Call to Order and Roll Call
The 3rd meeting of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, August 24, 2017, at 10:00 AM, in South Wing C, Room 101 of the Kentucky Fair and Exposition Center. Representative Steven Rudy, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Christian McDaniel, Co-Chair; Representative Steven Rudy, Co-Chair; Senators Ralph Alvarado, Danny Carroll, Rick Girdler, Stan Humphries, Morgan McGarvey, Gerald A. Neal, Dennis Parrett, Brandon Smith, Robin L. Webb, and Stephen West; Representatives Rocky Adkins, Tim Couch, Myron Dossett, Ken Fleming, Kelly Flood, Jeff Greer, David Hale, Regina Huff, Donna Mayfield, Suzanne Miles, Rick G. Nelson, Jason Nemes, Phillip Pratt, Sal Santoro, Arnold Simpson, Jim Stewart III, James Tipton, Jim Wayne, Russell Webber, Susan Westrom, and Jill York.
Guests: Jason Rittenberry, CFE, President and CEO, Kentucky Fair Board; David Brunori, Research Professor, Trachtenberg School of Public Policy and Public Administration, George Washington University and Partner, Quarles & Brady, LLP.
LRC Staff: Jennifer Hays, Cynthia Brown, Amit Shanker, Hannah Walker, Charlotte Quarles, and Jennifer Beeler.
Approval of the Minutes
Representative Nelson made a motion, seconded by Senator Alvarado, to approve the minutes of the July 27, 2017 meeting. The motion carried by voice vote.
Welcome Presentation from the Kentucky State Fair Board
Jason Rittenberry, CFE, President and CEO, Kentucky State Fair Board, gave an overview of updates and requests from the Kentucky State Fair Board.
He explained that Kentucky Venues is Kentucky State Fair Board’s public brand to promote all of the venues and events. Kentucky Venues is located at the Kentucky Exposition Center and Kentucky International Convention Center. Several of the large events at the Kentucky Exposition Center are the National Farm Machinery Show, All-In Hoopfest Basketball Tournament, Kentucky State Fair, World’s Championship Horse Show, and the North American International Livestock Exposition.
Mr. Rittenberry explained that the Kentucky Exposition Center (KEC) is the sixth-largest convention center in the United States, based on square footage. The Kentucky International Convention Center is undergoing a $207 million renovation, which is on time and on budget. The convention center is due to reopen July 2018 with the ability to attract 25 percent more convention, meeting, and tradeshow business. There are 50 events on scheduled from 2018 to 2022.
Mr. Rittenberry stated that annually the Kentucky Exposition Center hosts approximately 300 events and has approximately 2.3 million visitors. The generated tax revenue is $36.4 million.
He stated that, after the University of Louisville moved its programs to the YUM! Center in 2010, the Kentucky State Fair Board (KSFB) revenues dropped by approximately $20 million annually. The loss of revenue has prevented KSFB from maintaining the upkeep of the facilities properly. Almost a decade of deferred maintenance has resulted in immediate needs at the KEC to maintain operations. KSFB has not had a maintenance pool funded since 2010.
Mr. Rittenberry explained that KSFB had four priorities for capital funding: the maintenance pool of $6 million which will cover safety for guests, aesthetics of facilities, mechanical failures, and functionality of space, signage, and wayfinding; the entrance gates and parking booths of $3.5 million; Freedom Hall phase 1 renovation of $5 million; South Wing interior renovation of $7 million.
Mr. Rittenberry stated that without making some material and noticeable improvements to KEC, there is risk of losing longstanding conventions and trade shows that have been in Kentucky for 25 years. Several top events have expressed search in other cities for their events because of the state of the KEC.
Perspectives on Tax Reform
David Brunori discussed multiple perspectives on tax reform issues. The first thing anyone contemplating tax policy should know is that businesses do not pay taxes but that people pay taxes. In a mobile, global economy, it is usually consumers and labor that bear the burden.
He gave an explanation that exempting all business purchases from sales tax could aid in tax relief. When a business pays sales tax, it makes the initial purchase of everything more expensive; this then becomes part of the business’s cost of goods sold and increases the price of what is being sold.
Mr. Brunori said the second most important policy reform decision the Commonwealth can make is to repeal the taxes on business personal property. The Commonwealth taxes machinery, inventory, furniture, computers, supplies, and aircraft. Taxes on personal property discourage investment in all the things that are taxed.
Mr. Brunori presented other options that could help the Commonwealth with its consideration of tax reform.
With no further business, the meeting was adjourned.