Council Approves Final Changes to FY25 Budget!
Councilmembers Kathy Plomin, James Brown, and Vice Mayor Dan Wu in the May 28th, 2024 Budget Committee of the Whole Meeting. Source: LexTV
On Tuesday, May 28th, Council finalized the FY25 City Budget! While their changes to the budget have been voted on and approved, they will still need to take a final vote on the Budget.
The final vote will be on June 13th at 6pm in Council Chambers.
What changes did Council make?
Council added roughly $3.25 million dollars in new spending to the Mayor’s Proposed Budget. These additions include $743,237 in new spending from the General Fund, all of which goes toward funding ten new positions. Some of those positions include:
An E911 Manager
An Administrative Officer position in Streets and Roads.
A new Traffic Engineer which will focus on the Neighborhood Traffic Management Program
A Social Services Worker
A Real-Time Intelligence Center (RTIC) Analyst and an RTIC Supervisor.
The Public Safety and Social Services Link proposed funding the E911 Manager position jointly, drawing money from the General Fund and the E911 Fund. Similarly, the Administrative Officer in Streets and Roads was planned to be jointly funded between the General Fund and the Urban Services Fund.
However, the Administration informed Council that neither of those positions could be jointly funded, so they needed to be paid for exclusively through the General Fund.
Council also drew $2.45 million from the Capital Contingency Fund. A few projects included in that $2.45 million are:
$2 million allocated to replenish the Public Infrastructure Program Fund
$150,000 in funds to pay for grant writing service contracts in the Division of Environmental Services
$150,000 for an update to the Planting Manual
Before these changes, the Capital Contingency Fund had $36.2 million; now that number sits at $33.7 million. The Capital Contingency Fund was created in October 2023 using Fund Balance money, with the intent of funding large scale capital projects such as a new City Hall.
The Council also added $124,155 to the bond package, and pre-funded two items total $52,000.
Some of the bonded items include an outdoor warning siren ($38,000), two speed limit radar trailers ($11,000 each), and two vehicles for the Division of Engineering ($32,000 each).
Pre-funding is when Council reserves money from one fiscal year to pay for expenses in the next fiscal year. The $52,000 mentioned above will come from money in the current FY24 General Fund and will go toward support for the Digital Access Project ($27,000) and a pilot for a City-run Veterans Center ($25,000).
Council’s Changes to the General Fund Revenue Projections
In order to pay for the 10 new positions in the General Fund, Council voted to add $750,000 to the General Fund Revenue projection for the next year. This is slightly more than the $743,234 cost of the 10 positions’ combined total. Councilmember Fred Brown was the only Councilmember to vote against increasing revenue.
The Mayor’s Proposed Budget projected a General Fund Revenue of $500,011,434. With Council’s $750,000 addition, the new Revenue number is $500,761,434, which represents a total increase of .15%.
Council specified that they were increasing the estimates for the Payroll Withholding Tax, which is the largest revenue stream for the General Fund. The Mayor’s Proposed Budget projected $275,300,000 in Payroll Withholding revenue, and the Council’s $750,000 addition brings that total to $276,050,000 - an increase of .27%.
A breakdown of General Fund Revenue sources in the FY25 Mayor’s Proposed Budget. Source: April 23rd, 2024 Budget Committee of the Whole Meeting packet.
Revenue projections are estimates. Staff in the Mayor’s Administration collect data from Lexington, the Commonwealth of Kentucky, and the nation to analyze past and future economic trends for different revenue streams for the upcoming Fiscal Year. Because the economy is always changing, it is impossible to know with 100% accuracy what any given revenue stream will bring in.
This is why in Budget Committee meetings, Administration staff provide monthly updates on Budgeted Revenue (projections) and Actual Revenue (the actual money the City has earned to date).
Over the past several budget cycles, Lexington has earned more actual revenue than they had initially budgeted for — especially through the Payroll Withholding Tax.
In FY22, the City earned 12.5% more actual revenue in the Payroll Withholding Tax than budgeted.
In FY23, Lexington earned 7.8% more actual revenue from the Payroll Withholding Tax than the FY23 Budget estimated.
We don’t have the final number for FY24’s Payroll Withholding collection, but the City is on track to over-perform initial revenue projections by 2.7%.
Payroll Withholding Tax revenue forecast for FY24 and FY25, provided by Dr. Michael W. Clark of the University of Kentucky. You can learn more about Dr. Clark’s projections here.
Council increasing the Payroll Withholding revenue projection by .27% could be in line with the trend seen over the last few years. Revenue has grown every single year, but that level of growth has decreased over the last three years — that trend is expected to continue.
What’s next for the budget?
The FY25 Budget will receive its First Reading on June 11th at 5pm in Council Chambers. If you’re interested in giving public comment on the budget before it is officially passed, this meeting will be your last chance to do so.
The FY25 budget will receive Second Reading and its final vote on June 13th at 6pm in Council Chambers.
Once the budget is officially approved, CivicLex will release our annual Budget Guide booklet — a short, readable, accessible guide to everything in the final budget! In the meantime, you can comb through our interactive Budget Database and look at our Mayor’s Proposed Budget Snapshot page to learn more!
