Call to Order and Roll Call
The 5th meeting of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, October 20, 2011, at 9:30 AM, at the Kentucky Horse Park, Lexington. 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; Representative Leslie Combs, Co-Chair; Senators Jared Carpenter, Julian M. Carroll, Denise Harper Angel, Ernie Harris, and Kathy W. Stein; Representatives Julie Raque Adams, Royce W. Adams, John "Bam" Carney, Mike Denham, Ted Edmonds, Jim Gooch Jr., Keith Hall, Melvin B. Henley, Wade Hurt, Thomas Kerr, Kim King, Adam Koenig, Donna Mayfield, Tom McKee, Terry Mills, Fred Nesler, David Osborne, Ruth Ann Palumbo, John Short, Fitz Steele, Addia Wuchner, and Jill York.
Guests: John Nicholson, Executive Director, Kentucky Horse Park; Cheryl Norton, President, Kentucky American Water; Matt Sawyers, Deputy Secretary, Tourism, Arts and Heritage Cabinet; and Hank Phillips, Deputy Commissioner, Department of Travel and Tourism.
LRC Staff: John Buckner, Louis DiBiase, Karen Armstrong-Cummings, and Dawn Johnson.
Approval of Minutes
A motion and second by Representatives Hurt and Denham to approve the minutes of the September 15, 2011, meeting passed by voice vote.
Kentucky Horse Park
John Nicholson, executive director of the Kentucky Horse Park, updated members on the success of the park one year after the Alltech FEI World Equestrian Games (WEG). Based on an economic impact study commissioned by the Tourism, Arts and Humanities Cabinet, the games brought $201.5 million to the state including $45 million in wages, $18.4 million in state taxes, and $4.5 million in local taxes. In addition to the 70 national shows already held at the park annually, the state’s investment in the park has resulted in 14 new equine events, twelve of which are annual events including the Alltech National Horse Show, which is the oldest and most prestigious horse show in America and was formerly held at Madison Square Garden. The economic impact of these new events is estimated at $44.2 million. He noted that the cabinet is also currently conducting an economic impact study of the Horse Park.
Referencing Chronicle of the Horse, Mr. Nicholson quoted the equestrian sport publication's statements about the legacy the WEG left for United States horse sports. The park updates resulted in it being the “go to” location for national championships and other major equine events including the Junior Rider Championships and the National Horse Show. The benefits for the industry and the state will be measured for years to come.
Mr. Nicholson noted the park’s museum will feature an exhibit produced by the American Museum of Natural History, titled The Horse, and one of the park’s educational programs, the Kentucky Horse Park Literacy Project.
Representative McKee thanked Mr. Nicholson for his efforts in promoting the park and his work during the games.
Representative Edmonds commented that an associate from Deville, France said the Horse Park is now the finest equine facility in the world.
Responding to Representative Carney’s question, Mr. Nicholson said that each equine event participating at the park makes provisions for veterinary services per park requirements, and that there are top veterinary hospitals near the park.
Department of Travel and Tourism
Matt Sawyers, Deputy Secretary, Tourism Arts and Heritage Cabinet, noted the success of the World Equestrian Games and the dedication of Horse Park staff as well as the Department of Travel and Tourism.
Hank Phillips, Deputy Commissioner, Department of Travel and Tourism, outlined the agency’s mission to promote travel to and within the Commonwealth. The vision is to enable the traveling public to understand and feel the uniqueness of Kentucky. In 2010, tourism resulted in an $11.4 billion economic impact–$2.5 billion in payroll and $1.2 billion in local and state taxes, as well as 170,000 jobs. Mr. Phillips said the Southeast Tourism Society will announce that the department has been selected as the southeast state travel office of the year. Key to this award was “The Kentucky Experience” exposition at the WEG. The exposition was later moved to the Kentucky History Center and then to the state fair. Next year it will be a part of the Travel South conference in Louisville.
Mr. Phillips outlined other promotional efforts, which include commercials, the Kentucky Visitors Guide, and the award winning website launched in 2010. Upcoming events include the Civil War Heritage Trails Program, which is part of the Civil War Sesquicentennial; the Bill Monroe Centennial, the Kentucky Inaugural Sprint Cup Race, and the Senior PGA Championship.
Mr. Phillips explained the development of the new marketing campaign, “There’s Only One Kentucky,” which came about through the use of focus groups and input from tour companies. The campaign includes sites that are unique to the Commonwealth, such as “Horse Capital of the World,” Mammoth Cave, and the National Quilt Museum.
Mr. Phillips said the use of “ten second spots” in television commercial production helped budget advertising funds. The commercials were produced by a Kentucky company. Radio advertisements will be released in the spring of 2012. Other advertisements include print and banner ads in the visitors guide as well as online and social media.
Responding to Representative Julie Adam’s question, Mr. Phillips said $1.3 million has been spent on advertising.
In response to Senator Stein’s questions, Mr. Phillips said Miles Media, headquarted in Florida, published the 2011 Visitor’s Guide. It was selected through the state procurement process. Advertisements that are affiliated with the Tourism Cabinet are purchased by outside entities. The guide is published at no cost to the state—revenue is derived through advertisements. If income exceeds a certain percentage, the state receives dividends, although that has not occurred since contracting with Miles two years ago.
