Lexington Mayor Jim Gray unveiled a $324 million general fund budget on Tuesday that includes money for some ambitious new projects, continues many social service programs and gives a 3 percent raise to most city employees.
Gray's budget includes $22 million for restoration of the former downtown courthouse; $10 million for Town Branch Commons, a proposed linear downtown park; and funding for 35 new staff members, including 10 new police officers.
The proposed budget is a more than $10 million increase from this year's general fund budget of $313 million. It includes more than $58 million in borrowing, a substantial increase from the current year's bonding of $33.4 million.
After years of lean budgets driven by anemic tax revenue, Gray's proposal includes some big-ticket capital projects that have been on hold for years, plus money to continue some social programs such as affordable housing and homeless prevention and intervention.
Gray, during a budget address in council chambers on Tuesday, said that the city had made some wise financial decisions over the past four years — some of which have been painful. Those choices have led to three years of surpluses, he said.
"This is a year to make responsible investments to build Lexington's business and brand and to address bottled-up demand," Gray said. "This plan is part basic service and part aspirational projects ... both are important."
The budget is for the fiscal year that begins July 1. The Urban County Council is set to begin deliberations on Gray's proposal this month and must pass a budget before July 1.
Budget, Finance and Economic Development Committee Chairman Kevin Stinnett said he thought Gray's budget addressed some long-standing needs.
"I think it is a really good budget that balances the need of our city," Stinnett said. "It's ambitious, but it's doable."
$58 million bond budget
Although the $58 million in borrowing is more than in previous years, the city's debt ratio — the amount of debt it has compared to revenue — will remain about the same: 10.8 percent. That's because the city will pay off or retire debts this year, city officials said.
Gray said the city has borrowed more in prior years. For example, in 2010 the council approved $69 million in bonds. In 2009, the council approved $70 million in bonds, much of that money earmarked for the police and fire pension.
It's also a good time for the city to borrow, Gray argued. "Interest rates are also at historic lows," he said.
The borrowing budget includes $7 million for street paving. The city also can use $3 million in state funding for paving, for a little more than $10 million for roads.
Also in the bond proposal is $1.15 million for the purchase of development rights program, which protects farmland from development.
The budget includes $1 million for Bluegrass Community and Technical College toward a $24 million science building.
Mark Manuel, vice president of workforce and institutional development at the college, said the $1 million will be part of $6 million that the college must raise locally to build the science building.
The technical college is using $18 million in bonds, paid for by an increase in student fees, to pay the remaining cost.
Other notable items in the general fund budget include:
$250,000 for a parks master plan, which the council and the administration have said is a must to improve the city's aging parks system.
$50,000 for a study to develop a multisport complex in Lexington. That's in addition to $75,000 already raised by a nonprofit sports group for an economic impact study to determine how much money a sports complex — which could host regional tournaments for youth sports — would generate.
$1 million for the Jobs Fund, a local economic development fund to attract and keep jobs in Lexington. The fund is in its second year.
$1 million to be set aside to develop land for private businesses. Commerce Lexington, the city's chamber of commerce and job recruiter, has told the council that land available for development is scarce in Lexington and that land prices are higher than in surrounding counties. The $1 million would be used to help offset infrastructure costs of developing land, said Jamie Emmons, Gray's chief of staff.
More than $3 million to be set aside for partner social service agencies. How much each nonprofit or program will receive is not in Gray's proposal, said Melissa Lueker, the city's budgeting director. The committee that scores agency requests has not yet completed it work.
In other social service programs, Gray has proposed $2 million for the city's affordable housing trust fund and $750,000 for homeless prevention and programming. Gray's budget would pay for an additional staff person in the office of homeless prevention and intervention.
Money for two historic-preservation projects: $150,000 to help move a former People's Bank building on North Broadway, and $50,000 for a preservation study for Pope Villa, a Benjamin Henry Latrobe-designed home near the University of Kentucky campus.
Gray also wants the council to approve $10 million in spending from a projected surplus for the current fiscal year. Typically, the Urban County Council determines how the surplus will be spent after it passes its budget. Gray proposes the council make those decisions while considering the budget.
Out of that surplus, Gary wants to use $750,000 for further study on building or acquiring a new government center. The city's current building — a former hotel on Main Street — is costly to maintain. It needs at least $6 million in improvements, Gray said. The city has previously proposed hiring a private developer to take over the former hotel in exchange for developing a new government center, possibly on top of the city's LexTran garages on Vine Street.
Other proposed spending from the surplus includes $5 million for police vehicles and fire trucks, and $200,000 for beautification efforts for the 2015 Breeders' Cup.
The council was told last month that Gray would propose $22 million in his budget to renovate and stabilize the 1900 courthouse.
A consultant's report showed that it would cost more than $38 million — including financing and design costs — to stabilize the courthouse that has been vacant for nearly three years and in disrepair for decades. If the city moves quickly, it could take advantage of $15 million in an historic tax credit program that could pay for part of the cost.
Emmons said officials hope that the $10 million that Gray is proposing for Town Branch Commons will be paired with a $10 million federal transportation grant in addition to private fundraising to get the project off the ground. Town Branch Commons is a linear park that would go from Isaac Murphy Memorial Art Garden to Triangle Park and would eventually connect with the Town Branch Trail.
Some council members said they were encouraged by many of the items Gray choose to include.
Councilwoman Amanda Mays Bledsoe said the $250,000 for a parks plan will benefit the city and council as it tries to determine the best use of parks and green space.
As far as other projects, Bledsoe said she is reserving judgement until she learns more about funding sources.
"I am supportive of a lot of the issues that he talked about but at the end of the day there is only so much money," she said.
Councilwoman Angela Evans, a former assistant state attorney general, said she was encouraged Gray had put the 3 percent raise for city employees in the budget. "I think it says a lot about how we view our employees."
Evans said she was also encouraged that Gray put money in the budget for the courthouse — she got her first clerking job there, she said.
Councilman Ed Lane said he questions if spending nearly $40 million on the courthouse will be a good taxpayer investment. But Lane said he is interested in hearing more about the plans for Town Branch Commons.
"I lived in New York City and saw the value of Central Park and other green spaces in cities," Lane said.