Call to Order and Roll Call
The 6th meeting of the Interim Joint Committee on Licensing, Occupations, and Administrative Regulations was held on Friday, November 17, 2017, at 10:00 AM, Jim Beam American Stillhouse, 526 Happy Hollow Road, Clermont, KY 40110. Senator John Schickel, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator John Schickel, Co-Chair; Representative Adam Koenig, Co-Chair; Senators Julian M. Carroll, Jimmy Higdon, Dan "Malano" Seum, and Damon Thayer; Representatives Dennis Keene, Chad McCoy, C. Wesley Morgan, David Osborne, Phillip Pratt, and Walker Thomas.
Guests: Senator Stephen Meredith; Representative Lynn Bechler; Kevin Smith, Vice President, Kentucky Beam Bourbon Affairs, Beam Suntory, Inc.; Eric Gregory, President, Bryan Alvey, Senior Director, Governmental and External Affairs, Kentucky Distillers’ Association; Danny Percell, Chairman of the Kentucky Board of Funeral Directors and Embalmers; Julie Campbell, Board Administrator, Kentucky Board of Hairdressers and Cosmetologists; Sonja Minch, Board Administrator, Kentucky Board of Barbers.
LRC Staff: Tom Hewlett, Bryce Amburgey, Jasmine Williams, Melissa McQueen, and Susan Cunningham.
Minutes
Due to lack of a quorum, the minutes were passed over.
Welcome to Jim Beam
Kevin Smith, Vice President, Kentucky Beam Bourbon Affairs, Beam Suntory, Inc. told the committee that in 2014 Suntory Holdings purchased Beam Inc. creating a high performance team now known as Beam Suntory, with headquarters in Chicago. Global distribution is key. Their performance objective is to become the world’s fastest growing spirits company. Jim Beam recently redesigned the Beam bottle to market to new customers. The Grand Dad plant in Frankfort is the only plant in the United States that makes its own plastic bottles. Beam Suntory is focused on giving back by being more community and charity involved.
Kentucky Distillers’ Association Update and Legislative Agenda
Eric Gregory, President, Kentucky Distillers’ Association (KDA), said that legislation passed in recent years has been a tremendous help to the bourbon industry’s growth and success. In Kentucky, bourbon is an $8.5 billion industry and dominates bourbon production worldwide. Bourbon is also a tourism driver for the Commonwealth. In 1999 the KDA created the Kentucky Bourbon Trail tour. This gives visitors an education in the art and science of creating bourbon. In 2012 the KDA partnered with the craft distillers to create the Kentucky Bourbon Craft Tour to showcase the state’s micro-distilleries.
This year the KDA hired a Director for Social Responsibility. They have developed best practices in alcohol responsibility standards, and have partnered with Lyft to bring on-demand safe rides in Bardstown and Versailles. During the holidays, there will be a public service announcement that offers $20 off a ride with discount code SAFERIDEKY17.
The bad news, there is competition in all 50 states. In fact, Kentucky ranks11th in the country in the number of distilleries operating. Fortune magazine predicts that in five years there will be better bourbon produced in other states. One reason for strong competition is the high tax structure in Kentucky. If Kentucky loses the historic monopoly, revenue and investment in jobs will be lost.
Bryan Alvey, Senior Director, Government and External Affairs, KDA, told members the KDA is looking for legislative opportunities to make the industry stronger. Bourbon without Borders is the concept of having visitor center shipping at each distillery. The number one request from visitors is to be able to ship this product to their home. This is a solution to packing bottles in their suitcase. This will help the industry in the same way that California is helping the Napa Valley area. Visitor centers are retailers, so the product will go through the three-tier system and taxes will be collected. KDA would also like to restructure the alcohol tax laws to enhance the growth of the industry. Finally, KDA takes social responsibility seriously and is taking the lead to make Kentucky the model.
Representative Morgan commented that the Jim Beam Stillhouse was one of the finest facilities he has ever visited.
Senator Thayer commented it is not the job of government to create jobs, but to help create an environment where business and industry can create jobs. Legislation passed during the last four years has removed prohibition era laws and eliminated artificial barriers to free enterprise. The bourbon industry is a great example of this by blending the agriculture, manufacturing, and tourism economies.
