# Budget Committee of the Whole - April 26, 2022 > Auto-transcribed civic record · April 26, 2022 - **Permalink**: https://meetings.lexingtonky.news/meeting/5557 - **Source video**: https://lfucg.granicus.com/player/clip/5557?view_id=14&redirect=true - **Date**: 2022-04-26 - **Last revised**: April 26, 2022 - **Length**: 13,925 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 convened at 1:00 PM on April 26, 2022, in the Council Chamber. The meeting focused primarily on financial matters, with council members receiving two informational presentations related to the city's fiscal status and upcoming budget planning. During the session, the council heard a Quarterly Financial Update for Q3 and received an overview of the FY2023 Mayor's Proposed Budget. Both agenda items were informational in nature, providing council members with essential financial data and budget projections for the upcoming fiscal year. The meeting included one recorded vote and did not feature any public comments from citizens. The session served as an important briefing for council members on the city's current financial position and the administration's budget priorities for the following year, setting the stage for future budget deliberations and decision-making processes. ## Votes and Decisions The meeting concluded with a single recorded motion and vote. **Motion to Adjourn** - **Outcome**: Passed by voice vote - **Vote Type**: Voice vote - **Details**: The motion to adjourn was approved without a formal roll call. No individual vote counts or member positions were recorded for this procedural motion. The meeting records do not include information about who made the motion to adjourn or who seconded it. As a voice vote, no specific tallies of ayes, nays, or abstentions were documented, which is typical for routine procedural motions such as adjournment. No transcript timestamps were available for this vote in the provided meeting materials. ## Contested Items The meeting featured one significant area of contention regarding the Budget Stabilization Fund Usage, which generated heated discussion among council members. The primary disagreement centered on the appropriate use of the budget stabilization fund, with participants expressing divergent views on fiscal policy and long-term financial planning. Council members raised substantial concerns about future fiscal sustainability, questioning whether current spending proposals would jeopardize the municipality's financial stability in coming years. The discussion revealed fundamental disagreements about the proper role and utilization of stabilization funds. Some participants advocated for more conservative approaches to preserve fund balances for genuine emergencies, while others supported using available resources to address current municipal needs and priorities. A key point of contention emerged around the need for a comprehensive fund balance conversation. Several council members emphasized that decisions about stabilization fund usage should not be made in isolation but rather as part of a broader strategic discussion about optimal fund balance levels and fiscal reserve policies. The heated nature of the discussion suggests that participants held strong, opposing views about fiscal responsibility and the appropriate balance between current spending needs and future financial security. The debate touched on broader questions of municipal financial management and the proper stewardship of taxpayer resources. While the extracted data indicates this was a significant point of disagreement that generated substantial discussion, the specific outcome of the debate and any resulting decisions or actions taken by the council are not detailed in the available information. The contentious nature of the item suggests it may require additional consideration or follow-up discussions in future meetings to reach resolution. ## Quarterly Financial Update (Q3) The Commissioner presented the quarterly financial update for the period ending March 31st during this informational session. The presentation revealed positive financial performance, with the organization reporting a surplus of approximately $31 million for the quarter. The financial briefing covered several key areas of fiscal performance: • **Surplus Performance**: The reported $31 million surplus indicated stronger-than-expected financial results for the quarter ending March 31st • **Revenue Analysis**: Discussion included examination of revenue trends that contributed to the positive financial position • **Budget Allocation Review**: The presentation addressed how budget allocations were performing relative to projections The Commissioner led the discussion of the financial data, providing context for the surplus and explaining the underlying factors that contributed to the positive results. The presentation appeared to focus on both current performance metrics and trending patterns in revenue generation. This agenda item was designated as informational, meaning no formal action or decisions were required from the meeting participants. The quarterly update served to keep stakeholders informed about the organization's fiscal health and performance against budgetary expectations. The substantial surplus of $31 million suggests the organization's financial management strategies were performing well during the third quarter period, though the presentation did not indicate whether this represented a significant variance from budgeted projections or was consistent with expected performance levels. *Note: Specific timestamp information was not available for this agenda item in the meeting materials.* ## FY2023 Mayor's Proposed Budget Overview The Commissioner presented the Mayor's proposed budget for fiscal year 2023 during this meeting. The presentation outlined the administration's spending priorities and financial planning for the upcoming year. The proposed budget emphasizes three key investment areas: • **Public safety** - Enhanced funding for law enforcement and emergency services • **Affordable housing** - Increased resources to address housing accessibility and affordability • **Infrastructure** - Capital improvements and maintenance of city systems A significant challenge identified in the budget proposal is a $41 million funding gap that requires resolution before final adoption. The presentation indicated that various funding sources are being explored to address this shortfall, though specific details about these potential revenue streams were not elaborated upon in the available summary. The agenda item was structured as an informational presentation, allowing officials to review the Mayor's budget framework and priorities ahead of more detailed budget deliberations. This overview session appears to have been designed to provide a high-level understanding of the proposed spending plan rather than conduct line-by-line analysis or voting on specific budget components. The presentation serves as a starting point for the city's budget process, establishing the Mayor's vision for municipal spending and investment priorities for FY2023. Further budget meetings will likely address the $41 million gap and provide more granular details about departmental allocations and revenue projections. *Note: Specific transcript timestamps are not available for this agenda item.* --- ## Decisions - **Motion** — passed (0-0): Motion to adjourn --- ## Full transcript Music Thank you. Good afternoon, everybody. Good afternoon. Welcome. It's the Committee of the Whole budget meeting, April 26th. And the first order of business is a quarterly financial update. Commissioner. Good afternoon, everyone. First, I'd like to apologize. I have my good spring dose of Kentucky going on. So I apologize if you can't hear me. Please ask me to repeat myself. I'm happy to do so. Our first presentation for today is our financial update. This is for the month ended March 31st. So it is for the first nine months. And as we have been showing, this is our performance of actuals. So this is our actual revenue versus our actual expenses and transfers. So as of March 31st, we were ending with a surplus of about $31 million. Keeping in mind that this recognizes all of the revenue received that we will then turn around and pay out to the library, which accounts for about $4.5 million, as well as we have open encumbrances and commitments of $9.5 million. This is all part of what we're going to hear later as part of the mayor's proposed budget. and all of this goes into account when we're trying to determine how much we're able to pre-fund for the next year. So a good portion of this would be reallocated either in current year operating or through another method in order to help fund some of the items that are in the mayor's proposed budget for the pre-funding. At that point, unless there's any questions on this particular slide, I'm going to pass it over to Wes to discuss the revenues, and then we'll move on with Melissa and the expenses. Thank you. Questions? Okay, thank you. Good afternoon, Council Members. Just looking at the top four, we are seeing the same trend continue that we've seen for most of the fiscal year where we're having a large growth in employee withholdings relative to what our budget is. Just a note on that, there are two contributing factors. One is we have about 1,000 new businesses that are paying payroll compared with the same point last year. Anecdotally, a lot of that is businesses who call in and they say, we've got a remote employee we've hired in Lexington and we need to set up an account. But that's still, that's a new business to us. And also, a small number of our larger employers are driving a good portion of this variance. About 40 businesses or so make up about 50% of this growth over budget. And so when you think about the fact that we have 11,000 businesses paying payroll, it's pretty extraordinary how that's spread out and sort of fans out as you go down to smaller size businesses. With net profits, we're opening the mail right now and processing things, processing people's net profit returns. We can attribute this $6 million over budget mostly to our estimated payments that came in in December. We're tracking pretty well for the month, and we'll see to budget how that looks. But