The fifth meeting of the Interim Joint Committee on Local Government was held on Monday, November 22, 2004, at 10:00 AM, in Room 149 of the Capitol Annex. Senator Alice Kerr, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Alice Kerr, Co-Chair; Senators Charlie Borders, Julie Denton, Gary Tapp, Elizabeth Tori, and Johnny Ray Turner; Representatives John Adams, Adrian Arnold, Jim Callahan, James Comer, Ron Crimm, Ted "Teddy" Edmonds, Derrick Graham, Jimmy Higdon, Charlie Hoffman, Stan Lee, Marie Rader, Arnold Simpson, Roger Thomas, Ken Upchurch, and Jim Wayne.
Guests: Mayor David Cartmell, City of Maysville; Mayor Mike Miller, City of Jackson; Mayor Gary Williamson, City of Mt. Sterling; John Martin, City of Nicholasville; Sylvia Lovely, Bill Thielen, Phil Huddleston, and Jerry Deaton, Kentucky League of Cities; Vince Lang and Shellie Hampton, Kentucky County Judge/Executives Association; Jack Couch, Kentucky Council of Area Development Districts; Robin Cooper, City of Covington; and Gay Dwyer, Kentucky Retail Federation.
LRC Staff: Jamie Franklin, Donna Gaines, Mark Mitchell, Joe Pinczewski-Lee, Tiffanie Gray, Donna Holiday, Keith Krey, Karen Crabtree, and Cheryl Walters.
Upon the motion of Representative Simpson, seconded by Representative Crimm, the minutes of the September 22, 2004 meeting were approved.
Senator Kerr announced that the purpose of the meeting was to discuss the legislative needs of the Kentucky League of Cities (KLC) for the 2004 General Assembly. She then introduced Ms. Sylvia Lovely, Executive Director and CEO.
Ms. Lovely gave the committee background information about the League and their role. She then introduced Mayor David Cartmell, current president of KLC, to address the committee. Mayor Cartmell told the committee that KLC's issues of concern for the next legislative session included: the need for all local governments to have the flexibility they need to generate the revenues necessary to operate in the face of increasing operational costs, law enforcement costs, and insurance costs for their employees; fairness to local governments as the state develops their programs for the provision of health care insurance and retirements benefits for active and retired governmental workers; the inclusion of local governments in any efforts to expand gaming in the state or in state tax modernization efforts; and continuance and expansion of the Historic Property Tax Pilot Program which was begun after the 2004 session.
Ms. Lovely next introduced Mr. Jerry Deaton, Director of Governmental Affairs, to further explain the issues facing cities. In the area of health insurance, Mr. Deaton told the members that it is important to remember that many local governments are under the state's health insurance program and must pay the same rate state government pays as an employer. He explained that this is becoming more difficult for local governments as premiums keep going up and benefits go down. Mr. Deaton also reminded the members that the salaries of local employees and the budgets of local governments are not as large as state government so increases must be held to reasonable and affordable levels. In addition to discussing the cost factors relating to health insurance, Mr. Deaton also discussed a blue ribbon task force that was being formed to study the need to include better claims management, the lowering of prescription costs, and the inclusion of wellness programs for all members in the state's health insurance program.
Mr. Deaton also told the Committee that the League would at some point in the future, be bringing a legislative proposal before the General Assembly which will call for a constitutional amendment to shift the authority to utilize different revenue options from inherent and limited constitutional authority to the legislature. He said this would benefit local governments in that it would allow the General Assembly to determine the revenue generation needs of local governments as economic needs dictate in a more timely manner.
Lastly, Mr. Deaton told the Committee that KLC would like to see the Historic Property Tax Pilot Program expanded to include a pilot project in the Kenton and Campbell County area. He acknowledged that cities could implement such a program on their own for their own taxing jurisdiction. But Mr. Deaton emphasized that in order for such a program to be effective, it needs to include other taxing jurisdictions for property owners to have a real incentive to participate.
Representative Wayne asked if the appointments had been made to the task force. Mr. Deaton replied that today was the deadline to submit names so no appointments have been made yet.
Representative Wayne stated that he hoped that the Affordable Housing Trust Fund would be on the League's agenda for issues of concern. He noted that it was reduced by 20% last year. Mr. Deaton said the Afford Housing trust Fund is of interest to the League.
Senator Tori commented that it would be reasonable for cities to benefit from gaming. She asked what would be the actual social costs to the cities if gaming was expanded. Ms. Lovely answered that the League will have to look at other states' experiences but she said they would be ready.
Representative Adams commented that Kentucky will not be merging counties in our lifetime. He said we also need to take into consideration counties with multiple cities and find other ways for all local governments to work together.
Senator Borders commented that everyone needs to come to the table on tax modernization and everyone needs to support it. He noted that the social cost of gaming is going to be higher. Senator Borders stated that we need to look at long-term solutions and not be short-sighted.
Representative Hoffman commented that the implementation of impact fees by cities and counties is now unconstitutional. He asked if any constitutional amendment proposed would include impact fees. Mr. Deaton replied that would be up to the legislature but that it could be an option.
Regarding tax modernization, Representative Callahan asked if we are talking about "tax neutral" proposals. Mr. Deaton stated that cities just want to be able to use more options. Representative Callahan commented that cities need to look collectively al all options to find new revenue sources and they may need to be open to new ideas.
Representative Lee asked what type of additional taxes does the League want cities to enact. Mr. Deaton mentioned restaurant taxes and property taxes with varying levels. He said KLC wants to prepare a "menu" of options. Representative Lee asked if KLC will have a list of options for the 2005 session. Mr. Deaton said no, that it is a work in progress and probably would not be available until 2006.
Representative Lee asked how much cities are coming up short each year. Mr. Deaton replied that it is difficult to say. He noted that law enforcement costs have doubled over the last few years the same as health care.
Representative Simpson commented that local governments should be given flexibility to govern themselves. He urged KLC to look for avenues to reduce costs and to remove duplication of services. Representative Simpson suggested they work closely with counties to reduce tax burdens.
Representative Crimm commented that he is interested in seeing a study conducted on cities that have suffered from gaming.
Senator Kerr referred members to material included in their folders relating to metropolitan and micropolitan statistical areas.
The last item of business was recognition of retiring members: Representatives Adams, Thomas and Callahan; and Senators Karem and Robinson. Representative Crimm moved, seconded by Representative Graham, to adopt the resolutions in their honor. The motion carried by voice vote.
Senator Kerr announced that the committee had finished its work for the 2004 interim and this would be the last meeting. There being no further business, the meeting was adjourned at 11:20 a.m.