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May financials: Lexington reports slight revenue gains, year-end encumbrances and prefund timing
Summary
Staff told the committee May 2025 revenues were roughly $466.9 million through 11 months, expenses $431.3 million, and that prefunding decisions will appear in the June financial presentation; personnel and benefits drove year-over-year expense increases.
City finance staff presented the monthly financial update for May 2025 to the Budget, Finance, Economic & Development Committee on June 24, 2025.
Commissioner Hensley and Director Melissa Luker (filling for Director Holbrook) reported year-to-date (11 months) revenues of $466.9 million versus expenses of $431.3 million, with approximately $29.0 million transferred to other funds (primarily capital and affordable housing). The presenters said the net position at 11 months was about $7.0 million favorable to budget. "Our revenue collections were higher than we expected by about 1.4 percent," Commissioner Hensley said.
Staff cautioned that the May financials did not reflect all FY26 prefund items the council had approved; those prefunds would appear in the June presentation. Several items were encumbered and will roll into FY26 via purchase orders and capital fund transfers. Commissioner Hensley noted a header labeling error in the packet (the "amended" column ordinarily labeled "budget").
Committee members asked about net-profit tax timing and the state tax-deadline extension. Commissioner Hensley said taxpayers who used the extension would generally pay in September or October and that such payments would be recognized as revenue in FY26 rather than as a FY25 fund balance item. "If taxpayers choose to take advantage of that extension, they would be due in September 15 or October 15 ... and we would recognize that as additional net profits in '26," Hensley said.
Members also asked about personnel expense variance. Director Luker said personnel costs were about $18.2 million higher year over year through May, driven by base salary increases (about $8.2 million), pension cost increases (about $4.3 million) and health insurance (about $3.6 million). Luker said overtime, payouts and other personnel components were spread across accounts rather than concentrated in a single line item.
Luker said operating savings were visible in professional services, repairs and maintenance, operating supplies and utilities; insurance and debt service were near budget. She said staff were still closing FY25 and expected numbers to change somewhat in the June close.
Committee members asked about the expected fund-balance roll-forward and grant-match timing. Director Luker said divisions had identified open purchase orders for encumbrances and that, as of the close work earlier that week, approximately $15.3 million of general-fund encumbrances were expected to roll forward into FY26.
The committee had no additional action on the financial presentation and moved on to other agenda items.
