Lexington 'Prepared' For Pension Pressure, Mayor Says

Apr 10, 2018

Lexington Mayor Jim Gray is reassuring residents the city has sufficient contingency funds socked away to deal with a potential spike in pension costs, no matter how the issue shakes out in the final days of the 2018 legislative session. The message was part of the mayor’s annual budget address Tuesday.

Gray’s office developed the nearly $371 million dollar spending plan amid uncertainty down the road in Frankfort, as the governor and state lawmakers consider whether to soften the blow of higher pension costs for cities. Local governments, school districts, public universities, and other entities could be saddled with pension contributions hikes higher than 50 percent thanks to more conservative investment return assumptions set by the Kentucky Retirement Systems Board last July.

The mayor says the council set aside $10 million from a previous surplus to absorb the anticipated increases, which could run from $3 million under a phased-in approach to just over $10 million if the state refuses to slow down rising costs.

"Under whatever conditions are decided in Frankfort, we are prepared," Gray told reporters. "We're certainly hoping for and expecting... the phased-in approach. That's the responsible approach."

Gray praised the forethought exercised by the Urban County Council, which he said places Lexington on a more solid footing than other communities potentially looking down the barrel of dramatic pension obligations. The mayor also credited the city's pension negotiations with police and fire seven years ago in charting a more sustainable path, one that avoided a "catastrophic" outcome had it been combined with the current projected increases. 

"I would prefer not to have to pay it in an out-and-out way, but everybody else has to and we do too, we can and that's a big deal," District 5 Councilman Bill Farmer said.

Lawmakers approved a bill spreading out the pension increases over time, but Gov. Matt Bevin vetoed the measure over concerns that pension system buy-out provisions could more of the burden to future taxpayers.

Only two working days remain on the official legislative calendar to piece together new pension relief language, as lawmakers also scramble to craft new budget and tax bills or override gubernatorial vetoes on those measures before time runs out this Saturday.

The Numbers

Public safety again ranks atop this year’s spending proposal, grabbing more than half – or 55.5 percent – of the entire General Fund budget.

Gray said this year the emphasis pivots from police, who added 30 new officers to the ranks in 2017, to fire, which would add 25 under the mayor’s plan. All but one new firefighters would staff a new station in Masterson Station slated to open in 2019, creating the largest force the city has ever employed.

If approved in its current form, the budget sets aside $2.5 million for new police cars, mobile and forensic computers, and a new staff sergeant.

The budget also earmarks up to $20 million in bonding for the new convention center, $3 million for new parks initiatives, along with money for metal detectors for schools – an initiative district Superintendent Manny Caulk is backing in the wake of an accidental shooting at Frederick Douglass High School.

The mayor said the devices are one piece of a larger effort to coordinate city and school responses to violence.

"We think that's the right thing to so," he said. "When we've got a significant issue like this where public safety is an issue, we want to do all we can to help."

Yet council members warn the added security measures aren’t a guarantee.

"It's a mixed feeling," says Sixth District representative Angela Evans. "I don't disagree with it, but it's certainly not going to be... the only answer, but I understand it's a partnership and that's certainly a call that the mayor made and was something a lot of the public wanted."

Douglass is the first school slated for metal detector installation, with more on the way. Superintendent Caulk has said all 31 secondary schools and programs could eventually follow suit.

A new monument celebrating the history of women in the city is also proposed, with $100,000 allotted for the development and construction.