Lexington’s tax revenue up slightly in January

Lexington Mayor Jim Newberry

Lexington’s revenue growth slowed in January, but officials remain optimistic about the city’s financial picture in the current fiscal year.

The city collected $16 million in total revenue in January, up $229,000, or 1.5 percen, over January 2008. Through the first seven months of the fiscal year, the city has collected $150.4 million in total revenue, up $5.3 million, or 3.6 percent, over this time last year.

Collections in the licenses and permits category — the city’s largest area, which includes payroll tax, business net profit tax, insurance premium fees and franchise fees — is down $1.2 million year-to-date for the fiscal year, which ends June 30, said Mary Fister, the city’s director of accounting.

The city is continuing to limit expenses, including limiting food purchases and using a state contract to purchase uniforms, Fister said.

“We still feel like we can manage through 2009 and end the year on a positive note, or close to an even note,” Fister said.

In January, $8.9 million was collected in the licenses and permits category, a decrease of $3.1 million, or 26 percent, over the same time period last year.

The biggest drop last month came in the payroll tax category, Fister said.

The payroll tax brought in $2.1 million less in January than it did in January 2008, Fister said.

About $1.3 million of that decline is due to timing issues, but that leaves a decline of about $850,000 from January of this year to January 2008, Fister said.

On the expense side, the city has spent $3.7 million more in personnel costs than was budgeted for this time in the year, Fister said.

Specifically, the fire department is projecting it will be $1 million over budget in overtime for the year, Fister said.

Fister said she has already held meetings with Public Safety Commissioner Tim Bennett to come up with a plan for the fire department.

In the meantime, the city is in the process of building the budget for the fiscal year that begins July 1.

Division directors have been asked to prepare three budget scenarios, one with the same amount of money they received this year, one with a 7.5 percent reduction and one with a 15 percent cut, Fister said.

The city projects that it will have a $27 million budget shortfall in the upcoming fiscal year because of declining revenues and new expenditures related to collective bargaining contracts, an increased city contribution rate to the county employees retirement system and debt service on bonds.

- Michelle Ku