News Editor The Lexington City Council last Tuesday conducted the legally required fiscal year 2027 public hearing where the City Administrator answered City Council member questions regarding the proposed city fiscal year 2027 budget.

The city’s fiscal year 2027 budget will be placed on the City Council regular session meeting agenda for review and approval on Tuesday, March 24.

During the hearing, City Administrator Shawnna Funderburk delivered the following message on the budget.

“The proposed fiscal year 2027 budget for the city of Lexington reflects a commitment to fiscal responsibility, transparency, and long-term stability in the face of several significant financial uncertainties. The way we are approaching this is like a maintenance budget. While the city continues to prioritize quality public services for residents, the fiscal year 2027 budget must be approached cautiously due to multiple financial variables that could materially affect the city’s revenue streams and operational costs. As a result, the fiscal year 2027 budget does not include employee pay increases at this time. This decision is not a reflection on the city’s appreciation for its work force but rather a necessary step to ensure fiscal stability until several key financial uncertainties are resolved.

“Several significant revenue sources that impact the city’s financial outlook remain uncertain at the time of this budget preparation. First of all, the local county use tax ballot initiative presents a potential risk to the city’s current revenue distribution in our street department. The city of Lexington currently receives approximately $81,600 annually from the county use tax. If the ballot initiative passes and redistributes these funds differently, the city could lose that revenue stream. That money is used for road issues and street improvement. Second, the city must consider the uncertainty of surrounding support from the city’s Hospital Board in 2026. The Hospital Board authorized an allocation of $155,000 to assist with EMS salaries in 2025. At the time of preparing this 2027 budget, it is unknown whether the Hospital Board will authorize similar funding for FY 2027.

“Third, the city continues to monitor its contractual relationships with Lafayette Regional Health Center regarding the ambulance patient transport program. Under this current agreement, the hospital compensates the city per transport for ambulance transfers from LRHC to hospitals in the Kansas City metropolitan area. The fiscal year 2027 budget assumes the hospital will not honor this contract. If the hospital does not make payments consistent with the current agreement, the city will be forced to re-evaluate its ability to continue providing this service. The ambulance patient transport program represents a significant operational and financial component of the city’s emergency medical services. Currently, this program costs the city approximately $300,000 per year to operate.

“The fiscal year 2027 budget in front of you assumes the continuation of the current pay rates for EMS staff as shown in scenario one in the information sheet provided. In scenario one that was provided in your council packets for ambulance personnel includes current pay rates. Even though those current pay rates are more than scenario two and three given on the information sheets you were provided, we are still paying well below the market. That’s a very serious consideration. Without contractual payments from LRHC, the city of Lexington cannot financially sustain the continuation of the patient transport service. Maintaining EMS capability for emergency calls remains a core public safety priority. Any decisions regarding the transport program will be made with the goal of protecting emergency response coverage for residents of Lexington while maintaining fiscal responsibility.

“Additionally, future Medicaid reimbursement levels remain uncertain and could further affect EMS revenue projections. The fiscal year 2027 budget also reflects the loss of a cell tower lease agreement which previously generated $12,000 annually in revenue for the city of Lexington. While this amount represents a relatively small portion of the city’s overall budget, it contributes to the cumulative financial pressures the city must manage.

“On the expenditure side, the city is experiencing modest increases in operational costs. The most notable is a 3 percent increase in the city’s employee health insurance premiums for fiscal year 2027. While this increase is manageable, it contributes to the overall budget pressure when combined with the revenue uncertainties outlined above. We’ve also seen increases in our property and casualty premiums for fiscal year 2027 at an increase of 9.66 percent, and we were recently notified by Lagers, which is the employee retirement plan, that the city’s contribution will increase in 2027 by the amount of $23,450.

“Given the number of unresolved financial variables, the city’s fiscal year 2027 budget strategy focuses on stability and risk management. Key elements of our strategy include maintaining current levels of service where financially feasible, preserving fund balances and financial reserves. I’d like to note our city’s fund balance is still currently at 20 percent, which is a good amount. Another strategy is avoiding long-term commitments until revenue conditions stabilize, monitoring EMS transport programs, sustainability, re-assessing budget conditions once revenue questions are resolved, continue searching for grants in all departments and service areas, and evaluate placing a fire sales tax on a future ballot.

“If revenue conditions during FY 2027, the City Council will have the opportunity to revisit budget priorities and potential employee compensation adjustments. The city of Lexington remains committed to responsible financial stewardship while continuing to provide essential services to residents. City staff will continue to closely monitor the financial factors outlined above and will provide updates to the City Council as additional information becomes available. The city FY 2027 budget reflects a cautious but responsible approach to navigating uncertainty while protecting the city’s long-term financial health. Despite these challenges, the city remains committed to maintaining those essential services and ensuring responsible stewardship of public funds. As more information becomes available regarding the revenue sources, the City Council will have an opportunity to revisit budget priorities.

“The budget presented tonight assumes what I would call a worst-case scenario from a revenue perspective. It assumes we won’t get any additional funding from the Hospital Board. It assumes LRHC will continue not to pay based on the current contract. It assumes what we currently pay staff without any reductions for EMS transport services. It assumes that we no longer receive the county use tax allocation. And there are no pay increases. So we can only go up from here basically.”