mayor's proposed budget in 2014 is sitting at 29.725. So I would propose a 3.65 increase in the revenue in net profits to come up with a number of 33.375. And insurance is the one that gave me the most pause when I was looking at this before. We're currently at 20, or the mayor's estimate was 24.28. If you look at where we will probably end up, if you add June's budget to that, that would be $25.2 million. And we have a current revenue for 2014 of $25.5 million. My hesitation is insurance premium tax has a rollercoaster history. You have a couple of years of pluses, and then you have a negative, and then you have a couple years of pluses and then you have a negative. Even though the overall curve keeps climbing, there are these ebbs and flows. So the question is, we had a very strong year, 8% over the prior year. That year was some percentage over the year before. So is it appropriate for us to predict three years of year-to-year growth in insurance premium tax? and I made some phone calls and I'm more comfortable today saying that yes, because of the risk rates that are going throughout the country, unfortunately there have been very catastrophic events in the United States, not just in the state of Kentucky, and that risk rates, especially in homeowners, are still going up. And so this $1 million increase in the insurance premium tax would reflect a 5% increase year over year for the insurance. And then finally, I broke a franchise fee between rate adjustment and usage adjustment. And we've had a usage adjustment, if you carve out any rate proposals, of $18.7 million. That was kind of our base franchise fee for 2013. It was also the base assumption in 2012. We're looking at coming in at $17.7. We didn't make $18.7 the year before. So I'm not sure the $18.7 is a good number for next year. So I would propose a $975,000 decrease in the usage part of the franchise fees. So to recap, that would be a net change of $20,000 in the revenue for the general fund and would acknowledge that we do not have a budgeted franchise fee rate going into effect July 1, but it also acknowledges that some sort of funding decision will be made for the streetlights program that would be effective sometime in the second quarter of physical 14. So, oh, that's too dark. Anyway, that would be, for your consideration, changes to the general fund revenue. It's a decrease of 2.155 in withholdings. It's an increase of 3.65 in net profits. It's a million-dollar increase in insurance. And then the sum of the two variances for the insurance premium tax, part for the rate, part for the usage, would be a decrease of 2.475, and that would get a new number, which is listed there, 297-211-180. So it was a busy schedule, so I just wanted to walk you through it and go through the thought processes of building that and wanted to present that for your all's consideration. Thank you very much, Commissioner O'Meara. and I would suggest you just stay there. Okay. We have some council members logging in. And, council members, I would also like to mention, just before we go to questions, that Connie Underwood also spent a good deal of time looking through General Services Revenue Statement Revised, and you each have a copy. It's highlighted in yellow, and it should be at your place. And so let's go to questions. And I do thank both you, Commissioner, and Connie, for your hard work since our last meeting. Council Member Ellinger. Thank you, Vice Mayor. Mr. Mayor, could you explain? It seems kind of counterintuitive to me as a business person that your revenues for employee withholding are going down, yet your net profits are going up. Is there not something I'm missing there? I mean, I think you want your revenues to increase, and as your revenues increase, then your profit margin is going to increase. And now we're taking revenues down, and we're actually increasing our profits. And in business I own, that did not seem like a good mathematical equation. Well, this is all about what variance we're talking about. So let me try to show you. We are increasing employee withholdings. It's just by a matter of how much. If you will look, we're saying originally we thought we would end the year at 163.5. Under these sets of assumptions, it would be 161.5. That's still more than last year. and we are budgeting an increase. So whether you take the first number, which was proposed back in April of 168,450, or if you look at this revised number, 166,250, it is still an increase of about 3% over the prior year. I see that, but we're also having quite a big increase in the net profit. That's the one I think I'm more concerned is how we're raising such a – and I guess people are saying we're doing more with less now. I don't know if that's the answer to that. Well, on a global scale? Yes. Absolutely. Employee productivity is at a historical all-time high, I believe. I know one of the big issues we had was refunds that we had. Is that not going to be an issue? Have we taken care of that? Because I know we had a big bill outstanding. It is still an issue. And that affects the net profit, correct? Yes. But we're raising that. Yes, and again, it's from a point of comparison. we had an original budget in the $30-plus million. And then if you remember, we revised that estimate down. I know. I realize that. Because we weren't seeing it through February. We were seeing it in Louisville. We were seeing it at the state level. We weren't seeing it in Fayette County. So the question was, is it all going to happen in the fourth quarter? And so those estimated payments, we hoped, would be business's way of saying, this is what I'm going to pay