Senator Higdon commented that the bourbon industry provides good paying jobs in areas where there are distilleries. However, the agriculture sector also benefits because of the demand for thousands of acres of corn. The timber industry benefits because of the oak barrels that are produced in Kentucky. Independent Stave in Lebanon produces 1 million barrels a year that stay in Kentucky. The economic impact runs across the state.
Senator Carroll commented that Jim Beam has just built a new bottling plant in Frankfort. Franklin County has more distilleries that any other Senate district. Senator Carroll stated that he has never cast a vote against bourbon in Kentucky.
Continuing Education for Embalmers and Funeral Directors, SB 154 2017 Regular Session
Senator Stephen Meredith said when a constituent comes to a legislator they listen. This issue was personal due to the regulation placing a financial burden on the business community, even more to businesses in small or rural communities. SB 154 addresses increasing continuing education hours for embalmers and funeral directors from six to twelve. Original language in the statute says that “a minimum of six hours shall be attained from programs attended in a live, interactive, in-person format.” This language can have a substantial negative impact if you work in a rural community, even more so for a sole proprietor. A stand-alone business would have to contract for coverage when attending these programs. Senator Meredith stated that he was not aware of any other profession that required in-person continuing education credits. The landscape for education is changing and college degrees and certification can be obtained online in an affordable, convenient manner while at your home or business.
Senator Meredith said it was his belief that adding the in-person language had good intentions. However, the reality is that it has a regressive and discriminatory impact on stand-alone and sole proprietor funeral homes serving rural communities. It is a classic example of government over-reach and appears archaic in this day and time when continuing education hours can be obtained via the internet.
Danny Percell, Chairman of the Kentucky Board of Funeral Directors and Embalmers said in the past, as a school teacher, he has seen students progress when they had interaction with an instructor and fellow students. As the owner of three funeral homes, it is important for his directors to receive all updates and requirements of the funeral and embalming industry. Most disciplinary problems are due to lack of understanding of the new rules, laws, and regulations. One business was fined because it had been sending in the same CEU program from the intent and no one had attended programs in person until it was made mandatory. Kentucky has the lowest number of required CEU’s and is one of a handful of states that do not require some in-person attendance.
The Funeral Directors Association of Kentucky has done a good job of making sure that the CEU programs are offered in all regions of the state. There are 512 funeral homes in the state and programs are offered within a 30 mile range. It is in the best interest of the consumer and the profession if the CEU requirements are unchanged.
Senator Schickel said that if the votes to pass the bill to remove the in-person language are there, the bill will be heard in committee during the upcoming session.
In response to a question from Representative Koenig, Mr. Percell said there are four sets of license in the Commonwealth; 1. an establishment, 2. a dual license is required for a full service establishment, where funeral directing and embalming is being performed, 3. an embalming establishment only requires a licensed embalmer, and 4. a visitation, ceremonial facility where there is no embalming, and only a licensed funeral director is required. There are more assistants than licensees in a business. Mr. Percell added that he would not want a person who took a course on-line embalming his relative.
In response to a question from Senator Higdon, Mr. Percell said that as a board they review a minimum of 20 CEU programs throughout the country per month. Some funeral homes hire speakers to come to their funeral home to hold CEU classes that meet the requirements of the in person language.
Licensing HVAC Professionals
Representative Lynn Bechler said HVAC companies are having trouble hiring qualified workers. People living near the state’s borders are willing to come to Kentucky to work; however, regulations for out-of-state workers limit businesses ability to hire them. This bill proposes allowing people coming into Kentucky to take the same Masters and Journeyman tests as the Kentucky candidates, as long as they have the same experience. The bill does not issue a license, but does allow out-of-state workers to test. Controversy arose during the last session. All parties have come together to work out a solution for legislation for the upcoming session.
