Lexington City Council held a work session last week to discuss the city’s draft budget for the 2026 fiscal year. No changes to the city’s tax rates or utility fees for water and sewer are proposed for the upcoming fiscal year, but salary increases for the majority of the city’s employees are included.
Two employee positions are proposed to be eliminated in the upcoming fiscal year – the city’s accreditation manager and the youth services coordinator – both of which will be vacant at the start of the new fiscal year.
The draft budget is not providing an across-the-board cost of living adjustment, but is instead prioritizing paying all city and school employees a living wage of $18.08 per hour. In the proposal, the employees on the lower end of the city’s pay scale are receiving higher percentage wage increases than those at the top of the pay scale, with the highest paid city employees not slated to receive a wage increase until FY27.
While an increase in water rates is not proposed for the upcoming fiscal year, the city is anticipating collecting $8,340,680 in charges for ser- vices due in part to switching to a master meter for Virginia Military Institute and Washington and Lee University, an increase of more than $677,000 over the FY25 budget. The city will also begin collecting the recently adopted stormwater utility fee in the new fiscal year at a rate of 30 cents per 250 square feet of impervious surface. The fee is estimated to bring in $220,000 in revenue for the 2026 fiscal year.
The draft budget presented to Council at the meeting shows a $42,271,161 in expenses, a decrease from last year’s approved budget of $47,390,066. The budget includes $3,471,919 in capital investment expenses from the city for the upcoming fiscal year, including $187,406 for a new in-car camera system for the Lexington Police Department, $218,803 for a station alerting system for the Lexington Fire Department, $647,489 for citywide repaving projects, and $100,000 for upgrades to Jordans Point Park.
The budget also includes a proposal for replacing six vehicles for the police department, including two electric vehicles to allow existing staff vehicles to rotate into patrol use. The electric vehicles will be used by the department’s investigation division and will cost $40,000 each.
Of the other four vehicles – all hybrid Ford Interceptors – two will be purchased (with an estimated cost of $84,000 each, including “upfitting” costs) and two will be leased through the Enterprise Fleet Management system. The two vehicles will be leased for a five-year period for an annual cost of $16,000 apiece, the first payment of which is included in the police department’s operating budget for FY26. Enterprise covers the cost of vehicle maintenance for the leased vehicles, which will result in a $9,000 reduction in the department’s expenditures.
City Manager Tom Carroll proposed leasing two vehicles through this program and purchasing two similar vehicles as a demonstration of the reduction in replacement and operating cost for vehicles, having utilized the Enterprise system in previous localities where he’s worked.
“As these vehicles experience wear and tear and the cost per mile driven rises, we will determine when the optimal time to replace these leased vehicles will be,” he explained in a summary memo presented to council with the draft budget. “Because Enterprise buys and sells millions of vehicles annually, the liquidation of a leased vehicle will allow the City to always bring in a newer, lower cost vehicle rather than keep an aging car we own outright.”
Council will hold a joint work session with the Lexington City School Board on Thursday, and has scheduled another work session for April 3 to continue reviewing the budget. A public hearing on the 2026 capital in vestment plan is scheduled for Council’s regular meeting this week.
