# Budget, Finance & Economic Development (BFED) Committee - February 18, 2025 > Auto-transcribed civic record · Committee · February 18, 2025 - **Permalink**: https://meetings.lexingtonky.news/meeting/6341 - **Source video**: https://lfucg.granicus.com/player/clip/6341?view_id=14&redirect=true - **Date**: 2025-02-18 - **Body**: Committee - **Last revised**: March 27, 2026 - **Length**: 15,721 words > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed by OpenAI Whisper-1, with speaker labels folded in from Granicus closed-captioning. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude Sonnet. Speaker labels and verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Budget Finance and Economic Development Committee met on February 18, 2025, at 1:00 PM, with Chair Brown presiding. The meeting covered three agenda items, all of which were informational in nature: a Monthly Financial Update for January 2025, a Lexington Economic Outlook and Occupational Tax Forecast, and a discussion on Parks Sustainable Funding. Across these three presentations, the committee received updates on the city's financial position, economic conditions, and parks funding considerations. A total of 2 votes were taken during the meeting, and no public comments were heard. ## Attendance All eight members of the Committee were present at the February 18, 2025 meeting. **Present:** - Chair Brown - Councilmember Gray - Councilmember Savigny - Councilmember Lynch - Councilmember Ellinger - Councilmember Morton - Councilmember Sheehan - Councilmember Baxter No members were recorded as absent or late. ## Votes and Decisions The committee took two formal votes during the February 18, 2025 meeting, both decided by voice vote. - **Approval of the January 21, 2025 Committee Summary** [timestamp: 0:02]: The committee voted by voice to approve the summary from its previous meeting on January 21, 2025. The motion passed. No individual vote counts or mover/seconder information was recorded. - **Motion to Adjourn** [timestamp: 1:42]: The committee voted by voice to adjourn the meeting. The motion passed. No individual vote counts or mover/seconder information was recorded. Both votes were conducted as voice votes, and no roll call votes were taken during this meeting. As a result, no individual member voting records are available for either motion. ## Monthly Financial Update for January 2025 [timestamp: 03:00] Director Holbrook presented the monthly financial update covering the first seven months of Fiscal Year 2025 (FY25). The presentation provided an overview of the organization's financial performance, with a focus on variances in both revenue and expenditures. No further details regarding specific figures, line items, or the nature of individual variances were included in the available meeting data. No concerns, debates, or follow-up actions were recorded in connection with this item. The item was informational in nature, and no vote or formal action was taken. ## Lexington Economic Outlook and Occupational Tax Forecast [timestamp: 14:38] Dr. Michael Clark delivered a presentation on Lexington's economic outlook and occupational tax forecast, covering employment trends, wage growth, and potential risks to the forecast. The presentation was informational in nature, providing the Committee with an overview of current and projected economic conditions relevant to occupational tax revenue. Dr. Clark's remarks addressed key indicators including the state of local employment and the trajectory of wage growth, both of which are central drivers of occupational tax receipts. Dr. Clark also outlined potential risks that could affect the accuracy of the economic forecast, though no specific risk factors, numerical projections, or employment figures are detailed in the available record of the discussion. No votes or formal actions were taken as a result of this presentation. The item served as a briefing to inform the Committee's understanding of the economic environment underlying the occupational tax outlook. ## Parks Sustainable Funding [timestamp: 1:02:41] Director Monica Conrad and Michelle Kosiniak presented on the topic of Parks Sustainable Funding, covering the Parks Master Plan, current operations, and future funding strategies in the context of the recently passed Parks Funding Ballot Referendum. The presentation was informational in nature, providing the committee with an overview of where the parks system currently stands and how the department plans to move forward following the ballot referendum's passage. No vote or formal action was taken as a result of this agenda item. No additional detail on specific funding figures, debate points, or individual concerns raised during the discussion is available from the provided materials. --- ## Decisions - **Motion** — passed (0-0): Approval of the January 21st, 2025 committee summary - **Motion** — passed (0-0): Motion to adjourn --- ## Full transcript . . . . . . Good afternoon. We'll go ahead and call this meeting to order for the Budget Finance and Economic Development Committee for February the 18th at 1 p.m. Thank you all for joining us. We'll go straight to our agenda and the first item on the agenda is the approval of the January 21st, 2025 committee summary. Second. All right. Chris, are we good? I might have jumped the gun. Are we okay? Okay. All right. A motion was made and seconded. Are there any questions or corrections? Hearing none. All those in favor, please say aye. Aye. Are there any that oppose? Hearing none, that motion passes. Next, we'll go to the monthly financial update for January 2025. And in lieu of Commissioner Hensley, we have Director Holbrook. Thank you. Good afternoon, council members. So this is a look at our first seven months performance for FY25. Typically, we have this sheet that goes over just a high-level overview of what's going on. So we've spent slightly more in expenses and transfers than we've collected in revenue so far. You can see in most months, that's by design. We don't collect the same amount of revenue every single month. Our revenues have been very close this year, with a positive variance right now of 1%, which we'll get into in detail here in just a second. Personnel is running within 2.5% of budget through the first seven months, which has been very close. And then the budget staff is continuing to monitor and assess if dollars become available for reallocation. Much of the variance right now is encumbered for contracted expenditures. So that's something just to keep in mind as we go through this conversation. So looking at the revenues so far, in payroll, we're within 0.1% of our revenue to budget. $77,000, that is very, very close. It will likely never be that close again on a base of $155 million. One of the things to note there, it was a lot higher last month. We have seen some delays in mail and processing, not just for us, but I think nationwide, that have caused some issues. And we're starting to see some of that catch back up, and so we're going to have to wait and see if that's something that is going to impact us longer term, or if it's not just a mail issue, but we're also seeing some slowing. But either way, we should start to see some of that catch back up as we get into our February reporting and get some of those collections in. With net profits, we're running $1 million over budget, about 5%. We'll see as we get into our April tax season, March, April, May, we collect about 50% of our net profits budget in those months. The fact that we're running positive to date is a pretty good sign. I think that means we're on track to hit what we are anticipating to for this year, maybe slightly more. But it's something that we want to monitor because we really don't know what's going to happen with that revenue source or second largest revenue source until we open the mail whenever it starts to get here during tax season. Insurance has continued to grow very strong to budget and also just year over year. Insurance is what we see typically is a strong performer in each of the categories. You might see some variation with some categories like auto or health being up or down in any given year, but overall, insurance collections continue to be strong. Franchise fees, I think one thing that's important to figure out to remember with franchise fees is as we go through a winter and we see a season where people might be using more gas, more electricity and we see a negative variance here, that's something that I think causes some questions sometimes. With the collections here, this really only reflects payments people made through December and that really wasn't the point where winter was getting as intense and as extreme where people might have been using more gas and electricity. So as we get into our February reporting, we may see that variance start to tighten up a little bit. It was a lot closer to budget I think prior to this month so that's something that we'll look at and see as we get into February and later on in the fiscal year. With our other categories, the only one I want to point out to budget is under services and the main cause of that is the result of excess fees in collections being lower than budgeted. That's the result of some payments from some of our other constitutional elected officers and so that's causing that to be drawn down. Some of the other categories are slightly under budget or performing above budget but that's really the one that's causing a large negative on that variance. Some other categories just to note, EMS collections are slightly under budget within about $75,000 so pretty close and then golf course collections not something you see getting very large over this part of the year but then as we get into spring they're already running $205,000 above budget so that's something that we should see continue to grow and help eat into some of that negative variance right there. Just looking at it year over year, you can see we did tighten up our budget a lot. We've talked about that in previous months and you can see how even though we are running much closer to budget from our actuals when you compare with year over year you can still see some of that strong growth that we've talked about. If we start to see some of this payroll come back and it really is just mostly a mail issue then you can see that some of the growth just all across the board and in payroll particular is continuing to be very strong as we go into the second half of the fiscal year. I'm happy to take any questions that council may have related to revenues. Otherwise I'll kick it over to Director Luker. Thank you . Any questions? All right. I think you did a good job of explaining. We don't have any questions. Director Luker. Good afternoon. I'm here back with personnel. We're over the 1% mark where we had been under the 1% mark for our variance for the last three months or so. In the month of January alone we added about $45 million of personnel budget to our budget. You can see a big chunk of that $187 was in January. Out of that we spent about $41.2 million. That jump in the variance is due to our January budget to actuals there. We had some savings in our full-time salaries which then we had some overages in our health insurance which we're watching that. We're meeting with them later this month to review that. We had some savings in our payouts. We also had savings in our overtime. Overtime sounds kind of funny given the winter storm we had in January. We had savings in our sworn overtime. A lot of that is due to the detention center being staffed. We had some savings with our overtime at the detention center because we are seeing those staffing numbers go up out there. That offsets some of our overtime that we were overspent in some of our public works divisions for the month of January. When we go to operating, we added about $7 million of budget in our operating for the month of January. We spent about $5 million more. We've got about $2 million of that in our operating. One thing I would like to point out, while we have the overtime in for the winter storm in January, some of the salt and some of the professional services costs where we paid our contractors and we paid for the salt, those bills didn't come in until February. Some of those have not hit yet in that January operating number, but we'll see those hit for our February number. In addition to that, we had some changes in equipment accounts. Most of these are spread out across government, so there's not one big chunk that we can look to to say that's where the variance is coming from. Insurance, we're right there at budget. Debt service, as you all know, we just sold those bonds for FY25 and we'll get that debt service paid. Partner agencies, we're right there. Capital, we're just spending ahead of budget. On the next slide, you'll see we're spending more in operating than prior year. We're spending more in operating than prior year. You can see we're spending 12% more in personnel, almost $20 million for the first seven months that we've spent in personnel. 