Budget Committee of the Whole (COW)

Summary

Meeting Overview

The Lexington-Fayette Urban County Council met on April 30, 2013, at 1:00 p.m. in the Council Chambers, with the Vice Mayor presiding. The meeting included two informational agenda items: a presentation on the FY 2014 Mayor's Proposed Budget (MPB) Approach and a Streetlight Presentation Review. The Council heard 11 public comments during the meeting and took 1 motion to a vote. Both agenda items were presented for informational purposes without formal action items requiring a vote.

Attendance

The following individuals were present at the meeting on April 30, 2013:

• Melissa Luker
• Bill O'Meara
• Sally Hamilton
• Glenn Brown
• Jamie Emmons
• David Barbary
• Jim Woods
• Jeffrey Neal
• Council Member Stenner
• Council Member Scutchfield
• Council Member K
• Council Member Henson
• Council Member Farmer
• Council Member Ford
• Council Member Kay
• Council Member Lawless

No members were absent or late.

Votes and Decisions

The Budget Committee of the Whole meeting concluded with a single motion to adjourn. 1:29:28

Adjournment Motion

The Vice Mayor moved to adjourn the Budget Committee of the Whole meeting. The motion passed by voice vote with no recorded opposition or abstentions.

Budget and Financial Actions

The meeting addressed two financial matters related to municipal utility services and streetlight funding.

Electric and Gas Franchise Fee Increase

The city approved a 1% increase in electric and gas franchise fees, with $2,500,000 in appropriations directed to the Urban Service District Fund. This increase was designed to subsidize the streetlight program.

Streetlight Property Tax Refunds

An amendment was approved to provide refunds for streetlight property taxes from the Urban Services Fund. The annual refund amount is projected between $25,000 and $45,000.

Public Comment

Council members raised concerns about the city's streetlight service delivery and funding mechanisms during the meeting.

Service Delivery and Refunds

Council Member Scutchfield expressed concern that residents are paying for streetlights they have not received and questioned the fairness of refunding them while the city lacks funds to install lights 35:06. Council Member Stenet similarly raised concerns about the inconsistency of refunding residents for services not delivered, especially when the city lacks installation funds, and called for a policy review 38:12.

Scale and Administrative Impact

Council Member K asked about the annual refund amounts, confirming they range from $25,000 to $45,000, and noted that the administrative burden is disproportionate to the financial impact 40:27.

Systemic Issues

Council Member Beard critiqued the long-standing failure to address the streetlight funding gap, stating that the city has allowed the problem to grow until it became unmanageable 42:01. Council Member Henson asked about delays between when a development is taxed and when streetlights are actually installed, noting the process can take two to three years 45:51.

Proposed Solutions and Long-Term Concerns

Council Member Scutchfield proposed that developers be required to install streetlights as part of zoning approval to avoid burdening the city and taxpayers 47:59.

Council Member Ford questioned whether a proposed 1% franchise fee increase would be sufficient to cover future cost increases, especially with rising utility tariffs 1:08:16. Council Member Lawless noted that the cost of upgrading to LED technology is a significant factor in long-term streetlight expenses 1:15:10.

Broader Funding Questions

Council Member Stenet argued that property tax increases are unsustainable due to House Bill 44 caps and that the franchise fee, while more equitable, may be regressive for some residents 1:16:44. Council Member Kay highlighted that the city consistently underfunds essential services like fleet, building, and park maintenance, and warned that shifting costs to the general fund is not sustainable 1:21:04. Council Member Ford asked whether the city has ever utilized the full 4% property tax increase allowed under House Bill 44, noting that increases have historically been minimal 1:26:48.

Contested Items

Streetlight Funding and Refund Policy

Council members engaged in a heated discussion regarding the city's streetlight funding and installation practices. The primary concern centered on the city's failure to install streetlights in neighborhoods that had been taxed for this service, while simultaneously continuing to issue refunds to residents. Council members expressed frustration over this disconnect, raising questions about fairness to taxpayers and the city's fiscal responsibility. The debate also touched on the long-term sustainability of the funding mechanisms in place, with members questioning whether the current system could reliably support future streetlight infrastructure needs.

Equity of Franchise Fee versus Property Tax

A second point of contention involved the choice between two different funding mechanisms: a franchise fee versus a property tax. The council was divided on this issue, resulting in a split vote. Proponents of the franchise fee argued that it would affect all utility users equally and therefore be more equitable. Those favoring the property tax approach raised concerns about the regressivity of a franchise fee structure and questioned its collection efficiency. The debate reflected broader concerns about which approach would be fairer to residents and more practical for the city to implement and enforce.

FY 2014 Mayor's Proposed Budget (MPB) Approach

0:00

Melissa Luker presented a high-level overview of the FY 2014 Mayor's Proposed Budget to the meeting. The presentation covered the budget process, revenue estimates, personnel funding, and the financial challenges facing the city.

Key Issues Presented

The central challenge outlined was a $19 million shortfall that required difficult budgetary cuts. To address this gap, the budget approach was guided by several key principles:

• Government efficiency
• Public safety
• Leveraging outside funds

Budget Approach

Luker explained the overall budget process and how revenue estimates were developed. The presentation included discussion of personnel funding allocations and how these resources were being prioritized within the constraints of the identified shortfall.

Outcome

This agenda item was informational in nature, with Luker providing the city leadership and attendees with an overview of the proposed budget framework and the fiscal challenges that would shape budget decisions for FY 2014.

Streetlight Presentation Review

Commissioner Bill O'Meara presented an overview of funding options for the streetlight program 23:18. The presentation addressed a significant $2.5 million annual shortfall in the program's budget and outlined three potential funding mechanisms to address this gap.

Funding Options Presented

The three options discussed were: - Increasing the property tax - Implementing a flat fee structure - Using a 1% franchise fee increase

Key Issues Discussed

The discussion highlighted several challenges facing the streetlight program. A notable concern involved the complexities of refunding taxes for streetlights that had not yet been installed, which would create administrative and financial complications depending on which funding mechanism was selected.

The commissioners and staff also addressed the long-term sustainability of various funding sources, examining how each option would support the program's operations and expansion over time.

Participants

The presentation and discussion involved Commissioner Bill O'Meara, along with David Barbary, Jim Woods, and Jeffrey Neal, who contributed to the examination of the funding options and related concerns.

Outcome

This agenda item was presented as informational, providing the commission with an overview of the streetlight funding challenge and potential solutions without a final decision being made at this time.