Call to Order and Roll Call
The 2nd meeting of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, July 21, 2011, at 1:00 PM, in Room 154 of the Capitol Annex. Senator Alice Forgy Kerr, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Alice Forgy Kerr, Co-Chair; Senators Jared Carpenter, Ernie Harris, and Jack Westwood; Representatives Julie Raque Adams, Royce W. Adams, Linda Belcher, John "Bam" Carney, Larry Clark, Mike Denham, Bob M. DeWeese, Myron Dossett, Ted Edmonds, Kelly Flood, Jim Gooch Jr., Mike Harmon, Dennis Horlander, Wade Hurt, Dennis Keene, Thomas Kerr, Kim King, Martha Jane King, Donna Mayfield, Terry Mills, Fred Nesler, John Short, Fitz Steele, Wilson Stone, Addia Wuchner, and Jill York.
Guests: Marchetta Sparrow, Secretary and Gerry van der Meer, Commissioner, Department of Parks, Tourism, Arts and Heritage Cabinet; Peter Ervin, Office of Legal Services, Kentucky Public Protection Cabinet; Tracy King Sharp, Consultant, Boyette Strategic Advisors; Mandy Lambert, Executive Director, Office of Research and Public Affairs and Holland Spade, Executive Director, Office of Legal Services, Kentucky Cabinet for Economic Development.
LRC Staff: John Buckner, Louis DiBiase, Karen Armstrong-Cummings, and Dawn Johnson.
Minutes
A motion and second by Representatives Nesler and Flood to approve the minutes of the June 16 meeting carried by voice vote.
Alcohol Sales in Selected State Parks
Marchetta Sparrow, Secretary of the Tourism, Arts and Heritage Cabinet, said alcoholic beverage sales at selected state parks has been explored during prior legislative sessions. A study of the state park system commissioned by the cabinet in 2009, which was the most extensive in its 85 year history, resulted in a detailed financial and strategic plan. A key recommendation was the sale of liquor by the drink at selected state parks. Secretary Sparrow stated that peer park systems have demonstrated that liquor sales by the drink have dramatically increased meeting and special event bookings, overall park attendance, and golf operations. She said that given the state’s current financial situation, it is the cabinet’s duty to explore all avenues to keep facilities running, employees working, and increasing the park system’s bottom line. Other states, including Ohio, West Virginia, Tennessee, Georgia, and Arkansas, offer this amenity as do national park lodges, including Mammoth Cave Hotel.
Secretary Sparrow said this spring the Department of Parks applied for alcoholic beverage licenses for the five parks located in areas where the sale of alcohol is allowed: Jenny Wylie State Resort Park, Prestonsburg; General Butler State Resort Park, Carrollton; Lake Barkley State Resort Park, Cadiz; John James Audubon Park Golf Course, Henderson; and My Old Kentucky Home Golf Course, Bardstown. Secretary Sparrow said the agency believes these parks can offer alcoholic beverages responsibly while retaining their family-friendly atmosphere. Parks will not have bars or cocktail lounges and age restrictions will be strictly enforced. She noted that many customers have requested this amenity and there were no negative citizen comments during the 30 day public comment period. The cabinet will not pursue beverage sales for parks in “dry” areas.
Peter Ervin, General Counsel of the Public Protection Cabinet, said initially the parks’ authority to sell alcohol was questioned. After reviewing Kentucky statutes, regulations, and the constitution, it was determined that there is no prohibition on the sale of alcoholic beverages at state parks nor prohibitions for an appropriately licensed state agency to make the sale itself. There is a long history involving the sale of alcoholic beverages by state entities on state grounds, beginning with the Kentucky Fair and Exposition Center. For decades it has held a license and engaged in the sale of alcoholic beverages by the drink. Many of Kentucky’s cities and municipalities have held alcoholic beverage licenses. Mr. Ervin noted that the Kentucky Horse Park has obtained a license and is selling alcoholic beverages through catering and the park’s restaurant during events at the park. Recently, legislation has been introduced to allow special local option elections for state park facilities in dry areas of the state based on current local. There is neither a prohibition nor special permission required to license parks in these areas. Absent this, the parks would apply like any entity to receive a license and engage in the sale of alcoholic beverages.
