Lexington Meta 5: Parking Wars – Is LexPark’s New City Subsidy Equitable?

The big news in Lexington this week is once again parking-related. In the latest twist, the Urban County Council agreed to subsidize LexPark to the tune of $200,000 per year. In exchange, LexPark agreed to return to free parking at downtown meters on weekends and after 7 p.m. during the week.

The change comes after public outcry over the parking changes, which raised parking rates and extended enforcement hours to 9 a.m. to 9 p.m. Monday – Saturday from the previous enforcement hours of 9 a.m. to 5 p.m. Monday – Friday.

In a press release, the City said that “several” downtown restaurant owners had expressed concerns over the recently increased parking rates and expanded enforcement hours, and cited that as the driving force behind the effort to negotiate a compromise agreement.

LexPark says it needs the additional revenue for safety improvements. Indeed, the downtown parking garages have been a source of safety concerns with scattered violent incidents in recent years and a parking garage collapse in 2021.

However, there is an economic argument to be made that the cost transfer to fund the parking safety improvements through an increase in the amount the city pays for employee parking is unfair because it is ultimately funded by city payroll taxes rather than by the users of parking.

The argument is that the cost of operating and maintaining parking facilities, and making safety improvements, should be borne by those who use the facilities, i.e., the drivers who park in the garages and meters. By increasing the amount the city pays for employee parking, the cost of making safety improvements is being shifted from the users of parking to all of those who work in Fayette County, who will ultimately pay for it through their payroll taxes.

In this case, the increase in the amount the city pays for employee parking is approximately $200,000 a year. This is a significant cost that will be borne by all Fayette County workers, regardless of whether they use parking facilities or not. This cost transfer is unfair because it places the burden of paying for parking safety improvements on those who may not use parking facilities or may not have a choice about using them.

Ideally, the cost of parking should be borne by those who or benefit from it, and the cost of making safety improvements should be included in the fees charged to drivers and businesses for using parking facilities. This way, those who benefit from the improvements will be the ones paying for them, and the cost transfer will be fair and equitable.

Who Benefits From the New Agreement?

Consider these three hypothetical examples of Lexington residents, one who bikes everywhere, one who drives everywhere, and one who pays to take the bus everywhere, and how they will all now split the cost, assuming they all earn the same and pay the same in payroll taxes each year:

1. Biker: Jane is a Lexington resident who bikes everywhere and does not own a car. She pays the same amount of payroll taxes as everyone else in the example. As a result of the increase in the amount the city pays for employee parking, Jane will be required to contribute to the cost of parking safety improvements, even though she does not use parking facilities. She will have to pay her share of the $200,000 cost through her payroll taxes, which will be an added burden on her, since she already pays for her own mode of transportation. She will also experience a reduction in city services since the city is using $200,000 to subsidize LexPark instead of using it for something else.
2. Driver: John is a Lexington resident who drives everywhere and uses parking facilities frequently. He pays the same amount of payroll taxes as everyone else in the example. With the new agreement, John will also contribute to the cost of parking safety improvements, but this cost will be offset by the fact that he benefits from the parking facilities that LexPark provides. The cost to John may be negligible if he parks in Lexington garages, since the increase in the amount the city pays for employee parking may not result in a significant increase in parking fees for him. He will also experience a reduction in city services since the city is using $200,000 to subsidize LexPark instead of using it for something else.
3. Bus rider: Sarah is a Lexington resident who pays to take the bus everywhere and does not use parking facilities. She pays the same amount of payroll taxes as everyone else in the example. With the new agreement, Sarah will also contribute to the cost of parking safety improvements, even though she does not use parking facilities. This cost will be an added burden on her, since she already pays for her own mode of transportation, and it may not result in any direct benefit for her. She will also experience a reduction in city services since the city is using $200,000 to subsidize LexPark instead of using it for something else.

Overall, the increase in the amount the city pays for employee parking will result in a cost transfer from parking users to all Lexington workers, regardless of their mode of transportation. While drivers who use parking facilities frequently may benefit from the improvements, other residents who do not use parking facilities, such as bikers and bus riders, may feel the cost transfer is unfair.

