LFUCG Expense Reduction Plan

LFUCG Expense Reduction Plan

[photo, Lexington Flashmob SnowBowl edition, by Keegan Frank, at CentrePointe Paddock]

As Mayor Newberry took the podium on a snowy, otherwise-quiet Friday afternoon to announce LFUCG budget cuts, a flashmob snowball fight was winding down at the site of the “yet to be built” CentrePointe.

Early on, he highlighted his 2007 State of the Merged Government address,

“We have a precarious revenue stream for local government. The primary source of [general fund revenue] is the payroll tax. In fact, 83 percent of [general fund revenue] comes from licenses and permits—the largest portion of which is the payroll tax. So if our local economy has a downturn such that fewer people are employed in Lexington, our revenue stream will go down and services will have to be reduced.”

adding…. “Here we are” (cites Lexington’s current unemployment rate as “unprecedented”—characterizing Lexington as “recession-resistant, not recession proof,” emphasizes the importance of “continued economic development.”)

He then stressed, “It is not wise for our city to hunker down and wait out the current economic storm. In fact, now is, in many respects, a wonderful opportunity for us to make as many investments in infrastructure as we can afford, given our revenue.”

Reflecting again on the 2007 State of the Merged Government Address:

“In light of this situation, it is vital that our community emphasize our job creation efforts, and I am pleased that Urban County Government is working with Commerce Lexington and the University of Kentucky to maximize our economic development resources.”

In terms of specifics, he cited the Bluegrass Business Development Partnership, and his ongoing belief in Horses, Healthcare and High-Tech for Lexington.

Projected Shortfall
*$12 to $13 Million during FY10 (ends 6/30/10)
*State and local governments must balance budgets
*After October revenue results were behind projections, began developing a comprehensive expense reduction plan for FY10

Ways to address Shortfall

*Increase Revenue
*Decrease Expenses
*Rainy Day Fund and other non-recurring sources of funds
*Combination of Above

Goals of Expense Reduction
*No New taxes
*No layoffs or abolished positions
*sharing of burden
*No use of rainy day funds
*balanced budget by June 30, 2010
*Use FY10 reductions to help 2011

The Mayor surmises that “friends in the private sector” would recommend layoffs. Response:

*already reduced workforce by 201 employeees through attrition
*Human cost
*Organizational Cost
*Layoff Plan Requirements
*Short-term Financial Costs


*$12.5 million shortfall
*$7.6 M in reductions id’d without layoffs
*$332,000 in Council, County Officials, Partner Agencies Reductions
*$800,000 in net unanticipated funding
*$1.8 million in operating savings beyond proposed reductions from directors
*$2.0 million FY08 surplus used to balance

Reductions by Department

*CIO $389,000
*Social Service $403,000
*Finance $428,000
*Public Works $743,000
*Law $143,000
*Mayor’s Office/Senior Advisor $226,5000

General Services
Total $1,569,000
Commissioner’s Office $105,000
Parks $803,000
Facilities and Fleet $661,000

Public Safety
Total $2,801,000
Commissioner’s Office $24,000
Police $638,000
Fire $1,518,000
Corrections $336,000
Emergency Management $26,000
E911 $171,000
Code Enforcement $88,000

Other Reductions
Council $118,000
County Officials $167,000
Partner Agencies $47,000 [leave out the Library; another story]
Other LFUCG Admin. Reductions
    -Senior Staff Furloughs $70,000
    -Sick Leave Adjustment $639,000

Wrapping up with what the Mayor characterized as Good News:
*No Layoffs
*No use of rainy day funds
*Good economic news for 2010
*FY10 reductions help with FY11
*Work of LFUCG continues.

And the 2010 Mayoral Race proceeds apace.