The second meeting of the Interim Joint Committee on Local Government was held on Thursday, July 13, 2006, at 2:15 PM, CST in International A Room of the Executive Inn Rivermont in Owensboro, Kentucky . Representative Steve Riggs, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representative Steve Riggs, Co-Chair; Senators Julian M Carroll, Carroll Gibson, Alice Forgy Kerr, and Johnny Ray Turner; Representatives Adrian K Arnold, Ron Crimm, Derrick Graham, Charlie Hoffman, Thomas M McKee, David Osborne, Arnold Simpson, Ancel Smith, and Jim Wayne.
Guests: Senator David Boswell; Representatives Joe Bowen, Fred Nesler, and Tommy Thompson; Tony Carriss, Shelby County Magistrate; Bill Drury, Spencer County Magistrate; Patricia Hawkins and Larry Rogers, Hopkins County; Vickie Vineard, Ballard County; Kenneth Souder and Roger Jolley, Fleming County Magistrates; Sandy Lee Watkins, Henderson County Judge/Executive; Randy Stevens, Trimble County Judge/Executive; Forrest Burkhardt, Trimble County Magistrates; Noel Crum, Johnson County Fiscal Court; Walter Hester, Garrard County; Lewis Warren, Breathit County; Mike Buchanon, Warren County Judge/Executive; D. J. Mastin, Bourbon County Magistrate; Darrell Johnson, Estill County Magistrate; Jack Sumpter, Pendleton County Magistrate; Curtis Watkins, Harris Dockins, and Harold Prince, Logan County Magistrates; Paul Thompson, Floyd County; John Hudson, Boyle County; Casey Puckett and Mary Blevins, Montgomery County; Fred Brown, Crittenden County; Randy Thompson, Knott County; Ron Coleman, McLean County; Jim Townsend, Webster County; Vince Lang, Shellie Hampton, and Wanda Laslie, Kentucky County Judge/Executive Association; Richard Tanner, Kentucky Magistrates and Commissioners Association; Brian Hayes, Scott County; John Talbert, Big Rivers Electric Corporation; Phil Huddleston, Kentucky League of Cities; Jack Couch, Kentucky Council of Area Development Districts; Scott Kimmel, Kenton County;
LRC Staff: Jamie Franklin, Donna Gaines, Mark Mitchell, Joe Pinczewski-Lee, Rebecca Mullins, and Cheryl Walters.
Upon the motion of Senator Carroll, seconded by Representative Crimm, the minutes of the June 28, 2006 meeting were approved.
Representative Riggs announced that the committee was meeting in conjunction with the Kentucky County Judge/Executive Association (KCJEA) and the Kentucky Magistrates and Commissioners Association (KMCA) joint summer convention. He then asked for a moment of silence in remembrance of Senator Thayer's mother who had recently passed away. Representative Riggs next asked the members to introduce themselves.
Representative Riggs next introduced Shelby County Magistrate Tony Carriss, President of KMCA, for opening remarks. Mr. Carriss welcomed the committee and thanked them for meeting during the convention.
The first order of business was a discussion regarding the final report of the 2005-06 Task Force on Local Taxation. Representative Riggs introduced Ms. Shellie Hampton, Legislative Liaison for the KCJEA, to explain the report. Ms. Hampton told the committee that the report would be formally presented to the committee by LRC staff in September. She said the task force made the following 11 recommendations:
1. A proposed constitutional amendment to allow the General Assembly to establish a more flexible and efficient local government tax structure.
2. A streamlined procedure for the elimination of special taxing districts. Statutes should be amended to allow fiscal courts to eliminate special districts in a more streamlined and efficient manner.
3. Centralized registry for special districts. All existing and newly created special districts should be required to register with the Governor's Office for Local Development within a specified time frame. Registration should be required as a condition of the special districts retaining the authority to operate.
4. Reporting requirements for special districts. Special taxing districts created by fiscal courts, other than those regulated by the Public Service Commission, should be required to have all rates and fees, including rate or fee changes, approved by the fiscal court.
5. Budget submission. Special taxing districts should be required to submit budgets and tax rates to fiscal courts in a timely manner to comply with the county budgeting process.
6. The task force supports the development of incentives to encourage local governments to voluntarily engage in revenue sharing and to eliminate tax credit conflicts and encourages jurisdictions with overlapping taxes that are not uniform to develop interlocal agreements to reduce compliance burdens, including the filing of multiple tax forms by businesses.
7. Creation of a local government financial database. A credible local government financial database including county, cities, and special districts should be created and maintained to provide relevant information about local government finances to decision makers.
8. Require additional information on insurance applications. Legislation needs to be proposed to require insurance agents and insurance companies to place on every application for insurance the name and tax identification number of the jurisdiction where the risk is located. Penalties should be imposed for willful failure to comply.
9. Road aid formula. The General Assembly is encouraged to study the road aid formula, which has not been significantly amended since 1948.
10. 911 services. The method for funding 911 services needs to be expanded to allow alternative funding sources due to the declining base caused by a reduction in the number of landlines as people switch to cellular telephones.
11. Property Valuation Administrators (PVA). The General Assembly needs to establish a dedicated funding source for PVA offices by devoting 2.11 cents of the state real property tax rate to fund PVA personnel.
Regarding recommendation #8, Representative Crimm asked why the task force decided not to use a number that is already established for insurance agents and companies. Ms. Hampton said she did not know.