7.2 million more in operating for the first seven months. You can see we're spending more than prior year, but we're not spending to budget yet in 25. With that, I will take any questions. Thank you, Director. First we have Councilmember Gray. Thank you, Chair Brown. Previously, a Councilmember Savigny, he asked regarding for us to have a report of the full budget, and that includes with our EQPW, and I'm noticing in the packet, it says that we're not you, and I'm noticing in the packet, it's still excluded. So this meeting is a week earlier than normal schedule. We need additional time with our close with accounting because we don't get the actuals on the first. Accounting has to go through their closing process each month. It takes at least until the 10th. We then have to pull that data out. We do not have additional time to get the reports prepared. Getting these reports and getting them for the packet was a struggle. We're working on that with accounting. We've shared some information with Councilmember Savigny, and we have a meeting set up to discuss how we can move forward with those other fund reports with Councilmember Brown. I'm just hoping that one day we will actually see the full budget instead of just a little small portion. I want us to be intentional about seeing the entire budget, not just what people want us to see. Does that make sense? Thank you so much. Thank you, Councilmember. Any other questions from committee members? I don't see any. Thank you for the report. Committee members, also in your packet is the ARPA for information only for your review. We'll move to the next item on the agenda, and that's the Lexington Economic Outlook and Occupational Tax Forecast. Today we have Dr. Michael Clark, the Director of the Center for Business and Economic Research at the University of Kentucky Gatton College. He is here to present the Annual Tax Forecast. Dr. Clark, thank you for your work, and thank you for joining us today. My pleasure. Chair Brown, members of the committee, it's always a pleasure to be here to discuss our outlook, our update of how the economy is doing and how we think the economy is going to perform over the next year. I do also want to introduce Wells Apua, who has been our undergraduate RA this year. We try to include undergraduate students in the work that we do so they can learn a little bit about how these things work. I'm pleased to have had him working with us this year. In terms of our outlook, one of the things that I really want to communicate is, despite a lot of things going on, the economy actually seems to be in relatively good shape. One of the things that I'm going to be talking about today is that we do see the economy slowing down, but the real point that I wanted to make is that we've seen some really extraordinary growth over the last few years, well above what we typically have experienced prior to the pandemic. Where we're moving, even though it's slower growth, it is growth that is more in line with what we have seen long-term prior to the pandemic. The economy does seem to slow down, but it does seem to be relatively well positioned. There are some risks that I'll talk about towards the end of my presentation, but generally the economy seems to be on relatively good footing. In terms of inflation, inflation has been a significant issue over the last few years. Inflationary pressures have generally come down. They've come down significantly, although we're hearing a lot about inflation still, particularly in terms of certain areas, certain types of goods or products. We're hearing a lot about eggs. Those tend to be kind of isolated issues that eventually those supply chains should come back and take care of those types of issues. We're also seeing that inflation, what the Federal Reserve is trying to do is get us to a point where national inflation is about 2%. What we're seeing really is kind of in line with our expectations that as we get closer and closer to that, inflation tends to be fairly stubborn. That's kind of what we're seeing. We've made some really good progress in terms of inflation. Inflation is still higher than what we'd like it to be. It's likely to continue to ease, but it's going to be kind of hard. It's going to take some time for us to actually get back down to that 2% inflation. Along with that, what we're tending to see is at the national level, slower employment growth and slower wage growth. As we were coming out of the pandemic, we were seeing some significant increases in wages because of the tight labor market. That seems to be easing. That wage pressure also seems to be easing. In Lexington, what I'm going to be discussing is that we are seeing kind of a similar type of trend. There's a slower employment growth than what we saw. We saw slower employment growth in FY 2024, and we're anticipating that this is going to continue in 2025 and 2026. This will contribute to slower revenue growth going forward. I want to go over a few of the usual economic statistics that we like to discuss. I'm actually going to jump ahead because I've got some redundant slides here. I'm going to show you all this at the same time. On the left-hand side, you're going to see kind of the long-term unemployment rate. Unemployment rate is one of those big measures you hear about. It's a headline number that comes out every month, and you can see how we've been performing. There's a couple of things that I want you to see from this chart on the left, and that is the unemployment rate does seem to be increasing. We're seeing a higher unemployment rate than what we've seen the prior year. Even though that's increasing, we're increasing though from really low levels in the past year. When you look at the history, even 4%, even though that's higher than what we've seen here recently, that is a relatively low unemployment rate when you look at it in the historical context. On the right-hand side, you'll see as compared to some broader measures, you see Kentucky and the U.S., and you're tending to see similar types of trends that we're seeing the unemployment rate increase really across all these states. You'll see that the U.S. and M.S.A. have seen a little bit faster unemployment rise in the unemployment rate than what we've seen nationally. If you've been to my presentations before, you know I present the unemployment rate, but then I also present some caveats. I often joke that if we just look at the unemployment rate, we've got to be really careful, because the unemployment rate can lie to us. It can trick us into thinking there's something wrong with our economy. If you see the unemployment rate increase, I think a lot of people look at that and think, well, that must mean people are losing their jobs. That's not actually what seems to be going on right now, so I want to get down to what's driving this increase in the unemployment rate that we've been seeing in Kentucky and specifically here in the Lexington area. Well, we get the unemployment rate by doing surveys and basically asking people, well, are you employed? Well, if you were employed, you're considered employed. We ask you, were you looking for a job? If you were looking for a job, you're considered unemployed. If you don't have a job, you're looking for work, that's unemployed. If you're not looking for work, you're not considered to be unemployed. You're considered as being not in the labor market. The labor market is all those people who are working and all those people who are looking for work. So we see the unemployment rate go up. We see the unemployment rate go up, but we don't see it as being unemployed. But we also need to look at, well, how many people are actually working? That's what I'm getting at with this particular number. Here I'm showing you the trend in the number of people who are employed since the beginning of 2020. And what you can see is that with that green line there showing Lexington's MSA, we have more people working now than we had a year ago. So that's a good signal for the economy that people are continuing to work. So if it's not coming from people who are losing their jobs as we see more people actually working, what's happening here? Well, what's happening is we're seeing more people coming into the labor market in Kentucky and in the Lexington MSA. And this is a trend that we've been following for a long time. We're seeing more people coming into the labor market. And this is a trend that we've been following throughout 2024. We started noticing this relatively early. We weren't sure whether or not this was going to be a trend. But it has been a significant trend of this past year. We've seen both at the state and the local level more people indicating that they are in the labor force. Now, we're not entirely sure what this trend represents in terms of where are these people coming into the labor market. It could be that for whatever reason, during the pandemic we saw a lot of people leave the labor force because of health concerns or to care for older parents, things of that nature. It could be that we're seeing more people come back into the labor force because either they feel now is a good time to enter the labor market, maybe because of their financial situation, or it could be something that we've seen over the last couple of years in immigration over the last few years nationally, that may be starting to show up in Kentucky. So what we're actually seeing, what's really going on behind this increase in this unemployment rate is we're seeing more people reporting that they are in the labor force and looking for work. So while we're not seeing more people losing jobs, we're seeing more people come in and say, yeah, I'd like to work in the labor force, but for now what we really know is that we do seem to see more people entering the labor market. So one of the things that's going to do is that's going to ease that tight labor market that we have been experiencing over the past few years, and it may kind of ease some of that wage pressure that we've been seeing over