so far, we've put about $10 million worth net profits in the bank. Last year, we did 16. So we've still got a few days left in this month. And we'll see if we can hit that as we get our staff processing and putting in. Insurance has been up most of the year. A lot of this growth is tied to marine insurance. And then we have a few other areas that are growing as well. And franchise fees has just continued to be strong as electric and gas and water franchise payments have come in. Unless there are any questions to budget, we can just look at this year over year. Council members, questions? Yeah, I do have one. Yes, sir. on the roughly 40 largest businesses, is that an increase in the number of people they're employing or in the value of their payroll? It could be both, and that's not necessarily our largest businesses. Those have just been the largest growers this year. So we can look at them and see that some of the businesses had a very small footprint here in fiscal year 21, but in fiscal year 22, they've shown pretty remarkable growth. So we can attribute that to both additional people being hired and then also higher wages. Okay, so that's not the largest employers. It's the largest increase year over year in their fees. Yes. Thank you. Any other council members? Okay, thank you. Just seeing that we see the same thing year over year. The only thing I'll point out, the reason that net profits is not necessarily higher compared with the prior fiscal years because we still had some of the impact of that 2020 tax deadline that got moved to July, and we had a lot of those net profits that got posted in fiscal year 21. But other than that, everything is pretty on track with what we saw to budget. And you can see just in our two largest revenue sources just very quickly how this looks. And this is payroll. you can see we have this sort of quarterly trend with the exception of January. We've done really well compared with our budget and exceeded it in most months. And largely that's probably due to the fact that in July, October, and January, and April, the deadline is in the last day of the month. And so if people postmark their payments that day, or they just happen to send them in a couple days late or it falls on a weekend, we may have that activity occur in the next month. But overall, we perform very well to budget, as you saw in the last couple slides. And the net profits, this just really gives an indication of how much of that funding source comes in in April. We get about 50% of our net profit budget between March, April, and May. and that budget is around, you know, $48 million. So we're going to see a lot of that activity post this month, and so we just need to see how we end up. But so far it looks like we're tracking pretty well to end the month around where we budgeted. And then just looking at our overall revenue sources to budget, one that stands out is on services. We do have some good growth in some categories, such as golf course fees. We've talked about the EMS fees through House Bill 8. The only one that's really dragging that down is in our detention center with the bed fees. So that's causing that to fall under budget compared with some of our other sources there. And the only other one I'll point out is investment income. You can see that that's a negative. And there's an entry that we do that's called adjustment cost to market. And so if we were to sell the city's investment assets today, we would have to post that loss. And that's part of our accounting. And so that's why that's showing as a loss, largely because most of our investments are in bonds. And so as bond yields go up, the price of bonds go down. And so we would liquidate them for less money. Unless there are any questions for our revenue sources and total over budget, we can look year over year. It looks like there's none. You may proceed. All right. And again, we see the same trend. The only difference we'll point out is on services. That's where you can really see the impact of these enhanced Medicaid payments, golf course collections compared with what we've seen in prior year. there are any other questions i'll turn it over to melissa for expenses thank you good afternoon with our expenses here we've got some savings and personnel we're seeing those growing we've got several vacancies that are leading to the positive variance there on the the flip side, we are over budget in overtime. So that's a direct result of the savings from the vacancies as we're spending more on overtime there. When we go into our operating, we've got a $10.4 million variance there. That's our same professional services, supplies, repairs and maintenance accounts. It's the same ones that we're talking about every month up here. So that's making up that variance and we're going to be reallocating part of that positive variance with the budget amendment that is on for three o'clock today the insurance expense that is being accounting is actually booking that now so we'll see a change in that next month when we get these reports the debt service you see a savings there that savings if you all remember you've reallocated there was i know about half of that went to affordable housing to pre-fund a project there so So next time you see this report, that variance will not be there because it's been reallocated for various projects. The partner agencies were pretty much on track there. We had a couple of different payment timings and things like that. And then capital, you can see we're spending that. We had quite a bit of capital that we pre-funded in the budget this fiscal year. And so we are spending that. We know we have supply chain issues and order timings of getting things in. And so some of it is just spending a little slower than we had liked just based on the current climate that we're in right now. Overall, for the first nine months, we've brought in $31.2 million more than we have spent. And so you'll see we've got significant savings there. This chart looks opposite of the charts that Wes just showed. The charts that Wes showed, the orange was higher than the blue just about every month. This is our personnel actuals to budget. and you can see we've hit budget, we've exceeded budget one-ish month and we've come close. Now you see the spikes in there. October is a three payroll month, so we were paying our employees three times as well as April. So you'll see a spike up in April. The January budget includes payouts because we have a lot of retirements that happen in January as well as the sick checks happen in January. So you can see with all of that, we were very close to budget in January with all of the variants and the noise there. And here is our operating budget versus actuals. And you can see this really shows we're just not spending our operating. We're slow to spend that. And so we've got one month where we've exceeded budget. And that was a couple of large payments that went out to vendors where we had been working with them on that. Now, comparing to prior year, you'll see just about every category we have spent more in FY22 for the first nine months than we did in FY21. Like I said, the insurance expense, that is being booked now, so we'll see that change next month. I want to point out the personnel. That includes the changes in the collective bargaining agreements. We've got the compensation changes in there. We've also got additional overtime in the expense in there for FY22. So those are some of the larger things that are driving up that larger variance there from FY21 to FY22 in the personnel category. And here is our adopted budget versus revenue. So you can see we have some months where expenses are going to exceed budget revenues and some months where revenues are going to exceed expenses. And if you remember back on the first chart that the commissioner showed, our actuals are tracking pretty closely to where we were on the adopted chart here as well. And are there any questions? Thank you. We do have a question. At least one or two. Council Member Fred Brown. Thank you, Vice Mayor. Go back three charts to cash flow variance that has the partner agencies on it. It's, that could, let's see. Yeah, that's it. Under the partner agencies there, you've got actual versus budget. Are we paying some of the agencies prior to their monthly due or their quarterly due? No, we're not. Some of these, some of the agencies, it's a various ways of how they're paid. Some are paid monthly. The library is a monthly expense. Some are paid quarterly, and some are paid once or twice a year. So it's just a difference with the budget spread and the actuals, but we're not paying more than what we are supposed to be paying. That's going to be zero at the end of the year. Correct. Barriers part. Okay. Thank you. You're welcome. Thank you. Council Member Lamb. Thank you, Vice Mayor, and thank you for the presentations. I'm curious about over the last, I would say, two years, because if you say three, the first three years, we weren't necessarily in the pandemic and working from home as much. But as far as the operating expenses compared this year to last year, are you all measuring that? I mean, I'm just curious as to, I mean, oh, okay, duh. Well, I'm asking you to give. So it's almost a $4 million difference. Huh. Interesting. Okay. I forgot that that slide was in there. So that is interesting. I'm surprised it's not more, actually. I guess then the argument to take into consideration other ways of working methods from home and all that, it really does not give a large charge of expense savings. So thank you very much. Thanks, Vice Mayor. Thank you. I see nobody else signed up to speak, so thank you. We do have the ARPA slides at the end of the presentation for your reference for information. They're just there for reference. I just wanted to make sure to point that out for you all. Thank you. You're welcome. Okay. Next is the Mayor's proposed budget overview. Welcome back. Thank you. our first budget committee of the whole. I'll be doing an overview of the mayor's proposed budget for the FY23 year. And in this year, we have been fortunate to be blessed with having our artist in residence with us, who if you all did not know, she is a quilter. And so one of the things that we talk about