The 4th meeting of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, November 19, 2009, 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: Senator Alice Forgy Kerr, Co-Chair; Representative Eddie Ballard, Co-Chair; Senators Denise Harper Angel, Ray S. Jones II, Katie Kratz Stine, Gary Tapp, and Jack Westwood; Representatives Royce W. Adams, Kevin D. Bratcher, John "Bam" Carney, Larry Clark, Leslie Combs, Will Coursey, Bob M. DeWeese, Myron Dossett, Kelly Flood, Jim Gooch Jr., Keith Hall, Mike Harmon, Dennis Keene, Adam Koenig, Tom McKee, Tim Moore, Fred Nesler, David Osborne, Ruth Ann Palumbo, Don Pasley, Ancel Smith, Fitz Steele, Ron Weston, and Addia Wuchner.
Legislative Guests: Representative Sal Santoro.
Guests: John T. Walczak, Executive Director, Louisville Zoo; Gary L. Stewart, Board Member, Louisville Zoo Foundation; Bob Babbage, Babbage Cofounder; Kevin T. Sheilley, General Manager, Moral Hydro; Mike Baker, Executive Director; Hancock County Industrial Foundation; Gretchen Landrum, Executive Director; Northern Kentucky Convention Center; and Tom Caradonio, President, Northern Kentucky Convention and Visitors Bureau.
LRC Staff: John Buckner, Committee Staff Administrator; Karen Armstrong-Cummings; Louis DiBiase; and Dawn Johnson.
A motion and second by Representative Pasley and Representative Hall to approve the minutes of the October 15, 2009, meeting passed by voice vote.
The first item on the agenda was a discussion by John T. Walczak, Executive Director of the Louisville Zoo, about its importance to the Commonwealth as well as a presentation of the zoo's Glacier Run project. Mr. Walczak said the zoo reaches many people through a variety of means. Last year, attendance at the zoo was at a record high, with over 835,000 visitors. The zoo has also extended free admission to children of need through a partnership with Zoo Kids, Inc., and issued over 20,000 passes last year alone, the cost of which was borne by business donations to the project. The zoo is largely self-sufficient, raising over 80 percent of operating revenues through admissions fees and retail sales. The remaining money is raised by funding through the Louisville Metro City Government. Mr. Walczak explained that strategies are in place to make the zoo increasingly self sufficient.
Mr. Walczak said the Louisville Zoo is proud of its education outreach components. Through programs such as "Zoo to You," which brings animal exhibits to outlying areas in the state, and “School at the Zoo” where classes are held at the zoo itself, thousands of Kentucky school children are exposed to educational components that are designed to mesh with the curriculum demands of the school system.
Mr. Gary Stewart of the Louisville Zoo Foundation explained that the construction of the Glacier Run project is currently underway. The zoo has raised $23.5 million from over three hundred donors, and an additional $5.6 million is needed to complete the project, $4 million of which will be requested from state funding. Mr. Walczak said with the completion of Glacier Run, state and local tax revenues will increase by over $1 million and 400 jobs will be added as compared to 2004.
In response to Representative Gooch’s question on instructional content, Mr. Walczak explained that the zoo’s education programs present scientific facts and do not take sides on issues such as global warming.
Responding to Representative Bratcher’s question, Mr. Walczak explained that the recent accident involving the zoo’s train ride is still under investigation with the zoo’s complete cooperation. The ride is not in operation pending the outcome of the investigation.
The committee then heard a presentation by the Kentucky Aluminum Network on the importance of the industry to the state in terms of jobs created, tax revenues raised, and subsidiary businesses supported by aluminum producers. Following introductions by Bob Babbage of Babbage Cofounder, Mr. Kevin Sheilley, President and Chief Executive Officer of Northwest Kentucky Forward explained that aluminum and aluminum-related industries in Kentucky employ over 15,000 workers with an average wage of $52,000 annually resulting in over $100 million in state and local tax revenues each year. In 2005, primary aluminum shipments totaled nearly $4.5 billion, which ranks Kentucky as the nation's top aluminum producer. Aluminum is used in a highly diverse range of products, but its importance in the automotive industry cannot be overstated. With the search for increased fuel efficiency by building lighter vehicles, aluminum is a key production material in nearly all automobile components.
Mr. Eric Salisbury, General Manager of Moral Hydro, identified several core issues and threats to the industry, which are the availability of cost effective energy, workforce development and improving employee skills, facility infrastructure, and informed and collaborative environmental policies. It was emphasized that the skilled labor force needed to staff aluminum production facilities is rapidly aging, with nearly 40 percent of skilled labor being within five years of retirement. To staff production facilities, skilled labor such as electricians and machinists must be trained and brought into the workforce as soon as possible. Mr. Salisbury said another challenging area for the aluminum industry is an aging infrastructure.
Mike Baker, Executive Director of Hancock County Industrial Foundation said one of the opportunities for the industry is House Bill 3 passed during the 2009 Special Session which included the Kentucky Reinvestment Act. He said HB 3 provides the tools necessary to help companies reinvest in employees and facilities.
Representative Wuchner asked what job skills are needed for the future workforce. Mr. Salisbury said a high school diploma is sufficient for many jobs but the at-risk jobs are skilled trades such as mechanics, technicians, and electricians. Mr. Baker said the partnership with Kentucky Community and Technical College System helps fill vocational training needs for the industry.
Co-Chair Kerr asked in what areas of manufacturing is aluminum replacing steel. Mr. Salisbury gave examples of semi tractor trailer truck rims and building supplies used in Leadership and Environmental Energy Efficient Design, a program used to certify “green” buildings.
Representative Moore asked what effects the “Cap and Trade” bill would have on Kentucky’s competitiveness if it lost its advantage of being a low-cost energy state. Mr. Baker said this is why incentives are needed--to overcome negative situations and problems found with the state’s tax structure. He said that incentives are in place simply to level the playing field.
Finally, the committee heard a presentation about the history and economic impact of the Northern Kentucky Convention Center. Representative Sal Santoro said the center is the only publicly funded center that operates in the black, but demand for space has outgrown what the center can provide. He said the Northern Kentucky Consensus Group made the expansion of the convention center the number one funding priority in the region for the upcoming general assembly. Gretchen Landrum said the center is self-sustaining and has operated in the black since its opening. She said $104 million in business has been turned away because the center is fully utilized. Ms. Landrum said that while $51 million is needed to expand the convention center, given the state’s financial conditions, they are asking a smaller commitment of $3 million to help fund the engineering studies to purchase a parcel of surrounding land that is currently available. This land, a 108-space parking lot, is currently owned by the Internal Revenue Service. Given that the center is "land locked" with little available adjacent space for new construction, it is imperative to obtain this land while the opportunity exists. To secure a future purchase, the center will be requesting $3 million in state funding to hold the land for expansion at a later date.
Mr. Tom Caradonio, President of the Northern Kentucky Convention and Visitors Bureau explained that measured in terms of room nights, it is estimated that over 700,000 room nights were lost last year, which translates into $104 million in lost income to the area. He said the biggest problem they face is the inability to house growing conventions who must find other hosting facilities due to the restricted space of the convention center.
There being no further business, the meeting adjourned.