Budget Committee of the Whole (COW)

Summary

Meeting Overview

The Lexington-Fayette Urban County Council met on April 23, 2013, at 10:00 a.m. in Chambers, with the Vice Mayor presiding. The council addressed six agenda items focused primarily on fiscal matters, including fund balance discussions, economic contingency calculations, fund balance assignments and uses, and reserve accounts policy. The council took six motions and votes during the meeting, with five of the six agenda items approved. One item—the Explorium Agreement—failed to pass. The council also heard four public comments during the session.

Attendance

Present: Council Members Akers, Beard, Clark, Ellinger, Farmer, Henson, Kay, Lane, Lawless, Massadi, Scutchfield, Stenet, Ford, and Lomas.

Absent: Council Member Myers.

Late: None.

Votes and Decisions

Fund Balance Assignments and Uses 1:05:36 Council approved fund balance assignments and uses as tentatively agreed upon in council retreat, including economic contingency, health insurance reserve, home match, capital projects, and streetlights. Motion by Council Member Stenet, seconded by Council Member Ellinger. The motion passed by voice vote with 14 ayes and 0 nays.

Fire Overtime and Grant Match Funding 1:09:51 Council approved $640,000 for fire overtime and $700,000 for grant match from remaining fund balance. Motion by Council Member Stenet, seconded by Council Member Ellinger. The motion passed by voice vote with 15 ayes and 0 nays.

Explorium In-Kind Service Agreement 1:15:54 Council considered approval of $45,906 for Explorium in-kind service agreement, contingent on fulfillment of obligations. Motion by Council Member Kay, seconded by Council Member Lane. The motion failed with 7 ayes and 8 nays. Those voting in favor were Council Members Akers, Clark, Ellinger, Farmer, Kay, Lawless, and Lomas. Those voting against were Council Members Beard, Henson, Lane, Massadi, Myers, Scutchfield, Stenet, and Ford.

Economic Contingency Fund Amendment 1:44:05 Council considered an amendment to increase the Economic Contingency Fund by $2.7 million, above and beyond existing fund balance allocations. Motion by Council Member Massadi, seconded by Council Member Meyer. The motion passed by voice vote with 8 ayes and 6 nays. Those voting in favor were Council Members Akers, Clark, Ellinger, Kay, Lane, Lawless, Lomas, and Myers. Those voting against were Council Members Beard, Farmer, Henson, Massadi, Scutchfield, and Stenet.

Original Economic Contingency Fund Motion 1:44:38 Council approved an original motion to add $1 million to the Economic Contingency Fund, above and beyond existing fund balance allocations. Motion by Council Member Massadi, seconded by Council Member Ford. The motion passed by voice vote with 9 ayes and 6 nays. Those voting in favor were Council Members Akers, Clark, Ellinger, Kay, Lane, Lawless, Lomas, Myers, and Stenet. Those voting against were Council Members Beard, Farmer, Henson, Massadi, Scutchfield, and Ford.

Reserve Accounts Policy Referral 1:08:44 Council approved a motion to refer reserve accounts policy discussion to the Budget and Finance Committee. Motion by Council Member Farmer, seconded by Council Member Massadi. The motion passed by voice vote with 15 ayes and 0 nays.

Budget and Financial Actions

The following financial actions were approved during the meeting:

Appropriations - Fire ladder truck replacement using vehicle replacement reserve: $750,000 - Fire overtime for remainder of fiscal year 2013: $640,000

Purchases - Police radios for infrastructure burn-in period: $1,600,000

Amendments - Capital projects for council renovation: $45,000 - Grant match for fiscal year 2013: $700,000 - Economic contingency fund increase: $2,700,000

Contracts - Explorium in-kind service agreement: $45,906

The total financial actions approved amounted to $6,480,906. The largest single amendment was the $2.7 million increase to the economic contingency fund. Capital and equipment purchases included the police radio infrastructure investment of $1.6 million and the fire department ladder truck replacement of $750,000. Additional fire department funding of $640,000 was allocated for overtime costs through the end of fiscal year 2013. The council renovation project received $45,000 in capital project funding, and a $700,000 grant match was approved for fiscal year 2013. Explorium was contracted for in-kind services valued at $45,906.

Public Comment

Council members raised several questions and concerns regarding the fund balance and reserve allocations during the meeting.