you come April 15th. And it wasn't sending a message that they were going to pay us more. So we backed off of the base and the number that we used. to build the 14 budget because we had large concerns that the net profit would not meet the original budget. Now it looks like that original budget was a pretty good number. Okay, thank you. Council Member Farmer. Thank you, Vice Mayor. I just want to compliment you on this memorandum. It's exactly what we needed at this point. this day. I know getting you to deal in nuance is probably not easy, but that's kind of what we gave you on Thursday night and in conversations afterwards, was just work with us a little bit, kind of like Council Member Acre's new sign, work with me people. It really is an excellent document. It goes to the heart of us making a decision about how to fund streetlights in the new year, and with these reclassifications, that takes care of the other $1.5 million out around and pretty much sets our ship right other than the other things we need to trim and do around on today, and I just want to thank you for work well done. Thank you. You're welcome. Council Member Lane. Could you go back to the Urban Service Fund budget that requires an additional $2.5 million? Could you tell us what the expenditures in that fund are and what the current revenue is, so to put that in perspective? Yes, sir. It's page 214 of the mayor's proposed budget. And the total revenue is $36.1 million. And the total operating expenses are $35.3. and then there is $4.9 million in CIP and operating capital for a total appropriations of $40.3 million. And that is the sum total of the three programs in the urban service, the refuge collection program, the street light program, and the street cleaning program. Okay. Could you also now break that out by the streetlights and what the revenue and expenses on streetlights are? That's the one that's mainly out of balance, right? And our estimate is that it would be underfunded by $2.5 million. Can you give us the sort of annual expense for the streetlight program and the estimated revenue for the streetlight program? Do you have that available? I didn't mean to catch you off guard, but I think it would be helpful to put this in perspective. I have a lot of presentations. I may be able to find it. I may not have brought it. I don't know. All right. I'm looking to see if it was included. One moment, please. Yes, sir. No, sir, I don't think I have that to show at this time. Okay. I tried to grab everything I could think that might be asked. Okay, well, I'm sorry. Maybe I should have given you a heads up. But the reason I was asking the question, if that's where our deficiency in revenues are, then that's the amount of money we need to figure out where to get that, whether it be from the ad valorem tax or transferring it out of the general fund. That's why I was asking that question. But we can maybe get that later today. That's not going to have to have it right now. Well, I think it has been identified at $2.5 million. And that's been the budgeted number that we felt that the Streetlight program needed in additional funds in order to be fully funded. Okay. Well, you know, there are going to be some electric utility increases coming into the future. And I think the Kentucky Utilities is filed for an increase. So that would also, as time goes by, increase the cost in that fund. Absolutely. All right. I think that's all that I have right now. Thank you very much. Councilmember Massadi. Thank you, Vice Mayor. Thank you, Commissioner Amar. I really appreciate you getting this information to us. It's really helpful. Would it be appropriate, Vice Mayor, at this time to have Connie Underwood come up and speak to us? Her numbers in comparison to the commissioners are different in some respects. So I was just wondering if she could just give us an idea where the differences lie and why. Connie. Connie, I'm referring to the email that you sent out at 515 yesterday. Thank you. This one. Yesterday, I also went through looking at revenues in the general fund, knowing that we needed to possibly make some adjustments today and do them fairly quickly. And I looked at the big four. The difference between what I did and what they showed was, obviously, the growth rate that we're using for employee withholdings going into next year in this model is not 3% anymore. It's something less than that. Do you know what it is, Bill? Actually, I was 2.98. Because I have a slightly higher employee withholding figure than they have, and my figure for franchise fees assumed no change in the rates because at this point I wasn't sure which way we were going to go on that in the end. My net at the bottom, however, was $199,000. So I also took these four and found that we could adjust them possibly and still come out okay. My employee withholdings figure at 3% growth was $167,982,000. Net profits were pretty close. I had $33,432. You're at 1%. 2.97. Is this something that you could put on the screen for council members? I think she's working off of a different document than the one in front of council members. They've got one to put up. That's better. Thank you. Okay. So when I looked at what we had going on for 2013 and then into 2014, my estimate for a projection through the end of June was $163 million, 2.2% growth for 2013. That assumes that June comes in exactly the same as June came in last year. I applied the same growth rate that I thought I saw in the budget document of 3.3% and got 168.4%. For net profits, it looks like we're going to come in, if June comes in exactly the same as June last year at 32.6%, at 9.3% growth, which is a really nice growth rate for the year. And next year's... That doesn't look like what I thought that was supposed to look like. I don't think that one's the one, Paul. The email at 5 is this one. I was like, no, that's not right. 