The 1st meeting of the Interim Joint Committee on Licensing and Occupations was held on Friday, June 13, 2008, at 10:00 AM, in Room 129 of the Capitol Annex. Senator Gary Tapp, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Gary Tapp, Co-Chair; Senators Tom Buford, Julian M. Carroll, Perry B. Clark, Carroll Gibson, Bob Leeper, Ernesto Scorsone, and Dan Seum; Representatives Tom Burch, Larry Clark, Ron Crimm, Adam Koenig, Reginald Meeks, Charles Miller, David Osborne, Ruth Ann Palumbo, Carl Rollins II, Sal Santoro, Ron Weston, and Susan Westrom.
Guests: Henry Lackey, Executive Director, Department of Charitable Gaming; Larry Bond, Commissioner, Department of Public Protection; Annhall Norris, Environmental Health Program Administrator, and Kathy Fowler, Acting Assistant Director, Division of Public Health, Protection and Safety, Cabinet for Health and Family Services.
LRC Staff: Vida Murray, Bryce Amburgey, Tom Hewlett, and Susan Cunningham.
Senator Tapp called the meeting to order and asked for a motion to adopt the minutes from the November 9, 2007 meeting. There was a motion and a second, and the minutes were adopted by voice vote.
First on the agenda, Henry Lackey, Executive Director of the Department of Charitable Gaming, gave a status report on charitable gaming. He told members that the Kentucky Constitution was amended in 1992 to permit charitable gaming. Charitable gaming takes in about $500 million a year in gross receipts. The department is funded from one-half of one percent of those receipts and license fees and fines. He said gross receipts have decreased in part due to the cost of gas and the department anticipates a $40 million drop in revenue this year.
Mr. Lackey summarized legislative changes enacted in 2007. Mr. Lackey said House Bill 156 took undue burden off the charity volunteers by allowing charities who do not conduct weekly bingo and whose gross receipts are less than $200,000 to file annual rather than quarterly reports. The legislation added one person to the advisory board which he felt was a positive change and board meetings are very well attended. He said another aspect of House Bill 156 that the department will implement on July 1 of this year is a fee adjustment formula. Under the formula the tax on gross receipts will increase from .053 to .06 percent.
Mr. Lackey said that the largest part of the department budget, 86 percent, goes to personnel. He said the agency is concerned that, with gross receipts in a steady decline from year to year, and less fines being paid to the agency due to training the charities’ volunteers, there will be a $150,000 shortfall in the 2010 fiscal year. Mr. Lackey said that because the Department of Charitable Gaming is a restricted agency, it receives no general fund dollars. He indicated that the department has cut every expenditure possible, including scheduling more inspections during the regular work day. He said the department is currently discussing changing to a four-day work week.
Representative Palumbo said she has constituents interested in one-night events and would like for the department to work with her on this issue. Representative Clark said the non-profit charities came up with the idea for the rolling fee to minimize the fee paid and still leave the agency with enough money. Representative Clark said because the money was taken from non-profit charities, he did not feel that the Executive Branch and the Legislative Branch could sweep the department’s account to add to the General Fund. Representative Meeks asked what registered exemptions are compared to licensed charities and if training is required to receive a license. Marty Hammons, Deputy Director, responded that the department issues exempt licenses to any charity that games with gross receipts of $25,000 or less. He added that it was not necessarily bingo, but could be raffles or other types of fund raising events. Mr. Lackey said he would like to see legislation that would require training. Senator Seum noted some of the heavy-handed policies utilized in the past by the agency and asked what kind of training there was for compliance and enforcement departments. Alan Wagers, Licensing and Compliance Director said compliance officers are trained in the department on a quarterly basis to maintain a level of professionalism, although there is no statutory requirement for such training. Senator Seum also asked if it was true that, the smaller the bingo hall, the harder it is for it to comply with the 40 percent rule. Marty Hammons said the issue typically was being aware of patron attendance, rent, the cost of product, and having too many games on the floor at one time. Mr. Hammons added that 40 percent was the national average. Representative Rollins asked if there was a reason why the gross payout and attendance were dropping and if this was national. Mr. Lackey said it was a national trend that was directly attributed to increased gas prices and smoking bans. Representative Osborne asked if the department was required to set money aside for the treatment of problem gambling. Mr. Lackey said Representatives Wayne and Siler’s House Bill 137 in the 2008 session addressing treatment for compulsive gambling did not pass. Senator Carroll asked if there was any statutory prohibition that prevented the department from going back to the small charities that had closed and helping them get back into business. Mr. Lackey said there was not. Senator Buford said bingo operators are taking a risk by accepting checks and credit cards because Kentucky prohibits collecting on gambling debts. Senator Buford stated that the reporting forms were too complex and asked if the department would send committee members copies of the forms that the license holders are required to submit to the department. Representative Crimm asked if the Kentucky Revised Statutes has been amended to close loopholes and uncertainties in the charitable gaming laws. Mr. Lackey said he thought the statutes and regulations were on target. Senator Tapp asked committee staff to obtain copies of report forms to distribute to members for review. Representative Clark cautioned that some of the information sought in some of the forms may be required by the IRS and therefore may not be amendable.
