A tight bond between Mayor-elect Jim Gray and the Urban County Council is essential to confronting a potential $25 million hole in the city budget for the next fiscal year, Vice Mayor-elect Linda Gorton and other council members said Thursday.
To resolve the expected shortfall, Gray "will either have to cut jobs or raise taxes," said Kevin Stinnett, chairman of the council's Budget and Finance Committee.
Gorton told the Lexington Forum on Thursday that she hopes the council can collaborate with Gray on difficult budget choices before he presents his proposed budget for fiscal year 2012 in April.
If that happens, "when we get the mayor's budget in April, we don't have a big fight and are wrangling over issues," Gorton said.
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Giving council members advance input would be a major improvement over the current budget process, in which the mayor comes up with a budget and presents it to council to accept or change, she said.
Gray signaled Thursday that he intends to honor the council's request.
"The shortfall next year is apparently very severe, and we will encourage the council's involvement early on in the budget process," Richard Moloney, a former Urban County Council member appointed by Gray as the government's new chief administrative officer, said in a prepared statement. "When the mayor proposes his budget in April, it will reflect their early involvement and collaboration."
Moloney, who served on the Urban County Council under four mayors, said that he knew from experience "the process is more efficient when the council is involved" and that he would encourage members' input.
The city's budget for the current fiscal year, which began July 1, initially had a projected $15 million imbalance.
To make ends meet, the city used several one-time sources of revenue, the largest ones being $5.8 million from its rainy-day fund and making plans to sell $4 million in property.
Outgoing Mayor Jim Newberry's budget for 2011 also included a limited number of layoffs, unpaid furloughs for the mayor's senior staff and commissioners, closing two city pools and the Avon Golf Course, and no raises for city employees other than those in public safety.
Six government departments — law, information, finance and administration, social services, public works and general services — reduced their operating budgets an average of 9 percent. Only public safety was exempt from budget cuts and layoffs, but fire stations closed for one day on a rotating basis.
It is expected the city will need to grow revenue from an expected $265 million this year to $280 million in fiscal year 2012 to continue current programs at existing levels, Stinnett said.
Fixed costs such as utilities, pensions and collective bargaining agreements all continue to rise, he said.
"From day one there's the $15 million gap we faced this year that will still be with us," Stinnett said. "So that's $15 million we have to cut or find new revenue sources, right off the bat."
Added to that will be $7.2 million in higher than anticipated costs for Lexington's employee health insurance program, which officials acknowledged in November.
"So unless we can figure where to cut other expenses, we're facing a tough road," Stinnett said.
Council-at-large member Chuck Ellinger II said having the council and Gray work together "on the front end of the budget would be productive."
But he acknowledged that a natural tension exists between the council and mayor because they represent two branches of government. Still, he said, "you can disagree without being disrespectful."
The council's three recently elected at-large members — Gorton, Ellinger and Steve Kay — were guests at the Lexington Forum, a business group, to discuss issues facing the city during the next four years.
The state of the city's finances was a topic of particular interest to forum members.
"We are going to have some tough decisions to make here in Lexington," Ellinger said of the budget.