3.3 didn't sound right. It's three. Thank you. That's my 515 email. So 167,982 is 3% for employee withholdings. Net profits, 9.3 for this year. I applied the 2.5% that was in the adopted budget for next year for a total of 33,432. For insurance, we're looking at about $25.5 million to come in for this year, also assuming June comes in the same as last. And our projection, if we apply the 5% growth factor that was in the mayor's proposed budget, would give us $26.8 million. For franchise fees, like I said, I assumed no change in rates at this point. and my estimate then for next year is for this year, $17.5 a 4.4% growth rate and for next year, $18.2, roughly $18.3 also a 4.4% growth rate. I will agree with Bill that insurance is a little concerning because we do have years in which insurance grows negatively but that has not been an issue recently because of our natural disaster problems in the area. I'll also say that in terms of net profits growing stronger than employee withholdings, that is not an unusual trend. I think that as businesses become more profitable, they then turn around and give employee wages, wage increases. So sometimes we see profits going up before you see employee withholdings going up. And then they'll switch the other way. As businesses give profits out to employees as raises, then their profits go down, percentage growth-wise. So my net at the bottom was $199,000 to the good for next year, just looking at the top four and adjusting them. Are there questions for Connie? Council Member Massadi, did you have questions? I did also go through and look at all the rest of the revenues, and that was also in the email that I sent, looking for areas where, based on what I see through May, what might we adjust next year's estimate to? and i think the net result of the rest of the categories was about a million a few of them go down and some of them go up thank you okay are there questions for connie council member ellinger thank you you have the total at 246.5 what would your overall total then be? Because it's at $298,500. $298,500. If you took all the rest of them as well. If you just took these three, then it's going to be about $200,000 more than it was adopted. I don't remember. Was it $197,000 or $297,000? I don't remember what the point was on the So both of you are taking in the same for the other part, about 50-some million for the other part of the revenues. From the 246 to the 297, you're both taking in the same about numbers? When you do just the top four. When I look at all of them, there's about another million dollars out there you could recognize. Okay, so you actually have another extra million. If you look at the rest of the categories that I sent you, yes. Okay. Are we going to look at that? We can if you want to. Council members have it in front of them if you would like to look at that. I wasn't sure how far you wanted to look or if you wanted to do all. Well, I think we want to get a total estimate, and since that's the number we're going to be working with, I think it would be helpful to know where we stand. Can you go down on that one? Will it pick it up? Vice Mayor, may it... Yes, Council Member Kaye. Council Member Kaye has a question. A clarifying question, if I can. Are the differences... Let me back up. It seems to me what you just told us is that you use slightly different assumptions about what's likely to happen to come up with a different figure on the big four. Is it the same? Essentially, are you doing the same thing? Are you just essentially slightly differing assumptions about what's likely to happen than the way in which Mr. O'Mara and his team have calculated? So we're just looking at differences in assumptions. Yes. Okay. Thank you. And will you just go over those assumptions one more time? I essentially applied the same growth rate that was in the mayor's proposed budget to the categories once I came up with a new projection. I said, okay, here's what 2013 looks like it's going to be, assuming June comes in the same as last year. And then I applied the growth rates that were in the mayor's proposed budget to that number. If that's the case, Vice Mayor, it seems to me the task for the council is to decide which set of assumptions we'd like to take and then use that figure, rather than going through each one, which I think we have the data in front of us, what those assumptions mean. So that would be my suggestion if we can do that. Let's look at the underlying assumption, figure out which one we want to buy, or split them. I don't know, but do it that way. Thank you. And I took franchise fees increase. I have no increase in franchise fee rates in the assumption that I did. Okay. Council Member Ford. Thank you, Vice Mayor. Connie just spoke to the question that I had. I do agree that Commissioner O'Meara has done a great job in bringing us his adjusted revenue numbers, which basically still have us at $297 million, but it does have an assumption that somewhere during the fiscal year there will be a rate increase. Now, what you've done for us, Connie, is you've gone and you've done an admirable job as well to go through and highlight the adjustments. But I guess the major difference is that your assumption does not include a franchise increase. That is correct. Thank you. Thank you, Vice Mayor. Thank you, Connie. Council Member Stenet. Thank you, Vice Mayor. And thank you