caption test for AUGUST 25,

First on the agenda is approval

of the JUNE 23, 2026 committee

summary.

Is there a motion?

>> second.

>> there was a motion to approve

and secondedment are there any

questions or corrections?

Hearing none, all those in favor

say aye.

>> aye.

Chair: any opposed? Seeing none, that motion passes. Next item on the agenda is the monthly financial update for JULY 2026, we have commissioner hensley. Director holbrook and director lueker. >> before we get started on the financial update for the new fiscal year, would I like to make a very special introduction since we didn't see you all last month, we have a new member of our team with us. This is elaine stucky. Accounting. She joined us for the new fiscal year and is diving right in for her very first audit with us. Fortunately for us and her and the team, she is not new to audit. She has had years of experience with gazby and the preparations and single audits and we are benefiting from her years of experience both with the preparation and other agencies. She she is bringing a wealth of knowledge and experience and looking at things from different perspectives and she has hit the ground running with our team aand we also have a number of folks in our department new in their roles. as well as a new senior william long is new in his role so I want to congratulate her for stepping in and welcome her to our team. She didn't want to speak so I asked her if she wanted to elk spue. She was like, no. We will go ahead and kick off this fiscal year and with it bring JULY, we are in what we affectionately refer to as our look back period and we are making sure we are doing appropriate cutoff for the end of our JUNE 30 fiscal year so both of our revenue and expenses were taking an appropriate amount of time to make sure all revenue and expenses are correctly recorded into the year that they are. So if they're coming in in JULY and wes is going to talk about that in particular as it pertains to revenue but happening in the accounts payable with expenditures. If we occurred the expense in JUNE, it gets book back, even though we are paying for it in JULY. But if it is coming in for JULY and was actually for JUNE, we move those expenses into the appropriate fiscal year before we finalize our cutoff with the audit. There is lexington-fayette urban county government wages in JULY -- there is fluctuation in JULY and delays in our processes as we are closing our fiscal year while we are doing things like health insurance. That takes us a while to close the fiscal year. And so JULY health insurance has not been booked or transportation that takes us a while to close and larger items and you will see variance in the personnel melissa was talking about and the operations that have to do with the kind of things we see at the beginning of a new fiscal year. With that being said, as we are coming into the new fiscal year, we do have some little bit of revenue variance. Wes is going to go into that. Our top four revenues are volatile in the month of JULY. As you are well aware, we don't have any real income from revenues until we hit our property tax revenues that happen in NOVEMBER really. We see a lot of that that happens in knop NOVEMBER. We typically run we cans penses exsiding our revenues up until that time. So this is not an abnormal picture for us at this point in time to this time of the year. As our budgets come on, we are rolling forward, as everybody is well aware, that we bring on those rolled P.O.S and the things that are crossing over the fiscal year from last year into this year, the things that we just didn't quite get finished at the end of the year. Those budgets are also impacting the budget that was just approved in the new fiscal year. So all of that being said, a lot of movement happening, a lot of really intense scrutiny of what we have completed for the month of JUNE to make sure everything is appropriately recorded in its place and so then that is part of the reflections of the statements for the month of JULY and with that I will let wes talk about revenues. >> thank you, committee members. The first month as aaron indicated of the fiscal year for revenues all over the place. A lot the that's has to do with how much we see in JULY that is going get booked back. We had an extremely large revenue accrual back to fy'26, and so that is going to make some of these categories a little -- the vapors look like it maybe is a little less or more than it should be or in one case, right on track. We did have -- part what have was driving that accruals were the things that should have been collected in JUNE 30, for instance we had one of our largest taxpayers who submitted their payment to the wrong po box and we didn't get it or book it noel JULY 2. So then it's an fy'27 recognition we have to book back. There are a lot of things like that that we see as we are trying to close out the fiscal year so far payroll withholdings, slightly above what we have for the budget for JULY. Net profits is a little below but once we get to the actuals we will see it is clogger to -- closer to reality. Insurance, some of that is timing. The insurance is due quarterly and the due date is at the end of the month, so sometimes it comes in a little bit early and we are able to process it. Sometimes it's to the next month. So really the second quarter when is we start to see a good picture what have some of that looks like. Just as far as other budget categories, which are looking particularly strong, on the property tax item, there are two things there, the biggest one is motor vehicle ad valorem tax $300,000 above budget that is driving a lot of the property tax count and getting the collections right there. The rest of the categories are pretty close relatively. Services is one where we see a high variance driven by detention center bed fees higher than what we budgeted for the month. But overall in the whole, JULY is close to what we have for the budget, slightly down about 5 And as we don't did have the large accruals or transfers back into fiscal year we will have a better picture especially once we get past the first quarter. And just looking at what we collected last year compared to what we collected so far, one of our larger taxpayers paid their JUNE payment and we didn't see it until JULY and post it until JULY, so when that got accrued back, that creates a large variance and then insurance being the other where we see some timing right there. Net profits is very close even though it's maybe a higher percentage than we might like to see. Being within one had you been thousand dollars on net profits at any point in the year is really good. And over all we see a lot of growth in most of our categories with the accruals and timing, we are just under what we collected in prior year for JULY by $4 million but really a lot of those are due to a very large accrual, which is about 10 times the size what have we saw in the prior fiscal year. In JULY. That's a really high level view. I'm happy to take any questions that the council MAY have about JULY revenues. thank you director. First for logging in is council member elliot-baxter. >> I'm curious. I'm going to go back to your comment about a large payroll mailing a check incorrectly and this might be the same one that recently switched off ach and I'm curious if we have any indication that that business MAY go back to ach or if there is a way to require that companies of a certain size participate one way over auto. >> that's not somethig we have explored and some of it we use lock box processing with the third and every tax type and form has its own po box which is how it gets routed correctly but for businesses sometimes that can be confusing and they might send it to the payroll reconciliation payroll backs which is used at the first part of the calendar year versus our monthly payroll backs and we encourage people to pay as effect itchily as possible and better off for the business and for us but as far as a requirement, we haven't pursued any conversation with that with the law enforcement. >> there is no fees association with the ach payments, correct? >> relative will I low fee. it might not be very much for an individual business but to pay us with ach through a platform we provide, regardless of the size is 30 cents. >> council member sevigny and thanks for the presentation. It sounds like you moved, booked some -- you got to basically move some revenue from because even though we are kind of cash base like it seems like that is cash basis, we would probably call it but you guys did an accrual because probably the auditors would say it was earned in JUNE, right? Do we do that with, anything that shows up or just a major transaction. >> the main ones we look at it for, our top four, we do this really, accounts receivable adjustment but it accrues revenues back the other where we do it is our ems revenues because that truly is in a prior month and then is billed and is paid later. Those are four or five of the top six revenue sources and once you get past that point, the impact is pretty small. >> so we move that money back. What were the total movements back into JUNE? Was it three million? >> closer to eight million. >> that would improve our fund balance for the previous year. >> if revenues hadn't been -- if revenues hadn't been running under, it would have been more beneficial to fund balance. >> thank you, that's all I have. Thank you, chair. thank you, council member. That's all the questions we have, director next we have director lueker. >> moving to the expense side, we are still in the closing of fy'26, the actual numbers MAY change based on the year-end process. With our personnel, they're still working on the year-end so we haven't booked any health insurance subsidy yet or any of those type things. We are looking at our overtime and our other salaries to see how those are spread because we have MAY have a budget spread issue because we are showing a large variance in those categories and something we are digging into in our office to get that more accurately spread so we will get that updated. The operating, as the commissioner said, transportation is one of the things that hasn't been booked. That's one of the things that is popping as a vawrns for us here. -- as a variance for us here. 3.2 million is spread out across all divisions. There is not one area that is popping out when we look at it. It is in professional services and operating supplies and expense but there is not, I can't say -- it's this department or that department. It's kind of a little bit all over the place spread around. Insurance is just timing when we had the budget spread versus when the insurance was booked and debt service, all of that