the last few years. Okay. So the next thing I want to do is I want to show a different example of what we mean by employment. And it gets a little bit confusing what we mean by employment. The previous slide I was showing you that was labeled employment was the number of people working. We get that by contacting households and asking about the individuals in those households. We also get a count by reaching out to employers and asking how many people do you have on your payrolls. This is a count of jobs. What is a count of jobs? It's a count of people. So it's not really a count of how many people are working. It's a count of how many jobs. So if you're working multiple jobs, you could potentially be counted in these numbers twice. So it's a slightly different take. It won't always add up, but generally they will tend to trend along the same direction. And, again, what we're seeing is when we look at nonfarm employment, we see an increase in the number of jobs that are out there. And we seem to be doing relatively well compared to some of the other MSAs in Kentucky. We're doing better than Louisville, Cincinnati. We're doing better than the state overall. Bowling Green, something's going on in Bowling Green. They seem to be seeing some significant employment increases over there. So that's good for them. They've outpaced us, but we've been doing pretty well in terms of what's going on here. And I will tell you here right now I'm talking about the Lexington MSA, not specifically Fayette County. I'll have a few slides on Fayette County here in just a minute. But remember, when we're counting employment, Fayette County accounts for about 72% of the employment within the Lexington MSA. So as Lexington County goes, the MSA tends to go as well. In terms of financial growth, we've seen some good growth coming out of the pandemic. That has generally leveled off, but we have maintained those jobs. If you look at what's going on in Cincinnati and Louisville, you're starting to see that they're starting to lose some of those jobs. We're mostly kind of, you know, we've lost some from 2023 to 2024, but for the most part that has tended to be somewhat flat over this past year. In terms of manufacturing, kind of flat. Manufacturing is one where we tend to have less of the manufacturing employment than the rest of the counties in the MSA. So a lot of this is picking up what's going on in our surrounding areas. When we look at construction, we've had some pretty good construction growth over the last year. Lexington and Kentucky as a whole has really done well in terms of construction employment relative to the nation. That has continued into 2024. Again, Bowling Green, something's going on in Bowling Green. Now, one, I want to apologize. I always apologize for this, but I put this in there for your information. I understand you probably can't see much of what's going on in this slide from your seats, but my understanding is it is in your packet. Here, this is data for Fayette County, specifically Fayette County. It's not the MSA. It is the county. It is by fiscal year and it runs through 2024 fiscal year. I provide this for you. I'm going to show you some comparisons about how we did in each of these different sectors from 2023 to 2024, but I wanted to give you a sense of the long-term trends that are going on. Again, for Fayette County, manufacturing, the long-term trend has generally been a decline. Where we're really growing, this won't surprise anybody. It tends to be in the education and the health sector. We also are seeing significant growth in terms of the government sector. Now, we want to be a little bit careful about interpreting these when we think about government. The University of Kentucky is a government employer, so it tends to get it is actually in that government number, so just kind of keep that in mind, but I wanted to give you a sense of kind of long-term how these various major sectors in Lexington or within Fayette County are, how those are changing. So let's look at the year-to-year change, 2023 to 2024. We've seen some really good growth. Most of our sectors, our major industrial sectors, have seen some type of growth. Most of that, again, is in terms of the education and health services or the government sector. Where we've seen some losses is, again, not surprising in terms of manufacturing and information, and there's always a little bit of confusion about information. We think about information. I think a lot of us think about information technology. Information here is things like broadcast media, newspapers, magazines. You have software publishing, but most of this tends to be some kind of broadcasting where they're providing information. IT, as a business that is specialized in IT, would tend to be in professional business services, and IT-type jobs are scattered throughout the entire economy, so they tend to show up in government, education, health services, construction. They tend to show up everywhere. So the sectors where we're seeing declines over this past year was manufacturing and information, but again, really what's driving our employment growth has really been this education, health services, and government. Okay, so I want to provide a little bit of perspective in terms of how we did in 2024 compared to how things used to be prior to the pandemic. So here what I'm showing you is employment, how employment grew prior to the pandemic. So I'm looking at 2022 to 2019. I'm showing you the annual growth rate. So employment had typically grown at an average rate of about 1%. Annual wages were typically growing at about 2.4%. Inflation during this time was a little bit under 2%, generally. So our payroll taxes, when we start thinking about payroll taxes and what's driving that, it's employment growth and it's wage growth. And you can see that prior to the pandemic most of our growth was actually coming from increases in our actual wages. If we look at what was going on in 2024, what we see is that in 2024, and this was true for 23 and 22 as well, we were seeing some really significant growth, really well above what we had been seeing prior to the pandemic. So whereas prior to the pandemic employment was growing about 1% per year, 2024 we saw employment growth about 1.9%. Average wages were growing at about 2.4%. We actually had a bit of a slow year in terms of wages there. That was more back to normal. 2022 and 2023 we were seeing significant wage growth. And I'll show you a little bit more about that here in just a moment. Payroll tax revenues in 2024 grew at about 5%. So the point that I'm trying to make with this slide is to reinforce something that I said last year. A lot of what we've been seeing here over the last few years has really been atypical. We've seen significant growth relative to what is more normal. And over time we seem to be going more towards that normal pace of growth. And that's going to affect our revenues. So let's take a look at our forecast. We hadn't done this in the past but I'm actually providing you a forecast of what we think is going to happen in terms of employment and wages. Because this is what will drive our revenue forecast for the occupational license tax. And you can see as we go through and we look at employment in 2022 and 23, even 24, that was pretty high. Compared to what we were seeing which again was about 1% on average per year prior to the pandemic. We were seeing some really significant growth during those years. We are moving to a level of growth that is more typical of what we saw prior to the pandemic. If we look at average weekly wages, kind of the same type of thing. We had seen some really strong growth. Partially because we had this disruption with the pandemic. We had a lot of people step away from the labor force when demand for goods and services was strong and firms were competing aggressively for workers. That caused them to increase the wages and that was reflected in the wage data that we get and it was reflected in our revenues that we were receiving. We are moving back to something that's a bit more typical. 2024 we saw average weekly wages grow at about a rate of 2.3%. You'll remember I was telling you that in 2024 we saw a large increase in the labor force. I think that's part of what was happening here. As workers started coming into the labor force in Kentucky and Lexington, that reduced the wage pressure for employers and so we didn't see as much wage growth last year. We don't anticipate that labor force growth to continue as strong as we look out into the future. We think that's going to allow wages to come back up a bit over the next couple of years. Again, the trend is moving towards what we had seen prior to that pandemic. Continued growth but growth that is more consistent with what we saw prior to the pandemic. In terms of what this means for Lexington's revenue forecast, we look at our payroll tax. We are expecting our payroll tax will again continue to grow but at slower rates than what we've seen here in the last few years. We're expecting a growth for 2025 to end at about 4.5%. In 2026 we're anticipating growth at about 4.1%. We look at our net profits tax. I always caveat that net profits tax is one of the most difficult things to forecast. Last year net profits came in at 66.8. We had forecasted 66.9. I will never be that close again. We're really, really fortunate there in terms of forecast accuracy. It's really variable. It doesn't always move along exactly with what we see happening in terms of corporate profits. We tend to peg this to corporate profits in terms of long-term but there's so much variation that can occur at a local level in terms of how businesses report their profits that there tends to be a lot of variation. What we're anticipating in terms of our forecast is that after a fiscal year of about 4.5% in 2024 we would think this is going to rebound a bit in 2025. We think we'll end the year up about 7%. Then we think more of these long-term trends in terms of how corporate profits are going to play out will tend to set in. We anticipate 2026 basically being leveled down just a little bit so we're pegging it at about 1.2%. We also want to acknowledge that there's always significant risk in terms of forecasting the economy. In terms of where we're looking at risk this year there are a lot of things that are in play. Tariffs. How those could potentially affect inflation. What the Federal Reserve does in terms of interest rates to maybe try to tamp down inflation by slowing the economy. That could play a role here. A lot of immigration policy. Immigration has really fueled a lot of the growth in the labor supply nationally over the last few years. As immigration policy plays out we may see a reduction in the labor supply or slower growth in the labor supply and that may affect both employment and it may affect wages going forward. We're not entirely sure how this is going to play out. There's a lot of uncertainty in terms of where these policies end up. We've seen some initial indications of where they might go but it's possible that things may be very different when we actually see where these policies end up. So we look at this as a risk to the forecast that will have to be something that we'll have to follow as this plays out. That concludes my formal comments and I'd be happy to try to answer any questions if I could. Thank you, Dr. Clark, for your presentation and for your forecast. It's always great to hear what you're thinking and where you think we're going to end up in the next fiscal