Ed Monahan, Director of the Catholic Conference in Kentucky, told committee members that Catholic charities have 30 percent of the Charitable gaming licenses in the state, and that the proceeds primarily support the Catholic schools. He said there was concern regarding fund balance transfers totaling $6 million since 1998. In 1999, $2 million, in 2000, $2 million, in 2005, $191,000, in 2006, $1.1 million and in 2008, $700,000 were transferred. He said he is working with legislators to minimize or eliminate this transfer. Mr. Monahan said people come to play bingo with the intention of that money going to the charity rather than the General Fund, making the money equal to a tax on the person playing the game as well as the charity. He said that House Bill 156 was intended to require the department, every two years to recalculate their fee to factor in any monies that are carried over from the previous year, thus lowering the amount paid to the department and eliminating the accumulation of the fund balance. However, because of the fund transfer in 2008, the recalculation increased the fee to be paid by the charities. Senator Carroll asked for a list of the fund transfers.
Next on the agenda, Larry Bond, Commissioner of the Department of Public Protection and Acting Director of the Boxing and Wrestling Authority, reported on the implementation of House Bill 684, relating to boxing, kickboxing, mixed martial arts, and wresting. He said that prior to the enactment of the bill, there was no regulatory body for mixed martial arts, allowing for shows with no medical personnel present. There were mixed matches with a professional matched against local amateurs, resulting in people being injured. The legislation allows the authority to regulate all mixed martial arts matches or shows in the state. The regulations are similar now to boxing regulations. There must be medical personnel onsite, including an ambulance. He said that all participants, promoters, and shows must be licensed. Mr. Bond added that emergency regulations are in the process of being developed that will be ready July 15, when the bill goes into effect. Mr. Bond said the authority has two part-time investigators and one full-time employee to process licenses and work with promoters.
Senator Tapp asked how many licenses the authority processed in the past 12 months. Todd Neal, authority investigator, replied that 20 to 25 events per month had been held. He added that the authority has received reports of advertisements for bouts with a "local hero" who is actually a professional mixed martial artist. Representative Burch asked how the regulations could protect participants. Mr. Bond said that the regulations address requirements concerning the equipment, the referee, the types of blows that can be administered, and the size of the ring. Mr. Bond said that a medical advisory board will be appointed by the July 15 effective date. Senator Leeper asked how the $5,000 figure for insurance was derived and if it was required. Mr. Bond said it was recommended by the board and that it mirrors the requirement for boxing. Mr. Neal responded that the insurance coverage is not currently required. Representative Weston asked if the rounds should be timed and if there should be a limit to the number of matches a person could participate in within a certain period of time. Mr. Bond said that would also be set in the regulations.
Next on the agenda, Legislative Research Commission staff, Tom Hewlett and Bryce Amburgey gave a PowerPoint presentation on statutes and regulations for tattooing and body piercing in Kentucky and surrounding states. Mr. Hewlett said there are health risks associated with the practice of tattooing and body piercing. He stated that 38 states prohibit minors from being tattooed without parental consent and 28 states restrict body piercing for minors without parental consent. He said there are no uniform statutes or regulations for these procedures in any state. Mr. Hewlett reported that the Federal Food and Drug Administration reviews the type of ink used in tattooing, but that there are no federal standards for tattooing or body piercing. He said that in Kentucky, the Department for Public Health oversees local health departments, which issue licenses and inspect tattoo and body piercing salons. Inspections are conducted at least twice a year. He said the artists in these studios must be registered, but currently there is no testing or licensing requirement, except that an artist must be 18 years of age.