Gerry van der Meer, Commissioner, Department of Parks, discussed how the parks would responsibly serve alcoholic beverages. All park employees serving alcoholic beverages are required to complete the STAR licensing program (Server Training in Alcohol Regulations), which is sponsored by the Kentucky Department of Alcoholic Beverage Control. The program provides information and testing on serving alcohol, state liquor laws, and the proper method to check customer identification. Over 95 employees have completed training. Security of alcoholic beverages on premises is being addressed as well. Park rangers will work with local law enforcement to enforce the law. Guests at restaurants who do not order food will be limited to two drinks. Mr. van der Meer emphasized that parks will not become local bars.
Representative Clark expressed his support for the five participating parks. Responding to his question, Secretary Sparrow said no other parks beyond the initial five are currently eligible to offer alcoholic beverage sales.
In response to Chair Kerr’s question, Mr. van der Meer said to qualify for STAR training a person must be at least 20 year old. Parks policy is to train an employee within 30 days.
Addressing Representative Gooch’s question on liability issues, Commissioner van der Meer said the Department of Parks has purchased liability insurance for the protection of state employees who are open to negligence claims and for any negligence claim against a park itself.
Responding to Senator Harris’ question, Commissioner van der Meer said parks will serve beer, wine, and spirits. He noted that the focus is increasing restaurant sales and overnight accommodations.
Responding to Chair Kerr’s question, Secretary Sparrow said the cabinet will work closely with the Kentucky Distillery Association as well as the Grape and Wine Council on special promotions and marketing. Commissioner van der Meer added that they are looking to rotate different bourbons at state parks. Secretary Sparrow noted that regional wines will be featured at local parks.
Responding to Representative Julie Adams’ question, Secretary Sparrow said there are currently no monetary projections but locally businesses reflect an eight to 25 percent increase depending on location after the introduction of liquor sales. The cabinet anticipates having accurate projections in a year's time. Any additional funds generated by sales go into the restricted state park fund—not to specific parks. She noted specific parks may see an economic impact through increased hiring.
Reverend Lee Watts, Chaplain Ministry, expressed concern about the sale of alcoholic beverages in state parks. He said the state’s decision to offer alcoholic beverages in state parks is scripturally, constitutionally, and economically unsound. Biblically, it is wrong to consume alcohol. He said the 10th Amendment of the Constitution bars the state from acquiring a liquor license. The state does not have specific authority and should not take it upon itself. Reverend Watts said that economically the state should be more concerned about the private sector. Every meeting or hotel room booked with a state park is one less for the private sector.
Regarding Reverend Watts’ comments, Representative Gooch said the 10th Amendment addresses the rights between the federal and state government. Any right not specifically granted to the federal government falls to the states. Reverend Watts’ agreed saying the precedent the state may be setting is of concern. He said the state should not be given free rein on issues not specifically laid out by law.
Representative Clark said that as the capitol chaplain Reverend Watts’ predecessor never testified before a legislative committee. He said the Reverend is better served helping the legislature spiritually. He noted that continuing to testify before committees would be a disservice to himself, may hinder his relationship with the legislature, and may require registering as a lobbyist. .
Reverend Watts’ said his predecessor testified before the legislature many times. As he considered this a spiritual and moral issue, he chose to testify. He said alcohol consumption is unbiblical and the decision to offer alcohol at state parks will hurt the state morally. He will restrain from testifying in the future so as not to cross any lines.
Chair Kerr noted that Reverend Watts signed the guest list to testify as any member of the public can and thanked him for testifying. As a constituent she thanked him for his comments. She added that she is proud of Kentucky’s state parks and pointed out that park visitors spend money outside the parks system as well.
Representative Steel thanked the reverend for his comments and noted that several park employees in his district are only working 30 hours weekly and that more business at the parks would be helpful to them.