is based on our debt service payment schedule. The agencies, that is mostly with casa and lexarts. So the agreements, you all are on recess, you have your first two meetings the beginning of JULY and then on recess. So we couldn't get agreements or things passed through council. Some of those we will see coming on later as agreements are approved and make their way through the process and capital. That's always, we never know because it's a one-time thing. Tip typically when that will be spent. Moving on to compared to the prior fiscal year, I would like to note we did not get a 58% salary increase. JULY of 26, this fiscal year had three payrolls and JULY of 25 only had two. So that is a bringing reason why you see that big jump in that big difference in the personnel line. We had three payrolls in JULY. Last year we had three payrolls in AUGUST. So will you see that catch up here in a month or so. And then the debt service, you know, that's based on our schedule, owe while we spent less this year, it's based on the timing of our schedule, the timing difference there. Partner agencies, I will point out because that's a large difference. Last fiscal year was year two of esr so a lot of those agreements were able to be in place in JULY you will notice some of those agreements are coming, I believe they're on the docket or on work session today for you all to approve. So once those things get approved, we will see the partner agency amounts kick up but last year it was year two so you descrbt to go through the long process like you did the first year of the cycle with esr. So really that is all I have to point out today f. There are any questions. thank you for that, director. Council members, are there any questions? I'm not seeing anyone signed Commissioner I think you said we are not only moving revenues back to the previous years but also moving expenses back as well. >> we actually try and do that as they come through the accounts payable process and make sure they're recorded. The idea is to catch them on the front end and not have to touch them again so we record them at the time that they're being paid. But yes we try and make sure they're caught and moved to the appropriate year as we are going through them. >> so the estimate on the revenues that have been currently moved back is about $8 million. How much in expenses have we moved back. >> so because we try and calf them on the front end, we don't track it that way. With the revenues that we moved back, I do think it's important to note that we did, in our budget, anticipate a prefund so that utilizes some of that. We anticipated using revenue to do that and we did not make our revenue estimate even with the book back of those revenues so there are lots of parts and cease pieces that go into, including at cruel, that go into the end of year balancing of all the accounts revenue and expenses. thank you for that. we still don't have any questions so thank you directors for the presentation and thank you, commissioner. We'll move on to the next item on our agenda and lats the local impacts due to federal policy. If y'all remember this item was put in committee because at the beginning of I think it was last year, there was a lot of concern about the changes at the federal level, how they impacted and trickled down to the local level so we had a presentation on the federal impact and the changes it made for non-profit community and we were also looking at two other areas that MAY seem see impact and that's the business community and local government. So the next presentation is on the local business impacts due to policy changes. Our partner in the conversation was andy johnson at the chamber and she connected us with charles all, vice PRESIDENT Of policy and research at the kentucky chamber and he is here to present the floor is yours. >> thank you. It is an honor to be here. I appreciate you not only inviting awe louisvillian to your chambers but an indiana university graduate. I try to keep that under the radar but I think you are a friendly enough group that I can share that part of my background. I do appreciate the opportunity to be here today to speak with you all and I want to extend my thanks to andi and commerce lex for connecting us with this opportunity to get a chance to talk with you all. We have a wonderful partnership with commerce lexington. I know that they have a wonderful partnership with this body as well. And I'm looking forward to having this discussion and talking more about how we can continue working together. My name is charles all. Vice PRESIDENT Of policy at the connect chamber of commerce for those of how might not be familiar with that chamber, we are the state's largest business association and our primary mission is to advocate for pro-business public policy to grow our economy, attract more businesses, grow businesses that we have and create more of a thriving economic climate here in the commonwealth. My role at the chamber is to oversee our kentucky chamber for policy and research and lead our economic and policy research initiatives. We have written and analyzed a wide range of different topics. I've included a few samples up on the screen. We have talked about tax reform and housing and touched on issues such as workforce development and spend a lot of time thinking about the broader economy. Thinking about the U.S. Economy, the kentucky com economy and local community economies throughout state as well. What I want to do here today, in working with the chairperson and getting a sense of what might be helpful to you all as a legislative body, auto I'm going to talk about the current state of the economy, talk a little bit about what we know around federal policy as you all know is a very rapidly changing landscape and I think that the key themes you are going to be hearing from me today is a mixture of economic head winds and tailwinds and we'll talk about those things in terms of federal policy and that will be reflected in the economic data. We will look at a couple different charts of different data points and what you are going to overall see is a mixed bag, depending on how you look at it and depending on your perspectives. I want to try to move through some of this as fast as I can. I will start with the policy side and move into what we see in the economic data and economic trends and then happy to get into some discussion with you all after that. I'm going to start with what we view as one of the tailwinds that we're seeing in terms of the economy, something we think is broadly supportive to economic growth and encourage encouraging business investment which is the tax changes introduced through the one big beautiful bill account known as This bill, of course, got a whole lot after tension as it was moving through the congressional process last year but there is some really important tax policies embedded within the legislation. Examples of that are on the screen. i won't talk through all of these. One of the most important that you see is the way the federal tax code beats businesses and when the jobs act was passed in 2017, it made good changes to how the tax code treats business investments. One big beautiful bill act made the changes permanent and those are things that provide employers with a whole lot more stability at the way we treat things like domestic research and experimental expenditures, the way the tax code is ready to treating those prior to the big beautiful bill was unfavorable to business investments in those areas. We have seen some good changes there. Another thing that didn't get a lot of attention as the bill was passing was the expansion of the employer provided child care tax credits. An important tax credit that encourages businesses to open up things like on site child care facilities, a cred on the books for a long time. Doesn't get a lot of utilization. Hr-1 significantly expanded that program. This is something that we have talked about at the chamber quite a bit. The importance-of-increasing access to high quality child care. We produced a report two years ago one year ago now that demonstrates if we can increase child care in kentucky we can increase our labor force by 16,000 to 28,000 workers. In the lexington area you are looking at a ball park of 2,000 to 3,000 additional workers. Things like the employer provided tax credit expanded in hr-1 can help increase the access and get more folks into the labor force and help more folks access child care. Some of the examples of the tailwinds coming out of that bill on the other side of that we have head winds, a good example of a head wind coming out of federal policy is tariffs. I thought about how I would want to talk about this issue with you all because it's constantly in the news. It's constantly shifting. If I was to try to create a timeline of all the changes that have taken place in tariff policy, you would not be able to read the font on the screen and would have to extend the project are -- projector significantly but the chart on the left created by an excellent national organization called the tax foundation, gives you a sense of how much U.S. International trade policy has changed since JANUARY of last year you see the weighted average applied rate. The statutory tariff rate. We look at the rates, combine them into one and you can see how much it has changed since JANUARY of last year, it has changed more than 50 times over the past several months and so think about that from the perspective of businesses that are bringing in materials, equipment, supplies, from other markets from international markets, pricing those things It's remarkably complicated to do when you have those rates constantly shifting. To further illustrate the significance of some of the changes we have seen with tariffs, this chart on the right gives you the average effective tariff rate. As it currently stands and this is probably all right outdated due tote failure of trade negotiations between the united states and canada that unfolded over the weekend the current tariff rate is the highest level since 1969 if we were to go back to APRIL of last year, liberation day when tariffs were officially aunited states nod. It was the highest effective tariff rate since the 1930s. So in other words, a reversion to pre-world war ii economic policy. This is a very significant change. Arguably one of the most significant changes we can talk about in terms of things that are impacting the economy today. Another interesting piece of federal legislation we can confidently describe as a tailwind although it's recently passed, but we do think this is something that will be supportive of economic growth is the 21st century road to housing act which is frankly a rare example. We have seen