Mr. Amburgey told members that most of the seven surrounding states, like Kentucky, register or license artists and salons through their health departments. Ohio is different in that a locality may ban tattooing in its jurisdiction. In Missouri, artists are licensed through the Division of Professional Registration, and Virginia uses its Cosmetology Board. Ohio is the least restrictive and Virginia is the most. Fees in the surrounding states for studios and for artists vary widely. This holds true for training as well, and there is no examination in Illinois, Indiana, Kentucky, Missouri, or West Virginia. Tennessee and Virginia have an examination, and in Ohio there is an exam if the particular location requires one. Mr. Amburgey said that only Illinois has a ban on tattooing minors. All surrounding states permit piercing of minors with parental consent, except West Virginia limits piercing of minors, even with parental consent. Mr. Amburgey said that all states have policies for inspections and penalties for violations including fines and misdemeanor charges.
Annhall Norris, Environmental Health Program Administrator, Department for Public Health, Food Safety Branch, and Kathy Fowler, Acting Assistant Director, Division of Public Health Protection and Safety, Cabinet for Health and Family Services, also gave a PowerPoint presentation on Kentucky regulations for tattoo and body piercing salons and artists. Ms. Norris said that tattoo and body piercing is in the Food Safety Branch because the inks and dyes used in the tattooing process are defined as a cosmetic, and the Food Safety Branch enforces the Food, Drug, and Cosmetic Act. Tattoo regulations were first written in 1996, and the Food Safety Branch was given authority over these regulations. She said the regulations state that tattooing and body piercing shall be conducted in a certified studio, permitted through a local health department. Artist registration fees are $20 per year and studio certification fees are $100 per year. Studio workstations are required to have at least half walls, which can be partitions or curtains, and must be light in color. There should be 60 square feet of work space and a chair for the procedure, as well as a hand sink. The workstations must include storage space and adequate lighting in addition to overhead lighting. Ms. Norris added that surfaces in the workstation should be smooth with no carpet or cloth towels and must use an EPA registered, hard surface, high-level disinfectant for spraying down the procedure chair and counter tops to control blood-borne pathogens. Each workstation must have a sharps container that is disposed of by a licensed company. Each studio must contain a cleaning room that includes a utility sink, an ultrasonic cleaner, and an autoclave. All studios are required to keep records of clients. Ms. Norris said that trends are moving now towards surface implants under the skin, where a small incision is made and objects are placed beneath the skin. She said this may also require stitching. Another trend in the body-art category is branding. She said that some health departments have received reports of this practice as well as tongue-splitting; stating that these later trends have gone beyond the scope of inspection that may be performed by the Food Safety Branch.
Senator Gibson asked if the artist in any of the other states is required to have liability insurance. Staff replied that, while it may be a good business practice, there is no statutory requirement. Representative Burch asked how much training was required in other states and if Kentucky should mandate more training regarding sanitation and disposal of used equipment. Staff responded that Virginia required more training than any of the other surrounding states, including licensing the training schools. Kentucky currently has regulations for sanitation. Representative Rollins asked how much training was required in Kentucky. Staff replied that in Kentucky an artist need only pay a registration fee at his or her local health department. Senator Tapp asked how body piercing is being regulated. Ms. Norris said the regulations for both procedures are the same. Representative Clark said current legislation does not go far enough in regulating the newer trends and asked if the agency would send proposed legislation regarding the surface implants. Representative Meeks asked if tattoo parlors in Kentucky were currently performing tongue piercing and splitting. Ms. Norris replied that current regulations did not allow for tongue splitting or for branding; however, they have had reports of studios doing these procedures after hours. Ms. Fowler said that the agency feels the regulations should be taken from Public Health and placed under the governance of a board similar to the Cosmetology Board to cover training and policy issues. Representative Miller asked for a definition of a certified artist. Ms. Norris said that by certifying a tattoo artist the agency can track where the artist is working adding that the artist must show employment with a certified studio. Representative Westrom said new legislation should have input from the medical field to explain the consequences of tattooing, tongue splitting, and surface implants.
There being no further business to come before the committee the meeting was adjourned at 11:55 A.M.