this year is how we can make financial information more accessible to the general public. And so her being able to present finance in a quilt brings it to a different audience. So we thought we would take a page out of her book this year and present our budget in a very similar fashion. And so if you will kind of bear with me as we go through this analogy. The mayor's guiding principles is where we start. This kind of sets the framework for what we're going to see through the year. It helps us as far as the direction, and it kind of puts together the things that she wants to address in this proposed budget. So on this list were our investments in public safety and violence prevention, increased access to affordable housing through what we've traditionally done, as well as some new innovative methods, enhanced the quality of life in our neighborhoods and for our youth, to lessen the barriers for infill and development with the implementation of a new infrastructure investment fund, To kickstart the Bluegrass Ad Tech Development Corporation, obviously we want to continue to address and invest in our paving, our traffic and pedestrian infrastructure. We need to address some pent-up capital needs. We've not been able to address those in the last couple of years as we've been concerned over the economy, and those have started to gain a little bit of speed. So I wanted to address some of those and then also to focus on our wages So that we can continue to recruit and retain talented employees for the city So at the beginning she kind of sets the framework of what we've got So we need to at that time take our pulse on how we're doing this year So we look at our 22 revenues and we see how we're comparing versus where we thought we would be And so our revenues even though we projected an increase for this year have still been much stronger than anticipated. So it is allowing for us to be able to address some of the items as we did last year when we had a similar situation and propose pre-funding some of those larger items, things that are good for timeliness of the project or just things that allow themselves for transfer of operational costs in this year that helps alleviate expenses in next year's budget. The next thing that we looked at was our 23 revenue estimate. And now we look at all of those numbers ourselves, but in addition to that, we seek outside counsel. And so we typically have biweekly meetings with state and other city representatives. We meet with Louisville and representatives from the state, as well as we bring in Dr. Mike Clark, if you all recall, from UK Center for Business and Economic Research. And together, we can look at what's happening now. we project out what's going to be, and we provide our estimate for our 23 revenue. Keeping in mind all of those things, we want to make sure we stay in good standing with our rating agencies, because that's very important, and that can be a little difficult during tumultuous times, such as the COVID pandemic. So we want to make sure that when we are making our decisions and we are proposing the things that we're proposing, that they are sound financially and that they are looked upon as best practices. And so we have been able to maintain our AA rating with our rating agencies, and we're hoping to continue to do that through the application of this proposed budget. So at the core or at the center of our budget is our earned revenue. Those are all of the items that Wes typically discusses, and we're proposing to have $419 million of earned revenue. We'll go into that in just a little bit. But obviously you will see that our expenditures for next year are proposed to significantly outweigh our earned revenue. We're getting ready in this presentation to go through how we have pieced together all of the different funding sources that make that possible and where we have tried to make investments for needs of the city. So if you look at our general fund revenue breakdown, as you can see, we have a FY22 revised estimate that has an increase to almost all of our revenue line items. As you will further see, that continues to increase in 2023 for an overall increase from the 22 revised estimate of $399 million. dollars that was previously 377 to the 419 million dollars that we just discussed. So when we gather all of the tools as far as balancing, we are looking at the things that we've got for in our 22 budget that can help us out into next year, the items that we will have in next year as actual revenues received, and then any other component pieces that may be helping us out, which in this case is our friend ARPA that we have been using to stabilize some of our items. So when discussing the 22 items, we have the proposed pre-funding of $12.6 million. We have a balancing fund carried forward. If you all will recall, we balanced this year's budget with $8.1 million. We also, in the course of this year, have made some commitments, particularly in our compensation study that's a large piece we said we were going to address this year and then also we've typically used that to help with our increases to our pension so we're carrying forward that balance into the next year also in 22 considerations are a bond reallocation we have a number of items that we have bonded over the years that their projects have completed and they've left small residual balances. We have been able to go through and collect those items, kind of look at them and see where we could most appropriately fit them as far as addressing some of the capital requests. And what that does is help us not bond as much for the next year. It allows us to use money we already have to address the capital needs that we might see. As far as talking about our 23 resources, we have our earned revenue that we've discussed, and this budget proposes the use of $12.5 million of budget stabilization. If you will recall, that balance was $25 million. This uses about half of that and retains about half of it in budget stabilization for later decision making. And then, of course, our last piece is our FY23 ARPA. There's about $5.6 million of operating expenditures that are being offset with a grant fund for next year. As we go through ARPA, we expect that that amount will decline year over year, and thus we will be able to build our general fund revenues to support those items that ARPA will no longer be covering. So the goal is to try to decline that as we use it, and that is something that council has already approved and advised as well. So this contribution of 5.6, the majority of that is in the social services and human services salary replacement. So, when we look at all of the different pieces, I had mentioned that pre-funding in 22 was a big component piece of this budget. Last year, those top three items, extended social resources grants, street light transfer, and affordable housing, they were the same component pieces that we did last year. It's really helpful to be able to get ESR off the ground a little bit earlier to get our partners engaged, and so we found that to be very successful last year, and it's being proposed again this year. Our streetlight transfer has typically been around $2 million. In order to be able to continue that, we have had to invest $2.7 million this year just with the rising costs. So we've been able to do that transfer as well. And then of course, our traditional investment in affordable housing from the general fund outside of ARPA of $2 million. There are a number of other capital items and one-time items that are included in here. And some of these, as I mentioned earlier, are actually a one-to-one with savings that those units have in their budget currently. So if you'll look down through here, you can see items like the coroner morgue tables, the PDR on base. Those are funds that are existing as unspent in operating budgets today. And so instead of letting those continue to be unspent, we've been able to propose including those expenditures now so that the divisions can go ahead and spend the budget funds that they have in 22. But it's for things that they've actually requested in 23. Again, we briefly discussed the balance and carry forward items. That is the compensation study primarily, as well as the pension increase. Also in here is a space study for the government center. This is a new one for us. As we have gone through COVID, we recognize that our needs may have changed. And so while we are trying to figure out what our space plan and our capital plans in the long term look like, it'd be really great to know what it is that we need as far as space. So there is $250,000 in there for a space study. as well as some other things that are either pilot or may take a different, may look a little bit different in future budgets or may just not be a long-term item. Again, the last piece from 22 was the bond reallocation. As you can see, there was $2.7 million. That primarily went to the fire station alerting system as well as the fire boiler and chiller replacement. We tried to be very intentional that when those funds came from a specific division or department, that a reciprocal amount of funds were replaced for projects that they needed just to try and stay with the intent of the bonding in the past. It's not exactly one-for-one, but it's pretty close. So then the use of budget stabilization. Again, budget stabilization in and of itself is not a one-for-one item, so you'll see that the math doesn't actually balance perfectly. But keeping in mind that this is one-time funding, we try to be very thoughtful about one-time projects so that we don't have those ongoing costs that are hampering us in future year's budgets. So obviously the first item and largest is almost a $7 million investment in our general fund operating capital. We would typically see outside of our bonded capital some operating capital, And we reserve that for smaller items or items that have a very low, maybe three or five year useful life. They're not ideal for bonding. And if we had spread that out over the last several years, this number wouldn't be quite so large. But obviously, we've just been very careful and tried to make good strategic decisions over the last couple of years. So that's grown a little bit. And we have some larger items