Representative Kim King noted that she is in the unique position of being an elected official who must keep the state parks’ best interest in mind and part of a family business that includes a golf course, convention center, and leased hotel rooms. She said the parks are in competition with the private sector. Their employees are dependent on them and they must be profitable to stay in business. She said it is hard to compete with state parks that have lower fees. Secretary Sparrow said the resort parks are mainly situated where there is little or no tourism development and the parks bring business to rural areas. While they do not seek to compete with the private sector, they do have the responsibility to be good stewards of the parks system. She said the Travel and Tourism Department works hard to promote all sectors of the tourism industry including the private sector.
Strategic Planning Initiatives, Kentucky Cabinet for Economic Development
Holland Spade, Executive Director, Office of Legal Services, Kentucky Cabinet for Economic Development, said the cabinet secretary and the Kentucky Economic Development Partnership Board directed the development of a statewide strategic planning process. Following statutory guidance, Boyette Strategic Advisors were retained. Ms. Spade said there has been a high level of interest and participation statewide.
Tracy Sharp, a consultant with Boyette Strategic Advisors, gave a brief company overview. The company’s experience includes the Oklahoma Department of Commerce, which was a project similar to Kentucky’s.
Ms. Sharp said the project focus is to develop a statewide strategic economic development plan, entitled “Kentucky’s Unbridled Future,” to provide direction for the cabinet and the state in economic development efforts over the next five years. It will include a review of economic trends, identification of targeted business sectors, and a review of assets challenges in the state to develop strategic recommendations to move forward, to attract new sectors, and retain existing business and industry. The process began in late May and will continue through late October with the completion of the strategic plan.
Ms. Sharp said plan development is a four-phase process with the competitive assessment portion nearly complete. The assessment includes research and data accumulation of demographics, major employers, economic successes and losses, available sites, and education among others. Consideration will be given to any strategies completed in the last three to five years locally, regionally, or statewide. Assessment of global, national, state, and regional trends that could affect Kentucky in its economic development efforts are part of the process. Ms. Sharp said an important tool that is currently available is three online surveys targeting economic development partners, companies, and residents. In the coming weeks they will conduct statewide economic development visioning sessions inviting anyone wanting to participate.
The next step is identifying the top 10 strategic business or industry sectors for the state to focus its efforts on over the next five years. Through this process niche opportunities will be identified. Policy and procedural changes that are needed to move the state forward will be addressed as well as areas such as workforce education, organization, site building, entrepreneurship, existing industry, global development, incentives, infrastructure, product development, real estate, rural development, and regionalism.
The final phase of the plan is delivery and roll out set for late October. The process includes an implementation action plan.
Representative Clark said as a member of the Kentucky Workforce Investment Board he hoped the recent work by the board would be considered in the plan. He noted that 2010 House Joint Resolution 5 was passed to measure the success of the economic development program and to provide more transparency on tax incentives awarded by the state. He said the legislative Appropriations and Revenue Committee needs more information for the budget process, and that the legislature wants to be advocates of the cabinet. Ms. Spade said the cabinet is working with the Legislative Research Commission on the mandated study. She said new programs under the bill now require that companies who participate in incentives program to self-report. Most have yet to reach the first reporting stage. Once this begins the cabinet should be able to provide better data.
Responding to Representative Julie Adams’ inquiry, Mandy Lambert, Executive Director of the Office of Research and Public Affairs, explained that in addition to using cabinet contact information, many partner organizations have shared their own network of contacts to reach individuals during the plan process. She encouraged legislative members to share the questionnaire links to increase participation.
In response to Representative Carney’s comments, Ms. Sharp said the economic development trend leans toward regionalism which benefits everyone involved. Ms. Moore said the cabinet is looking beyond on new industry economic development and instead is focusing on existing industry, and that they are working on job retention and working with small businesses and startups.
Representative Denham said economic development in rural areas is suffering with pronounced issues that are reflected in economic trends and population shifts.
Representative Gooch expressed concern about the impending loss of cheap electricity in the state and asked that this be addressed in Boyette’s recommendations.
Representative York noted that the meeting locations for plan input have overlooked certain areas such as areas of northeastern Kentucky. Economic development leaders in the area have expressed concerned that they may be underrepresented. Ms. Spade said they are aware and are making sure the area is represented.
There being no further business the meeting adjourned at 2:20 PM.