.jpg)
Lexington City Council last Thursday unanimously approved several amendments to the city’s financial and debt policies, including some recommended by Davenport & Company, a financial advisory group based in Richmond that is helping the city plan for financing future capital projects.
In the financial policy, the city is amending the minimum unassigned fund balance from 20 percent of general fund revenues to 40 percent at Davenport’s recommendation. Davenport also recommended amending the debt policy to set the tax-supported 10-year payout ratio at “no less than 50 percent.” A debt payout ratio is the rate at which the city retires its debt, with the policy meaning that the city will, to the best of its abilities, retire at least 50 percent of any debt within 10 years of acquiring it.
“I think these are conservative policies for a reason,” Lexington City Manager Jim Halasz said in his report on the amendments. “We are in very strong financial condition right now. We do have a lot of potential projects that we will be participating in and there will be some significant debt issued in the near future … [and] we want to plan for good financial management up to a fairly long horizon, if you will, maybe 10 to 15 years.
“I think they accomplish much of what you would like to see accomplished – and what our community would like to see accomplished – if we manage our financial resources today and in the future,” he added.
In response to a question from Council member David Sigler regarding the city’s ability to reassign some of the unassigned funds if it would become beneficial to the city to do so, Halasz noted that the policy could be amended again in the future to reflect policies best suited to the city’s financial needs at that time.
Another amendment to the financial policy was in regard to the city schools’ ability to carry forward the contingency balance in the school operating fund with City Council’s approval. The policy had previously stated that the balance had to be $75,000 or more before the schools could request to carry the funds over. The amendment removes the minimum requirement of $75,000 and allows the schools to carry forward any balance it has in the fund, provided it is approved by Council.
Council member Leslie Straughan moved to approve the amendments, with Sigler providing the second.
