Council Budget & Finance Committee

Summary

Meeting Overview

The Budget & Finance Committee met on March 20, 2012, at 1:00 p.m., presided over by the Chair. The committee addressed five agenda items during the session, including reports on the monthly budget, hotel/motel tax considerations, and fiscal year 2013 budget priorities. Two motions were voted on during the meeting, and three members of the public provided comments. Of the five items discussed, two were approved—the FY 13 Budget Priorities and Items Referred to Committee—while three items, including the Monthly Budget Report, Hotel/Motel Tax discussion, and CAFR Timetable, were presented for informational purposes.

Attendance

The following individuals were present at the meeting on March 20, 2012:

• Stinnett
• Lane
• Farmer
• Beard
• Gordon
• Driscoll
• Browder
• Schoninger
• Barberte
• Ryan
• Bill
• Phyllis

No absences or late arrivals were recorded.

Votes and Decisions

Motion to Pass Budget Priorities Ranking 48:09

Vice Mayor Gordon moved to formally pass along the ranking of budget priorities from the joint budget workshop to the administration. Mr. Farmer seconded the motion. The motion passed by voice vote with no opposition. All members present voted in favor: Stinnett, Lane, Farmer, Beard, and Gordon.

Motion to Adjourn 1:08:55

The Chair moved to adjourn the meeting. Mr. Farmer seconded the motion. The motion passed by voice vote with no opposition. All members present voted in favor: Stinnett, Lane, Farmer, Beard, and Gordon.

Budget and Financial Actions

The meeting addressed funding allocations related to tourism and hospitality revenue for Lexington-Fayette Urban County Government.

Lexington Convention and Visitors Bureau Appropriation

The Lexington Convention and Visitors Bureau received an appropriation of $3.5 to $4 million for operations.

Hotel-Motel Tax Revenue

Hotel-motel tax revenue for fiscal year 2012 totaled $7.5 million, allocated to Lexington-Fayette Urban County Government.

Public Comment

Three speakers addressed the council during the public comment period.

Mr. Lane 13:29 raised concerns about the impact of mild weather on franchise fees. He noted that reduced utility usage due to warm temperatures has lowered revenue and asked whether a better reading on franchise fees would be available in the next month or two.

Mr. Stinnett 43:18 requested clarification on the legal ability to implement a 1% PDR tax via voter referendum. He asked for a synopsis of the process should the council wish to pursue this option for the hotel-motel tax.

Mr. Beard 1:05:50 questioned whether offering a completion bonus to the audit firm could incentivize earlier delivery of the CAFR. He noted that such practices are common in construction and suggested this approach could be considered for future contracts.

Contested Items

Timing of CAFR Submission

A heated discussion arose regarding the timing of the Comprehensive Annual Financial Report (CAFR) submission. Council members expressed significant concern over the late delivery of the CAFR, with some noting that delays have persisted since the implementation of PeopleSoft.

The administration defended the extended timeline, attributing the delays to increased accounting standards and audit complexity. However, the administration acknowledged the need for improvement in meeting submission deadlines going forward.

Monthly Budget Report

The committee reviewed the February 2012 monthly budget report during this agenda item. 2:00

Key Presenters and Participants

Bill, Ryan, and Jane Driskell led the discussion on the monthly budget findings.

Report Highlights

The February 2012 budget report identified timing differences in several key revenue sources, including withholdings, net profits, insurance, and franchise fees. After adjusting for these timing variations, the report showed a year-to-date surplus of 0.8%. However, personnel expenses were noted as running slightly over budget.

Key Discussion Points

A significant emphasis of the discussion was the importance of analyzing quarterly trends rather than relying solely on monthly data for forecasting purposes. This approach was highlighted as more reliable for understanding the budget's overall trajectory and making accurate projections.

Outcome

This agenda item was presented as informational, providing the committee with an overview of the current budget status and financial trends without requiring a formal decision or action at this time.

Hotel/Motel Tax

25:13

The committee discussed the legal authority governing the use of transient room tax revenues, which consist of two components: a 4% tax dedicated to the Lexington Convention and Visitors Bureau (LCVB) and a 2% tax allocated for the convention center.

Key Presentations and Findings

The law department confirmed the legal parameters for using these tax revenues. Funds from the 4% tax can be used for tourism-related facilities, provided the LCVB consents to such use. The committee also learned that implementing an additional 1% Prepared Destination Resort (PDR) tax would require approval through a voter referendum.

The LCVB president, identified as one of the key speakers, provided information on the bureau's funding and operations during the discussion.

Speakers

David Barberte and Jim Browder were the primary speakers on this agenda item.

Outcome

This agenda item was informational in nature, with no formal action taken. The discussion served to clarify the legal framework and restrictions surrounding transient room tax revenues for committee members.

FY 13 Budget Priorities

43:53

The committee reviewed budget priorities that had been ranked during a joint budget workshop. The discussion focused on identifying and formalizing the most critical funding needs for the upcoming fiscal year.

Key Priorities Identified

The ranked priorities from the workshop included pension issues and infrastructure needs, which were identified as the highest priorities for the budget cycle.

Committee Action

Paul Schoninger and Vice Mayor Gordon led the discussion on this agenda item. Following the review of the ranked priorities, a motion was made to formally forward these priorities to the administration for consideration in the upcoming budget process. The motion passed.

Outcome

The committee approved the motion to submit the FY 13 budget priorities—with pension issues and infrastructure needs at the top of the list—to the administration for incorporation into the budget development process.

CAFR Timetable

The committee discussed the timing of the Comprehensive Annual Financial Report (CAFR) submission, addressing concerns about delays in the process. 49:14

Key Participants

The discussion involved Jane Driskell, Vice Mayor Gordon, Mr. Lane, and Mr. Farmer.

Issues Discussed

The administration explained that the audit process has become more complex due to two primary factors: updated accounting standards and the implementation of PeopleSoft, a new financial management system. These changes have contributed to delays in completing the CAFR.

The committee expressed concern about the timing of CAFR delivery and emphasized the need for earlier submission. Members indicated that an ideal delivery timeline would be November or December, rather than the current schedule.

Outcome

The discussion was informational in nature. The audit firm was asked to provide a finalized schedule for CAFR completion that would address the committee's concerns about earlier delivery.

Items Referred to Committee

During this agenda item, the committee addressed a motion to remove the hotel-motel tax item from the agenda. The motion was seconded and subsequently passed. 1:08:55

Key participants in this discussion included Mr. Stinnett and Mr. Farmer.

No additional items were referred to committee for consideration beyond the hotel-motel tax matter that was removed from the agenda.

The outcome of this agenda item was approval of the motion to remove the hotel-motel tax item.