Call to Order and Roll Call
The second meeting of the Budget Review Subcommittee on General Government, Finance, and Public Protection of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, October 24, 2013, at 10:00 AM, in Room 129 of the Capitol Annex. Senator Christian McDaniel, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Christian McDaniel, Co-Chair; Senator David P. Givens; Representatives Dwight D. Butler, Mike Denham, Adam Koenig, Tom McKee, Brad Montell, Steve Riggs, Tom Riner, and Wilson Stone.
Guests: Adam Edelen, State Auditor; Sean Riley, Chief Deputy Attorney General, Office of the Attorney General; Larry Clarke, Budget Director, Office of the Attorney General; Todd Hollenbach, State Treasurer, Office of the Treasurer; Lindsay Hughes Thurston, Assistant Secretary of State, Office of the Secretary of the State; James Comer, Agriculture Commissioner, Department of Agriculture; and Steve Kelly, Executive Director, Office of Strategic Planning and Administration, Department of Agriculture.
LRC Staff: Frank Willey, Linda Ellis, Katherine Halloran, Jennifer Rowe, and Benjamin Thompson.
Kentucky Auditor of Public Accounts Status
Mr. Edelen discussed the Auditor of Public Accounts Office.
In response to questions from Representative Stone concerning the difference between the audits performed by his office and the audits performed by a Certified Public Accountant (CPA) firm, Mr. Edelen noted that his staff searches for public corruption whereas a CPA firm wants to just make sure that budget is balanced, which tends to allow funds to slip through the cracks.
In response to questions from Representative Riggs concerning whether his office performs any oversight on CPA firms, Mr. Edelen confirmed that the Public Auditor’s Office oversees CPAs in cases where audits have been contracted out to those firms from the Public Auditor’s office.
In response to questions from Representative Denham concerning auditing city governments and retaining staff, Mr. Edelen stated that his office would need between 45 and 50 more auditors to oversee Kentucky’s cities along with the 600 statutorily required audits currently performed. Mr. Edelen added that he would need about $300,000 more in the first year of the biennium to retain talented workers, because CPA firms are able to pay much more.
In response to questions from Senator Givens concerning abusers of public funds, Mr. Edelen noted that with a lack of oversight people tend to feel as if they can get away with abusing public funds and there is a responsibility to punish those who do so.
Office of the Attorney General Status
Mr. Riley discussed the Office of the Attorney General.
In response to questions from Chair McDaniel concerning restricted funds, Mr. Riley stated that the Office of the Attorney General cannot access restricted funds without appropriation from the General Assembly.
In response to questions from Representative Denham concerning funding and what was being done concerning increased heroin use in-state, Mr. Riley said that he was not prepared to give an exact number for increased funding but that the Office of the Attorney General gives a large return on investment. Mr. Riley stated that the Attorney General is working closely with law enforcement to determine how to keep heroin out of the hands of drug users.
In response to a question from Representative McKee concerning personnel, Mr. Riley said there have been no reductions in staff in the last year.
In response to a question from Senator Givens concerning the Tobacco Master Settlement Agreement, Mr. Riley said that Kentucky is deemed nondiligent in enforcement of tobacco laws in 2003. The Office of the Attorney General is exploring legal options. Mr. Riley anticipates that if the decision is upheld, next spring’s escrow payment would be reduced by an estimated $30-40 million.
In response to a question from Representative Montell concerning restricted funds, Mr. Clarke noted that all funding for the Office of the Attorney General must be appropriated by the legislature. The Attorney General requested about $6.5 million in restricted funds along with $10.2 million in general funds during the last biennium.
In response to a question from Representative Stone concerning resources and Kentucky’s nondiligent status, Mr. Riley said that there have been sufficient resources available during litigation.
In response to a question from Senator Givens concerning the 2003 Tobacco Master Settlement Agreement, Mr. Riley confirmed that previously it was believed that the ruling would set precedence for following years. Mr. Riley stated that the end decision was convoluted enough that no one was comfortable assuming that the judgment would be repeated for subsequent years.
Kentucky State Treasurer Status
Treasurer Hollenbach discussed the Office of the Treasurer.
In response to questions from Chair McDaniel concerning annual lease payments and office space, Treasurer Hollenbach stated that payments for the building in which the Office of the Treasurer is housed are about $150,000 per year. Treasurer Hollenbach said that his office would be agreeable to moving its offices to the Capitol Annex.
In response to questions from Representative Stone concerning technological updates, Treasurer Hollenbach said that telephone and computer systems need updates in the near future. Treasurer Hollenbach stated that the encryption software update the Office of the Treasurer needs will be needed by many agencies in state government.
Representative Riner complemented Treasurer Hollenbach on his actions to save funds in the Office of the Treasurer.
Secretary of State Status
Ms. Thurston discussed the Office of the Secretary of State.
In response to a question from Chair McDaniel concerning the budget request, Ms. Thurston stated that the Office of the Secretary of State would be requesting about the same amount of funding as last biennium.
In response to a question from Representative Riner concerning witness protection, Ms. Thurston said that there is no legislation accounting for shielding the addresses of those in witness protection programs.
Kentucky Department of Agriculture Status
Commissioner Comer and Mr. Kelly discussed the Department of Agriculture.
In response to Representative Denham concerning county fairs, Commissioner Comer stated that last year Kentucky spent $500,000 on county fairs. Mr. Kelly said that $500,000 would be requested in each year of the next biennium for the capital expenditure projects for county fairs. Mr. Kelly said $4 million would be needed to accommodate all county fair funding requests.
In response to a question from Chair McDaniel concerning county fairs, Mr. Kelly said that the Department of Agriculture uses general fund money to support county fairs.
In response to a question from Representative McKee concerning funding for Farms for Food banks, Commissioner Comer stated that serious consideration would be given to requesting additional funding for the Farms for Food banks program.
In response to questions from Representative Montell concerning ride inspectors and livestock inspectors, Commissioner Comer said that all ride inspectors are certified. The livestock inspectors had previously been underutilized but now are being used in areas that previously had not been their responsibility. Mr. Kelly stated that two entry-level inspectors have been added to the ride inspector staff since last biennium.
In response to questions from Representative Riggs concerning fees, Commissioner Comer said that Department of Agriculture fees for performing inspections are minimal, in some cases nonexistent.
In response to a question from Representative Stone concerning scale inspections, Commissioner Comer stated that there are over two million scales and scanners in the state. Over 99 percent of them have been inspected.
Senator Givens commended Commissioner Comer on the job he is doing and complimented the job inspectors do around the state.
Chair McDaniel called for a motion to approve the minutes of the last meeting, which was held on September 26, 2013. The motion was made by Representative Stone and seconded by Representative Montell.
There being no further business before the subcommittee, the meeting was adjourned at 11:49 AM.