Will Trump’s potential federal funding cuts affect Lexington’s next budget?
Lexington officials said this week they don’t know if they can count on federal dollars as work begins on its more than $500 million annual budget.
Lexington Mayor Linda Gorton, members of her administration and the Lexington-Fayette Urban County Council met in a budget workshop Thursday to begin outlining priorities for the next fiscal year that begins July 1.
President Donald Trump’s administration issued a memo on Jan. 28 to pause federal funding while his office reviews where that money was going, to make sure it aligns with a blitz of executive orders Trump has signed since taking office.
The memo halting federal funding was rescinded by the White House two days after it was put in place, and two federal judges blocked the matter. However, the Trump administration said it is still reviewing federal spending to be sure it aligns with Trump’s executive orders.
That leaves a question for the Lexington Fayette County Urban Government budget Will the city be able to rely on federal funding for the upcoming year?
The answer – nobody knows.
“We really don’t know any more than anybody else knows as far as what’s going to happen,” said Erin Hensley, commissioner of finance. “Changes in administration are things that (city officials) have dealt with, and so these are things that are not uncommon to us.”
How much does Lexington receive in federal funding?
Last year the city received $55.8 million in federal funding. But $25.2 million of that came from COVID programs that ended this fiscal year. That leaves a possible $30.6 million deficit in expected federal funding for the city if a complete federal spending ban is put back in place.
Lexington used that federal funding to pay for improvements to Raven Run Park, police tactical equipment, emergency services staffing, domestic violence personnel and programming and senior service programs.
Commissioner of Housing Advocacy and Community Development Charlie Lanter said the city will have to prepare to pick up some essential costs with local money if federal funding is cut.
The city received $121 million in American Rescue Plan Act money which was spent over several years.
“Our budget this year is going to be the full representation of standing on our own, post the (American Rescue Plan Act, aka COVID relief money) grant funding,” Hensley said at the budget workshop.
“That is a huge thing, because that has not always been a successful transition for folks. That was a huge influx of money.”
This year’s budget tighter than usual
Gorton will present her proposed budget on April 15, which will then be reviewed and amended by the council. The final budget must be approved before July 1, the beginning of the fiscal year.
Outside of the potential lack of federal funding, the government may face other financial shortfalls. This year’s budget, which totaled $539.2 million, included some carry-over funds from last year, totaling $37.2 million.
Hensley said this year’s budget is tighter than usual, so there will be less money in surplus or one-time money to plug any holes.
She also warned that pending tariffs may lead to cost inflation in the city, and urged the mayor and council to think of how to best prepare for those challenges while working on the budget.