Gorton: ‘Our expenses are rising faster than our revenue’
Lexington Mayor Linda Gorton is proposing 15 percent cuts for some spending categories, closing Picadome pool, furloughs for her top staff, no raises for most city employees and little new spending for the budget that begins July 1.
She proposed no tax increases or layoffs in her $379 million budget, which would spend 1.5 percent more than the current-year budget of $373 million.
“We are calling this a continuation budget,” Gorton said. “It’s a continuation of our excellent services to our citizens and a continuation of our quality of life and the continuation of outstanding public safety.”
The city’s revenue is growing at a much slower rate than prior years, Gorton said during her budget address in front of the Lexington-Fayette Urban County Government. The city’s expenses, though, are ballooning — including a $3.3 million jump in the amount it pays for city employee pensions to the state-run pension system.
The 15 percent cuts will be to certain spending categories, such as travel, professional development and contracts for professional services, and should have little impact on city services, Gorton said.
“The good news is, I don’t think our citizens will notice,” she said.
Gorton also proposed putting the city on a borrowing diet. She proposed $15.4 million in bonding or borrowing, which would be the least the city has borrowed since 2013.
This fiscal year, the city spent $45 million — more than 12 percent of its current general fund budget — to pay off it’s debt. That’s more than the goal of 10 percent.
“This budget resets our spending,” Gorton said. “Our fixed expenses are increasing faster than our revenue. Our revenue growth is slowing.”
Gorton, who took office in January, ordered a $2 million cut —or less than 1 percent of the total budget — for the current fiscal year that ends June 30 after the city’s revenue — the amount it collects in taxes and fees — fell below projected estimates.
Police, fire and corrections will still get raises as part of their collective bargaining agreements. But other city employees will not, Gorton said.
“This is one of the decisions we’ve made in this budget that I am most concerned about — our employees are excellent and they deserve a raise,” Gorton said.
Other proposed cuts in the budget include:
▪ A 12-day furlough for many of Gorton’s appointed staff — including city commissioners. Gorton will also refund 12 days of her pay to the city. Elected official can not take furloughs, she said.
▪ A 15 percent cut to other city agencies, including the Fayette Commonwealth Attorney’s office, Fayette County Attorney and Fayette County Clerk.
▪ No new positions and no additional police and fire employees. Police and fire will continue to have recruit classes to replace retiring and outgoing firefighters and police officers.
▪ One pool — Picadome —will close and there will be a decrease in the weeks or hours some park programs are open. Picadome consistently has the fewest number of swimmers of the city’s seven pools. A popular senior water exercise class will be moved from Picadome to Southland pool, Gorton said. “That program will be saved,” Gorton said.
Gorton’s budget proposal includes $8 million for paving. That’s down about $3 million from prior years’ paving budgets. The city’s affordable housing trust fund will receive $2 million, the same it has received in prior years. Social service agencies will get $3 million, the same amount they received in prior years.
There is no money in Gorton’s budget for a step pay program for the city’s sanitation workers. Sanitation workers have asked the city to move to a new pay program to correct pay inversions. New employees are making $2 to $3 an hour more than employees who have worked for the city for decades, they have said.
Gorton said solid waste employees are paid through a property tax that is not included in the general fund budget. The Lexington council is expected to look at the issue of solid waste employee pay at a committee meeting in May.
There also is no new money for a new government center, which has been debated for decades.
The city will spend more than $5.5 million to replace aging fire trucks and police cars, Gorton said.
“We plan to purchase a ladder truck and a fire engine for $2.3 million,” Gorton said. “We are also spending $3.2 million to replace police vehicles.” Gorton said many of those police cars have more than 100,000 miles on them.
There is some money for traffic signal improvements — about $650,000 — and $200,000 for pedestrian safety improvements, with $100,000 of that money earmarked for safety improvements around the University of Kentucky.
Gorton warned that future budgets will likely be worse. The city’s pension, utility and other costs continue to climb at a much greater rate than revenue. That means the gap between revenue and expenses will continue growing.
Gorton said it’s time to analyze the city’s long-term budget picture.
“I’m putting together the best minds in town to help us analyze our revenues and expenditures,” Gorton said. “This will be a small, independent group that can recommend steps to modernize our finances.”
To balance this year’s budget, Gorton had to take $2.2 million from a $10 million fund the council set aside several years ago from a surplus to pay for increased pension costs. The city still has more than $34 million in a separate rainy day fund that it still has not spent, Gorton said.
Many council members said Tuesday they were concerned about future budgets. By 2023, the amount the city will need to pay all of its fixed costs is likely to be $424 million but revenues are only expected to increase to $395 million, according to figures the city released Tuesday. That’s a $29 million gap.
“I’ve been concerned about the amount of borrowing for a long time,” said Councilman Richard Moloney. “We should have done one or two projects over ten years but we did several big projects in a row.”
Over the past few years, the city borrowed $30 million for the ongoing expansion of the Lexington Convention Center, $22 million for renovation of the former Fayette County Courthouse and $11.8 million for Town Branch Commons, a more than two-mile downtown trail that will eventually connect the Legacy Trail and Town Branch Trail.
The council will have until late June to make changes to Gorton’s budget proposal. It’s first budget meeting is Thursday.
Councilwoman Amanda Bledsoe, who chairs the city’s Budget, Finance and Economic Development Committee, said several council members have said they are concerned there was no money for raises for city employees but police and fire will continue to receive pay raises.
“The question will be whether we can find the money,” Bledsoe said.
Councilwoman Jennifer Reynolds’ council district includes Picadome pool.
“I’m very sad that the pool is going to close,” Reynolds said. “But the amount of people who use the pool did not justify keeping it open. I wish we could. But the 20 people who use it regularly will be able to use Southland pool.”
Other cities and counties are also struggling with declines in revenue and an uptick in expenses. Louisville Metro Council recently rejected a proposal by Mayor Greg Fischer’s to increase that city’s insurance tax to offset a $35 million hole in Louisville’s budget.
Louisville’s money woes are worse in part because Louisville police and fire are in the state pension system. Lexington has a separate police and fire pension fund that is much better funded than the state pension systems.