Lexington mayor’s crisis budget cuts millions from staff, grants. What about pools?
Mayor Linda Gorton unveiled an austere $372 million spending plan Tuesday that slashes grants to social service and outside agencies by more than $6 million, freezes more than 47 open positions and cuts more than $12.6 million across city government.
“While this budget plan reflects input from many people, it’s safe to say not one of us likes it,” Gorton said during her annual budget speech Tuesday. “This is a crisis budget, not much different than one in wartime.”
It includes no layoffs or furloughs for the city’s more than 3,000 employees. It also does not include any tax hikes.
To make up for a predicted $40 million revenue shortfall for the fiscal year that begins July 1, Gorton has proposed taking $30.2 million from various city savings accounts, including $13.6 million from a $35.6 million economic contingency fund and $9.4 million from an $11 million reserve fund for increased payments into the state’s beleaguered pension fund.
In addition to using one-time money, Gorton relies on cuts across city government, including parks, to balance the city’s books.
Gorton’s other key budget moves include:
- No funding for 47 vacant permanent positions to save $3 million.
- The affordable housing fund, which helps fund new affordable housing units or rehabilitates older ones, would only receive $200,000. It typically receives $2 million. It has $400,000 in reserves. That’s still enough to fund a multifamily project.
- Cuts to economic development agencies, including Commerce Lexington, Downtown Lexington Partnership, World Trade Center and Urban League. Instead of individual grants, a request for proposals would be issued. The city received more than $618,000 in funding requests from those agencies. The plan cuts those agencies by $358,000.
- LexArts would also get a cut. The city would provide a one-time grant of up to $200,000 to match LexArts other fundraising efforts. LexArts, which also funds other art agencies, has previously received a direct allocation of $417,000.
- The Explorium and Lexington History Museum would not get any funding. The Explorium had received $191,250 in prior years. The museum received $52,000.
- $2.1 million in extended social resource grants, which are grants to nonprofits, were eliminated as part of the $6 million reduction in grants to outside services.
- Borrowing would be limited to $7.6 million, the least amount of borrowing in decades. That total includes $5 million for paving. This year’s budget includes $7 million in bond money for paving.
After her speech Tuesday, Gorton said the city is looking at the possibility of closing the Shillito Pool, which is typically used by competitive swim leagues and rarely by recreational swimmers. The city is working with private pools to see if the competitive swim teams can move to those private pools. A final decision has yet not been made, she said.
Gorton said it’s still not clear if the city’s six other pools will reopen this summer. That is not a budget decision. It’s driven by public health guidelines prohibiting large crowds during the coronavirus pandemic.
“We will likely know more by the first of May, or likely by next week,” Gorton said.
The same is true for city sports and recreation leagues and summer camps. It’s not clear if those will resume this summer because of the coronavirus pandemic. No golf courses will be closed under Gorton’s budget proposal.
Gorton said Tuesday cuts to social service agencies would hurt the most. Many have been working diligently during the coronavirus outbreak to serve those who have lost jobs and housing. Some of those agencies will be eligible for federal COVID-19 funding.
“But I know our cuts will hurt … hurt people who are in need of our help. We have worked very hard to assist these partners as they’ve taken on burdens that were unimaginable a few short weeks ago,” Gorton said. “This is an important opportunity for citizens. If you can afford to help these agencies and the people who depend on them, now’s the time. Now’s the time to pull together as a community and support our local nonprofits.”
Cutting allocations to outside agencies was tough, Gorton said, but the city cut its own expenses more.
“For every dollar we cut externally, we cut two dollars internally,” Gorton said.
Gorton warned last week that coronavirus-related business closures had decimated the city’s two major revenue sources — employee withholding or a tax on wages and a net profit tax, which is a tax on business profits.
The city’s unemployment rate had hovered under 3.5 percent for the 18 months prior to the coronavirus outbreak. Since March, the unemployment rate has skyrocketed to more than 18 percent, city officials said.
“This March, over 18,200 Lexington citizens filed first-time claims for unemployment,” Gorton said. “In March 2019, Fayette’s initial claims numbered 408. Safe to say, most of us have no experience with anything like this rapid decline.”
When unemployment climbs, tax revenues fall.
Gorton said using $30.2 million in one-time funds for ongoing expenses is not ideal.
“I recognize these are one-time monies. And I recognize that we are using one-time monies to meet recurring expenses,” she said.
“That’s not something we would normally do. But these are not normal times.”
Still, Gorton said the city has to position itself so when businesses are allowed to reopen, the city is ready. Gorton has appointed a COVID-19 Economic Response Committee which she will co-chair with Luther Deaton, the president and CEO of Central Bank.
“We are taking a broad look at our economy. Everything from small business to health care to manufacturing to education to agriculture to tourism, and beyond,” Gorton said. “This broad-based and diverse group is intended to get Lexington’s economy roaring back as soon as possible, ensure that our city is resilient as we weather future impacts from this virus, and bolster confidence that we are a safe, health-conscious, and responsible city in which to live, work, and play.”
Gorton said the city has already received good news. Last week, the city finalized a deal that will bring 600 to 700 new jobs to Lexington in the coming years. Those jobs are related to the previously-announced Baptist Health Lexington expansion
in the Hamburg area. More details about that expansion and development will be revealed soon.
Cities and counties across the country are bracing for similar bare-bones budgets because of precipitous drops in revenues caused by the coronavirus pandemic.
Local governments pleas to Congress for help have so far gone unheeded in Washington D.C.
One thing Gorton cannot do to balance the city books — furlough employees.
A state statute does not allow the Lexington-Fayette Urban County Government to decrease civil service employee pay, including furloughs for rank-and-file staff. Furloughs have been used in the private and public sector, including by the University of Kentucky, to save money.
Still, the city is freezing or not funding 47 open positions which means it will not have to lay off current employees, Gorton said. It has set aside money for recruit classes for police, fire and corrections.
The Lexington-Fayette Urban County Council has until June 30 to make any changes to Gorton’s budget proposal.
The council began initial discussions about the budget at a meeting later Tuesday.
Vice Mayor Steve Kay said he understands the city had to make very difficult choices during a very difficult time. But he’s concerned Gorton’s proposed budget cuts key social service agencies and the city’s affordable housing program at a time when those agencies and the people they serve are hurting. The council can look at offsetting some of Gorton’s proposed cuts by dipping into reserves or possibly raising taxes or fees, he said.
“We need to look at this through the lens of what government does that directly impacts their lives and their quality of life,” Kay said. “There are a lot of deep cuts in this budget. The question becomes how deep can those cuts go without directly impacting people’s lives?”
Kay said he would not rule out raising taxes and fees. “At the very least, we need to have that conversation so the public understands that is an option,” he said.
Several council members said they had concerns about the cuts to outside agencies, particularly nonprofits. The $2.8 million in extended source resource grants has traditionally gone to more than 30 nonprofits including God’s Pantry Food Bank, the Salvation Army and the Lexington Rescue Mission.
“I am worried that some of them will end up closing,” said Councilwoman Jennifer Mossotti.
Council will continue its discussions about the budget over the next two months.
This story was originally published April 28, 2020 at 10:10 AM.