that are some other items that need to be addressed in there. We've also mentioned the two new funds, the Infrastructure Investment Fund and the Neighborhood Investment Fund, as well as the Bluegrass Ag Tech Development Corp. Kickstart, as well as some other one-time items. Just, again, being cognizant of the fact that not all of our revenues are reoccurring. And then, as we discussed briefly earlier as well, of the $5.6 million that ARPA is offsetting, About $3 million of that will be in human services payroll. Our homeless allocation has come out of there, as well as our summer youth program, workforce development, and some of our other social service-type activities. So as far as discussing our ongoing revenue and the use of our earned revenue, we have spent a lot of time this year talking about our investment in our people. That has come in a number of ways, in our compensation study, in our increase to the $15 minimum wage, our addressing our on-call pay and our hazardous pay, as well as a 5% salary increase for all non-sworn personnel. Also, we have negotiated five out of six of our collective bargaining agreements in the last year, which is astronomical as far as both work and time and effort that everyone has put into this. And so all of those things have really led to a massive investment in our people for this year and for the upcoming budgets. There are 12 new and expanded positions proposed in this budget. They are listed here. There were many, many more requested, and they're all valuable and important. However, these are the ones that we thought really needed attention this year. switching gears a little bit excuse me because everybody wants to know how much is in paving we have nine and a half million dollars good transition right we have about nine and a half million dollars in the bond for paving as well as three and a half million dollars in the map fund i think something that is really important to note is that we were able to contribute so much from the MAP fund to paving because salaries are no longer a piece of this budget. Salaries have been moved off the MAP fund over into the general fund for streets and roads and engineering. And so that's quite a big accomplishment. And I think, you know, when council kind of gave the direction, we took that wholeheartedly and really tried to make that work in this budget. So that does provide for a $5.4 million investment total as far as MAP, with three and a half of that being the paving maintenance crack seal for those arterials, Manowar, Tate's Creek, and I think a few others, but I can't remember off the top of my head. As far as our bond goes this year, it's a $42 million bond being proposed. There are three major categories in that bond. The first one is fleet. Our fleet represents almost a two-year investment. Typically, we have bonded about half of this in our fleet replacement, so this is quite a bit more than we have in the last several years, as well as our $9.5 million we mentioned for paving, plus the Mason-Headley Road widening project at For Sale's Road, as far as our streets go. And then also, one of the large component pieces for this year's bond is our $10 million investment in the chale roof. It is definitely aging and it is something that we need to address. So those three large component pieces make up the majority of this bond. As you can see, the last several years in 20 and 21, we were very conservative with our debt issuance, and now we're needing to address some of those items that have come forward. In looking at the overall mayor's proposed budget by category, you can see that 63% of our entire budget is for our personnel. On top of that, there's another 12% that is related to our debt service. So there is a good portion of our budget that really is difficult as far as making decisions, and we are very locked into a lot of these expenditures. operators. Operating represents about 14% of our budget, which is typically where we see the most flexibility in requests from our divisions, but obviously when it's that small of a piece, it's a lot harder to make changes to. General fund by department, we've included this slide just for your all's reference. Our public safety initiatives invest almost half of the city or over half of the city's with the remainder of the departments and divisions making up the rest of our overall budget. So as you can see, as with a quilt, as with a budget, as with everything we do, there are a number of different ways that these things can be put together. They can be part together and pieced together and woven to where we think that they're going to make the best sense and display for the city. At this point, that is the overview of the presentation. There are a number of slides on the other funds. This just addresses the general fund portion, but there's a number of other slides that are provided for your reference should you have any questions, and we're happy to address any questions you have at this time. Thank you very much. There are some questions or comments, starting with Council Member Fred Brown. Thank you, Vice Mayor. I'll lead it off. I've got several questions. Let's go back to the slides, probably the third one starting all the way back. First off, I want to congratulate your department and the budgeting and everything that's been put forth. In all the years I've been on the council, I've never seen a budget like this. That doesn't mean I like it. Understood. But I've never seen one like this, and it's, you know, there's a lot of results of that. The $12,600,000 would be the one right before this one. That one? Revenue overview. Revenue overview. That's the third. Second or third. Right there, right there. the 12-6 yes is that fund balance money um the 12-6 if not used to balance next year's budget would drop to fund balance potentially at the end of the year obviously we have several more months to go so that would be a component piece we did pre-funding i think last year so this is going to need a budget amendment to put this in but it's fund balance, right? If not used by the end of this year, it would drop to fund balance and have the conversation in October. Okay. Now, when we were looking at the fund balances there, is this the only item that's pre-funded or only amount to budget? So, 12 points. So, what we will do is adjust our revenues by about $20 million. Okay. And that will be the increase for FY22. And what that does is allow for this pre-funded component and that also alleviates the responsibility on that $8.1 million that was balancing our budget and allows it to carry forward into next year. Okay. Okay. So, you know, just a long story short, it's fund balance. It is where it's coming from. Now, we projected out $30 million of fund balance. Did you use any of that other than this pre-funding? So as the $30 million that proposes, well, let me back up just a second. The $30 million was a actual revenue versus actual expense estimation for March. So we are now a month past that. So that number is no longer valid, but we were presenting on March. So that's where that is. Because the year ending for nine months was $31 million. That was. Okay. One of the large component pieces that we do at the end of our fiscal year, which makes it accrual versus cash, not to get too crazy, is we make an adjustment for our payroll. And so for the days that are paid into next year that are actually attributable to this year, we have to book that back. That is 11 out of 14 days in this year's budget. So that could be an $8 to $10 million dollar end of year adjustment. So when we say we don't project fund balance necessarily, it is because there are so many things and there are very large things that happen at the end of the year that prevent us from being able to predict what that's going to be and potentially spend it before we have it. But all of our analysis looks like that there's going to be a big fund balance already at at 9.30 for nine months, we've got it. You used part of it in his pre-funding. That's what I consider use of fund balance. And then the other, on that second, go on to the next page. Vice Mayor, I'm not gonna have enough time to ask my questions. I think we can come back to you, sir. You get another minute. Unless somebody else will give me five minutes. Go ahead, one more. One more. Okay. Now, when you're looking at that physical, the second item there, the $8 million, balancing funds carried forward, isn't that part of fund balance also? It's not. Actually, right now it is tied up in the budget. So right now it is balancing our $22 budget. So we will have to release that by doing a budget amendment to add revenue. Yeah, but if you release it, then it becomes fund balance. It would if it was not proposed to be used next year. Right. That's what I'm saying. We're getting into the next year, so you're going to use the $8 million. So right now already, and in the prior year's bond reallocation, I think we already did a budget amendment on that, if I'm not mistaken. We haven't done that one yet? We have not yet. Okay. But you're looking at those three numbers right there that you're using to balance the budget this year. That's correct. So, I mean, and I just want to, my understanding is that's extra money that we have coming out of fund balance on all three of those items. So in the 22, may I respond? Okay. In the 22 budget, we pre-funded over $8 million, and then we also balanced with these carried forward funds of $8 million. dollars. So again, we had carried in 16 million dollars to balance the 22 budget. But we're not using it. We haven't used it yet. We have not used it yet. You are correct. Okay, thank you. Thank you. Councilman McCurran. Thank you, Vice Mayor. Commissioner, thank you and thank you to your team for all you guys to work on this. This is a it's a very big budget. It is. And no, it's a lot of work that went into this and I appreciate all that. My question is about the raise grant and match the five million dollars. Has that been approved from the federal government yet or is this something that we're just anticipating requesting? To my knowledge and I think Brandy's here to speak to it if I don't address it appropriately. To my knowledge we won't know about that until the fall but regardless