both, Mr. O'Mara and Connie, for bringing us some additional revenue information. I think any time you look at either charter or any time we get into this process, especially right before we're getting ready to ratify, there's a lot of assumptions. We have to assume one way or another. You're within $1.3 million more than what the administration has presented. We all, I think the other day, thought the original $297 million was being very aggressive, given what's going on in the economy and how we're going to end the year. But at the same token, 298 looks attractive too. I would encourage us, unless there's a motion to raise our revenue, to stick with the number that we currently had so we can continue moving forward with our other discussions, or we can wait and approve a new number later if we feel like there's a need to recognize additional revenue. Because regardless of whether we agree with the franchise number, it all goes back into the general fund anyway. So the general fund over the year levels out. Some funds will be higher than budgeted. Some will be lower. And so I think whether or not you show the same franchise increase or not, it's still the general fund. You found other monies that they didn't. So it still, at the end of the day, equals out in terms of the categories. What affects the most, though, and what I want to make sure we get right, is the categories that the divisions are allocated that they have enough money to run their division. That's what I want to make sure. I know I see a big number in here on half a million for a detention center. That's one number that pops out. How did they get half a million dollars off on that number? I looked at what we'd received through May and then made an estimate for this year and then took a look at next year to see. I looked at, obviously, four prior years and then 2013 through the end of May and said if I was sitting here today, what would I estimate next year to be? Right. Well, again, I think we should be a little more conservative and stick to the 297 number we approved the other day and work our way through the rest of our list. Because if you're right, we have a good fund balance at the end of the year. We have a good cushion to help us throughout the year if the economy does turn south. If you're wrong and we approve it, we're in trouble. We've got to start cutting. So I'd rather be on the other side of the house. Obviously, having more than one person look at it and come up with a similar idea. Our difference really was in employee withholdings. and whether we were going to take franchise fees out for the whole year or not. And, again, it's all the whole picture in the general fund. Yeah. Then the other items were areas that, you know, if you wanted to go with them, I think you would be okay. Because based on our prior history, what I'm estimating is not out of line. But, yes, you could not do any of these. And hopefully then next year, as long as you have funded everything and you're good with the divisional budgets, then you would not need to adjust any of these, and hopefully next year you'll come in with a million dollars extra. Right. Have you shown the administration, have they seen this chart? I don't know. I didn't send it to you because I wasn't sure what you all wanted to do with it. I didn't know if they had an opportunity to look at it. Maybe they agree with you. I don't know. I gave Bill a copy when we came down. When you all got a copy, I gave you. So they do have a copy. So if you all could look at it, Commissioner, and if there's something on here you agree with an assumption that we may need to revise again, I hope you'll let us know. I haven't had it on the future. Right. No, not today, but in the near future, before next Tuesday. Before 3. Before 3. You said before 3 o'clock. Because we just got it, too, so that's. Well, as you saw, I just finished it yesterday at 5.15. Well, it is wonderful that you all, all of you, have worked so hard to get us what you think is up-to-date numbers. I mean, I think that's terrific. so we appreciate it. We have Council Member Kay and then Council Member Myers. Thank you, Vice Mayor. I agree with Council Member Stinnett, and it seems to me where we are at this point is we have already approved that number. Is that correct? We have approved a number, but it's with different category numbers of the Big Four, which some of us would feel more comfortable approving different numbers for the Big Four revenues. sources, I think. Well, then I'd like to make a motion that we approve the new number slightly, I guess it's the, with the calculations from Mr. O'Mara on the big four. Second. So your motion, I believe I heard Council Member Farmer. Well, there's a little, okay, Okay. Council Member Lane will take the second. So your motion is to approve the number 297-211-180, which is a little bit different revenue than we approved last week, with the new numbers for the categories employee withholding, net profit, insurance, franchise fees, as reflected in Mr. O'Mara's. Correct. Okay, now, Mr. Myers. Thank you, Vice Mayor. Does this number include the franchise fee increase? It does. Some sort of increase. For budgeting purposes, it assumes a franchise increase sometime in the second quarter of FY14. And the reason is to have both funds balanced. We need to have the general fund balanced, but we also need to have the urban service fund balance. And that urban service fund, I think we've all agreed, needs that $2.5 million revenue from somewhere. So since we already had the transfer coming from the general fund, we just left that alone. if council wants to balance the