year. So committee members, do you have any questions for Dr. Clark? Vice Mayor Wu. Thank you, Chair. Thank you, Dr. Clark, for your presentation. If we can go back a few slides, I wanted to look at the slides having to do with wages. I think it was a little bit towards the end there. Yeah. Employment versus wages. Can you talk kind of very generally about what drives wage growth, especially compared to jobs or employment growth, and should those things echo each other or are they completely different factors? To some degree they echo each other, but I think we need to make some distinctions between long-term growth and short-term growth. Long-term growth, one of the things that's really, really important is productivity. So as we see people become more productive, their wages go up to reflect that increased productivity because they have more value to their employers as productivity increases. So long-term, one of the important drivers is seeing people become more productive. We get that through technology change. I know a lot of people are concerned about AI and what that means for workers. Economists generally tend to think that AI can be disruptive. Certainly there are some workers that might be competing against what AI can do, but it is productivity enhancing, and so it creates new types of jobs and it allows people to do more with less so they become more productive. Generally we see these types of technology shocks as good for the economy long-term, even though there are disruptions that need to be managed. So things like technology, improvements in education, improvements in skills, these are all things that drive workers to be more productive and earn higher wages. Short-term, particularly over the last couple of years, what we're seeing is significant changes in terms of the labor force. With the pandemic, a lot of people were stepping away from the labor force. When firms were needing workers, they were seeing strong demand for the things that they were producing. They wanted to produce more, so they wanted to hire workers. Short-term, that creates a shortage of workers, and so the way markets respond to that is they increase wages. So as they increase wages, that translates into higher tax revenue for the city. As workers come back into the labor force, that relieves some of that tension, some of that pressure, and that allows wage pressure to kind of ease. And so we do tend to see some continued growth, but it tends to be maybe at a slower pace than what we typically see. Do you have a sense in terms of wage growth, how much of it is from new hiring at a higher sort of base level versus people who have been in companies or jobs for X number of years and kind of getting raises? Are things broken down in that way at all? I haven't looked at that in a while, but there is some evidence that at least at the national level, people who tend to move jobs tend to do better in terms of wages. There's some data published by the Federal Reserve of Atlanta, and they publish this every month, and what I've generally seen out of that is that they break it down into movers and stayers, and you do see wage growth in both groups, but people who are moving tend to be seeing higher wages. And usually it can reflect a number of things. It can reflect the fact that people who maybe are undervalued at a particular employer are seeking opportunities where they can be recognized or compensated for that potential value that they have. It could be that people who are generally more productive are going to be maybe more mobile and take advantage of that. But we do tend to see both increasing generally, but movers generally tend to see higher wage gains. And if we looked at a couple of graphs, not these in particular, but hypothetically, if we saw a fairly consistent job growth and employment growth, but either a stagnant or dropping wage growth, is it too simplistic to think about it as the types of jobs are changing, that more people are getting jobs in, say, like retail or hospitality or some of the lower wage jobs versus fewer people in higher paying, managerial, technical type jobs? So that certainly could be a driver. I wouldn't assume that if we saw the scenario that you're describing that that was necessarily the driver. It's something that we want to check out. A lack of wage growth could occur for a number of reasons. But certainly the job mix is one of those. And we saw this during the pandemic. When the pandemic hit, there was a lot of concern about what was going to happen in terms of wages. We actually saw average weekly wages, and you can see it up here, they went up significantly. Part of the reason average weekly wages went up is because what jobs were lost? A lot of the jobs that were lost tended to be in service jobs, leisure and hospitality that generally pay lower wages. So when those workers left, that was a significant loss in terms of employment, and particularly for those individual workers. But in terms of total wages, we still had a lot of workers who were earning really high wages. Average weekly wages actually increased as a result of that. So the job mix matters in all this. As those workers came back into the labor force, they would have maybe put some downward pressure on wages, although they did actually see some really significant wage gains. There for a while they were receiving wages at least at the national level of about 8% year over year. They were leading the wage gains across all the different industrial sectors. Still below average wages, but they were seeing the largest wage gains. So mix really does make a difference. And it can be a contributing factor, but I wouldn't say it's the only factor. Thank you for that, Dr. Clark. Thank you, Vice Mayor. Next we have Council Member Savigny. Thank you, Chair. And thank you, Dr. Clark for this presentation. It's always good. I've got just a few quick questions. On slide 12, which had basically all the sector, like 12 sectors or whatever, if you I feel like sometimes we're intermixing fiscal year and calendar year. And so I'm struggling with that a little bit in different slides. And Fayette County and Fayette MSA. Is all the data that you're getting from, except for our individual payroll tax, is this data from the MSA or is this data? One more. I think it is one more back. Is that from the MSA? And I'm wondering because we're moving towards this regionalism concept. And I'm just curious. So we get data from two different sources. The Lexington MSA data, it comes out every month. So we get those and it's relatively real time. It only lags by one month. So it provides us a good indication of what's going on at the MSA. And largely Lexington because we are a big part of that MSA. But it's relatively timely. That's part of the reason I present that. The data that I label as Fayette County is coming from a different data source. It's actually coming from when employers report to the unemployment insurance office, how many workers they have. It's much better data because it's an actual census of workers. It counts almost every worker unless you know you're not covered by unemployment insurance. So it's a much richer data set. It allows us to get to smaller geographic areas specifically the county. It's a better data set overall except it's lagged by about six months, two quarters. So I can't give you this type of data and have it run all the way through December. Whereas the MSA data I can give you that. So I typically provide you both. Where I'm labeling this as Fayette County it is truly Fayette County. It's based on that unemployment insurance data that's being provided that says we have X number of people working for us. It is a count of Fayette County but it only currently runs through June. So that's why I have that. So I give you both of those so you can kind of see a more timely indicator of what's going on but also I give you this so that you can see a specific what's happening here in Fayette County. Okay. Thank you. I've got a follow up. And these categories are basically the company's category, right? So if it's in manufacturing or information those companies are considered that but their accountants are still manufacturers and their marketing people are still manufacturers. So it's typically based on NAICS codes so it reflects the primary activity that the business is engaged in, not the type of workers. Okay. Next one is on the payroll growth. I was kind of struggling with that for fiscal year or calendar year and that was I forget which slide that was after that. I can't remember which one that is but it just seems like they're all I'm struggling to basically align them because some of them seem like they're fiscal years and some of them seem like they're calendar years. I could be wrong but I think I've got everything labeled as fiscal year when it's fiscal year. When it's June 30th is the fiscal year. So it runs July through June. And then net profits I think it's on slide 17. Is there a reason why and is that an actual number or was that what you projected that time? 2024 is the actual number. That's the actual number? Yes. And then what do you think led to that one? Did you say it? To the decline? Yeah. It's something that we typically see when we have these large increases in net profits taxes is it's often followed by a decrease. And we've been seeing some pretty significant growth there. So we had actually projected that we were going to see a bit of a decline in that particular sector. Okay. But again that is one that is very difficult for us to forecast. Yeah. Thank you so much. Thank you, Chair. Thank you. Thank you, Councilmember. Next we have Councilmember Gray. Thank you, Chair. And it's last year. Thank you. Thank you. Thank you. Thank you for your presentation. I find it always find it fascinating. The fact that I read your entire book that you sent us last year and I underlined it. It's just fascinating. You got one this year, right? I think we sent you one this year. I think we sent you one this year. Question for you. Just for what areas are included in the MSA? So the Lexington-Fayette MSA includes Fayette County and all the surrounding counties except Madison County. Okay. Now the natural question that you should ask is why not Madison County? I don't have a good answer for that. Economically it is important to our region. I can't say it's more or less important than any other county. But at some point a decision was made and Madison County was not included. Okay. Interesting. I cannot recall. It was the slide that Councilmember Savigny I keep slipping. Sorry. Savigny mentioned the one before where we had the industries up. I'm sorry? Well, I have a question regarding the industries. We can go with this one. Looking at the manufacturing and the information area, which we are lagging way behind, is COVID, the pandemic the sole, I mean it can't be the sole reason for why we are in the negatives in regarding creation of jobs? No, no, no. I don't think COVID is relevant in terms of the declines that we're seeing in information or manufacturing. For information, I think a lot of that is what's going on in terms of the industry. A lot of consolidation where you're seeing like local publishers are struggling, local newspapers have been struggling for years. You're seeing a lot of that industry consolidate so you don't see the local businesses as much there. It is a small sector in terms of the number of jobs, which is not reflected in this graph, but it's a relatively small share of the economy. Still an important