lately of bipartisan policy making at the federal level but this is a welcome bill. With a lot of good things in it this is another one difficult to describe in a short timeframe. It combines about 60 pieces of legislation that have been filed in congress over the past several years. It is easily the most significant housing reform package we have even in at least a generation and I think the way to think about this, the road to housing act is that it is very much supply side focused whichy with flects the research. One of the things we know about housing in the united states is we don't have enough of it. We certainly don't have enough of it for low and middle income americans and this legislation and a lot of ways was designed to speak to those challenges. I do want to point out I think this is a particular challenge in lexington and a big opportunity with the road to housing act. Last year, I think two years ago now we produced a report called building a foundation-for-growth which outlined some of the housing challenges we have seen in kentucky. We are in the process of updating that report and releasing a new version-of-it in partnership with the kentucky realtors understand ahome bimedders association in kentucky but a quick statistic from that, if you look at median home sale prices in lexington, they are 3.8 times higher than median household incomes. If you compare that to where we stood 30 years ago, median home sale prices in lexington were 2.7% higher. Think about the strain that puts on family budgets, household budgets. This is certainly a community that could benefit from more housing and would you benefit from having more housing in this community because if we look at the economic impact of housing, 1,000 new single-family homes alone can support reoccurring annual impact of 775 jobs, a lot -- 757 jobs, a lot of good coms from increasing housing and excited to see how the road to housing act supports more housing access throughout the state. Fuel prices. So this will be another instance of a head wind. Something that I think is going to be pushing back on a lot of economic progress and economic growth and this is a complicated one because it is largely connected to international affairses happening around the globe. I don't think it's any secret the conflict in the middle east with iran has caused diesel and gasoline prices to surge. Last mess #ur -- last measure I believe gasoline prices were 36% higher than they were before the conflict started. Diesel prices are about 60% or more higher than when where they were before the conflict started. Diesel is a little more complicated right now and it's one that I would encourage a body like this to keep a very close eye on. Gas is what you hear about the most. Diesel is the thing that is going to have a larger macroeconomic impact, something that will affect things like business net profits, affect consumer behavior in ways that are harder to see than direct gasoline but one of the things happening with diesel is a lot of the ukrainian-russian conflict is now starting to have large impacts on diesel exacerbating what we have been seeing within the conflict. You can see a separation between gas el prices gasoline prices and diesel prices. Another head wind that we are wrapping our hendz around, what to expect from reduced levels of immigration. We don't know what the flows look like yet 2026 will be interesting to see how much immigration has reduced. Immigrants in kentucky make up 4.5% of our population but they make up a disproportionate size of our workforce. About 5.9% of our workforce and that dates to around 2023-2024 data, I believe. We also have a lot of immigrant entrepreneurs in kentucky. Entrepreneurialism is a key part of how we get net new job growth and so is some something that as we see reduced levels of immigration, we are all going to watch how that affects our labor force and entrepreneurialism and in addition to that though, if you look at our country as a whole our projected rates of population growth at the national level and this applies at the local level and state level as well, is heavily dependent on net immigration, by the time we get to around 2030, all of our future population growth will be tied to net immigration as we see deaths begin to outnumber births in the country. So big trends that we are going to want to keep an eye on. Shifting to the economy very quickly. we track a lot of economic data. If you go to kychamber.Dom/economy, that's where you can find a majority of the position. I will go flew a couple of the slides to show what you we are seeing. This is a quake look at job growth. Non-parm payroll jobs. The first friday of the month you hear the news about the big jobs report. This is the data I'm referring back to here. Lots of caveats on the screen. We don't necessarily need to get into the details. We set this up to a way where we think you can compare the nation, kentucky and the lexington labor market in a similar way. We compare where the jobs are in one month to what they looked like that same month a year ago. And we think that's one of the best ways to track job change over time. That yellow line is the united states. Job growth has been meager over the past several months in the united states kentucky, the way that we measure it on a year over year basis, growth has actually been negative. What that means is we compare one month of this year to a month in the previous year. We actually have less jobs than we did at that time. And that follows a very lack luster 25 where we saw negative job growth. Lexington is bucking that trend a fair amount and largely to be expected. Our urban areas tend to outperform the state as a whole and that's a good thing. We want to see growth throughout the. By and large following what we see following national trends but edging higher, seeing more year over year job growth and that's something I think you all can keep an eye on as a positive. Another thing going back if you think about the impacts on reduced immigration, labor force participation is another metric to keep a really close eye on. Labor force participation looks at the share of the adult population that is actively participating in the workforce. That means they either have a job or they don't have a job but they're act actively looking for one. We have had fairly stable rates of labor force participation the last couple of years. That changed in 2026. It started following a downward trend. We are not entirely sure why. There are several different things going auto there. We are not seeing widespread job loss. We are not seeing mass firings but we are seeing a smaller share of our adult population participating in the workforce much I don't have lexington up here because the metric I'm using doesn't have an easy local parallel. In general if we look at other survey data. Lexington tends to run usually in the ball park of 8 to 9 points higher than the state as a whole which is to be expected. Urban areas have higher rates of labor force participation than rural areas and kentucky is a very rural state. I want to shift over to inflation now because I think the dovetails nicely into the excellence presentation from your tall's finance team we had a few minutes ago. What we are looking at here with inflation is core personal conception copings. This is the most important metric you can use for gauging inflation because this is what the federal reserve bank of the united states uses as their target metricment -- metric. They want to see core pce at 2%. We haven't seen that since 2021. Instead we have been hovering in the high 2s. Now we are in the mid 3s, not ideal n. MAY it was 3.5. Fell a little bit in JUNE to What we are seeing with inflation, we can connect very closely to tariffs. Very, very closely to tariffs because you can get into the granular details of some of that information and was we see here is tariffs but the way tariffs interact with inflation is they don't just continually push it They have these quick effects and then it is baked in after that what we have been seeing with tariffs, is they have kind of leveled out. That might change over the next few weeks again to are some disruptions between the united states and canadian trading. A lot of impacted fuel prices is not showing up in the data yet. It's not in there and that's very important as you all think about economic decisions, budgetary decisions, is that we haven't experienced 9 full brunt of some of the fuel prices and give you a sense what have that could look like. This chart here takes a look at a handful of inflation metrics. The one I want to point out is the one jumping off the chart on the right. This is a really nerdy metric and one that doesn't get a lot of fanfare but called ppi intermediate demand stands for the producer price index intermediate demand. It measures the prices that businesses are paying for the inputs and products that that& they make. And there is where we are really starting to see the impact of inflation. We have been tracking this for the past couple of months. I keep having to adjust that vertical axis because it keeps growing. And it finally took a break over the past couple of months which is el elwell com. What you can expect to see as a consequence of ppi intermediate demand increasing. Those are prices that are being paid by businesses. Eventually that is baked into consumer prices or you will see those businesses eat those costs and when they eat the costs, it will take the form of reduced profits which can in turn affect you all as you think about things like your net profits tax as an example of that. This is something we are watching very, very closely. At the chamber,this is stuff that we track very closely. we work have a lot of partners around the state to try to understand that. The way we view our role is to help communicate this information, raise awareness of it and we advocate at the local, state and federal levels for pro-business public policy. We also do a locality of proactive head business programming and access to child care, programs that are focused on second chance hiring and something the chamber is well known for is community and statewide vinings -- convenings. If you are interested in some of the information and want to learn more, we have some several different resources. You can go to kychamber.Com/research or economy and we also have our vice PRESIDENT Of communications sawyer noel in the audience. She does a lot of our communications work. That's a great resource for keeping track of what the chamber is up to. With that, CHAIRMAN, I am happy to take any questions. thank you, MR. All, for the presentation. Committee members, if you have questions, please log in first is council member reynolds.

