Call to Order and Roll Call
The first 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, June 18, 2015, at 10:00 AM, in Development Room B at The METS Center, 3861 Olympic Blvd., Erlanger, KY. Senator Danny Carroll, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Danny Carroll, Co-Chair; Representative Rita Smart, Co-Chair; Senators Stan Humphries, Christian McDaniel, and Dennis Parrett; Representatives Tom McKee, Brad Montell, Steve Riggs, and Tom Riner.
Guests: Steve Rucker, Deputy Secretary, Finance and Administration Cabinet; Scott Aubrey, Director, Division of Real Properties, Finance and Administration Cabinet; Paul Gannoe, Deputy Commissioner, Department for Facilities and Support Services, Finance and Administration Cabinet; Mike Hayden, Kentucky Wired Program Director, Finance and Administration Cabinet; John Hicks, Deputy State Budget Director, Office of State Budget Director; Jerry Graves, Executive Director, Kentucky River Authority; David Hamilton, Staff Engineer, Kentucky River Authority; and Jennie Wolfe, Kentucky River Authority.
LRC Staff: Katie Comstock, Joe Lancaster, and Spring Emerson.
New State Office Building Lease-Purchase Update
Steve Rucker, Deputy Secretary, Finance and Administration Cabinet, provided a brief presentation and overview of the New State Office Building construction project.
In response to questions from Representative Montell, Mr. Gannoe said that even though continuous preventive maintenance had been performed on the Capital Plaza Tower, some remaining issues are primarily due to its age. Safeguards included in the contract for the New State Office Building including warranties on the mechanical and roof systems that remain in effect when the building is transferred to the state after 35 years. The cost of the lease is approximately $13 per square foot. The tax-exempt debt was sold by a limited liability corporation, and lease payments are held in a trust.
In response to questions from Representative Riggs, Mr. Gannoe said the New State Office Building property and all the improvements would revert to state ownership in 35 years. Mr. Rucker stated that early stage planning for the Capital Plaza Tower includes an option of demolition and replacement. Mr. Gannoe said the New State Office Building would be certified by the U.S. Green Building Council for energy efficiency.
In response to questions from Chairman Carroll regarding construction oversight of the new building, Mr. Gannoe said all plans have been approved, Finance and Administration Cabinet representatives review on-site weekly, and monthly progress meetings are conducted.
In response to questions from Representative Smart, Mr. Gannoe said the New State Office Building will be well constructed. Mr. Rucker said the Mayor of Frankfort, the Tourism Cabinet, and others have been involved in discussions concerning the future of the Capital Plaza Tower building.
In response to a question from Representative Riggs, Mr. Rucker said other possible uses for the Capital Plaza Tower and other properties in downtown Frankfort have been discussed.
Next Generation Kentucky Information Highway (NGKIH) Update
Mr. Rucker provided a brief presentation and overview of Kentucky Wired, formerly known as the Next Generation Kentucky Information Highway.
In response to questions from Senator Parrett, Mr. Rucker said that the eastern region of Kentucky is deficient in broadband service compared to other state regions and shall receive priority, but the entire state should have service by the autumn of 2018.
In response to a question from Representative Riggs, Mr. Rucker stated that broadband carriers prefer a guaranteed return on investment before providing services, and the Public-Private Partnership (P3) was chosen after careful deliberation. Mr. Hicks added that the failed P3 projects were dependent upon subscription rates, but financing for this project would not be dependent upon the number of customers. He said there would be a presence in each county, but due to location not at every state government site; those omitted sites would receive network services through the use of vendors. Mr. Rucker said the services would be open access, with the next step being community leaders building the infrastructure.
In response to questions from Representative Montell, Mr. Rucker stated that all wireless technologies require middle-mile infrastructure, and must be fed by the fiber network. Iowa began in the mid-1990s, and Illinois has implemented it as well, so Kentucky would not be a pioneer.
In response to a question from Chairman Carroll regarding fees for private companies, Mr. Rucker said they will be offered fiber strands through a bidding process.
In response to questions from Representative Smart, Mr. Rucker said the network would be 85 percent aerial fiber in right-of-ways, with 15 percent buried. He stated that citizens would pay for home service use.
In response to questions from Senator Humphries, Mr. Rucker stated that an excess of fiber capacity would be available for use through a procurement process, whether for a major carrier or an internet service provider.
In response to a question from Representative McKee, Mr. Hayden stated that routes of fiber create cross-sections and would be completed in phases.
In response to a question from Representative Riner, Mr. Hayden stated that the federal First Net wireless connectivity network for first responders would not be in the same risk category.
Kentucky River Authority
Jerry Graves, Executive Director, Kentucky River Authority (KRA), provided a capital project update for the Kentucky River locks and dams.
In response to questions from Representative McKee regarding water withdrawal restrictions, Mr. Hamilton said the Kentucky Division of Water regulates water withdrawal from the Kentucky River. Mr. Graves said no agricultural use restrictions exist.
In response to questions from Representative Montell, Mr. Graves said the KRA services its own restricted agency fund debt service, and new bond issuance would be determined by the Office of Financial Management.
In response to a question from Chairman Carroll, Mr. Graves said water withdrawal rate charges would remain the same upon completion of the projects.
In response to questions from Senator Parrett, Mr. Hamilton said irrigation by tributary use is handled by the Kentucky Division of Water. Mr. Graves said Kentucky lock and dam rates are fairly low, compared to other states.
In response to questions from Representative Smart, Mr. Graves said the KRA mission includes an increase in tourism and recreation on the Kentucky River, in partnership with the Tourism Cabinet.
In response to a question from Representative Riggs, Mr. Graves said he continues to communicate with members of the Kentucky federal congressional delegation for assistance.
There being no further business before the subcommittee, a motion to adjourn was made by Representative Riggs and seconded by Representative McKee, and the meeting was adjourned at 11:34 AM.