portion of the economy, but there tend to be relatively few jobs there. Actually this is showing you the number of jobs. So we lost about 120 jobs in that sector. On manufacturing, this is more of a long-term trend that we're seeing. So it really predates COVID and I think this really if you think about economists like to talk about comparative advantage and so when I think about Lexington's comparative advantage or Fitt County's Lexington's comparative advantage, my sense is it tends to be, again, in education and health care. That's what we produce. When you think about manufacturing, you think about where manufacturers are likely to locate. Well, there are some attractive things to Lexington. You can tap into an incredibly skilled labor force. But you can also tap into that same labor force by locating in nearby counties, have access to similar transportation networks, maybe just down the interstate a little bit farther. Still tap into that same labor force and possibly have lower real estate cost. So I think in terms of manufacturing, that's still an important sector for us, but I think it's changed in terms of the type of manufacturing we have. I think the manufacturing that we're likely to be more competitive with is those that really need to be located here. That close proximity to the University or to other types of similar companies where they can kind of cluster and take advantage of these benefits of clustering. You know, we might have some specific comparative advantage in certain types of manufacturing, but in manufacturing broadly, you know, we tend to see that being more common in the surrounding areas. Thank you. Thank you for your information. Appreciate it. Pleasure, thank you. Thank you. Thank you, Council Member Nix. Council Member Lynch. Thank you, Chair, and thank you for your presentation. They're always pretty insightful. And I just have a couple of questions about the slides you didn't get to, just to make sure I'm looking at them from the right context. On the inflation slide, where the graphics about the Consumer Price Index, what is the green line? I wasn't sure which one, is that the? So I always throw a few slides in here just in case somebody asks a question. In terms of inflation, the green line, I'm sorry, my labels didn't show up. The green line is another measure of inflation that's called PCE inflation. We have different measures of inflation because economists are just quirky like that. We like to measure things in a lot of different ways. The Federal Reserve actually tends to target the PCE inflation rate, as opposed to the Consumer Price Index inflation rate, which is one that you often hear about in the news. They tend to move very similarly, as you can see from the graph. But they measure inflation in slightly different ways. And then my last question is, a couple of slides later, you have two graphs. One referencing all private industry workers, and then another one that says fourth quarter 2024, 12-month percentage change. Is that for Fayette County, is that for Lexington? I wasn't sure what? That is not, unfortunately, that data is not available at the state or local level. So this is U.S. numbers. And so this is one that we like to present because it gives us a sense of kind of where that wage pressure is. So when I'm talking about the general economy, I often talk about this. And you can see, I made several references to wage pressure that we were seeing as we were coming out of the pandemic. And you can see that, when you look across all private workers, we were seeing close to 6% wage growth as we were coming out of the pandemic. That has eased. The most recent number we had from that was about 3.7%. On the right-hand side, you're seeing it across different industries. And right now what we're seeing is we're seeing some pretty, the strongest wage growth in certain sectors, like professional business services, healthcare and social assistance and transportation warehousing. Most are seeing wage growth that's higher than the inflation rate, which means that their take-home pay is actually keeping up with inflation and maybe doing a little bit better. That's encouraging. So even though we see this inflation, it's kind of like our wages are, this doesn't reflect an individual household, but households in general, we're seeing that this wage growth is keeping up with inflation. So that's a really encouraging thing. So inflation is high, that's tough, but our wages have been growing faster. So that's encouraging. Now, keep in mind, households are in different situations. So if you're on a fixed income, you don't have a cost of living adjustment or something like that, this doesn't give you much comfort. This is one where, if I showed this a year or two ago, you would have really seen retail and restaurants, at least in hospitality, with some significant wage growth. And I think, again, it was running around 7%, 8%. Thank you. Thank you, Chair. Thank you, Council Member. Next, we have Council Member Ellinger. Thank you, Chair. Thank you, Dr. Clark. I always enjoy this. And as you said, forecasts, especially I think with what's going on in Washington right now, is going to have an impact on what's going to happen. Because when you start looking at with tariffs, and can you talk a little more about, you brought it up with tariffs. It looks like feds are not going to be doing anything with interest rates this year, because we looked at probably had two times that they were going to reduce, but it doesn't look like that's going to happen with immigration, how all this is going to play in nationally that's going to affect us locally. And I guess with DOJ and how they're going about their process right now. So I really can't comment on DOJ and how that's going to play out in Kentucky. That's a little bit more difficult to really understand what that's going to mean for us. When we talk about tariffs, one thing I really want to point out is we don't know where tariffs are going to land. Tariffs are being used as a negotiating tool. And so we don't know how those negotiations are going to proceed, and if there's going to be significant changes. We look at the previous Trump administration, one of the things that we saw was a lot of discussion of tariffs, renegotiation of NAFTA. NAFTA was a free trade agreement between Canada, Mexico, and the United States. NAFTA was replaced by a new trade agreement, but it really wasn't that different from the previous one that was there. So it didn't have much of an effect. As we look to kind of where this is going to play out, we don't know if we're going to see significant decrease or changes in tariff rates. So we don't know how that's going to play out in terms of the economy. It's going to take us some time before we see how those actually play out. Generally, what I will say about tariffs is that when we start looking at tariffs, they are inflationary, because what happens is it's a tax on the importation of a good from a foreign country. We import a lot of different things, a lot of consumer products, and when that tariff is put on there, it means that it becomes more expensive to purchase in the United States. Consumers will pay for that, or they will substitute away from that. But regardless of how they do that, that ends up being inflationary pressure. So one of the concerns about tariffs is that it could cause inflation to remain higher than what we're seeing right now, or it could keep inflation from coming down the way we'd like it to come down. So we may see higher rates of inflation depending on how these debates play out. It also has a long-term impact on economic growth. One of the benefits of free trade is it allows us to specialize. You know, it's kind of like when you think about maybe a doctor. A doctor has a specific set of skills, is very valuable, and adds to GDP when the doctor works on these, you know, for providing healthcare. If the doctor is having to specialize in other types of things like plumbing for his house or lawn care, he's not specializing, and so, you know, his productivity is declining. Same types of things happen when we start thinking about international trade. If we're able to specialize, we're able to produce more goods than we otherwise would. That's the advantage of free trade. When we move away from free trade, we might get certain types of jobs in the United States, but it's very likely that productivity will decline, and as productivity declines, what we tend to see is slower economic growth. Now, it doesn't mean that the economy's going to decline. It just means that the economy might grow at a slower pace. Thank you. One thing you did bring up, and we don't talk about here, but how about underemployed? Do you do any stats on that, on unemployment, but then we'll look at underemployed, that people are working in jobs that are kind of below what they are skilled or trained to do? Does that, is that numbers that you all look at, too? So, there are some measures of underemployment out there. Usually, they're based on people who maybe are working part-time who would like to work part-time. We don't do a whole lot of people who maybe are not matched to the right job. That would be, you know, an issue where maybe an individual's not reaching the full potential because, you know, I have a certain training in terms of economics, and my time is probably best spent on economics as opposed to doing other types of jobs. If I find myself unemployed, I might be doing other types of jobs where I'm able to earn as much as I could as an economist. Lots of workers could find themselves in similar situations. So, certainly, that exists. I don't have any real good statistics on that particular aspect of underemployment, though. Okay, one last question. My time is about up. Could you give your just brief summation or final analysis of what looking going forward? It's going to be growing, but at a slower pace. Is that kind of what our takeaway will be from here? Yes. Our expectation, based on where we stand now, is that the economy is going to continue to grow, but at a slower, more sustainable pace than what we've seen over the last few years, more consistent with what we've seen prior to the pandemic. Thank you. Thank you, Chair. Thank you, council members. Committee members, I don't see anybody else signed up for questions. And Dr. Clark, I have a question, but I think you touched on it already. The net profit tax growth was 12.5% in 2024. You projected net profit tax revenues of a positive change of 7% in 2025, and then the decrease in 2026 by negative 1.2%. Can you please explain the historic trends, if any, in regards to estimating the number? Well, part of that is what we're already seeing in 2025. 