Lexington Mayor Jim Gray touted the city's efforts to create more jobs and make government more efficient in his fourth State of the City address on Tuesday.
"I am proud to report that the state of our city is strong and getting even stronger," Gray said.
Gray, who is completing his first term as mayor of Kentucky's second largest city, focused much of his 34-minute speech before the Lexington Forum at the Hyatt Regency on Tuesday on how he and Urban County Council have worked together to fix long-standing financial problems. At the same time, the city is working to make Lexington a vibrant city that attracts high-paying jobs, Gray said.
But the city has not been able to make valuable investment in many public infrastructure projects because of years of declining revenues, he said.
Gray pushed the state legislature to pass a bill that would allow cities and counties the option of increasing the sales tax by 1 percent for a limited time period to pay for such things as infrastructure projects.
"Over the past few years we've really only been able to address critical needs because of limited resources," Gray said. "Lexington has community projects — like major transportation projects and a world-class park system — that aren't even being considered today because the funds aren't available."
If the legislature passes the measure, local voters would be able to vote on whether they want up to a 1 percent increase in the sales tax. In Lexington, a 1 percent sales tax increase would generate $34 million per year in additional revenue, Gray said.
Both Gray and Louisville Mayor Greg Fischer have backed the plan but it has encountered resistance from leadership in the Republican-led Senate.
During the height of the recession in 2009, unemployment in Lexington was 8.7 percent. In November, the unemployment rate was 6.1 percent, Gray said. More than 149,000 people have jobs in Fayette County, according to the Bureau of Labor Statistics.
"That's more than have ever been employed here since the government started keeping records in 1990," he said.
But the city can do better, Gray said.
To attract more jobs, the city has created the Jobs Fund, a $1 million local economic development fund to help local businesses expand and attract new businesses, Gray said. Gray and Fischer have developed a task force aimed at boosting advanced manufacturing in Kentucky. The city has also fixed some long-standing financial drains on the city's coffers.
To help control costs, the administration and Urban County Council have worked together to make key changes to current employee health insurance plans and to the police and fire pension, he said. Those changes have resulted in $61.8 million in savings, Gray said, drawing perhaps the largest applause from forum members.
"That doesn't mean we have that money to spend," he said. "We just don't have to bond pension payments anymore or look for one-time fixes for health insurance. We have righted the financial ship."
At the same time, Gray said the city has been able to make investments in public safety. For the first time in several years, the city has been able to fill open positions in police, fire and corrections. All three divisions are almost at 100 percent authorized strength, he said.
Overall crime is down 7.8 percent compared to 2012, Gray said. "Lexington is one of the safest cities of its size anywhere in the country," he said.
Gray has spent much of the past three years pushing for the renovation and reinvention of Rupp Arena and the Lexington Convention Center, the crown jewel in a proposed Arts and Entertainment District for downtown. Gray said Tuesday that more than 8,355 citizens participated in a recent survey about what they wanted to change about the interior of Rupp Arena. Those responses will help architects design the new Rupp.
Gray said that the final design for Rupp Arena and Town Branch Commons, a public park adjacent to Rupp, will be unveiled in "coming days." Gray said after Tuesday's speech that he could not elaborate on when those final designs will be unveiled to the public.
The city, state and the Lexington Corp., which manages Rupp, have so far given a combined $5.5 million for planning and design of the new Rupp Arena and convention center.
A financial plan on how to pay for the renovation has not been revealed to the public.
Later on Tuesday night, Gov. Steve Beshear announced during his annual budget speech that he is proposing using $65 million in state bond funds for the Rupp renovation in his budget. The total price tag for the project is more than $300 million, Beshear said.
Some Urban County Council members said after Gray's speech that they want to know more who will be paying for the cost of the renovations before they can support it.
"I think all of our concerns about Rupp Arena is the cost because we don't want to pass it along to the taxpayers," said Councilwoman Jennifer Scutchfield,
Vice Mayor Linda Gorton agreed.
"It's not only the cost but the logistics of what that financing plan will be," Gorton said.
Councilman Steve Kay said problems with the KFC Yum Center in Louisville have given everyone pause. The bond rating for the home of the University of Louisville men's basketball program has been downgraded to "junk bond" status, because of a host of problems with the financing of the arena.
"Unfortunately, Louisville has become an example of what we should not do," Kay said.
Beth Musgrave: (859) 231-3205. Twitter: @HLCityhall.