Council finalizes spending plan after surplus is off by nearly $5 million

bmusgrave@herald-leader.comOctober 22, 2013 

  • Projects approved by the council Tuesday

    New windows at Dunbar Community center $150,000

    Constitutional Park trail replacement $30,000

    Man o' War design for traffic improvements $250,000

    Bike lane striping and signage on city-owned streets $80,510

    Castlewood Park ADA improvements $100,000

    Charles Young Park expansion $67,500

    Replace basketball court with parkinglot at Valley Park $80,000

    Move a bridge in Wellington Park $90,000

    Berry Hill Park walking trail $82,000

    Douglass Park expansion $82,000

    Restrooms at Masterson Station Park playground $250,000

    Economic incentives to keepand attract new jobs $1 million

    Basketball court repair at Highlands Park $20,000

    Renovate baseball fields at Idle Hour $150,000

  • Projects previously approved by the council

    Additional economic contingency fund allocation $1,500,000

    Facilities HVAC projects $350,000

    Facilities roofing projects $400,000

    Old courthouse $250,000

    Fire vehicle replacement — 2 engines and 2 EMS buggies $2,000,000

    Traffic controls Reynolds Road roundabout $26,000

    Fire air tanks $40,000

    Repave Jacobson Park roadway (phase 1) $125,000

    Aquatic climbing wall and shade structure - Woodland Pool $45,000

    Police vehicles — 25 marked and 11 unmarked $1,250,000

    Picnic pods for 4th District parks $42,000

    Restore bus shelter and sign on Alexandria Drive in Gardenside Shopping Center $45,000

    Corrections kitchen floor $400,000

    Legacy Trail $600,000

The Urban County Council finalized Tuesday how it wanted to spend more than $8 million in surplus funds — a process that was thrown for a loop after the council learned that the estimated surplus was off by nearly $5 million.

Finance Commissioner Bill O'Mara told the council Tuesday that new government accounting standards led to confusion over how the city should account for ongoing expenses. O'Mara said he was wrongly advised that the city didn't have to set aside $3.1 million for the spending that occurs over multiple fiscal years. The city must set the funds aside. Much of that $3.1 million — $1.3 million — is for the city's replacement of public safety radios.

In addition, O'Mara said the city has received a confidential report from pension actuaries that show that the city would need to put aside an additional $825,000 for its annual pension contribution. O'Mara said that he could not give details of the actuary report, which helps calculate the city's contribution to pensions, because that report will not become public until the police and fire pension meeting in early November.

The council ultimately voted to divert $4.6 million that was supposed to go to surplus funds for ongoing expenses and for additional contributions to the pension fund. The council originally thought it had more than $12.4 million in surplus funds to spend.

Councilman Kevin Stinnett said city officials had warned the council not to start discussions about how to spend surplus funds until after November, when the city's audited finances became available. The council began in late August to debate how to spend the surplus funds.

The change in the surplus "was the exact thing that we were warned about," he said.

In the future, Stinnett said the council should wait until after November to start discussions on spending surplus dollars.

But Councilman Ed Lane said he doesn't understand why it takes so long for the city to close its books. The city's financial year ends June 30. Yet it takes four months for the council to receive audited financial statements, Lane said.

Four months of not knowing how the city's finances are doing is like being in a "boat in the middle of the Atlantic Ocean without a compass," Lane said.

O'Mara said that the city has to wait for partner agencies to finish their accounting before it can close its books. To boot, some federal and other grants that flow through multiple agencies can create accounting headaches, he said.

Over several meetings in October, the council had allocated more than $7 million from surplus funds, including $3.2 million for new fire trucks and police cars. The council had also voted to set aside $2.5 million for the city's rainy day fund. That city account has more than $18 million.

But on Tuesday, Mayor Jim Gray's administration asked that the council take $1 million of that $2.5 million for an economic incentive fund to attract and keep jobs in Kentucky.

Only Paducah has a similar economic incentive fund in Kentucky. Other cities with similar economic incentive funds include Cleveland and Durham, N.C.

Gray has said that part of the incentives would go to grants or loans for innovative, research-based companies that have already received federal U.S. Small Business grants.

Many council members said they were concerned about taking money away from the city's saving account. Vice Mayor Linda Gorton proposed lowering the amount for the economic incentive fund to $500,000.

"I don't want to see us take out a $1 million from our rainy day fund," she said.

Gorton said that she doubted that the city could spend the full $1 million before the end of the fiscal year on June 30, 2014.

Gray had originally asked for $2 million for the program. He argued Tuesday against lowering the amount to $500,000. The city needs to let high-tech companies know it is serious about attracting those types of businesses, he said.

Other council members said the city receives 80 percent of its revenues from occupational taxes. To grow revenue, the city needs to grow jobs.

"There really is a window of opportunity here," said Councilman Steve Kay. "I think we need to move on this quickly."

The council ultimately voted against lowering the amount to $500,000 and approved the $1 million for the new jobs program.

Other items approved Tuesday include $250,000 for a design study for Man o' War Boulevard, $250,000 for restrooms at Masterson Station Park and $80,510 for bike lane striping and signage. The last item approved was $150,000 for the replacement of windows at the Dunbar Community Center.

Tuesday's votes were only preliminary. The council will have to formally approve the changes to the budget in coming weeks.


Projects approved by the council Tuesday

New windows at Dunbar Community center $150,000

Constitutional Park trail replacement $30,000

Man o' War design for traffic improvements $250,000

Bike lane striping and signage on city-owned streets $80,510

Castlewood Park ADA improvements $100,000

Charles Young Park expansion $67,500

Replace basketball court with parking lot at Valley Park $80,000

Move a bridge in Wellington Park $90,000

Berry Hill Park walking trail $82,000

Douglass Park expansion $82,000

Restrooms at Masterson Station Park playground $250,000

Economic incentives to keepand attract new jobs $1 million

Basketball court repair at Highlands Park $20,000

Renovate baseball fields at Idle Hour $150,000

Projects previously approved by the council

Additional economic contingency fund allocation $1,500,000

Facilities HVAC projects $350,000

Facilities roofing projects $400,000

Old courthouse $250,000

Fire vehicle replacement — 2 engines and 2 EMS buggies $2,000,000

Traffic controls Reynolds Road roundabout $26,000

Fire air tanks $40,000

Repave Jacobson Park roadway (phase 1) $125,000

Aquatic climbing wall and shade structure - Woodland Pool $45,000

Police vehicles — 25 marked and 11 unmarked $1,250,000

Picnic pods for 4th District parks $42,000

Restore bus shelter and sign on Alexandria Drive in Gardenside Shopping Center $45,000

Corrections kitchen floor $400,000

Legacy Trail $600,000

Beth Musgrave: (859) 231-3205. Twitter: @HLCityhall.

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