2025, we have two quarters already in the bank, so to speak, and those have been up. So that's giving us some positive signal about how 2025 is going to play out. So that's part of what is going on there. But we're also seeing kind of at the national level that corporate profits are likely to decline. So as we look beyond 2025, that's part of why we are looking at this decline, that why we're going to kind of come back off this dip that we saw in 2024. We kind of bounce back, recover a little bit. We're seeing that already in the data. And then we anticipate that we'll just fall off that just a little bit, you know, again, 1.2%. And then you said the University of Kentucky. So are all of their jobs under the government sector, or does that split between education and healthcare and government? I believe they would be classified under government, both the education and the healthcare side of that, I believe would be classified as government. I have to double check on that to be absolutely sure, though. Okay, okay. All right, yeah, I'd like to, I'd just like to know if they're being counted once or split or potentially- I don't believe, I believe they are being counted under government, but I will double check and I will get back to you with that. Okay. All right, thank you. It doesn't look like we have any other questions. We appreciate you and look forward to seeing you next year. Thank you very much. Thank you. All right, committee members, we'll go back to our agenda. And the next item on the agenda is the Parks Sustainable Funding. We have a presentation from our Parks Department. Council Member Baxter, this is your item in committee. Would you like to introduce it? Yes, Chair, thank you. Colleagues, as you know, the Parks Funding Ballot Referendum passed this past, passed this past November, with 61% support from our community. So as we start working on the policy, which you'll have a presentation on next month, the policy surrounding our allocations for the Parks Fund, we wanted to give you an update on our current master plan progress and take a look to the future and how we prioritize projects going forward. So our Parks Director, Monica Conrad, is here to help us kind of see where we are at the moment. So thank you for being here. Thank you, Council Member Baxter. Thank you, members of the committee, for letting us give them an update today. Our senior leadership team is here with me today, as is Michelle Kosiniak, our Superintendent of Planning and Design. She's gonna be assisting with part of the planning slide portion of the presentation today. I also want to thank CAO Hamilton, Commissioner Ford, Dave Barbary, and Aaron Hensley. They've been working with us hand-in-hand, really, since November, since the ballot initiative was passed. And obviously, thank you to our Parks Advisory Board members, Council Member Ellinger and Council Member Morton both sit on our board, and we certainly have some members with us today who've just been great advocates for our park system here in Lexington. So we're early in the process, and we're looking forward to hearing your feedback. So today, we're just gonna give a brief overview of our Parks Master Planning, the community impact that that has, the history, the process, the outcomes, then a snapshot of our current operations, our capital improvement approach, and then 2026 Public Parks Fund Planning. So certainly, the Master Plan impacts our community, and the two cornerstones of that are really civic engagement and informed decision-making. Civic engagement strengthens our community by encouraging input and involvement in park investment. It fosters volunteerism and stewardship of our parks. Informed decision-making provides data-driven insights for strategic investment, ensures our improvements align with community priorities and future growth. These together lead to community well-being and improved public health, whether folks are using our trails to exercise, perhaps decreasing obesity, whether they're using it for social and mental and emotional health. Certainly, economic growth. I love hearing Mr. Clark's presentation and how our parks, we know, attract businesses, tourists, and new residents to our community, and we encourage economic development through tourism and events. Environmental conservation and sustainability, and that we conserve our green spaces. We plant trees, we talk about climate resiliency and ways to improve our quality of our environment. And then lastly, our Master Plans are required by our CAPRA accreditation. We are one of two public park agencies in the state that are accredited. We have been accredited since 2007, and part of that is ensuring we have a Master Plan every 10 years to guide our investment, our programming, and what our services are delivered to the community. So a little history, the 2018 Parks Master Plan named Your Parks, Our Future, adopted by Council in 2018 that was led by Brandstetter Carroll and our team, obviously from Parks and Rec. It's a guide for Council, the administration, Parks and Recreation, other agencies and divisions about investments in our community. It identifies where, why, and how services can be improved, and it's really a plan or a guide for all of us moving forward. Establishes recommendations and strategies. The 2018 plan did include the 2016 Aquatics Master Plan recommendations that came slightly before that, as well as the Keegan Golf Analysis of our golf operations. We did an updated strategic plan in 2024. All of those can be viewed on our website. Now Michelle is gonna walk us through the outcomes in the process of our 2018 Parks Master Plan. Thank you, Director Conrad, and thank you, Council, for having us here today. My name's Michelle Kosiniak, and I'm in the Planning and Design Office, for any of you that might not know. The heart of the process was community engagement. So we hosted typical workshops, and we did surveys, those you will find with most all master plans. But what I think made this unique is that we went to where the residents were. We hosted community conversations at four locations in the community, north, east, south, and west, and we attended 16 community events. We had surveys, dollar voting booths. We asked to speak to folks and just generally share their ideas. And we had lots of, at the time, we had lots of council members and other leadership in the city attend those workshops and those meetings. We also held 21 special interest focus groups, just to give you one idea like we would have one on individuals who use rectangle fields in our parks, and that could be a lot of persons. And we let them self-identify whichever, whatever group they wanted to belong to. And it allowed us to dive really deep into successes, needs, and ways to improve the system in each of those specific areas. In nine months, we engaged nearly 1,000 residents in person and 2,000 either online or by mail. The last piece that we added into this was the comprehensive plan on the table. When they analyzed the results of that, there were many that addressed trails, green space, open space, and so all of that input was also incorporated. One of the analysis that was used to determine where parks and recreation services are most needed is the social needs and conditions analysis. This process was used in the aquatics master plan as well. So what you're seeing on the screen basically represents that there were 10 publicly available data sets, and all of those were mapped using US Census tracts. Then all 10 were layered on top of each other, which helped to reveal and identify those areas most in need of social services. And if you can kind of read some of the categories, such as household income, education level, unemployment, you understand this is not just park services, this is all services. And so the result was this map that you can kind of see, and I don't expect you to be able to read it, but in general, you can view that the darker red areas are the ones that have highest social needs, and the darker blue areas have the least. The master plan produced many resources that we use daily, and some of those include an action plan with 198 specific tasks that were assigned to each unit within Parks and Recreation. That action plan was actually analyzed and updated as part of our strategic plan update. We had lots of simple charts. We just pulled one example, the city survey results, which remains relevant today and helps guide program and partnership development. So it just gives us a real high level categorization of what people are interested in. And then another map, which is probably why Director Conrad had me present this because I love maps, the composite service areas. So what this reflects is the walk and drive times to Parks and Recreation facilities, and what that helps us do is identify gaps in our system. So right now, 59% of residents live within a 10-minute walk to a park, 70% live within a five-minute walk or drive to a community or regional park. We'd like to see those percentages increased, but it's important to remember that if you have a community with a growing population, which Lexington does, you still need investment to keep the same level of service. So even with just growth, we still need investment. The master plan also has, and again, this is all online, and most of you dive into this regularly, but it has individualized and prioritized roadmaps for over 100 parks. So here's an example. You can see Garden Springs Neighborhood Park. It's got the individualized recommendations for that park, what level of priority each one is, and then what type of improvement it is. And so this is just an example to show you that the master plan is not a one-size-fits-all. It's an individual park analysis, helps us better respond to varying populations across the community, but it also helps maintain a high standard of service delivery across the board. This is the same thing, but a community park, which is a larger park, a community park serves multiple neighborhoods. So over half of Lexington's parks are either neighborhood or community parks, which is why we chose to highlight this for you. In these parks, what we have the opportunity to do because we have more acres is we can provide things that require more acres that won't fit in a neighborhood park. And because they may be more expensive to build or operate, we can offer them to multiple neighborhoods. Some examples of these may include dog parks, restroom buildings, and aquatic features like pools and spray grounds. So these become more destination outings. And what's important about these two is that they support the goal of building community at a larger scale, as opposed to the neighborhood, which builds community at a smaller scale. Great. So Michelle's given you a little bit of background about the 18 master plan, how we came up with our outcomes. I'm now going to talk you through kind of what we're doing today. So by the numbers, this just gives you a brief overview of acreage. The one that always sticks out to me on here is 147 sport courts, so lots of things to manage and maintain within our city. Our current park operation, so for FY24, our expenses were $27 million. Parks expensed $17.5 million, or 65% of our budget, dedicated to our people. Those are the folks that deliver programs, run our community centers, our summer camps, golf, aquatics. They mow the grass. They pick up litter. They clean the bathrooms. Our operating expenses in FY24 were $9.5 million, or about 35% of our budget. These are all the items needed to operate our parks. They're administrative. It's what it takes to keep them clean and green. So mown, litter picked up, trash bags, chemicals, pool chlorine, landscaping, bank charges, concessions. It's a little bit of everything that goes into that operating line. Our average capital expenses for 21 through 25 are $7 million per year. Certainly ARPA was a significant portion of that. And we saw that that massive investment post-COVID was such an important investment for Lexingtonians and for our city. Prior to that, numbers would range from $187,000 in FY20 in capital expense to $427,000 in FY18. So it varied greatly. But we have really been fortunate, not only through ARPA funding, but also through general fund bond projects, council appropriations. Council members have been very generous in