Litigation and Refund Reserves

Council Member Stenet discussed the approach to litigation and refund reserves, noting that council members preferred to leave these reserves unassigned within the fund balance rather than formally earmarking them as designated reserves. This approach was intended to maintain flexibility in how these funds could be used. 1:26:51

Economic Contingency Fund

Council Member Stenet emphasized the intended purpose and governance of the economic contingency fund, stating that it is designated for use during economic downturns and emergencies. The council member noted that withdrawals from this fund are governed by a strict formula. 1:31:02

Explorium Agreement

Council Member Lane raised concerns about the informality of an existing Explorium agreement. The council member questioned the lack of formal documentation and urged that any future similar arrangements be properly formalized and require council approval before implementation. 1:34:11

Health Insurance Reserve

Council Member Henson requested clarification regarding how the $250,000 health insurance reserve amount was determined. The council member noted that the city had experienced significant payouts in the past, raising questions about whether the reserve level was adequate. 1:43:01

Contested Items

Explorium Agreement

Council members disputed the timing and conditions of a $45,906 allocation to the Explorium. The disagreement centered on whether the funds should be approved before the Explorium fulfilled its in-kind service obligations. Some council members raised concerns about the informality of the arrangement and the lack of proper council approval for the commitment, suggesting that the allocation should not proceed until the organization had completed its required obligations.

Economic Contingency Fund Increase

The council voted 8-6 to add $2.7 million to the economic contingency fund, a narrow margin that reflected significant division among members. The dispute involved competing priorities: some council members advocated for holding the funds in reserve as a contingency measure, while others argued the money should be deployed immediately to address capital needs. The close vote demonstrated that council members were nearly evenly split on the appropriate use of these funds.

Fund Balance Discussion O'Mara

Council discussed fund balance matters, including the economic contingency calculation, fund balance assignments, and proposed uses of fund balance. 0:00

Key Speakers

The discussion involved Mr. O'Mara, Council Member Stenet, and Council Member Kay.

Topics Discussed

The council addressed several fund balance-related items:

• Economic contingency calculation
• Fund balance assignments
• Proposed uses of fund balance

Key Decisions

The council approved the following actions:

• Reclassification of the capital reserve into the economic contingency fund
• Several reserve allocations

Outcome

The fund balance discussion was approved.

Economic Contingency Calculation

4:54

The Council discussed the methodology for calculating the economic contingency fund, specifically whether the capital reserve should be included in the calculation.

Discussion and Debate

Mr. O'Mara and Council Member Stenet led the discussion on this agenda item. The Council debated the appropriate treatment of the capital reserve in determining the size of the economic contingency fund.

Outcome

The Council reached consensus to include the capital reserve in the economic contingency fund calculation. This decision resulted in an increase to the fund of approximately $1.3 million.

The item was approved.

Fund Balance Assignments

8:15

The Council reviewed and tentatively approved several fund balance assignments during this agenda item. Key speakers in this discussion included Mr. O'Mara and Council Member Stenet.

The assignments under consideration included:

• Health insurance reserve
• Home match
• Capital projects
• Streetlights

The discussion focused on policy considerations and future planning related to these fund allocations. The Council's review emphasized the importance of these assignments in supporting the municipality's financial planning and operational needs.

The outcome of this agenda item was approval of the fund balance assignments as presented.

Uses of Fund Balance

The Council discussed capital and operating uses of fund balance during this agenda item 12:20. Mr. O'Mara and Council Member Stenet were the key speakers during this portion of the meeting.

The discussion covered several proposed expenditures from fund balance, including:

• Fire overtime
• Grant match funding
• Police radios

Several motions were brought forward and passed by the Council to approve these expenditures from the fund balance. The outcome of this agenda item was approval of the proposed uses of fund balance.

Explorium Agreement

The Council discussed a proposed $45,906 allocation to the Explorium during this agenda item 1:12:03. The allocation was contingent upon the Explorium's fulfillment of in-kind service obligations.

Key participants in the debate included Mr. O'Mara, Council Member Kay, and Council Member Scutchfield. The discussion centered on concerns regarding whether the Explorium had met the conditions required for the funding to be approved.

The primary issue raised was that certain in-kind service obligations had not been fulfilled. This contingency became the focal point of the Council's deliberation, with members expressing concerns about approving funds when the agreed-upon conditions had not been satisfied.

The motion to approve the $45,906 allocation failed. The Council did not move forward with the funding at this time due to these unmet conditions.

Reserve Accounts Policy

The Council discussed the Reserve Accounts Policy as agenda item VI. 1:06:39

Council Member Farmer and Council Member Massadi were the key speakers on this matter.

The discussion centered on the need to establish a comprehensive policy framework for reserve accounts. Rather than resolving the matter immediately, the Council agreed to refer the broader policy on reserve accounts to the Budget and Finance Committee for future discussion. The referral encompasses several key policy areas, including funding mechanisms, capping limits, and usage guidelines for reserve accounts.

The outcome of this agenda item was approved, with the Council moving forward with the decision to have the Budget and Finance Committee conduct further review and analysis of the reserve accounts policy before bringing recommendations back to the full Council.