First‑quarter FY26 report: Lexington remains near budget but debt service front‑loaded
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Summary
City staff told council that FY26 first‑quarter revenues are tracking close to budget; property taxes are due Dec. 5, debt service of roughly $1.5 million was paid in Q1, federal school grant reimbursements will appear later, and staff proposed an interfund arrangement for equipment funded from utilities.
City finance staff presented Lexington's FY26 first‑quarter financial report and told council that overall results are tracking near budget but that timing differences make the second quarter more informative.
"It's really too early in the year to make any bold statements about how we're going to end up, but the first quarter is tracking along as we normally do in the first quarter and pretty close to budget," said Jen Bell, who reviewed revenue and expenditure items for the general fund, school fund, stormwater fund, utilities and equipment‑replacement fund. Bell noted that property tax payments are due Dec. 5 and that some revenue streams are timing sensitive, including county revenue sharing and Rockbridge County's payment for fire services.
On expenditures, Bell said debt service is heavy in the front of the year: "We pay about 1 and a half million dollars out in debt service in the first quarter." For the school fund, Bell said federal categorical revenue stands at about 4 percent in Q1 because many federal reimbursements arrive after related expenses are incurred. Bell also reported that the new stormwater fund shows expected revenues but that projects financed by bond proceeds have not yet started, leaving expenses low.
Councilors asked about a backhoe purchase shown as fully paid from the utility fund. Bell and staff proposed an agreement between the general fund and the utility fund so usage on general projects could be reimbursed. "That would be my proposal to do that," Bell said when asked if splitting the cost remained an option.
Council also discussed a previously noted utility undercharge that will appear in the second‑quarter report (roughly $62,000), tap fees and other 'other revenues,' and potential miscoding of software purchases to capital projects rather than administration. Staff assigned the utility director and finance to review classifications and follow up.
What comes next Staff will provide corrected classifications and the second‑quarter report (which will reflect property‑tax receipts and the undercharge), and will pursue an interfund agreement to align equipment purchases with project usage.