investing in our park projects, grants, and then private donations as well. So as mentioned, the investment in our personnel and parks programming improves community well-being. Here, you'll see a graphic of some of our programs in 2024 and the number of associated users. Over 60,000 community center visitors, over 100,000 visiting our pools and golf courses, and nearly 130,000 visitors to our natural areas. Having an established Parks Master Plan not only improved our programming, but provided the roadmap for ARPA investment. When asked to provide projects for ARPA in 2021, we immediately reviewed the Parks Master Plan, which we knew it had significant community engagement, and ensured each area of our community was receiving investment. We also have regular assessments and evaluations of our park's development. We also have regular assessments and evaluations of sport courts, and paving needs, and roof assessment. So we look at those as well. Community members were then re-engaged with identified projects. So for Cardinal Run North, significant, robust community engagement, survey, in-person meetings. Something like Whitney Young Playground, much smaller scale, talking directly to the neighborhood and the council member and having those conversations. As Michelle indicated earlier, having identified prioritized projects for over 100 parks, allow us to quickly select high priorities in deferred capital. Our first ARPA investments certainly focused on neighborhood park improvements, as well as community infrastructure. Through administration and council approval, parks will complete 67 projects in 44 parks at 31 million. So our capital improvement approach going forward. Following the proven success with ARPA model, our plan would be to utilize the park's master plan, prioritize balance throughout the city, and involve the community each step of the way. We anticipate continuing this approach with the public parks fund. Protecting park assets is always our first priority. That's the building envelopes, the windows, it's all the things that keep the amenity at its worth and at its value. It also prioritizes life safety and any code compliance. Neighborhood infrastructure, neighborhood parks are the lifeblood of our community. It's where kids learn to ride their bike, it's where they go play ball for the first time, it's where parents go for a walk in the evening. Community park system infrastructure investments, as Michelle mentioned earlier, those bigger parks, destination parks, sometimes often referred to as special use. And then park development as new park properties come on, such as William Floyd Park on Paris Pike and Kelly's Landing at the River. Life safety certainly elevates priority. So Douglas Pool, not on our radar in 2018. It wasn't the next pool we planned to actually rehabilitate, but a failure in the pool in 2023 elevated the priority. So we have to be able to adjust to those changes. We also have to balance projects across the city, but we also have to be aware of emerging priorities. Pickleball, not mentioned in 2018, which who knew we would have a global pandemic and have unprecedented demand for public space. So we're always thinking about those emerging priorities and changes in trend. The Parks Fund, I think, let me get you over here, I think everyone's familiar when it passed. This is the actual language. This gives you over 60% of the voters were in favor of the ballot referendum. I think what's important here is that this sustainable funding really allows for improved planning and efficiencies, improved capital preventative projects and repairs, and then again, those emerging priorities. So we see, again, we're very early in the stages, but this is kind of our thinking about how Parks proposes continuing the program and policy framework we utilized for ARPA. So capital construction, repair, and replacement is where we would factor in the investment. We would look to those Parks Master Plan priorities. We know they had high community engagement. We know they've been assessed for every park within the city. And then our model to success is to follow the project management and efficiencies that we used with ARPA. Communication, transparency, and accountability will remain at the forefront of our plan. Timeline, our Parks Advisory Board appointed a strategic planning subcommittee. They actually met this morning. So they are working hand-in-hand to guide and advise and really help us vet through all of the challenges and thinking as we look to the framework. We'll be back in March to be fed, and we'll be talking more about guiding policies and procedures. In April of 2025, the mayor's proposed budget, we anticipate will include FY26 Parks Fund projects. And in June of 25, the budget adoption or approval of the FY26 Park Fund projects. We anticipate funding to be available January, 2026. And I think we're at questions. Okay. Yes. Thank you, Monica, Director Conrad, for your presentation and for your work on this. Committee members, we'll go to questions. First up is Council Member Lynch. Thank you, Chair. Thank you, Director Conrad, for your presentation. My only question is that two-word phrase, deferred maintenance. I know we have a lot of park deferred maintenance. So where will that lie in this world? The new flow of funding go to some of that deferred maintenance, or will that free up money, existing money that we can put towards deferred maintenance? How does that all work? Great question, Council Member. We anticipate that it will go, so we have about $123 million in outstanding capital improvement. Some of that is deferred maintenance. That could be a roof, or it could be a trail replacement. It could be any number of things that are defined as capital. So they're in queue. Just like we could certainly say that Douglas Pool was deferred maintenance, right? It led to a failure in the pool. That rises and then becomes a capital project and a capital investment. Yeah. Thank you, Council Member. Next we have Council Member Savigny. Thank you, Chair. Thank you for the presentation. A quick one, a couple quick ones. As you increase the amount of capital product that we have, meaning land and parks and stuff to maintain, is there like a best practice? My thinking is that your budget, your operational budget will go up, probably similar to like depreciation on an item, you know? And I'm just wondering, is there a best practice, like how do you see your operational budget changing with an $8 million influx a year? Because each year you're gonna influx $8 million. And I just want this body and the administration to be aware that it comes at a cost. So do you have an estimate of that or is there a best practice for that guidance? So there is some benchmarking, certainly, through National Recreation Parks Association, to which we belong, and Trust for Public Land. I think it's a little bit too early to tell what that operational impact will be. However, we are approaching capital investment in a way that we think will have some benefit to operational impact. For instance, we spend a lot of time and a lot of money moving mulch into playgrounds. And then you have weeds grow in the playgrounds because we can't spray the playground with chemical. So we spend a lot of time hand-weeding playgrounds. Our standards, and Michelle and her team are working to redefine our park standards, is that we would look at port and play in those playgrounds that we're now developing so that we're no longer spending time or purchasing mulch. So that's just one of the examples. So we're trying to be very thoughtful about that, but I think it's too early to tell exactly what the operational impact will be. And do you see the need for, if you're gonna buy land for a park, is the intent to use that developer fee to do that? Or do you feel like you'll go into the $8 million a year or whatever to do that? So at this time, I think the park acquisition fee and the park acquisition fund will still be utilized to purchase park land. Thank you. That's all I have, Chair. Thank you. Thank you, Council Member. Next we have Council Member Sheehan. Thank you, Chair. Thank you, Director, for the presentation. You've talked about the 2018 master plan and then talked about the strategic planning group. Could you define a little bit more the difference between the strategic plan versus the master plan and what the public should find in those places and when we discuss those two terms? Absolutely, yeah. So the master plan, think more all-inclusive. So capital, operations, the entire divisions work, if you would, and what that plan looks like. The strategic plan is really an update to that master plan. When we looked at it, we looked at our vision, our mission, our goals, our objectives. We did a lot of employee feedback and surveying as part of that. And then if you'll remember, or if you've looked at our 2018 master plan, it had 198 action items. When we did the master plan in 2018, we said we are not gonna go through the work, quite honestly, and spend the funds to do a plan that is gonna sit on a shelf. And so we have strategically utilized that plan to move the needle on a lot of things. And so it speaks to that. It talks about what has been accomplished. It also gives a summary of the projects that have been completed or were funded as of, I think, December of 2024. So it gives an update on all of those types of pieces. Thank you, and I do appreciate you mentioning how fast you were able to respond to the American Rescue Plan Act funding when it became available, because I use parks as an example here when I talk about master planning and strategic planning and why it's so important, because you had projects and a project list ready and vetted. And so when funding became available, we were able to implement things almost immediately. And so that planning piece was very important. And so I'm always encouraging groups to do things similar to that. Could you talk also a little bit more about your community outreach? So you had the community outreach to establish the master plan, and then you do community outreach for specific projects. And Michelle talked a little bit about what that looked like for the master plan. Could you talk about what you do now for the individual projects, like Cardinal Run North or any of the upcoming ones? Absolutely. One of the pieces, in fact, that we're working on to talk with you about in March is a community engagement policy, kind of overarching for parks and recreation. And then we'll have pieces that speak just to project investment. So for instance, Cardinal Run North, we had a consultant on board that did the design. And so we worked with them to have public meetings, to do surveys, QR code surveys, met with the council member and the neighborhood on more than one occasion throughout the design process. So that was key because we knew that having lit fields next to the neighborhood was not gonna be a good fit for the neighborhood. But so we had a lot of conversations about that. But it can take on many forms. If we were talking this morning, if it's a replacement of a slide because it's been vandalized, we're probably not gonna do community engagement. We're gonna go replace the slide. If we're replacing a playground where the demographics of the neighborhood may have changed the neighborhood, we want to be involved, the neighborhood association. And so we generally sit down with them, talk about all types of things. Do you want a spinner? Do you want a climber? Do you want a big slide or all the