The 3rd meeting of the Interim Joint Committee on Agriculture and Natural Resources was held on Thursday, August 21, 2003, at 10:00 AM, in the VIP Suite at the Kentucky State Fairgrounds. Representative Roger Thomas, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Ernie Harris, Co-Chair; Representatives James Gooch, Co-Chair, and Roger Thomas, Co-Chair; Senators David Boswell, Paul Herron Jr, Robert Leeper, Vernie McGaha, Virgil Moore, Joey Pendleton, Damon Thayer, and Elizabeth Tori; Representatives Royce Adams, Rocky Adkins, Adrian Arnold, Sheldon Baugh, Scott Brinkman, James Bruce, Dwight Butler, Mike Cherry, Hubert Collins, James Comer, Tim Couch, Mike Denham, Jimmy Higdon, Thomas McKee, Brad Montell, Don Pasley, Marie Rader, Dottie Sims, Brandon Smith, Tommy Turner, Ken Upchurch, Robin L. Webb, and Susan Westrom.
Guests: Dr. Will Snell, University of Kentucky; Donna Brown, Associated Industries of Kentucky; Mark Brown; Eric Gregory, East Kentucky Power Cooperative; Dan Ison, Phillip Morris; Joel Neaveill, Governor’s Office of Agricultural Policy; David Sparrow, University of Kentucky; Jeff Harper, Kentucky Farm Bureau;.
LRC Staff: Dan Risch, Biff Baker, DeVon Hankins, D.Todd Littlefield, Rhonda Carter, Kim Phelps, Laura Goins, Tommy Druen, and Sheri Mahan.
Representative Roger Thomas, Co-chair, called the meeting to order. The secretary called the roll and a quorum was established. Rep. Thomas thanked Ms. Mary Ann Cronan and other members of the State Fair Board for their hospitality and for meeting with the committee. Each member of the committee and the Fair Board then introduced themselves.
Ms. Cronan, Chairperson of the State Fair Board, welcomed the committee and pointed out that the Fair Board is beginning to plan the 2004 State Fair, which will be the 100th Kentucky State Fair. She also reminded everyone that the economic impact of the state fair to the state is $16 million.
Mr. Harold Workman, the Chief Executive Officer and President of the State Fair Board, gave an update on expansion plans at the fairgrounds and attendance at the state fair. He said attendance was up for the fair but didn’t have final numbers yet. He pointed out that this was in contrast to other states that have already held their fairs and saw declines in attendance.
Mr. Workman emphasized, as he has in past years, the need for the Kentucky State Fairgrounds to continue its expansion and upgrades to remain competitive with other states. In response to a question from Rep. Thomas, Mr. Workman said that Kentucky’s convention facilities rank in the top 10 nationwide in square footage available for shows and in events committed to use Kentucky facilities. He said the annual economic impact of Kentucky’s convention facilities is $400 million.
The next topic was presented by Dr. Will Snell, from the University of Kentucky, College of Agriculture. Dr. Snell gave an update on Congressional proposals to end the federal tobacco marketing program. He said there is a lot of support among tobacco growing states for a tobacco buyout, but a number of challenges remain. He said the U.S. Senate and the U.S. House of Representatives have taken different approaches to the topic. He said the Senate is attempting to produce one bill that all parties can support while in the House separate bills have been put before the public for consideration. A fundamental difference between the House bills and the Senate’s general proposal is the cost of the buyout. The House proposal would be substantially more expensive than the Senate version. He said the House proposals also are viewed as allowing a marketing program to continue after the buyout that would be much like the existing program.
Dr. Snell said it is too difficult to predict if a buyout will pass. He pointed out that non-tobacco producing states are not convinced that a buyout should be passed because of a concern that it would negatively affect their tobacco master settlement agreement payments. He mentioned other challenges to passage of a buyout bill including: disagreements among the cigarette manufacturers, lack of a clear approach to the possible involvement of the U.S. Food and Drug Administration in regulating cigarettes, and uncertainty about how best to pay for the buyout.
Dr. Snell offered his opinion of the consequences of passage of a buyout bill. He said that he would expect tobacco production to become concentrated among fewer growers and that production could shift to one region of the state. He also said production methods could change.
He said if the efforts failed there is no alternative plan to address the problems of the current tobacco program.
Finally, Dr. Snell said that last growing season approximately 75% of the tobacco crop was marketed through direct contracts with cigarette makers. He said it is too early to know how much tobacco will be grown under contract for next year.
The final presentation was given by DeVon Hankins, staff to the committee, who gave a brief report on an Illinois lawsuit against cigarette manufacturers. Ms. Hankins reported that a judgment of $10 billion was rendered against Philip Morris for falsely representing “light” cigarettes to consumers. An appeal is expected but the court has ordered Philip Morris to post a $12 billion bond during the appeal. Philip Morris has argued that the bond amount threatens the company’s solvency.
States, including Kentucky, that receive tobacco master settlement payments are concerned that the Illinois lawsuits’ results might jeopardize the payments. Ms. Hankins concluded by saying that the appeal process may be lengthy and the ultimate impact on settlement payments can’t now be known.
The meeting was adjourned at approximately 11:30 a.m.