Council Member: thank you, chair. And thank you for your presentation. It was very helpful. I had a question in regards to the immigration numbers. Last year when I was on the cd fly-in, the head of the national chamber of commerce was talking about how he thought that it was very hard on the economy, the crackdown on immigration and how we were reviewing it. And your numbers represented that as well. Is there any type of effort to rally around these numbers and say hey, we need immigrants. They're good for our economy. They're good for our country and what we are doing right now is hurting us? >> I think that exists. I think there is a lot of awareness raising, unfortunately it's not translating into political will. Because at the end of the day, this needs to be addressed by the united states congress. We have seen a lot of changes that have been made at the executive branch level and sometimes those are good changes. Sometimes they're bad changes. The fact of the matter is they're not permanent. And a lot of the challenges that we do see with the immigration system tend to fall into statutory frameworks and so I think those efforts are there. I think there is a push for it. At the end of the day, it is the congress' -- immigrants have positive impacts on our entrepreneurialism, positive impacts on our labor force, great members of our community and also it is going to be very important that we have continued net immigration into this country, into this community and into the state as a whole if bee we want to continue growing our population and growing our economies. So we are certainly contributing to that and would encourage others as well. I think more united voices, the more we can come together and put pressure on congress, the better. So thank you. >> yes. thank you, chair.