urban service fund with another revenue source other than coming from the general fund, that's to your purview as well. Okay, thank you. Connie, can I ask how you got to where you got without the franchise? What's the difference between the way that you got us where you got us and the way he did it? My employee with holding's growth is slightly stronger. Okay. Well, I like that option better. And let me ask you one more question. If we went that route, then at the end of June, because you suppose that June comes in exactly like it did last year in all four big four categories. So in just a few weeks, we'll have that answer. So if we need to have this conversation again in August, we'll have the information at that point in time. Is that correct? Yes, you should. Thank you. Although by then we'll have a budget, so it would just... It would have to be an amendment. There would be budget amendments that we would make, correct. And commissioners jumped up. Come on to the microphone. In fact, I just want a clarification. Which revenue number, you know, I'm not, it doesn't matter. We share the wealth. the key is that are you going to keep the $2.5 million transfer in the general fund that is subsidizing the urban service? I just want to make sure, because if you don't, then the urban service fund is out of balance. I just want to make that clarification. Council Member Lane. Mr. O'Meara. Okay. Do you have any kind of a seat-of-the-pants number where we would have a surplus number for the year end of this fiscal year? that we could, to me, if we could do a one-time fix on the deficit for the franchise, or not for the franchise, but for the streetlights fund, and then we could put an ad valorem tax increase in, so that would be fixed on an ongoing continuous basis, because if we don't make that change, then that account will be structurally unbalanced into the future. If we go ahead and modify the tax, we would solve that problem also. But we would need a short-term amount of funding that are available either from the fiscal year 13 or fiscal year 12 surplus to pay the amount necessary to get that balanced. I understand your suggestion. Unfortunately, I don't embrace it. whatever budget that the council wishes to adopt, my advocacy is for it to be structurally balanced so that total revenues are equal to or greater than recurring expenses. So using fund balance to balance the deficit of revenues would not be my recommendation. Leaving the transfer in, as we have discussed, whether it's Connie's revenue number or Bill's revenue number, you don't have a structurally imbalanced budget. And then when actions are taken and a decision is made to use fund balance or to use property tax or to use franchise fee, then at that point we can make budget adjustments within 2014 would be my advocacy rather than a budget that is based on use of fund balance at this point. All right. Well, if we increase the ad valorem tax, there's a delay for that to kick in. Would all that revenue be available for this coming fiscal year if we put that in then? The revenue from property tax, it's two large infusions. Most of it comes in in November and January. You have a 2% discount on October 31st. And people actually take advantage of that, but they don't put it in the mail until October 31st. So that's a November revenue. And then to keep from paying large penalties, it needs to be postmarked December 31st. That then is our revenue in January. So whatever rate you set this summer will be used to produce bills October 1st and will be revenue that is received in 2014, FY14. Okay. I think that answers my question. Thank you. Are there other questions? Connie, did you have a comment? I did. I just wanted to point out, I have been in the process, I don't know if all of you all realize this, when I was here in my prior life, every year for the annual budget document, we did a five-year forecast for the general fund and the urban service districts. In that five-year forecast, we separated the services so that you could see refuse collection, streetlights, and street cleaning separately. I have been in the process of updating that format so that you can get a better picture of streetlights. I don't have a good forecast for solid waste because I'm not clear what their plans for the future are in terms of capital particularly. But streetlights doesn't have that issue. Street cleaning doesn't have that issue. So for those two, I can give you a fairly good feel for a best guess of where the next five years look. And I can tell you where we are right now accurately. So I'll be sending that to you shortly. I just have a couple of questions still out that I need answered before I give it to you. Okay, that would be terrific. I think a lot of us would appreciate that. In the next couple of days probably. Okay. Are there any other questions or comments? Council Member Myers. Thank you, Vice Mayor. I guess I would just ask the administration if anybody in the administration is doing that same type of forecasting. Forecasting. Our project doesn't forecast out five years. Our project was saying where is the 2014 budget, if passed, what would be in each of the three programming buckets, and we have that document in process. Okay. In terms of what Connie said about separating out each of those funds or each of those services, are you guys doing that? Yes, that's my answer. Okay. So you're separating it out, you're just not doing five years out? Correct. Okay. And I would say that I wouldn't use very accurate as the description. I would use the word estimate because you have very specific identifiable expenses that go with those