we know that there are safety issues there and improvements that need to be done And so whether or not it is a grant match or not, we have issues that we need to address there. Is this still target focused on the High Street corridor? Okay. I was waiting for the look. That was the look. Hi, Council Member. So, yes, High Street is the primary area of concern. The Rays Grant does include that along with multiple other corridors adjacent to that that deal with bike, pedestrian, and vehicular safety. If the Rays Grant is not awarded, the $5 million is proposed to be used in the High Street, Manchester, Jefferson area. What that exact scope is, we don't know yet until we get put pen to paper. No, and that's okay. I just wanted to make sure that even if the $5 million was approved, I didn't know if we would be seeking another chance at the Rays Grant in the future or just saying, go ahead and let's go ahead and put the money towards that improvements. I think this is an area that has some safety concerns that need to be addressed in advance of another year's cycle. I just wanted to double check on that. Thank you so much. Thank you all. Thank you. Council Member Ellinger. Thank you, Vice Mayor Brandy. That was part of my question. So when are we going to have some information on the grant to know as we go forward? Yeah, as far as if the award is received? We've been told it could be mid-August, early September when they make the awards. And this is going to take care of, because one thing I put in, the budget stabilization was going to be the park and high street and all that. And that's what this is going to take care of. And I just want to make sure when I bring that up that this was going to be addressed so that gets taken care of. But this will. And what is the total number that we asked for on that grant? Let me see. Look at my notes. 80-20? The total project cost was estimated at $32,750,000. And so we provided, we being us and our partners, at nearly 31.8% match. So that's $10,410,000 that was provided as match. Five of that coming from the city. 1.75 from the Lexington Center Corporation. 2.5 from the Kentucky Transportation Cabinet, $800,000 from Town Branch Park, and then $360,000 from Lex Tran. Okay, thank you very much. And then I want to get back to the fund balance part that Council Member Brown had talked about. Mine goes into the budget stabilization. It's amazing. It looks like it's almost 50%, and we have 50% left. I think it's exactly 50%. Exactly. I know. That's amazing. Amazing how that happens. Yeah, when we looked at, and the reason we did the budget stabilization initially was because of the pension? That's correct. What cost do we have associated with that? Do you know? So there's about $2.3 million increase in pension costs for next year that we're anticipating, and that is included as one of the items that we're addressing in some of this funding. I'm sorry? And that is included as one of the items that we're addressing with the application of this funding. So when we did that, we were going to do about $2 million to $3 million every year as it kept going. So will that be the last time we'll need to do that? Or as we go forward, will there be more of these increases? Right. Obviously, as we increase, our wages and our responsibility goes up as far as our pension. And so I believe that that is – well, I don't believe. That is going to continue. We're going to have increases every year. We've been able to absorb a number of those over the last several years. But I think initially, if I'm not mistaken, maybe Melissa and Wes can speak to it better for me. I think what we were anticipating originally is that we were going to be hit very hard in one particular year. And there was no way that we were going to be able to absorb that. That has not transpired. We have been able to keep up with our increasing responsibility to this point. Wasn't that because of with COVID and Frankfurt? I think it was a legislation change. I'm sorry? A legislation change, if I'm not mistaken. Is that how it transpired? So with that, we won't need to keep the same amount in this. So if we went ahead and spent the 12-6 as the council, we'll be okay going forward? We're not seeing an indication at this point that there's going to be that one-time hit that we were expecting. so I think that the use of an application of budget stabilization has definitely changed and maybe the needs for it have changed. Okay, thank you Vice Mayor Thank you Council Member Lamb Thank you Vice Mayor and thank you for this presentation I kind of took some time this morning after reviewing all of this to go back and to Council Member Ellinger your comment about the or question about the pension. I just reviewed this this morning and there is a new house bill and it's Kentucky Public Pension Authority that has been created and now the Kentucky Employee Retirement System and the County Employee Retirement System have their individual boards. And as I recall, if I read it correctly, I think we'll know more about that after November of this year because they just had their first, the County Employee Retirement System just had their first board meeting this past week. So I think there's an opportunity for us to be educated on that in the coming months, and I think that would be very important for us to understand that full-fledged. But having said that, I agree that I think that our responsibility financially has changed immensely in response to all of that. Now I'm going to kind of go back into the creation of the budget stabilization was because we thought there was going to be a phase-in, and so we had a certain amount of money in there that was set aside solely for that. Well, now, as of October of this past year, we've gone and we've put our fund balance money into that, too. And the administration had already taken out their tranche of money, which was in excess of $12 million for projects that was presented to us in October of 2021 for the expenses that they wanted to use, the administration wanted to use for the government and community, which is great. Now we are coming back and we're going to use another 12.6 of that. When we haven't, we as a council have not ever exercised our right for our discussion of a fund balance. And I'm going to try to maintain my composure here because I have been saying this until I'm purple in the face. everybody knows around this dais that I have said we have not had our fund balance conversation. And I feel very strongly that we need to have our fund balance conversation going forward before we move forward of spending more out of this budget, this fund balance that has been put into budget stabilization. And I'll be so glad when we don't have that fund anymore because, or that reference of a fund because it confuses everything. And so I feel adamantly about this in my expression. I don't normally express this adamantly, but I feel adamantly that we need to have the conversation about fund balance before we move forward. I appreciate all this information with the proposed budget, but I am not in favor of another huge $12 million tranche coming out before we as a council have not had our opportunity to have the fund balance conversation. And I look forward to that day on Thursday. So thank you so much. Thank you. Thank you. Council Member Baxter. Thank you, Vice Mayor. Thank you, Commissioner, and your team for all your hard work in this presentation. I have a couple of quick questions about our bond projects. first of all the mason healy roadway widening at versailles road was this a topic of conversation prior to fayette county public schools buying that piece of property do we know let nancy speak oh i'm getting the whole team okay can you repeat the question again i'm sorry Sure. The Mason-Headley widening at Versailles Road. I was just curious if it had been a topic of conversation or in the works prior to Fayette County Public Schools buying that piece of property there. No. Thank you. Point made. And then, Commissioner, one more question about, you made a comment about our fleet investment being about a two-year investment. I just wanted to ask if you could clarify what you meant by that. Sure. Over the last several years, we have bonded about half of that for fleet replacement, half of what is included in the bond this year. The conversation of our fleet replacement, and it is much needed, came about in our ARPA conversations this year. And so I think originally the thoughts were that that was going to be funded maybe through ARPA. And so we wanted to honor the intent and the request to be able to replace that a little bit faster than we would have otherwise and so the the numbers that were provided as part of the ARPA conversation moved over into the bond as part of the mayor's proposed budget okay i appreciate that thank you i'm just going to leave it right there for right now i appreciate it thank you you're welcome thank you councilmember reynolds thank you vice mayor and thank you aaron for this presentation It's really set forth well, and I really appreciate it. Doug, I'm going to call you back up, and I know the answer to this question, but I want to state it publicly because it's a little bit confusing. When I heard that we were going to spend so much on the Mason-Headley intersection, my heart kind of sank because that's a lot of money that could be going into the Versailles Red project that desperately needs to be done, and we're doing that intersection there. So my thought was, well, why can't Fayette County Public Schools pay for it? And then we use that money for Versailles Road. And so I got the answer from several people. Could you explain why that can't happen? So Fayette County Public Schools is prohibited by state statute from using their funding off-site. So for the roadway repair, that roadway improvements that would be necessary for that site, they can't spend funding in the public right-of-way. They can only spend it on their site. So we're kind of forced to make the improvements that allow for that development to go through? We're the local agency and the state is the state agency on the Versailles Road side that is responsible for making the improvements in the public railway. Okay. And so the decision this