Chair: thank you council member. Next is vice mayor wu. >> thank you for the presentation and building on council member reynolds comments, you know, looking at, especially some of the head winds, whether it's the down turn in immigration numbers, the tariffs driving our prices up or conflicts, you know, around the world that affect our gas prices and kind of to the point that we just talked about. So much of this has to be done at the federal level. What are some ways on the local level through policies or economic development or other efforts, what are things that we can tangibly do on the local level to build resilience against some of the fluctuation and against all these larger forces that we have no control over. >> that's a wonderful question. I think we might have to dedicate probably a whole other committee hearing to that. I do think there are things, though, to be thinking about. The chamber is pursuing a handful of initiatives that I think reflect things that should be replicated at the local level. Entrepreneurialism is a good example of this. One of the things I like so much about entrepreneurialism is not only the fact that you get a lot of innovation. It's a way for folks to increase personal household wealth, contribute to the economy and also a way to diversify economy. One of the until one things that we could be doing in an communities and as a state is diversifying our exphes because a diversified economy is much more resilient economy. Kentucky is starting to turn the corner on that. Helping folks get into ownership is one of the greatest ways to build generational wealth but then you can think about the economic impact that I mentioned a few minutes ago. Increasing access to child care is another good way do that and what is happening with the federal tax crowed and what we might do at the local level to complement that. I understand in kentucky local governments don't have many actions when it comes to taxation but we can think of those things, at least, think about, if we have a big playing field at the national level that has a federal tax framework at the national level, how can you make it to the local level for better treatment of things like research and experimental expenditures or better treatment of investments in manufacturing equipment. What can we do to sweeten that deal and make this place more attractive. So I think I would love to have the conversation at the local level to see what we can do to build in resiliencey. It is a good reminder that we can all feel helpless when you have this sort of massive change in federal policy. A good reminder that if and when things calm down, that doesn't mean we need to calm down. That's the time to act and strengthen the local economies. >> I appreciate those points I have no hope or confidence in things calming down soon so we can only think about what we can impact on the local level and diversifying the economy and businesses, too, I think about this also in terms of energy, right? Like our, if we are energy dependent on fossil fuels, any time there is a conflict overseas, that's going to have an outsized impact on us and we are certainly trying here to kind of diversify our energy capacity. I appreciate your points. Thank you, sir. Thank you, chair. thank you, vice mayor. Next is council member sevigny.

