As the Urban County Council prepares to vote again Tuesday on the city's budget for the upcoming fiscal year, Mayor Jim Gray continues to raise red flags over changes the council made to his proposed spending plan.
Gray will have the right to line-item veto the budget, but he remained coy about whether he will use that power during an interview on Monday. The council could override any veto if nine of its 15 members agree to do so.
The $273 million General Fund budget Gray presented in April called for reducing recurring expenses, mainly by laying off 26 employees, outsourcing security at the Government Center and the Phoenix Building, and not taking on more debt.
Instead of cutting workers, the council gave preliminary approval last Tuesday to a budget that keeps 11 city security officers and several public information employees and adds a police recruit class of 25 officers, for a total of 45 positions, said Bill O'Mara, the city's director of revenue.
"Those positions will cost $2.3 million this year but, in 2013, the cost goes up to $3.7 million, and that expense will occur over and over, year after year," O'Mara said. "The question is: Where is the money going to come from to pay for that $3.7 million payroll?"
To help pay for the salvaged positions and extra police, the council voted to delay for six months selling a $31 million bond to help fund the police and firemen's pension fund, which faces an unfunded liability of about $200 million. The six-month delay frees up $1.4 million by delaying the first repayment on the $31 million bond until January.
"But next year, when you have to pay debt service for 12 months, instead of six months, that's going to be a $2.8 million payment," O'Mara said. "Where's that money going to come from?"
The council also voted to restore $300,000 in funding to partner agencies such as the Hope Center and Salvation Army and restored $363,000 in supplemental salaries for the city's computer personnel.
"We agreed with the mayor on the revenue number. What we changed was how we were going to spend the money," said council member Kevin Stinnett.
The council also plans to borrow $400,000 for four projects: $150,000 for disc-golf courses at Jacobson and Coldstream parks; $100,000 for a handicap-accessibile entrance at the Charles Young Center on East Third Street if it becomes a senior citizen center; $75,000 to build multipurpose lacrosse fields at Shillito Park; and $75,000 to take out Berryhill pool when it closes at the end of this season.
Of the city's total budget, 12 percent a year goes to pay debt service on bonds. Bond experts have told the city that number needs to be cut to 10 percent, O'Mara said.
On Monday, Gray said the "hard realities" of Lexington's economy suggest that city finances will not improve in the next year.
"It's not the right timing to take on issues like Frisbee golf," he said.
"We're still fixing a $9 million shortfall we inherited" from the former administration, Gray said. "We're dealing with a $27 million shortfall in the 2012 budget. We're going to have the gap closed, but that was no Chicken Little to get worked out."
After giving the revamped budget a first reading on Tuesday, the council is expected to finalize the document with a second reading on Thursday. The mayor then has 10 days to use his veto power.