Council-Mayor Joint Budget Retreat!
On February 7th, the Urban County Council and the Mayor’s Administration held their Joint Budget Retreat to share their respective priorities for the Fiscal Year 2025 (FY25) Budget.
City Finances
To start the meeting, Commissioner of Finance Erin Hensley gave a brief update on the city’s finances. So far, revenue for the current fiscal year (Fiscal Year 2024) has slightly outperformed revenue projections, but is not outperforming at near the levels of the two previous fiscal years. Revenue projections for FY25 will likely not be made until late-March or early April.
As LFUCG moves beyond using Federal funds given to Lexington through the American Rescue Plan Act (ARPA) and other COVID-era funding sources, Hensley anticipates that significant pre-funding will be needed to balance the FY25 budget.
Pre-funding is a budgeting strategy where money from one Fiscal Year’s General Fund is held aside to use in the next Fiscal Year’s General Fund. Pre-funding has been used in LFUCG budgets both pre- and post-pandemic.
Approximately $50 million of costs funded from one-time or outside sources in the FY24 Budget will need to be absorbed and paid for by the City’s General Fund in FY25.
While inflation has been slowing down, many project, service, and labor costs have risen over the past two years. Projects soon to start or still underway, even if funded in previous budgets, may need extra money to address rising costs.
The FY25 Budget will, in many ways, be a continuation of work done in past budgets. Projects funded, either in full or in part, by ARPA funds over the past three years will continue being shaped in the FY25 Budget using more of the City’s own money.
Capital Project Construction Fund
In October, Council created a Capital Project Construction Fund to reserve money for future capital projects. The Fund had $36 million in it as of October but has been accruing interest over time. Money from this fund should provide Council flexibility in funding ongoing projects.
The Mayor’s Administration and Council’s priorities for the FY25 Budget largely overlapped. Both mentioned the following as priorities:
Complete Streets - projects that increase bicycle and pedestrian safety.
A new City Hall.
A new Senior Center in Shillito Park.
General mental health services.
Other Priorities
Both Council and the Mayor mentioned homelessness services, although slightly with different focuses. Mayor Gorton expressed interest in replicating a program like Houston’s One Way Initiative, where street workers interview every homeless person to assess their specific situations, and the City moves them into housing while providing assistive services catered to their needs using a tight network of non-profit partners.
Council cited three ideas for addressing homelessness: Permanent Supportive Housing, which places homeless individuals into subsidized housing while providing social services and life skills training; increased funding for Affordable Housing; and continuing a revised version of the Housing Stabilization Program operated by the City from 2021 to 2023.
The Mayor’s Administration will continue conversations with City Divisions/Departments and Councilmembers over the next few months as they prepare to draft the proposed budget.
Want to learn more about the City Budget process in Lexington and how you can get involved? Head to our City Budget Issue Explainer!