three different distinct programs. but you also have a pool of expenses that are shared by everyone that is in the urban service. So the assumptions that we may have used in order to allocate to each of those may be different from assumptions that Connie used. And that would be, if we did it separately, which sounds like we are, might result in a nuance and a variance between what's behind curtain A versus B versus C. But I do like the fact that we have two different sets of eyes looking at it, though. Okay. Thank you very much. And that is true. I have a slightly different view of other expenditures than I think they did in the model that I saw last year, maybe. That I saw last year. It's not hugely different, but it is just slightly different. Okay. Thank you. And I will say the reason I looked at five years was because I was trying to figure out what rate we would need to set to keep streetlights whole for the future, or at least a five-year window of the future. So, Council Member Massadi. So I'm clear, we've got about a million and a half dollars swing between the two numbers at the very end. And what would your recommendation be, Connie, since we are paying you to give us advice on how to proceed? I will say that I was originally a little concerned with the 3% growth in employee withholdings for next year that was in the mayor's proposed budget. I left it in for now because that was what was in and everyone had agreed to it at that point in time. I guess the big question is, if there's the feeling among council that the franchise fees will happen before the end of next fiscal year, so that that number is good, then the conservative route would be to take Mr. O'Mara's estimate and go with it because that leaves you a little lower in your growth rate for employee holdings. And I don't think 3% is hugely out there, but it is a little more aggressive. If you're not going to do a franchise, or if you really don't think that's going to happen before the end of the fiscal year, then you might want to look at picking up some of these other revenues and staying a little leaner on your employee with holdings growth rate for next year. Because you could do a little of each. Pick up some of the other revenues that appear more reasonable to come in and stay low on your employee with holdings growth. So basically it's all predicated whether or not we determine we want the franchise fees or not. And how positive you feel about the economy going into next year. Okay. Thank you. And so to clarify again, this motion that's on the floor is predicated on an increase in the franchise fee, and your number is not. I guess I would ask Council Member Ellinger to take the chair for a moment to speak to the motion so I can speak. Certainly. Vice Mayor? So last week, or what is today? Okay, yes, it was last week. During this budget cycle, it gets, you know, we get on this treadmill. What I'm thinking right now is that last week the council tabled the franchise fee. and my sense is that it was tabled because there were not eight votes to pass it. Now, that could be a faulty assumption, but unless someone brings it back up and it would have to be brought up in a Thursday night meeting, which is where it was tabled, I do not believe we're going to have an increase in the franchise fee by July 1st. and my personal opinion is this is very different from last year. Last year we built the budget on an increase in the franchise fee and we were not asked to vote on it before we voted on the budget. We all said yes, we think that concept is good. and when we need it we want the administration to bring it to us and we'll vote on it and we didn't need it which is a credit to the way that folks held their expenses down and within government this year is very different we've already been presented with the franchise fee and we have not passed it. And so I have a very difficult time voting for this motion because it's built on an increase in the franchise fee. And there were not eight council members willing to do that. So I'm going to have to vote against the motion just purely for that reason. I think Bill, I appreciate, Commissioner, I appreciate the numbers you brought us and your assumptions are are clear. But personally, I can't vote for it because we will not have an increase in the franchise fee. And just one other quick thing, we could do this every year if we wanted to. We could say, oh, well, we think we'll have an increase in this and build a budget based on that when we really don't have that. So thank you, Mr. Chair. Thank you. I'll relinquish the chair back, Vice Mayor. Thank you. Council Member Stennett. Thank you, Vice Mayor. Mr. O'Mara, last year we budgeted a franchise fee increase of $2.5 million, correct? Yes, sir, that's correct. We assumed an effective date of October 1. But it was in the budget last year? Yes, sir. Okay. You know, Vice Mayor, I know it's hard to believe, but I disagree with what you said. Well, that's a first. I know. But this is the same scenario. Regardless of when we were asked to act upon it, last year we were going to be asked in October. We knew that. This year we were asked to act last week. We just delayed that until August. There's no one in this room that can tell us that we're not going to raise it with all certainty. We could raise it in August. There could be a majority by then say we do. We think that's the best method. There could be a majority say it's not. We don't know that yet. And I think all that, to go back to what Mr. O'Meara started off with the meeting, all that we said last Thursday was we need until August to make that final decision. This