Council Budget & Finance Committee

Summary

Meeting Overview

The Lexington-Fayette Urban County Government Budget & Finance Committee met on January 31, 2012, at 1:00 p.m., with Chuck Ellinger presiding. The committee addressed four agenda items during the session, including a discussion of the Board & Historic District Fee Structure, which was deferred for further consideration. The committee also heard an informational presentation on Activity Based Costing regarding Lane, and reviewed other business and items referred to the committee. The meeting included three public comments and one motion and vote.

Attendance

The following individuals were present at the meeting on January 31, 2012:

• Chuck Ellinger
• Ed Lane
• Richard Farmer
• John Stinnett
• Paul Schoninger
• Bettie Kerr
• Scott Seymour
• Jim Gray
• Vice Mayor Gordon

No absences or late arrivals were recorded.

Votes and Decisions

A motion was brought forward to request Ms. Kerr return with a three-tier fee arrangement proposal, consisting of one option at no cost and two others at reasonable levels designed to offset costs without exceeding them. 23:08

Motion Details: - Moved by: Ed Lane - Seconded by: John Stinnett - Vote type: Roll call - Outcome: Failed

Vote Count: - Ayes: 3 - Nays: 4 - Abstentions: 0

Voting Record:

*In favor (3):* - Chuck Ellinger - Ed Lane - Richard Farmer

*Opposed (4):* - John Stinnett - Paul Schoninger - Bettie Kerr - Vice Mayor Gordon

The motion did not pass, falling short of the required majority with three votes in support and four votes in opposition.

Budget and Financial Actions

The meeting addressed revenue generation from application fees related to historic district oversight.

Certificate of Appropriateness Fees

The board approved an appropriation of $12,000 in revenue from application fees for Certificates of Appropriateness in H-1 Local Historic Districts. This revenue source supports the administration and processing of applications required for properties within designated historic districts seeking approval for modifications or improvements.

Public Comment

Three speakers addressed the meeting with concerns regarding financial management and reporting processes.

Ed Lane 24:51 spoke about activity-based costing implementation. He expressed concern about the need for better cost data to manage government operations efficiently, particularly during economic downturns. Lane emphasized the importance of understanding the true costs of services, specifically citing golf courses, swimming pools, and real estate operations as examples where accurate cost tracking is essential.

Vice Mayor Gordon 35:30 addressed indirect cost allocation and activity-based costing. He asked about the committee's approach to allocating indirect costs and inquired whether desk audits are being used to track time spent on activities. Gordon noted that transparency in cost allocation is essential for accountability.

John Stinnett 46:27 raised concerns about the timeline for CAFR (Comprehensive Annual Financial Report) and audit documents. He emphasized the need to accelerate the CAFR production process to align with the budget cycle, noting that the current timeline delays critical financial reporting.

Contested Items

Historic District Fee Structure

The council was divided on a proposed three-tier fee system for historic district services. The motion to request implementation of this structure, which would have included a no-fee tier alongside two other fee levels, failed with a vote of 3-4. This split decision reflects fundamental disagreement among members regarding whether the proposed fees appropriately balance cost recovery with accessibility, or whether they are justified from an administrative standpoint.

The close vote margin indicates that council members held substantively different views on the merits of the fee proposal, with neither position commanding clear consensus support.

Board & Historic District Fee Structure

0:00

The committee discussed a proposed two-tier application fee structure for Certificates of Appropriateness in H-1 Local Historic Districts. Under the proposal, staff-reviewed applications would cost $20 (representing approximately 65% of cases), while applications requiring Board of Architectural Review would cost $50 (representing 30–35% of cases). The estimated annual revenue from this fee structure is $12,000.

Key Speakers and Positions

Bettie Kerr, Ed Lane, Richard Farmer, and Vice Mayor Gordon participated in the discussion.

Concerns Raised

Several concerns emerged during the discussion:

• Questions about whether administrative costs justify the proposed fee levels
• Potential barriers to participation that fees might create for applicants
• Uncertainty about whether fees should be tied to building permits or structured differently

Motion and Outcome

A motion was made to request a three-tier fee system that would include a no-fee tier in addition to the two proposed fee levels. This motion failed.

The agenda item was deferred, indicating the matter was not resolved and will be revisited at a future meeting.

Activity Based Costing — Lane

24:51

The committee received an update on the organization's efforts to implement activity-based costing (ABC), a method designed to improve cost accounting and financial transparency across divisions.

Presentation and Progress

Ed Lane, Richard Maloney, and Jane Drissel presented updates on ABC implementation efforts. The presentation highlighted progress on several fronts:

• Monthly division meetings to review and refine cost allocation practices
• Development of performance reports to track financial data by division
• Improved cost allocation methodologies to enhance budget transparency

The CAO and Jane Drissel emphasized steps being taken to strengthen divisional ownership of financial data, enabling departments to better understand and manage their costs.

Challenges Acknowledged

The committee recognized significant obstacles to full ABC implementation, including:

• System complexity in tracking and allocating costs across operations
• Time requirements for staff to learn and apply new accounting methods
• Financial costs associated with system development and training

Committee Decision

Despite the acknowledged challenges, the committee agreed to continue pursuing activity-based costing improvements. The outcome was informational, with the committee receiving the update and supporting the ongoing effort to enhance cost accounting practices and budget transparency across the organization.

Other Business

The committee discussed the delayed release of the Comprehensive Annual Financial Report (CAFR) and management letter. Vice Mayor Gordon and John Stinnett addressed the timeline for these documents, which the auditor is expected to deliver by early March.

The committee emphasized the importance of accelerating the audit process to support the upcoming budget cycle. This acceleration was identified as a key priority to ensure the financial documents would be available in time for budget planning activities.

In response to these concerns, the Chief Administrative Officer (CAO) committed to developing a revised timeline that would address the committee's need for expedited delivery of the audit materials.

The outcome of this discussion was informational, with the CAO taking on the responsibility of creating an updated schedule for the CAFR and management letter release.

Items Referred to Committee

47:01

The committee reviewed a list of items that had been previously referred for ongoing consideration and action. Paul Schoninger presented the status of these referred matters.

The following items were confirmed as remaining active:

• Comprehensive Review of Economic Contingency (removed from the list)
• Solid waste management
• Procurement task force items, including:
• Local vendor preference
• Minority women business recruitment
• Itinerant merchant task force
• Activity-based costing
• Street lighting fund

The committee confirmed that these items remain active and will be addressed in future meetings. This was an informational discussion intended to ensure that previously referred matters continue to receive attention and progress toward resolution.