Council Member: thank you, chair and thanks so much for the presentation. I've got a few questions. It would be helpful in the future at least to compare lexington to some of the other urban environments in kentucky. I just think it's kind of interesting to note how we rate and what might be some of the causes or effects of that. Just for the future. On population growth, they probably all use different numbers but is there a standard number that folks use probably more at the federal level to gauge when they're doing like their budget justifications for doing the tax cut, like you usually are considering some sort of growth and I'm curious, like that chart doesn't look good that you were showing and so it's concerning in general and I'm just kind of wondering what makes the economy sing better? Like what is the growth rate that they typically like to bake into something to make the numbers work better? >> that's an interesting question. That gives me a lot to think about. I assume this is the chart? that one just shouts out at me. I get the immigration piece but it's the overall population growth as well and we are not procreating as much as we were so you have to do something to make up the difference. You need net immigrants for sure I'm curious if if there is a number and if you don't know it, that's fine I don't know if anyone has an ideal target for population growth. For economic growth, people tend to strive for G.D.P. Growth at 3% that's a tough goal to hit this day and age. This particular chart, this one comes from the congressional budget office. I do try to put the chart in front of people when I get the chance because I think it's something as a country, as a state, even at the local level we are probably not thinking enough about how much society is going to look different 30 years from now and in this chart particularly, produced by cbo in the context of social security. Whens -- that's the whole point of this chart. >> you need more net payers into the system than receivers. I get that. Like would I love to know that number at some point the labor participation chart that you have so being someone who is at the, I'm at the tail end of the baby boomers council member ellinger at the tail end of the bay buy boomers, slightly younger than me. Without the -- but we are leaving the labor force rather quickly and we are a big surge but I also know I reentered the labor forcewhen the market took a 30 or 40% hit and I'm wondering if there is a a correlation of that age group staying in the labor force or reentering the labor force when the market takes a tank of 25 to 30%? >> that happens a lot what have we might be looking at. More data that we are going to need to understand the narrative unfolding with the labor force participation. A lot of it is has been projected, though this is kind of following a trend line that we would expect to see as we have more boomer enter the labor department, enter and leave and then they stay on, my dad is a good example of this. My dad left the labor market four or five years ago. You are not getting him back. He is not coming back to the labor market. There is nothing that will get him back in there. He put his time in and because of the way that population growth is going and reduced net immigration, we are not back filling at the rate that we used to so this is a sorry that will unfold over time and the way to think about this that is going to mean we will still have lots of people consuming goods and services because we have people living longer which is a great thing but where we will have less people producing the goods and services col paired to how things have worked in the bast and dove dovetails into the question that I didn't answer that you asked a minute ago, what does the economy feel stable as these things are happening and a lot of that I think is coming down to tk logical change -- technological change is going have a lot to do with that. I'm not really in that camp of folks that says technology is going to come in and save the day on all of this. I think it will supplement and help but at the end of the day we need more and more people in the labor market because I think that's jebly the -- generally the way we see technological change unfold. It creates more jobs than it destroys on net and that would include potentially new technologies like we are seeing here today but we are seeing economy as a whole productive. Manufacturing employment has been declining for a long time but manufacturing G.D.P. Has been increasing. Why is that? Because manufacturers are getting more efficient and more productive so I think that's kind of why we see this as seek libium in the economy. I am out of time but I have another question to ask.