different kind of things that can happen or can be delivered in that. So it really varies. We've through COVID really, I think, grasped technology and said we can reach a lot more people through QR codes and having that ease for people to be able to respond to us. But we still do in-person meetings. We still do lots of conversations around a table about what is best for the neighborhood or the community park. A lot of that involves stakeholders. If we're doing anything at Jacobson, we have a lot of stakeholders that invest time and energy into that park. So we try to engage all of them. Thank you, Director. And thank you to your full team of Parks and Rec for all of the programming and all of the project management that they do. I do appreciate all the reporting that comes back to me as a council member on the status of every project and the open communication that we have with your group. So thank you. Thank you, Chair. Thank you, Council Member. Next, we have Council Member Morton. Thank you, Chair. And thank you for the presentation. I just have a couple questions kind of going to a little bit of the slides. So first on page 48, it looks like, just within that smaller number, a total of 952 households completed this survey on park priorities. And well, can you speak towards, do we know where these responses came from? Like, do you have specific districts or certain sides of town that these responses came from? I'll let Michelle. I think this was... Yeah, I'm not sure. Which slide was that? Specifically, I wanna make sure that... It's on page 48, and it's the city survey results. Sure. So that included lots of different things, as I mentioned. We initially did a statistically significant sample, mail survey. We also launched on our social media site a voluntary survey. We had, in person, all of those meetings where we would have the QR code ready. All of those events, we had the QR code ready. I don't know, honestly, if we asked any questions that would locate those individuals, but we were very intentional about, as I mentioned, the meetings being very spread out geographically all around the community, and that the events were very different. We didn't just go to one type of event. So, similar to that same slide on page 48, the city survey does not highlight youth programming as a priority or need, yet in my communities, almost every year, that emerges as a top priority and concern. Can you speak towards why that's not on there, or if that was even an option? On this one? I'm sorry. No, on page 48, and we're talking about the city survey results. Just that little graph that was on the page. It's this page right here. That one. Yeah, so the city survey results were from those surveys. So, this is what the community told us were their priorities. So, again, this was in 2018. I suspect some of this has changed. Although, we find that walking and hiking trails are almost always number one. But as far as programming, yeah, and I remember at the time, council member going, adult fitness was number one. That was a highlight. You know, and I think perhaps maybe we didn't reach enough children to get their input, or enough young people to get their input. But those came out of those surveys back in 2018. Cool, cool, cool. So then, the master plan was updated in 2018, but there are many factors and emerging needs that are not highlighted, such as you mentioned the pickleball court, the new tax that was just adopted. And others, does this indicate the need to possibly revisit this master plan or update the master plan, do you think? Absolutely, yes. We are due to have a new master plan in 2028. So, every 10 years, we need to deliver a new master plan in order to remain CAPRA accredited. So, yeah, we anticipate a new one coming out in 28. And we really think that it will, you know, it'll guide a lot of new things that have happened in the city, along with the ballot, along with, you know, I think the changing demographics of the city. So, yeah. Great, cool. And then lastly, I know that you mentioned the meeting in March regarding more policies. I just want to touch on, while I understand the parks master plan includes an equity component, do we believe that that is sufficient, or is that something we want to also look at in more detail? We anticipate that the policy will be built around accessibility, transparency, accountability. I mean, we think that it is very important that the public understands and knows how we're selecting projects, where we're selecting projects, and are completely kept up to date of where that's happening and when. So, we're thinking, you know, we're thinking kind of real-time tracking. We're thinking there will be a website where people can log on and say, I can see what's going on in District 1 and where that project is and how that money is being spent. That they can go on and suggest a project. So, you know, we feel like this needs to be done at, you know, Oakwood Basketball Court needs to be repaired. So people can self-select to give us projects as well. Of course, we'll want to make sure that they meet with the master plan and do all of those things. But yeah, we anticipate that there will be a lot of focus on equity, transparency, accountability, accessibility. And those are all things that are, you know, ingrained in our mission. Thank you. Yeah. Thank you, Council Member. Since I don't see anyone signed up, I'll just go ahead and ask my questions now. Maybe folks are getting theirs together. But let me start by, Council Member Gray. I'll default. I'll let Council Member Gray go ahead. You ready? Okay. All right. So I'll start off by just saying thank you all for what y'all do in parks. Thanks for the presentation. Thank you all for being good stewards of the American Rescue Plan funds or excellent stewards of the American Rescue Plan fund. I'll just reiterate that, you know, I think that money was well spent during the pandemic. I think when we were all closed up in our houses, I was thinking about that this morning while I heard my son sneezing, that we were all looking for somewhere to go and the parks were it. And I think the investment that we've made in our parks and how you all have executed that investment is just tremendous. And I think there's an opportunity to do even more going forward. So I'd also say thank you to the folks who have advocated for additional funding for our parks and have actually reached out to the community and hear from them. And I think they've weighed in and told us where they want us to put more resources. So this presentation today, I think, was a good overview of where we sit today. So when y'all come back in March with policy recommendations, how clear is that gonna be to the community about how we're gonna disperse this money and how we're gonna put funding where we need it and how those priorities are gonna be determined? Can you speak to that? Yeah, you know, and I think we're still somewhat working through that. I mean, we want to make sure, it's easy for us as park professionals, right? I mean, we kind of, we do this a lot. We look at the list, we prioritize based on life safety. So I think that that will be something we've gotta spend some time and be very intentional about how we're discussing that. You know, we have policy, several policies in process currently. I mentioned the community engagement. We also have kind of an overarching parks fund program, how the program will work. As with, you know, our internal policies and procedures, those that are, I think, important will be on our website and available for the public to see. But as you can see, I mean, selection of projects is not an easy thing, and it changes. You know, we would like to see a couple of year approach. I don't know that we're gonna have that ready for you by March, but we would like to be looking for a couple of years at a time until we get to the next master plan. And we feel like that is really gonna help define the future of what it looks like for a six-year plan. So we'll be, you know, we'll be working with law, we'll be working with finance as well to really develop a plan that we think the community will see the benefit of. Yeah, and I know that was a hard question to answer, but I think a lot of us are concerned about how we're gonna communicate this to our constituents, because we had folks that were in support of it, and we had folks that were not. And the reasons that they weren't in support of it, I don't think it's because they didn't understand that we need the investment. They just wanna make sure that it's fair and equitably distributed across our city. So I think as easily as possible, we can communicate that to them. I think it will be beneficial. So the other thing I'll ask too, and you don't have to give a number, you can give a range. What are we looking at in regards to updating the master plan? Just ballpark. And you can give a range. It's about 900,000. The number's 900,000. That's kind of what we've asked consultants, kind of what that would look like in today, doing all of it together. So we're talking the aquatics piece, golf piece, parks master plan, all of it together. Of course, that's a lot of community engagement. It's a lot of meetings, face-to-face meetings. So yeah, we think it's a big number. It's about 900,000. Okay, it's bigger than I thought. Yeah, I know, me too. But I think updating that plan is important. I think the community engagement piece is important, but then we also know that not all communities engage the same way. That's right. So we just need to make sure that we're making good decisions going forward. So look forward to seeing you again in March. Thank you. All right. All right, I don't see anyone signed up for questions. We'll go to the next item on the agenda. Oh, I'm sorry, for questions. So I'll turn it over to Council Member Baxter to close us out on this issue. Thank you, Chair. Monica and Michelle, thank you both for your hard work on this presentation and bringing us all this great information. Colleagues, you heard we will have a proposed policy presentation in March, and I'm happy to make myself available between now and then to discuss any specific concerns that you might have or that you would like to see as part of the policy. We've got our work kind of cut out for us, but we've been thinking about it for a while now. So I'm, and I do know that it's very important that we set really strong expectations for what our community understands and what this, the Parks Fund actually means in reality. So that is a focus of ours, and then also wanted to make sure that as we enter into budget season that everyone is prepared to still fund our regular operations of parks in the same way that we have been previously. Just because we have this additional funding doesn't mean that we can slack on our current responsibilities to the community. So like I said, I'm available in the next month if you have specific things you'd like to talk about. And once again, thank you guys for your hard work and the presentation. Thank you. Thank you, Council Member. Going to the next item on the agenda is the review of committee referrals. Are there any motions, any changes? I don't see any, and with that, I would entertain a motion to adjourn. So moved. All right, a motion to adjourn was made and seconded. All those in favor, please say aye. Aye. Are there any that oppose? Consider this meeting adjourned, thank you. ♪ Sha la la la sha la la la la la la la la ♪ ♪ Sha la la la shalala la la la la la la la la ♪ ♪ Sha la la la sha.... ♪