Go to
The Lane Report

Fayette - One of Kentucky's Tax Rich Counties
A Report from 12th District Councilman Ed Lane

As residents of Fayette County, we are very fortunate when compared to Kentuckians residing in other counties around the state.

Lexington-Fayette County is has the state's best-educated workforce, strong employment and population growth, and is the state's second largest center of retail activity. (see Exhibit A).

Based on '04-'05 revenue estimates, the Lexington-Fayette Urban County Government (LFUCG) will collect $340 million from taxes, fees, grants and other income sources. Although the Louisville Metro Government receives more revenue because of a larger population, Lexington receives more revenue on a per capita basis.

1. (Editor Publisher Market Guide - 2004 estimates
2. Budget for period 7/1/04 - 6/30/05
3. All receipts - includes local taxes and fees, state and federal grants and capital. Excludes boards of education.

As a taxpayer and long-term resident of Fayette County (before I ran for the Urban County Council), I began to wonder why my county - one of Kentucky's fastest growing and "tax rich" communities - always seems to be almost broke and short on cash.

Between 1995 and 2004 expenditures in Lexington's general fund increased $80 million (from $129 million to $209 million annually). (see Exhibit B).

Questions to be pondered

Why is Lexington short on funds when its growth in revenues has been so robust?

Why are salaries for some of Lexington's public safety and regular employees below those paid by other cities, state and federal government agencies?

Why does Lexington's rainy day fund have only $6 million when Louisville's has over $60 million?

Why does Lexington spend $1.25 million to condemn the local water company but only invests $50 thousand annually in Commerce Lexington to promote economic development?

Why has your local government failed to upgrade its financial controls over the expenditure of the taxpayer's money? The LFUCG's current accounting system uses obsolete software that is no longer supported or updated by its initial provider.

Why has our local merged government not been restructured to improve its productivity and cost effectiveness?

Why have very few non-essential government services been outsourced to private businesses?

Why is the firefighters and police officers pension account under-funded by $137.7 million?

In order to answer these and other similar questions, the LFUCG needs to evaluate its cost centers and how effectively government is investing the taxpayer's dollars.

Shortly after the election on November 2nd , a report by the LFUCG Commission on Budget Effectiveness (CBE) was released. The commission was appointed by Vice-Mayor Mike Scanlon and chaired by Phil Roeder who is a professor of political science at the University of Kentucky. The purpose of the study was to evaluate the structure and financial policies of Fayette County.

The CBE's key recommendations:

• Implement a strategic planning process with vision and mission statements.
• Establish a three-year planning budget process.
• Redesign financial reporting with end-users in mind.
• Upgrade and replace the IT system (hardware and software).

Preparing vision and mission statements, budgeting for three years and redesigning end-user reports are enhancements that can be made by the Mayor and Council and will cost little to initiate. I expect these changes will be in effect for the 2005-2006 fiscal year budget.

Conversely, the cost to bring LFUCG's financial controls and IT systems up-to-date will be expensive. A recent upgrade of Louisville Metro Government's accounting system cost about $7 million. The failure to upgrade the way your tax dollars are accounted for and expended could increase inefficiencies and waste in Lexington's future governmental operations.

With a modern accounting system, LFUCG will be able to determine how much it costs to pick up a "Herbie" full of trash, or to provide property management and cleaning services for government owned buildings. These costs can be compared to benchmarks (the cost for which other entities are providing the same service).

Without excellent controls on budgeting, cost analysis and expenditures, local government managers and elected council members can not accurately evaluate how well government is providing services and spending your taxes. As one of Kentucky's "tax rich" communities, the LFUCG must be a better manager of our tax dollars. There should be "surplus dollars" to put into Lexington's rainy day fund.

Transparent financial reporting and planning are the foundation of good government and should be the LFUCG's top priority. I plan to strongly support upgrading budgeting, planning, financial reporting, and IT systems for Fayette County. Our government needs to look for ways to operate more cost effectively.

If you would like to review the final report prepared by the LFUCG Commission on Budget Effectiveness go to www.edlane12th.com. If you would like to contact Ed Lane he can be reached via at edlane@LFUCG.com; and by letter at 200 East Main Street, Lexington, KY 40507.

Councilman Ed Lane represents the 12 th District on Lexington Urban County Council. He is the owner of a commercial real estate services firm and publishes a statewide business magazine.

Exhibit A

Exhibit B

“I want to conservatively spend our tax dollars,
eliminate waste, and bring sound business ideas
to local government.”

To contact Ed Lane's 12th district council offices, e-mail him at edlane@lfucg.com.