Chair: no one is signed up. Go ahead. >> because it relates to we had a net profits drop off at the end of last year. Am I right, commissioner? My guess is, like this spike that you showed with the input of people's product going up. Would you speculate that people -- do you feel like they're raising their prices quickly enough? Or do you feel like we MAY see a dip, that tip in net profits MAY become more problematic this year if tariffs kind of stay where they're at. >> it's very hard to say because of the way that employers are reacting to tariffs and the way they're reacting to energy prices. You know, consumer tolerance for higher prices I think, as all of you know, is wearing thin and so businesses have to factor that in, right? A lot of businesses are in positions where they're making decisions on there is there a way to cut a deal with the supplier? That is the preferred route. Is there a way to absorb the cost and offset it elsewhere or is there a way that we can pass this on to the consumer? And generally what you see in a lot of instances a combination of all three of those things with a fourth, fifth, sixth, seventh, eighth and ninth option as well. One of the things that concerns us at the chamber is very large firms have the ability do that fairly efficiently. Small firms absolute absolutely do not. So the impact on your main street businesses, that's where we have deep, deep concerns, but the impact on your really large firms as well, because a lot of our employment is within large firms so it's really hard to tell how those impacts -- the timing is the big issue. With tariffs, following the APRIL announcement liberation day, a lot of folks expected to see pretty quick impacts of the tariffs. You didn't. It was very gradual. So I would definitely think in terms of whole fiscal years is awe this will play out. >> thank you and thank you for allowing me the additional time and do I think this this body should be watching our net profits number and our trend compared to budget pretty closely this coming fiscal year so thank you. >> thank you for your presentation I know when we first started work on this item, I think it was obvious there was a lot of uncertainty in the community in regards to our non-profit partners and I think we were scrambling in local government because we didn't know how it was going to impact but a lot of us didn't know or hear because we didn't know where to put our ears to the ground. Your presentation is important because it gives us perspective. I remember on a flight in from D.C. And I heard our local business folks talking to federal policymakers aand I think the saying they said is that the business community is on edge when things are uncertain and a lot of things are up in the air and a lot of ways, it's still the case that's why it is important to include community with the lowell non-profits. >> thank you. the next presentation and to close out this issue is the local impacts from federal policy here at local government. We have commissioner lanter here to present on that. And with that, commissioner, I'll turn it over to you. >> thank you, council member. This will be a little more succinct because some of the issues overlap and some of this is an update on previous conversations. I'm here to talk about similar impacts on federal funding and policy on our federal grant portfolio and what we are seeing there; which before we get into that, real quick, primer on our grant portfolio, what we have at lfucg we manage a grant portfolio of 50 to $60 million in total federal state grants. That number has declined over the last couple of years but not for nefarious reasons. But because we received so much money during the covid-19 pandemic and it took a while for the funds to play out so as arpa has spent down, the emergency rental assistance program, the overall value of our grant portfolio has declined. But not because of less money, the covid-19 impact funds have wrapped up and back to a more normal or typical state of what we saw pre-pandemic. There is really two types of grants within the portfolio you are looking at. Formula grants the city gets because we are the city of lexington. We get a specified amount based on a is the of data, the age of our housing stock, poverty rates. Things like the community development block grant, home program solutions grant. Some of the highway funds, traffic funds, those are allegated -- allocated directly Woo don't compete with other cities. We have to apply and manage them and be compliant but we don't have to compete for the dollars. The other type of grant we typically have are the competitive ones, the ones that people more typically think of when they think of a grant and those are the ones where we go and apply and so do 50 other cities or organizations and the best are funded. Those are a fxed amount of money for a fixed amount of time for a fixed purpose. They all have a specified end date, and start date and for a specific purchase or program. We have not seen anything change in either of those despite some concerns about shifting federal priorities. Beginning in 25 we started to see and hear of the changes from our funders, specifically regarding certain types of grant activities no secret buzz words and things the administration did not want in the braming there were cases where we were asked to reword things but no significant funding or program at programmatic changes, relatively administrative. We have not lostening or passed over as a result of any federal `policy changes. All that to say is that there is a lot still percolating out there. Current their there is a proposal in the federal register where the federal government publishes changes to the federal policies. That would shift how the federal government administers its grant programs, all the rules for federal grants are issued by the white house, and those get updated from time to time through the federal register but tend to be sweex. This is -- tweaks. This is a major overall that is proposed and allow any PRESIDENT, current or future to award or rescind grants based entirely on political philosophy and so a lot of folks are concerned about that on both sides of the political spectrum because either side to cake on a project or grant and essentially told somebody MAY come in next year and yank it out from under you. It is really going to raise questions about the abilities of local governments and non-profit orbses to really help the government meet its goals, the federal government, as they shift to being more of an unreliable partners one thing you could count on once you inked the federal contract, the federal government was good for it now it is not sure. One thing that would change, the senate passed a continuing resolution to fund the federal government a couple weeks ago in that resolution was buried language that pauses this process until DECEMBER 11; however, that language is not in the house version of the cr so without getting into the political weeds as of right now, that would not pause but it could still change. We haven't seen major cuts or reductions but we have had some close calls 679 the council MAY remember in 25 when we heard that our samsa grant operated in social services, we got a notice one day that you are not getting this. It's not being renewed and we are yanking what you already have. At that time I think we had a week's notice that our entire project was going to end. That's not something have I seen in 20 plus years of working in that industry and it was extraordinarily unusual not just here but on a national scale. There was equivalent push back at the national level from that program and within 24 to 4 hours, the federal government reinstated the grants. We did not lose the samsa grant and are still working on it and recently submitted the next iteration. What that mazes more soing our when we are making plans for budgets next year how do we know for sure the samsa grant is going to be there and if we can rely on it. If the federal government is like yes you are, no you are not. It's the whiplash that makes it difficult. Some of the conversation in the previous conversation was around the business community not liking the uncertainly. I would echo that because those are businesses in a different tax status. The lack of certainty around the funding make it impossible to operate a business and makes it very difficult to operate a government as well see so there are some legal battles percolating that affect our funding. We passed through a lot of federal homeless dollars from the continuum of care program award tbrd hud to us but then they go straight past us to individual organizations like hope center that operate homeless programs. Last year the federal government issued the rfp for that and had completely revamped the entire program and changed what you could and could not use the funds for and without going into the weeds how that change took place, the they killed the housing policy first and could not use hud funds to pay for housing which is confusing and upsetting that we didn't know where to start with that news. A number of advocates sued and it was quashed and killed and the pfeffer was told to go back and rewrote it, it grot quashed again eye about the court. Currently sitting there quashed. The court says you have to give everyone the same grant as last year and start over. The federal government is saying they're going to appeal that. So again uncertainly. We don't know one of three things could happen. We could get nothing if this doesn't get figured out. we could have just a quick refund of everything everybody got last year or have to turn around and run a competitive process on a week's notice. That's the uncertainty we are or dealing with with many of the federal programs. Not that we are losing money but teetering on the edge of questions around policy and how these things get implemented and rolled out. We were told shortly after the new administration came on, they would want anyone who participated in a program that received federal funds before we could serve that person, we had to their name through the save database, a federal database that checks immigration status. We had concerns about that and have not had to implement it because it had been put on hold because it was not designed for that and the federal government has not been able to figure out how to allow everyone to use it for that purpose. So far we have been saved by administrative hiccups but we are not sure where that is going to land the road to housing act was mentioned in the last presentation and worth mentioning again here. That is landmark legislation that is going change the game. You probably won't feel much of it for a little bit because it's going to take a while to roll it out. A massive, massive piece of legislation. I have started distilling the issues that will affect lfucg and I'm up to 17 pages. So we are still working through that a lot of it is in the weeds and some is higher level. We can use cdbg funds to build new housing when was a restriction previously. One catch to that. It doesn't release you from the federal requirements that come from cdbg funding which so what we MAY have is a lovely change that no developer wants to take advantage of because it will raise the cost of their development. We have will to flip through this and see where it will be useful another requirement is that all cdbg grantees will have to search a published database for the land owned. We have produced that. Commissioner ford produced that as part of our other efforts on housing woo.Y have it ready to Just have to put it online essentially but we also already know what is on there because we have been looking on there already. We are ahead on that element and some other things we are ahead There are going to be as a result of this legislation, several new grant programs that we will be able to apply for and to get the funds, you will have to be compliant with and/or moving towards certain policy elements that lead you to more housing construction. So that includes density bonuses, intrusion collusionary zoning, parking minimums, all the things that get discussed at the planning level and planning commission level. As we adopt those, we are scoring points on future grant applications now. and the good news is we are way ahead of cities on some of the elements. We already have eliminated parking and density. So we are well position tooth take advantage of the new funding once it becomes available. However congress, when they passed the road to housing act, did not put any money in the road to housing act. So there are several new grant programs established in the act but no funding given to those programs so we are still waiting and the continuing resolution process hoping that some of those grant programs get funded. I will pause there because we have lots to talk about and see what questions you all have and thank you for the opportunity to speak. thank you commissioner. First up is vice mayor wu. >> thank you for the update. Will you go back to the road to housing slide I'm very much interested in that one I'm going to say I'm cautiously enthusiastic about it. Thinking about the rewards and grants soifts being set up -- incentives being set up. Those will kick into effect, I think it's like two years from now, something like that el. >> elements are staggered we have to have the list of properties published this fall. Most of the stuff doesn't kick in until 27. >> when they talk about rewarding an incentiving steps within a couple of years we will not be able to produce x number of extra housing no matter what policies we pass so I don't know if you would know the details right now but do you know how they're looking to grade or assess what are these positive steps? Is it a wide range of things? Is it subjective or a specific list here like density bonuses. >> excellent question and hud is still determining that. The legislation directed hud to come up with sthalt and to devise the mechanism you will decide how a city is successful at doing this I am certain that they will look at the metrics that you would expect they would. The housing starts maybe some other metrics like coverage rends and it will be the same measures they will use for the grant programs. >> it's heartening to know that we are ahead of the curve on some of this stuff and I love the idea that we are going to be rewarded for the direction we are already moving in my hope also is that as we are taking these steps towards creating more housing supply, that this act in itself and these rewards and incentives will be part of support measures and avails us to the extra funding from the federal government. Soy hope that's the direction we continue to move in and we can benefit from this act as much as possible. >> one thing I failed to mefntion is that act creates a provision by which hud can determine a city is not making adequate progress towards this and reduce their cdbg allocation is a penalty and the money that is taken is put into a pot awarded to some of the grants. On one hand you could be a victim, but you could also get somebody else's money if you are doing it really well and they're not. >> sounds like built in with a carrot and stick in the same mechanism. Thank you. Thank you, chair. >> thank you, vice mayor. Next is council member sevigny.