year to put that money aside was because that money was available and you knew that it needed to happen. And so you just decided to go ahead and do it, even though we don't know the details of what they're putting in there yet. We've seen some preliminary layouts, so we have an understanding that there's going to be a school going there. And again, we have to provide what's called a letter of roadway adequacy. And in order to provide that, we have to essentially say that we're going to make sure the roadway is adequate. And to do so, we have to design and construct the roadway to be so. Okay, thank you. And then I had a question for Director Conrad. Please. Thank you, Deb. Director. Hello. Hello. I have a funny question. About the golf carts that are in the budget, $750,000 is a lot of money. Could you explain that a little bit and why there's a need to spend it all now on golf carts? Yes, thank you for the question. Councilmember, throughout the pandemic, we've seen record numbers of usage in our golf courses. We've not purchased golf carts. The last fleets were purchased in 2013 and 2016. So they are at their end of life. We utilize those carts, turn them back in for trade-in value. so we actually get more money back per cart. So while we're purchasing four fleets of golf carts, it's $750,000. The value is much higher than that. Our return on investment on golf carts is about 13 months, so they quickly pay themselves off. Okay, and how much, I know you said fleets, but how much is one golf cart? I would have to look that up for you and send it to you. Okay, so you're not sure how many golf carts for the 750? I believe there are 60 at three of the courses and 70 at one of the courses. Kearney Hills are electric. The remaining golf carts are gas. So there's a difference in price there. Okay. All right. Thank you very much. You're welcome. That's all for now. Thank you, Vice Mayor. Thank you. Council Member Maloney. Thank you. I, too, want to bring that. Doug, can you come back up? When did you find out or when did the city find out that they were going to do that improvement on Vassel's vote? Thank you. I don't have that exact date off the top of my head, but we probably started discussing six, eight months ago that they were interested in that property. We have quarterly meetings with them just to coordinate any issues we have, and they mentioned it in one of those probably two or three quarters ago. So my question, are we going to put $6 million on Mason-Healey and the state going to pay the rest on the state road? I don't know what the amount is for the state road, but there's not as much work to do there because the primary entrance will be off Mason Healy, not off for Sales Road for the facility. I mean, to me, I know that the state highway and the state has that rule and all that, but to me, I'm trying to figure out it's going to cost $6 million off Mason Healy to get an entrance off Mason Healy. That's when I look at that, because I always try to look at the state money, because that's state highway, and we try to do a match and get whatever we have to. But when I'm looking at why we're putting $6 million into it, and we're paying $6 million for an entrance off Mason Healy, that just concerns me a little bit. It's a little bit more than just the entrance. There'll be a turn lane. There'll be roadway widening. There'll be bike pedding improvements that will go back to just beyond the lane. So it'll go actually beyond that point. So it's not just an entrance for the school. It's a little bit more involved in that. So they're going to pass the lane and all back through that way to pull that entrance in? The roadway improvements, again, this is all preliminary because we just found out not that long ago, so we don't have design done. But preliminary sketches we did show us going back to just beyond the lane. And I know I've always been told many years ago that when Governor Chandler was the governor, He made sure he wanted Mason Healy to be four lanes and that the state, and there's a reason why people ask why there's no sidewalks and why the trees are always, the supposedly state owns half the property because the governor always wanted to have four lanes all the way to the hospital. And when I hear, I just want to make sure that the state may still own part of Mason Healy. I've always heard two mixed stories, but if you look at the question, because we've always tried to put sidewalks up there on Mason Hill for many years. And I was always told that if you put it, it will be halfway up in the middle of the yard, because the state owns the right of way, because if Governor Chandler wanted a four lane highway all the way to, But I know it's going to take a little while digging in that information, because I'd rather put the cost on the state, because they're the ones that came up with that rule that we can't. But even though we tell our developers, if they're going to build something, you're going to have to fill the interest. Everybody's been told to fix the interest, but if the state is now the one, and if we got a chance to make the state liable, if you can find some language, I'll be buried somewhere. But I've been told, because I tried to get sidewalk back in the 80s back there. And that was a rule that I heard and nobody wanted a half their yard to be taken out because it stayed on the majority of that road. So just give your heads up, you all might want to look into that. Will do. Thank you. Thank you. Council Member Fred Brown. Thank you again, Vice Mayor. Presentation up on the screen there, the third page. I got the revenue overview again. You're going to have to keep your remarks a little bit briefer because you're taking all my time. I'm sorry. I'll do better. Revenue overview. Quickly. That's not it. You're out of time, sir. Right there, right there, right there. No, that's not it either. I'm sorry. Okay, go two more pages. Yes. Maybe go one page, right there. Okay. Now, this gap of 41 million, that's to balance the budget. Yes. Currently, okay. I was always taught in school that you always looked at your revenues and then you did your budgeting based on revenues. My understanding and what I've got here is that you all looked at the expenditures of 460 million, how you did your budgeting plan is that a yes or no answer no i agree with you usually you would look at your revenues and then your expenditures and the problem is our revenues are in a lot of different pots this year and so this is our recurring revenues these are our earned revenues what we anticipate earning for the normal budget that's all you can spend 419 million but you're all in this budget is spending 460 million. Now, flip back forward, I'm sorry, forward a couple pages. And I just want this is for clarification. One, two, three numbers on the top, plus the budget stabilization of 12 million plus, plus the of 5 million 629, all those total that $41 million. I just want a clarification. That's where that $41 million is coming from to balance the budget, right? All those total the $460 million. Right. Okay. Now, go to your bonding. I'll be quick. Bond projects, page 38. Two thoughts on that. One is I'm not sure that we can spend all that money in the fiscal year. especially some new items that are on there. But the $42 million that's in there, when we look at the $460 million expenses to balance this budget, we're also borrowing $42 million on top of that $460 million, correct? Our debt service is included in that $460, but yes. I understand that, but we are borrowing $42 million on top of $460 million. Now, whether we spend the $42 million, it's another, you know, where you can spend it all in one year. But I want people to understand that this $460 million expenditure budget is really $500 million. Now, that's my take from budgeting and accounting and looking at this, And I want people to realize that we are also not only gathering all of the money that we have, except I think we're leaving some in fund balance, but we're gathering all the money up so that we can meet that $460 million. Plus, to relieve that $460 million, we have found out that we need $42 million more if we want to do all of our bonding, which I think is entirely too high. But anyway, I just wanted to point that out. I think probably some of the revenue estimates in there are a little high, but that's all I wanted to do on that, just to people know. Thank you. Thank you. Council Member Ellinger. Thank you, Vice Mayor. I think you make a great point there that when you do budgeting, usually you want to see how much your revenues are, and then you match that with your expenses. And as you've said, we have spent, where's the, 41 over that. And we've kind of been able to bring in different years. How is this going to look as we go forward in fiscal year 24 and 25? Well, unfortunately, and this shouldn't be news to anyone sitting here, we typically have less earned revenue than the expenditures that we need. Our revenues are not sufficient to meet the expenditures that we need as a city. And our costs are not getting any smaller. Our costs of employment are going up. Our costs of benefits are going up. With inflation, our costs of operating are going up. And unfortunately, this is not a new situation. What we were trying to do with this budget is compile a number of sources of revenue, some of which are one-time, and trying our best to match those with one-time expenses to address the capital needs that we've been unable to address, to address some of the systematic needs, affordable housing, some of the other things that we know is a city that we need, but trying to do it in a way that is strategic so that we're not having to absorb all of these as ongoing costs year over year. Obviously, the personnel is going to continue our operating. Hopefully, we'll balance at some point. We'll come down from these inflationary costs, but this is not a new situation, I think, for the city. this is just a new way of addressing it. And unfortunately, it uses some of our rolling balances and some savings that we've accumulated to address some of the things we haven't addressed in the last few years. And I understand that. But as we go forward, I think 24 and 25 are going to be very difficult because we're not going