It is possible to argue that the new LexPark subsidy may disproportionately benefit the wealthy, who are more likely to own and operate cars than lower-income individuals. As a result, the cost transfer to the city’s payroll taxes may have a regressive effect, whereby lower-income residents end up contributing disproportionately towards the parking safety improvements compared to wealthier residents.

The Regressive Cost of “Free” Parking

In addition to the regressive nature of the new parking agreement between the City of Lexington and LexPark, there is also an opportunity cost to consider in not spending the $200,000 on social programs or services that could benefit the entire community.

For instance, that $200,000 could be invested in social programs that help lower-income residents in Lexington. The funds could be used to improve public transportation options or to provide affordable housing to families struggling to make ends meet. Additionally, the funds could be used to support job training programs or to help small businesses in the community, which could help create more job opportunities and stimulate the local economy.

The recent agreement between the City of Lexington and LexPark to transfer the cost of parking improvements to the city’s payroll taxes is a misguided and regressive policy that unfairly burdens lower-income residents while disproportionately benefiting the wealthy.

The fact is that the new cost to the city will be funded by everyone who works in Lexington, regardless of whether they own a car or rely on alternative modes of transportation like biking or public transit. This cost transfer is particularly unfair to lower-income residents because they are more likely to rely on alternative modes of transportation and will feel the corresponding $200,000 reduction in city services the most.

Do we really want the burden of paying for parking improvements to be placed on the most vulnerable populations in our community?

Systemic Transportation Issues Remain Unaddressed

In addition, this policy does not take into account the underlying systemic issues that contribute to the over-reliance on private cars in the first place. Public transportation options in Lexington are limited, and there is a lack of bike lanes and other infrastructure that makes it easier for people to choose alternative modes of transportation. Subsidizing LexPark without addressing these issues will only make it harder for people to choose alternative modes of transportation, which will further exacerbate the problem.

Therefore, policymakers should reconsider this regressive policy and explore alternative funding mechanisms that do not unfairly burden lower-income residents or discourage the use of alternative modes of transportation.

The city could consider using revenue generated from the local hospitality tax, which is paid by tourists and visitors, to fund parking safety improvements. This would ensure that those who benefit from the city’s amenities and attractions are the ones who are contributing to the improvements, rather than placing disproportionately the burden on lower-income residents.

Local hospitality tax as a potential source of funds

Lexington’s hospitality tax currently funds VisitLex, one of the organizations working to grow Lexington’s tourism industry. VisitLex recently issued a press release announcing a new project called “Horse Kicks,” which is a sneaker customization service for horses. The project is a partnership between VisitLex and a local shoe artist, Marcus Floyd, and it aims to serve the billion-dollar Thoroughbred industry in Lexington. The project has gained attention and is set to launch this fall with a pop-up store in downtown Lexington.

While the concept of customized sneakers for horses may seem novel and entertaining, the decision to allocate resources towards such a venture raises concerns about the city’s priorities. Given that Lexington is facing a housing crisis, with many residents struggling to find affordable housing, it seems impractical to spend time and money on a project that caters exclusively to the equine industry.

While the idea of donating proceeds from Horse Kicks to local minority organizations is admirable, it is unclear how much impact this would have compared to a more direct investment in social programs or services.

By state statute, hotels collect an eight and one half percent occupancy tax from their guests. In Lexington, four and one-half percent of that revenue goes to the Central Bank Center for debt repayment. The remaining four percent goes to VisitLex. There’s more than enough to fund LexPark’s $200,000 shortfall and still fund VisitLex, too–their FY2023 adopted budget was $6 million.

A Better Way Forward?

It is clear that the proposed plan to transfer the cost of parking safety improvements from the users of parking services to the city budget is not a fair or equitable solution. It unfairly benefits some and puts an unnecessary burden on the rest of the community.

Furthermore, the opportunity cost of not using that $200,000 to fund much-needed social programs is too great to ignore.

Instead, the city should consider funding the parking safety improvements through the local hospitality tax or by placing the cost on the users of parking services. This will ensure that the burden is shared equitably and that the city’s limited resources are directed towards the most pressing needs of the community.

---

Lexington Meta is a weekly column that examines happenings and events that may have gone unnoticed in Lexington. If you have a suggestion for a future column, please email editor@lexingtonky.news.

Top image: James Frazier, chair of the LexPark Board (left) and Mayor Linda Gorton.