Council Member: thank you, chair. Thank you for the presentation. Do you see anything in this that might be supportive of permanent shelter housing. The things we have been looking Is there any angle there. >> you mean like homeless sheltering? >> yeah. >> it's really getting into permanent housing. There are provisions that deal with permanent supportive housing coming out of the homelessness but they're looking at more permanent multifamily rental, permanent home ownership, I wouldn't call this homeless legislation. Indirectly it will benefit the population but not going to address that directly. >> thank you, that's all I have.

Chair: commissioner, it looks like that's all we have. Thank you. Going back to our agenda items referred I will make a motion to remove well, I don't knowsly know if I need a motion. So I'm going to remove digital accessibility and then I'm going to remove the item we went through today, local impacts due to federal policy. Any motion motion to remove any other items if noted the next thing I will say and autos not on the agenda but I wanted to mention it because I mentioned at our last committee meeting. Today's report out we will report out in the motions, the infrastructure funding plan and I retched out to a few of you all and I think sean denny has been having meetings with folks. It it doesn't sound like additional questions. We talked about an additional meeting but the plan is to report that out today I just wanted to make sure and cover that base. If there is no other businesses, I will entertain a motion to adjourn. >> so moved. >> second. >> motion to adjourn and seconded. All those in favor? Please say aye. >> eye. any opposed? Hearing none, consider there