to have some of this money coming back in the ARPA and others. And we're going to have a big hole to fill. One thing I am glad to see is that we've talked about and that would be on slide 37 with the map money. Yes. So is this going to be a new going forward way of. Sure hope so. That we don't use our map money for personnel. We sure hope so. Okay. Because that was one thing that we talked about and I'm glad to see that. And let's see. I think that's all I have for right now. Thank you, Vice Mayor. Okay. Thank you. Council Member Bledsoe. Thank you, Vice Mayor. Just a couple of follow-up, just for Council members to keep in mind. Based on what, just a follow-up on what Council Member Ellinger said, 75% of this budget is personnel in debt. 75%. And as we've known, the last several years, we have been fortunate to use budget stabilization and other fund balances to provide a delta. But our revenue does not meet our expenses. It hasn't for several years, and it won't moving forward under this model. It just won't. That's going to take substantial change and from a foundational change to work. I won't give you my thoughts on that. But it's not sustainable, and it hasn't been. Second piece, the emergency rainy day fund, how much is in that account right now? Roughly $37 million. So it's less than the $419 million budget this year. And our goal is to have somewhere between 10% to 12% in that fund. Yes. Thank you very much. The EFO actually recommends three months operating. Yeah, and we're not going to get three months. But if we could get to 10% to 12%, I think that was the goal, the original intent of that, we're in a day fund. And as you know, several years ago during the first part of COVID, we actually projected using money out of that account and then did not. So it has remained that amount, but it is not 10% of our general fund or our, you know, large budget. Thank you. Thank you. Thank you. Council Member Maloney. I want to echo what Council Member Blusso said. I kind of agree with my concern. And before the pandemic, we were sitting here deciding how we're going to raise taxes. And we're on the same phase right now. If we do pass this budget, which I'm not a big fan of because I agree with the Council Member, we're still backing the thing. We're not making enough revenue to pay for these things. The question we need to ask ourselves is what taxes are we going to raise to keep this going in the next couple of years? And to me, that's why I brought up a few years last year, that we need to save as much money as I can. Because I sit here and we had a consultant here and everybody talking about how bad things are going to be in 23, 24. And I know we've got some great projects out there, but Also, I know if we're going to fund this, we've got to have a plan. And I don't see a plan how we're going to continue to pay for these things. And because we all need to go back to before the pandemic and just sit here as we all said in this meeting, I'll raise this tax, I'll raise this tax. We're all going to go back to that. And to me, we've got to be very careful before we spend a lot of money. And that's why I'm not a big fan, and I appreciate your budget. I appreciate, but that budget stabilization is a big concern of mine that we should not be spending a lot of it. And I don't mind waiting two or three years when you all warn me. You all out there warn me how bad it's going to be. And if we can save money and we can get through those next two years, and if God help us, if everything ends up being as great as everybody thinks it is, Then I think we start making our wish list to how we're going to pay for all these other things. But it concerns me that we're sitting here without any plans. And everybody's looking at how great things are when really it's not that great to me because I've had the experts tell me that. I'm on the airport board. There's a lot of professional people on that board. They understand, and I've listened to them very seriously because they see the future. They said the next two years, like you all said, it's going to be bad. And the airport is now starting to cut back, save money, because they want to get through this storm. And the storm is coming, folks. And we need to be prepared. We've got inflation coming, recession coming, we've got gas coming. I know it looks great right now, guys. We're looking at all this money. But I just got a bad feeling in the next two years we're going to have a bad, But if we smart and save our money like the airport and other businesses are doing, and we get through this, I think in two years we'll be looking a lot better. I agree with Councilmember, but our revenue is not paying for this guy, so that's my biggest concern. Thank you. Thank you. Councilmember McCurran. Thank you, Vice Mayor. And thank you, Councilmember Maloney, for some of those comments there. I agree with Councilmember Bledsoe that there's an overview that needs to be done on this. Moving forward, there's another conversation, not for necessarily today, but looking at what we have in front of us, that is absolutely necessary. My question for you is on the $42 million in the bond, how much of that is going to be a debt service? How much is our increase to debt service this year? Yes, ma'am. That's what you're asking. Is it through? $4.7 million. 4.7 million. Okay. I'll state my thoughts on that for now. Thank you. Thank you. Council Member Lamb. Thank you, Vice Mayor. To piggyback on what Council Member Bledsoe was talking about with the Rainy Day Contingency Fund, I recalled the conversation of us talking about the $50,000 a month and that we, I think we stopped that for a little while during one of the most previous budgets. Do we do that? Are we back into that now? It's reinstated in this budget. Okay. But this past budget, we did freeze it? This past budget, it was suspended briefly. However, there was an additional contribution made when we thought we were going to have to use it. Right. And so when we drew that back, we left what would have been those two years contribution in there based on council's vote and action. And so it was made whole through the course of the coronavirus pandemic. Oh, okay. Well, that's good. And I'll just say this. It's not one of the things that I brought forward for the budget stabilization, but maybe we should consider as a council putting in $4 million out of the budget stabilization if we don't have to deal with it for the pension and then bring that up to 10% of our revenue. And I'm just saying that out loud just because it just came to my mind. So anyway, that's my thought. So thank you. Thank you. Thank you. I see nobody else signed up, but I have a question or two or a comment or two. I want to kind of go back to a number of things that have already been discussed. But if we can go all the way back to the pension costs, I just want to clarify. My understanding is that initially the budget stabilization fund, although it was not officially earmarked for anything, I think people remember, but the discussion had to do with the impending fairly dramatic increases in the way in which pension costs were calculated. And that legislation has been changed so that the dramatic increases are not to be expected. But what will be expected is the normal increase. As the personnel costs go up, the pension costs go up, but not in a dramatically escalating way. Is that all fair to say? I believe that to be correct. Okay. Okay, so I guess secondly, I want to go back to the one time, to the gap in the present proposal, the $41 million. Yes, sir. How much of that is recurring cost? And I ask that question because if there are recurring costs in that, that will obviously be reflected in the forthcoming budgets. If they're not recurring costs, it will not be. So how close do we get to our revenue if we take out the non-recurring costs? If you will allow me some really quick math, I think probably where we get back to is between $16 and $20 million that we had to fund last year, both in pre-funding and in budget stabilization. That seems to be around from the $41 million, between $16 and $20 million of that will be recurring. Okay. So, projecting forward, if we put the recurring cost back in and add it to the $419 million, and we didn't change anything else in next year's budget, which fortunately I will not be around for, we would be looking in order to balance that budget we would be looking for revenues of $439 million is that correct we would also be looking at the next year's revenue increases as well but yes you're correct do we have an estimate of the increase at this point so right now we're at 419 is it possible that the increase would come close to adding another 20 million bucks Well, we've taken a big step from our 22 adopted of $377 million. The $42 million increase is not typical. However, I don't know if Wes has an idea of, and I hate to put him on the spot like this, if we can't get that to you fairly quickly, we will absolutely give that information to you. but I don't know if he has something to impart. I'll just, I don't know if this will answer your question directly, but just say a couple things. Our 85% of our revenue can really be tied to five factors. It's how many people are working in Lexington, how much they make, how profitable businesses are, how much insurance people are buying, and what's the weather because that determines what people use for their franchise fees. So we can have a pretty good idea of what we're going to see over the next year, but it starts to get a little fuzzy as we get out. With that being said, Dr. Clark has done a projection, and we've looked at some history, and we've seen that typically we'll grow in our payroll around 3.5 to 4 percent, and that's just when you look at the long trend and you sort of measure everything out, that's probably what we're looking at. When you get to our second largest revenue source net profits, you can have double-digit percentage swings in either direction because it's all business profitability. And so once we sort of get outside of fiscal year 23, it just, you need to have a wide range in what that might be as far as what you're looking at. Over the long term, we can have a growth number that we can feel fairly confident in, but in the short term, it's just sort of hard to see. The crystal ball is fuzzy. Okay. That 3% increase, I'm sorry, Wes, the 3% roughly, I haven't got the base number in front of me. What does that mean in dollars? As our budget gets larger, that does tend to change. But 3% on $400 million would be about $12 million. 