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Lexington to spend $500,000 on study to help increase minority contracts

Lexington Herald-Leader logo Lexington Herald-Leader 10/29/2020 Beth Musgrave, Lexington Herald-Leader

The Lexington council opted Tuesday to put more than $10 million of surplus funds into savings while spending some of the money on a new juvenile treatment court, a program that helps neighborhoods pay for traffic-calming devices, and a study that could help the city increase the number of minority contracts.

The more than $11.3 million in surplus funds was for the fiscal year that ended June 30.

The city saw a drop in tax revenues due to business-related shutdowns during the coronavirus outbreak’s early months. But the city received nearly $20 million in federal COVID-19 relief money that helped offset those tax losses, city officials said Tuesday.

Without those coronavirus relief funds, the city would have ended the fiscal year $1.4 million in the red, said Finance Commissioner Erin Hensley during a Lexington-Fayette Urban County Council committee meeting. Thanks to those federal coronavirus relief funds, the city ended the year $19.2 million in the black.

The city has to sock away some surplus funds into various accounts to pay for such expenses as health insurance. That left $11,395,013 in surplus funds to spend.

Mayor Linda Gorton had proposed putting away $10,395,013 in a budget stabilization fund, a fund the city drained to balance this year’s budget.

Hensley said Gorton felt the city was still facing great financial uncertainty due to the coronavirus outbreak. In addition, the city is expecting additional expenses in the next fiscal year, which begins July 1. Some of those additional expenses include $1.5 million in raises for fire and police and possible increases in pension payments to the state.

The city used $36 million from various savings accounts to balance this year’s budget. That means the city will have to come up with at least $36 million in the next fiscal year to keep spending at its current levels, Hensley said.

Hensley said that saving as much of the surplus as possible for next year’s expenses was the most prudent path forward.

Councilman Richard Moloney agreed. Moloney argued all $11.3 million should go back into savings. Next year’s budget will be tough and tight.

“For every dollar that we spend today, we will have to cut expenses next year,” Moloney said.

Others said some programs were worth spending money on now because there was either an immediate human need or the program could save the city money over time.

Over the five-hour Budget, Finance and Economic Development Committee meeting on Tuesday, the council ultimately voted to spend $960,000 of the $11.3 million. Some of that money went to new programs or to restore funding to some city programs cut from the current-year $379 million budget.

That means $10,435,013 went back into the budget stabilization fund.

One big-ticket item was the $500,000 the council agreed to pay for a disparate impact study to help identify minority and disadvantaged business contractors. Disparate impact studies typically take two years to complete. Once finished, the city could identify specific spending targets by minority or ethnic groups. The study would set those spending targets.

Gorton’s Commission on Racial Justice and Inequality, which released its recommendations on Friday, wanted the study to help increase minority contracts and address economic inequality. A group of Black faith leaders had also repeatedly asked the city, the schools, and the University of Kentucky to spend more money with minority contractors.

The city currently has a goal of spending 10 percent of its total contracting dollars on minority contracts. It recently spent 20 percent with minority contractors. But the vast majority of that money went to white-owned businesses — women or veterans, numbers provided by the city show. Less than 1 percent of those contracts went to Black-owned businesses. There are no penalties if the city doesn’t reach its minority contracting goal.

To set goals by racial and ethnic categories, a disparity study must be completed, said David Barberie, a city lawyer.

The disparity study would also identify the city’s policies that discourage or prohibit minority contractors from bidding on contracts, city officials said.

Some council members said the problem has long been that there are too few minority-owned businesses to bid on city contracts. Councilwoman Jennifer Mossotti recommended the city spend its money on upping and expanding the number of minority-owned businesses.

Others said the city doesn’t know how many minority businesses are out there. This study would tell them.

“This is something that we should have done years ago,” said Vice Mayor Steve Kay. “Goals are nice, but they have not moved the needle.”

The council also decided to set aside $100,000 for a new juvenile treatment court to encourage treatment over punishment for juveniles facing charges. It’s a new pilot program backed by Fayette District Court Judges Melissa Moore Murphy and Lindsay Hughes Thurston. The group hopes to get state and other grant funding in future years for the program that would combine alternative sentencing with mental health assessments and case management.

Other programs the council decided to fund include:

$50,000 for the Safety Net program, a new intervention program targeting gun violence. The city has seen a spike in homicides and shootings over the past nine months.

$60,000 to continue funding for the fire department’s community paramedicine program, which connects people who typically rely on pricey ambulance services with social and other services.

$150,000 to restore funding to the neighborhood traffic management program that helps neighborhoods pay for traffic calming devices such as speed bumps. Funding for that program was nixed from this year’s budget.

$50,000 for a street tree program that helps homeowners remove trees that are dangerous and could fall onto homes or roads.

$50,000 for additional mowing on city-owned property and along major roads. Funding for that program was also cut in the current-year budget.


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