Ron Kramer, owner and principal of Prudential Heating and Air Conditioning Company in Louisville said he supports Representative Bechler’s new legislation. The new bill better defines what routine service is, as well as a major repair. A Master HVAC license allows a person to operate a business. The Journeyman license allows a person to repair equipment. Current law states that in order to hold a Masters license you are required to be a technician for two years. Operating a business and repairing equipment require two different skill sets and a journeyman HVAC technician would not have the knowledge required to operate a business.
Additionally, there is a change in the licensing requirement when there is a death of the owner of a business. A business is given time to get a Master license holder rather than closing the business. All industry associations are in support of this new bill.
Hairdressers, Cosmetologists, and Barbers
Senator Higdon told the members that his bill combines issues confronting the Board of Hairdressers and Cosmetology and the Board of Barbers but it does not combing the boards. One common item in the bill is fee structure. All boards and commissions are made up of state workers. Because of the pension crisis, the contributions are going to be raised. In order to generate money, the boards are going to have to raise licensing fees. Rather than coming to the legislature every time a board needs to raise a fee, putting a fee schedule in administrative regulation will allow a board to raise a fee as needed. Also, the boards are asking for individual accounts with the treasury to prevent the legislature from sweeping their accounts. The cosmetologists are asking for subpoena power which has been granted to only a few boards.
Sonja Minch, Administrator for the Kentucky Board of Barbering said the changes the barbers are asking for are housekeeping measures. During the last session a bill changed the term apprentice to probationary. This has caused confusion with new barbers who go to another state to work. The term probationary sounds like the barber is being disciplined. The board is asking to go back to the term apprentice, keeping all the measures, with one exception, for a probationary barber. Currently a probationary barber is required to take the barber exam within six months. The board is asking for an extension from six to nine months.
At this time, the board does not plan to raise any fees. The barbering industry is booming. In the past three years three new schools have opened. Two schools will be opening by the end of 2107, and another school plans to open by March of 2018. The board is currently testing monthly and issuing licenses within two days so people can begin working immediately.
In response to a question from Senator Schickel, Ms. Minch said the bill does remove fees from statute. However, any fee raised will have a cap set in administrative regulation.
In response to a question from Representative Thomas, Ms. Minch said the purpose of a wall between barbers and cosmetologists in the same building is that the skill sets are different. Barbers are trained in precision cutting and straight razor shaves, cosmetology learns more about make-up and hair color. Ms. Minch stated that if hair color and chemical services were taken out of the equation she would be all for removing the wall requirement.
Julie Campbell, Administrator for the Kentucky Board of Hairdressers and Cosmetologist said her board is streamlining their chapter by collapsing Chapter 317B, regulating estheticians, and putting the necessary language in Chapter 317A. The board is also in the process of repealing more than 20 administrative regulations. The board has adjusted fees one time in the last 35 years, so currently hairdressers only pay $20 to renew their license. Looking at fees in surrounding states, Kentucky is at the bottom both in licensing and testing. Today the barbering board charges $200 for its exam, the hairdressers exam fee is $75, capped by statute.
The proposed bill also removes restrictions for hairdressers and cosmetologist starting out in business. Removing the apprentice license, which requires taking an exam, six months of supervision and taking another exam, will allow new hairdressers and cosmetologist to become independent contractors and either start a salon or rent a booth. Currently, hairdressers and cosmetologists can only test in the Frankfort facility, with a quorum of the board. The exam is a proctored exam. The board is asking for an emergency clause that allows it to use a national testing model and to implement that model immediately. This allows the board to go to regional testing centers across the state, which makes it easier on the student. This also allows a license for license exchange between states.
In a response to a question from Senator Schickel, Ms. Campbell said some fees are excessively low. Fees have not been raised on schools for years, and fees were lowered in the aesthetics license. There is an issue with human trafficking and unlicensed activity therefore larger fines should be a deterrent for this activity.
In response to a question from Representative Koenig, Quincy Ward, board attorney, said the main reason for requesting subpoena power is that the board is facing enforcement issues and other boards that are in the compliance business and inspect establishment and enforce statutes have subpoena authority. The bill also gives the board the power to seek a preliminary injunction against unlicensed activity. With subpoena power the board could compel a business to allow inspection of licensing documents and other records used in that business.
There being no further business to come before the committee, the meeting was adjourned at 11:34 AM