4% would be $16. And as we go up, we'll see that continue to grow. Okay. Do you want to add something to that? I was just going to say, this seems to be an equilibrium point at where we've been in the last couple of years. Whether the funding mechanism be pre-funding or budget stabilization or now ARPA, which is fantastic, we seem to hover around the same growth trends. Okay, and my initial time is up, but I'd like to speak again. so I don't need five minutes, but I need a few minutes. This has to do with the whole way in which we've thought about the budget stabilization fund. And my understanding is there's been a change in thinking about the way that that does or does not impact our larger fiscal solvency and the way in which bond companies might look at our rating. Can you explain if there's been a shift of focus and what it is and why? I think one of the things that the rating agencies look at is our liquidity, our cash that we have on hand, and they want that to be more substantial than what it is. What they don't want to see is us continuing to balance our budget with one-time funding that is not recurring. They want us to get back to a place where our revenues, our earned revenues and our expenses offset each other without that. and unfortunately based on what we've been seeing over the last many years, that has not been the case. So we've been using the budget stabilization or pre-funding mechanism or depending on what it is to be able to balance those items. Fortunately, we've not had to access a lot of that. We've had good revenue growth over the last couple of years and haven't had to use what we're projecting to use, which is fantastic. That's what you hope to see. But going into the year with that knowledge is not something that we can project that far out ahead. When you think of it overall, $25 million is not that much money as compared to a $410, $20, $30, $60 million budget. It's actually a fairly small margin. so that is not necessarily they're not looking necessarily at the dollar amount they're just looking at how we as a philosophy want to do our revenues and expenditures they also have noted that there are a number of folks in this past year that have significant deferred capital and maintenance that they've not done over the last several years so they're also seeing some of this one-time funding be used for that kind of expenditure and that is not something that is negatively looked upon. Okay, and so that might explain why the administration was willing to propose 12 plus million dollars out of budget stabilization. I guess then a comment that's really about questions that are not for you, but information for council. Until or unless council actually takes action on any budget amendments, the money that's in the budget stabilization fund is in the budget stabilization fund. So we have the option to look at that in its entirety and determine the appropriate allocation of those funds. Council Member Bledsoe. Thank you, Vice Mayor. And just to further reiterate kind of what you both mentioned, just in very plain terms. in the last i've only been on council for eight years but in those first five or so years we were or between the five and covid we got to the point where we were about 20 million dollars short in our revenue and expenses consistently so that delta meant as long as our revenue was growing about three and a half percent and our expenses were going eight percent that doesn't take a genius to figure out it doesn't work so what's the first thing that gets cut maintenance building capital infrastructure, and we did the most important things we had to do, and correct me if I'm wrong, on capital bond. And we bonded things that we had to get done because we didn't have the capital costs, the operating costs, to do it. Because you can't cut, I mean, you could cut personnel, but routinely we weren't. If 67% is that, that is still the fundamental thing going forward. So we can spend down the money, just like Vice Mayor said, down to zero if we wanted, and put that money toward capital costs and infrastructure costs and deferred maintenance, which we've all seen over the last however many years we have not done because, again, we've not done it because our revenue has not met our projected expenses. And I doubt in next year's economy that's going to change. I mean, 3.5% is probably not going to be enough to make that number come together for us. So I would just encourage you to keep that in mind as we move forward in these conversations. Thank you. Thank you. So I see no one else signed up to speak, so thank you very much for the presentation. Councilmember Ellinger is- I got a question, I've used my two five minutes, but I didn't use all my second five minutes, so FYI. But it was when it came up, the economic contingency that Councilmember Lamb asked, and I wanted to follow up on that. Yes sir, with the council's intelligence, Councilmember Ellinger. Thank you, Vice Mayor. We had suspended using the $50,000 each month for the $600,000, but is there also another provision in there about a quarter of the surplus? Is that part of that that we put in there, too? I'm trying to remember on how that thing is set up. Not that I've seen in practice, but we can certainly look back at the ordinance. Because I thought there was something in there that we used to, if we would have a surplus, that we'd also put part of that surplus into the contingency. They're looking. Okay. That's all right. You can get back with me on that. But I just, we're instituting the $50,000, and I see somebody standing up here. So the ordinance for the economic contingency fund was changed a couple years ago, maybe three, four years ago. So the funding sources for it are the monthly deposit of $50,000 required unless the 10% goal has been met. In the event funds are withdrawn for revenue stabilization purposes, deposits that fiscal year may be suspended, which was how the budget was put together in FY21. And the second funding source is interest earned on monies in the contingency fund will accrue to the fund. So we are no longer putting a portion of fund balance to the fund based on the new ordinance. Okay, because at one time we did that, right? Correct. And so we've changed that now because, so it gives us more flexibility on our surplus. Yes. Okay, just checking. Thank you. I see that Council Member Maloney, who's also spoken twice, is asking for recognition. I have a couple minutes left. Council Member Maloney, I'm just asking if Council will object to your being recognized. Is there any objection? Council Member Maloney. I'm sorry, guys. I didn't hear him. He doesn't speak very loud. I apologize. I didn't hear him. But my question to you is on the bond rating. We used the rainy day fund to help keep our bond rating low. We tried at 10%. In some places, the bond rating has gone up to 15%. Are you concerned about the bond rating, if we're going to continue to go at this pace and the way the economy is going? Do you think they're going to make it more restrict on rules on how we pay and how we bond in the future? I think when I had my debrief with the members from Moody's and S&P, one of the main things that they said as far as the bond rating for the city is the retirement and the drag, if you will, that that is on our ability to have a higher rating. We cannot affect how much of the KPPA and all of the other component pieces of that are funded. And so that, unfortunately, negatively impacts our bond rating as well. And that's really not something that we can do anything about. When we talk to them about an increase in bonding and having a bond, maybe one that we just finished recently and then one that we would do again, and having it for those items such as our fleet replacement, our capital improvements, they were not concerned that that was going to be a problem. So I didn't get any indication from them that that would potentially, any of these decisions would lead us to a downgrade or anything of concern for them. So the last point, I thought our budget stabilization helped us a lot because we had a lot of money. Now we spend that budget stabilization and we're below our 10%. That's my worst fear because we're not going to have that budget stabilization advertised because we're going to spend a lot of it. I think their response, well I don't think their response, their response to that was our cash available would have to be so much higher than what it is, the difference of you know, 10, 15, 25 million dollars was not going to make a difference as far as upgrading or downgrading our bond. I'm being nibbled to death by ducks. Unless there's objection, I'll recognize Council Member Bledsoe. I'll recognize Council Member Bledsoe. Thank you. Just one point of clarification. Commissioner. Yes. The point is not that they don't like us having a slush fund, which is what it looks like. the name budget stabilization. They don't like that we use it to supplement our budget whenever we need to put the delta in. That's the point. We can reallocate it to anything else in the budget and call it whatever we want towards capital costs. It's just, we can't, we don't need to have that account look like this anymore. Period. Thank you. So I'm going to take the privilege of the chair and just make one brief comment. Investing money is as good as savings money at certain points. And what we're doing now is we're trying to catch up for investments that we haven't made in the past with the money we've got to prevent costs in the future. So it's not just putting money in the bank. It's investing money if that is warranted. So I think now I see nobody else signed up to speak. Thank you again for your presentation. And unless I think we've got the two other items of information only. unless there are any questions about any of that, I'll accept a motion to adjourn. I move. Second. Motion to adjourn and second without objection. We stand adjourned. I move. Bye.