is the same type of assumption we do for payroll taxes, property taxes. We don't know exactly what's going to be in each of those. And we go back throughout the year and do budget amendments when we see one fund trailing up or one fund trailing down. So this is no different in what we did last year and this year, in my opinion. Thank you, Vice Mayor. You're welcome. Council Member Kay. Thank you, Vice Mayor. I find myself in agreement again with Council Member Stinnett. It seems to me that we have a decision to make about the level of budget to adopt. Neither of the proposals that we've had, actually, from Commissioner Romero or from Connie, is different in terms of the assumption about what Council will do. And as far as I'm concerned, it's not an assumption that we will raise the franchise fee. It's an assumption that we will address the revenue question and the deficit that we now see in that fund in August or sometime after that. I made my motion because I think that the more conservative estimate that we have is the one we ought to go with. And I started, in my thinking about this, really on the other side of this question. I thought either you've made a decision about that money or you haven't. and I've become convinced that, in fact, we have the flexibility within the way we're thinking about the budget to adopt a number, make decisions that will fulfill the obligation that we have to have a balanced budget as we go forward. Thank you, Vice Mayor. You're welcome. Council Member Myers. Thank you, Vice Mayor. I'm not going to support this motion because there are several e-mails passed around among the council in the last few days that gave us lots of options for taking care of this hole in the budget that we have. And if we pass this motion, it seems to me, like the Vice Mayor said, we're eliminating some of those options, and so I'm not going to support the motion. Thank you. Councilmember Clark. Thank you, Vice Mayor. First place, I'd like to say I think Councilmember Stinnett's correct in terms of this Council's ability to increase the budget in some way. Maybe not necessarily the franchise fee, but there are other options that I think this Council is capable of coming up with in the first place. In the second place, I would say that I would support this because I think it's the way to go with faith in this Council to come up with this additional funds. And I think the idea we're taking the lower figure that's proposed by Commissioner O'Meara is the sound way to go as well. If Connie is right, then we have all benefited from that assumption. And I would disagree with Councilman Myers for those reasons too, George. So I would support this motion. I think it's the way to go. Thank you, Vice Mayor. Thank you. Council Member Farmer. Thank you, Vice Mayor. I, too, will be supportive. I believe that in terms of this discussion for this budget, this is the easiest placeholder for us to put in there with the least amount of discussion today to move forward with making other budget decisions, ratifying a budget, and moving on. I agree with Council Member Clark. I have faith in the brethren to make the right decision on the funding mechanism, whether it is franchise fee, property tax, or fund balance, or something else as yet, or a combo of those, but for assumption purposes, this is the right motion at the right time. I'm supportive. Thank you, Vice Mayor. You're welcome. Council Member Akers. Thank you, Vice Mayor. It's my understanding, too, that we are just accepting or adopting the proposed budget total that Bill has offered us, the 297-211-180, and that we're not necessarily married to how we got to that number, that revenue number. So, I mean, even Connie's is actually higher. So I would also agree that we should accept the lower of the two revenue numbers, and so for that reason I will also accept it. Thank you. I wonder, Commissioner, could you clarify if the motion passes, it will automatically assume the top four categories with an increase in the franchise fees. Can you clarify that? Based on Council Member Aker's comment. I'm sorry, I was talking. Okay. That's okay. If this number is accepted and the motion passes, can you clarify? That will rearrange the category numbers, correct? Correct. Yes. It will be a new assumption to new category numbers, not the old ones, and that will include a franchise fee increase, correct? It includes an assumption of a rate increase sometime later in the year. Okay. Okay. A franchise fee increase. Thank you. Council Member Lane. Thank you, Vice Mayor. I just put a quick pencil to the numbers, and Connie's number with the number she proposed for the four main income categories was $246.5 million, and Mr. O'Meara's number was $246.4 million. So there's only a $100,000 differential between the two numbers. The main difference is that Connie had a smaller amount for franchise fees and a greater amount for employee withholding, holding, whereas Mr. O'Mara had a lesser amount in those two categories. So I think we could adopt that number and we'd basically be adopting the gross revenue estimates that both of them came up with, although they may not necessarily end up in those categories at the end of next fiscal year. I'm still supporting my motion on that. Councilmember Henson. Thank you, Vice Mayor. Mayor O'Meara, your numbers specifically include a franchise fee increase, but it's assuming that it will happen later in the year, correct? That is the budget assumption at this point. If I could, as I started my presentation, it acknowledges that some funding option will be acted on. it does not necessarily lock in which one.