Kentucky American Water
Cheryl Norton, President of Kentucky American Water (KAW), discussed what the company and its parent company, American Water, can do to help economic development in the area. Ms. Norton gave an overview of the company and its history. KAW, with approximately 150 employees, provides water and waste water services to approximately 500,000 people in portions of 10 counties by producing 86 million gallons of water daily. During the World Equestrian Games, KAW saw its maximum usage with high temperatures being a contributing factor to increased demand. Ms. Norton said maintaining a substantial water supply has been an issue over the past 20 years. In 2008, KAW and the Public Service Commission agreed the best solution was a new 20 million gallon treatment plant and distribution system in Owen County. The facility was completed in 2010. Over 200 people were employed during construction. The project contributed more than $1.1 million in new property and real estate tax revenue in the four counties involved, and the revenue supplied needed school funding during a period of cutbacks. Ms. Norton listed several of KAW’s community project involvements. She noted how important having a sufficient water supply is to economic development, pointing out this was a major consideration when Toyota Manufacturing came to Kentucky.
Responding to Senator Stein’s questions, Ms. Norton said Fayette Urban County Government pays $38 per month per fire hydrant in maintenance fees. With the addition of the new plant, community growth is sustainable for the next 15 to 20 years. Ms. Norton said usage per customer has declined in recent years due to the economy and other issues such as rainfall and more efficient homes.
In response to Representative Hall’s question about new Environmental Protection Agency (EPA) regulations of storm water systems and other utilities, Ms. Norton said the new EPA regulations, costing millions, are challenging and costly to communities and customers. Many of the regulations are not based on scientific evidence. She said it is important to address these issues in a logical manner.
Responding to Representative Palumbo’s question, Ms. Norton explained that KAW’s limit of 17 or fewer notifications is self-imposed. She said as EPA regulations get more difficult to meet, it is more of a challenge to avoid getting notices of violation.
Independent Contractor Issues for Interpreters and Translators
Mr. William Graeper, Certified Languages International, travels in sponsorship of legislation that will classify interpreters and translators as independent contractors as opposed to employees of language service agencies. He stated in 2001 his language services company was audited by its insurance company, resulting in the company’s interpreters being classified as employees. He considers interpreters to be independent contractors and not employees. Certified Languages International fought the decision and won. Mr. Graeper sponsored legislation in Oregon exempting interpreters and translators who are performing work under language service agencies from unemployment insurance taxes and workers’ compensation taxes. His intent was to present the issue in a broad fashion before it comes to the committee as legislation in 2012. He has worked for the past ten years in sponsoring legislation regarding this issue, which has passed in Oregon, New York, and state of Washington.
Interpreters and translators are highly skilled workers. There are 7,000 individuals who are members of the American Translation Association. Most of those members are independent contractors and want to remain that way. These individuals are used by multiple language service agencies and not doing the work of the language service company itself, but of interpreting and translating for the various entities that hire them.
In response to questions from Senator Harris, Ms. Bell, Chief Executive Officer of In Every Language, a Louisville based company, stated that there are nine language service agencies in Kentucky. In Every Language provides services nationwide. There are 2,500 companies that provide translation and interpretation services in the United States. The translators and interpreters could be placed by multiple companies in order to maintain their work load.
In response to a question from Representative Nemes, Mr. Graeper explained how language services are constantly battling the issue of whether interpreters and translators are independent contractors or employees. More enforcement actions are taking place among the individual companies nationwide, but it is ultimately a strain on time and resources to fight each individual case. Therefore, Mr. Graeper feels that it is better to approach the subject on the legislative level.
Ms. Bell stated that the language service industry is a $31 billion market globally. In the United States, companies spend $17 billion annually on language services. With 2,500 language service companies in the nation, only nine are located in Kentucky. She said it is tempting to move her business to another state because Kentucky has not taken a stand for the industry.
Senator Kerr advised the committee that a summary of employee misclassification in the construction sector is available in the members’ meeting folders from the Kentucky State Building and Construction Trades Council.
Senator Kerr introduced Commissioner Dwight Lovan and Deputy Director Melissa Beasley, who were present to answer questions regarding independent contractors as it relates to workers’ compensation insurance and unemployment insurance. Commissioner Lovan explained that whether a worker is an independent contractor is determined through case law. In the Kentucky Workers’ Compensation Act, there is no definition of independent contractor nor is there any reference to such. An independent contractor is not an employee; therefore, workers’ compensation does not apply. The four predominate factors to determine whether a worker is an independent contractor are as follows: the nature of the work in relationship to the employer’s business; the extent of the employer’s right to control the work activity; the professionalism and unique skill of the worker; and the true intent of the parties. The exemptions in the Kentucky Workers’ Compensation Act are in KRS 342.650 and an employee is defined in KRS 342.640.
In response to questions from Senator Harris, Commissioner Lovan said generally, a subcontractor who owns his or her own business and does business for different people would be viewed as an independent contractor. Commissioner Lovan said he could only find one citation two years ago for a translation business, and the fine was minimal. He did not know if it was in regard to in-house employees or agency interpreters.
In response to questions from Senator Kerr, Ms. Bell clarified that she had been fined by the Department of Workers’ Claims. She said the company paid the fine instead of contesting the citation.
There being no further business, the meeting adjourned at 11:00 AM.