The 6th meeting of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, November 20, 2008, at 1:00 PM, in Room 154 of the Capitol Annex. Representative Eddie Ballard, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representative Eddie Ballard, Co-Chair; Senators Julie Denton, Denise Harper Angel, Richie Sanders Jr, Katie Stine, Gary Tapp, and Jack Westwood; Representatives Kevin D. Bratcher, Larry Clark, Leslie Combs, Jesse Crenshaw, Jim DeCesare, Mike Denham, Bob M. DeWeese, Myron Dossett, Keith Hall, Mike Harmon, Dennis Keene, Thomas Kerr, Tom McKee, Brad Montell, Fred Nesler, David Osborne, Don Pasley, Ancel Smith, John Will Stacy, Alecia Webb-Edgington, Ron Weston, and Addia Wuchner.
Guests: Commissioner George Burgess, Department for Existing Business Development, Cabinet for Economic Development; Janey Moores, President and Chief Executive Officer, BJM and Associates, Inc. and President-Elect, Lexington Chapter, National Association of Women Business Owners; Adrienne Grizzell, President, MANAGEMENT, Inc.; and Justin Maxson, President, Mountain Association for Community Economic Development.
LRC Staff: John Buckner, Committee Staff Administrator; Karen Armstrong-Cummings; Louis Pierce; and Dawn Johnson.
The Commissioner George Burgess of the Department for Existing Business Development, Cabinet for Economic Development, began the meeting with an overview of the department in terms of its staffing and mission. The primary focus of the department is to assist small businesses by providing customer-driven counseling and assistance that will contribute directly to economic growth and long-term viability. The department provides a variety of services, including “one-stop shopping” for permits and licenses needed by businesses. By providing this service, which is available either on-site at their office or through an 800-number, the commissioner said that businesses can access all permitting and license applications at one location, be advised on any additional permits or licenses that may be needed, and receive counseling and immediate answers to any questions that an owner may have regarding these applications.
The department also offers a micro-loan program, which is now being operated through a contract with Community Ventures, Inc. The department received $300,000 for the program through appropriations, and Community Ventures was able to leverage that money to obtain an additional $1.5 million from the Small Business Administration. Micro loans are offered to small businesses that have fewer than five employees and may be for a maximum of $35,000. The commissioner noted that this program is not available in all counties, but that they look forward to expanding it at a later date.
A motion and second by Representatives Pasley and Hall to approve the minutes of the October 23, 2008, meeting passed by voice vote.
Next, Janey Moores, President and Chief Executive Officer of BJM and Associates, Inc. and the president-elect of the Lexington chapter of the National Association of Women Business Owners; and Adrienne Grizzell, President of MANAGEMENT, Inc. addressed the committee about some of the problems faced by small businesses in Kentucky. A slide presentation was given and showed that Kentucky has very high workers’ compensation rates and is also one of the “high tax” states. She also said that the alternative minimum tax was particularly onerous and burdensome, particularly to new businesses that have yet to establish a consistent cash flow. Finally, she said that Kentucky is not a “right to work” state, which means that employees can be forced to join a union against their will. Because of these and other factors, Kentucky’s “curb appeal” for start-up firms is very low–the combination of high workers’ compensation and health insurance rates, high state taxes and the alternative minimum tax, and a poorly educated work force results in Kentucky being the 46th worst state in which to do business.
She stated that a better work force was needed, and to do so she recommended a repeal of the alternative minimum tax, more incentives to help businesses, a reduction in “paperwork requirements,” teaching students the importance of business skills and the need for a clean criminal record, expanded drug testing, including drug testing for state employees, a repeal of prevailing wage laws, legislation that would make Kentucky a “right to work” state, a reduction in government spending and a freeze on hiring, using “just in time” temporary employees, and drug testing for welfare recipients. She also said that the state should stop competing with private businesses, and gave examples of state-owned marinas competing with private docks, and universities selling pizzas and providing delivery to dorm rooms. She said that the general rule should be that if a service is provided by a business, then it should not be by government.
Finally, Justin Maxson, President of the Mountain Association of Community Economic Development talked to the committee about the structure of the organization and some of its functions, which includes providing business counseling and loans to small businesses. To foster small business development, he suggested that the role of the Commission on Small Business Advocacy be expanded and that a study be undertaken to examine underserved areas in Kentucky, expand investment and entrepreneurial support, and to better coordinate the provision of services by various agencies.
There being no further business, the meeting adjourned at 2:30 PM.