Senator Carroll commented that state government and local governments need to join back into a partnership. He said he is concerned about the substantial amount of money being spent on local projects that is putting a strain on the state's budget. Senator Carroll stated that state government has maxed out its credit card. He noted that he is interested in the enactment of most of the recommendations in the task force's report, and commended the task force for a good report.
Representative Hoffman commented that the task force had a total of seven meetings. He noted that a lot of hard work was done by the task force and staff, and thanked the LRC staff.
Representative Graham commented that there are a lot of issues facing counties which should be the responsibility of the state. He encouraged local governments to be persistent in letting the legislature know their concerns.
Representative Wayne, who relieved Chairman Riggs, pointed out that the LRC would review the task force's report at its next meeting. He also noted that the Local Government and State Government Committee's would meet jointly in September to review the report.
The next order of business was a presentation from the Kentucky Magistrates and Commissioners Association (KMCA). Representative Wayne introduced Richard Tanner, Executive Director of KMCA. Mr. Tanner commented that he would like to encourage the Louisville Metro Government to participate in the KMCA. Representative Wayne suggested that Mr. Tanner extend a formal invitation to the mayor and council. Mr. Tanner replied that he would extend an invitation to them.
Mr. Tanner told the committee that there were some items discussed by the task force that did not get into the report relating to the rapidly developing, high growth counties. He said those items included: (1) the authorization for a deed transfer tax, especially for high growth counties who do not have an occupational tax. Mr. Tanner stated that those counties are often called "sleeping" communities, for example, Spencer and Oldham Counties. He added that this would probably only affect 10 to 20 counties; (2) the use of impact fees; (3) the amendment of HB 44. Mr. Tanner noted that there has been a lot of opposition to change this. He noted that in 1979, the growth of special districts began as a result of HB 44. Mr. Tanner said the KMCA will have some specific recommendations relating to special districts; and (4) annexation and the need for revenue sharing between cities and counties. Mr. Tanner mentioned that 02 HB 314, relating to the coordination of local government finance and sponsored by Representative Hoffman, did not pass and the KMCA would like to look at that in future.
Representative Wayne noted that the House did pass that legislation but that it died in the Senate.
Representative Hoffman commented that impact fees can be essential. He said realtors and developers must come to the table. Representative Hoffman noted that he is working on a new approach to impact fees by renaming them "privilege fees." He said high growth communities are tapped out and looking for alternatives.
Representative Arnold asked if the provision was still on the books where local governments can enter into interlocal agreements for revenue sharing, but that it was not mandatory. Mr. Tanner said that provision was still on the books. Representative Arnold stated that revenue sharing should be able to be worked out to help some of these other counties.
Representative McKee commented that we have to look at the other side of the coin as to how local governments can become more efficient and share services. Mr. Tanner stated that KMCA has always advocated interlocal agreements.
Senator Carroll commented that the best government is the government closest to the people. He said state government should take over the operation of local jails. Senator Carroll added that an efficient operation of regional jails by state government would save money and remove the burden from local governments.
Senator Gibson commented that the concept of regional jails has been discussed since 1978. He said it is time to move forward. Regarding the recommendations of the task force, he encouraged the committee to study those during the interim.
The last order of business was a presentation from the Kentucky County Judge/Executive Association (KCJEA). Representative Wayne introduced Vince Lang, Executive Director of KCJEA.
Mr. Lang first noted that Representative Graham has had a bill for the last two sessions for a five-year take-over plan of county jails by the state. But, he said the bills have always hit a road block because of no money. Next, Mr. Lang told the committee that there were four issues that the KCJEA would like to see considered during the 2007 session: (1) medical expenses at the county jail level. He said that 06 HB 84, relating to the medical expenses of county jails and sponsored by Representative Montell, would have helped county jails but it did not pass. Mr. Lang said the KCJEA would like to that bill reconsidered during the 2007 session; (2) cost of elections. Mr. Lang noted that HB 519, relating to election costs and sponsored by Representative Arnold, would have increased state payment, but it did not pass either. He said the KCJEA would like to see that bill pursued as well; (3) assault on local officials. Mr. Lang mentioned that Representative McKee sponsored a bill during the 2006 session that would make an assault on a local official a Class D felony instead of a Class A misdemeanor, but it did not pass; and (4) extension of the retirement window. He said this would only be for those elected officials with 27 years of service.
Representative Graham commented that the KCJEA and KMCA staff do an outstanding job working hard on the local governments' behalf. Regarding the cost of elections, Representative Graham asked what election officials were paid. Mr. Lang said it varies county to county. He noted that it was hard to get qualified workers.
Regarding the 2006 bill relating to the assault of local officials, Representative Graham asked why it did not pass. He added that the legislature should pursue that in 2007. Mr. Lang replied that he did not know why the bill failed.
Representative McKee said he would prefile that bill and attempt to get it passed in the 2007 session.
Representative Arnold gave the committee some background information on the 1982 jail legislation. He said in 1981, Kentucky was the one of five states in the country that did not have jail standards. Representative Arnold stated that the federal courts had threatened to take over county jails if legislation was not passed. He noted that at that time, counties did not want to lose their jails, but times have changed and counties did not have the catastrophic medical costs at that time. Representative Arnold added that county government has changed in that county officials are more professional. He encouraged continued training of county officials and to continue to strive to be better.
Regarding the extension of the retirement window, Senator Carroll commented that he was gravely concerned about the number of experience employees which feel they are being forced to retire by 2009. He added that there is going to be a great loss of experience and knowledge which will seriously impact the operation of state government.
There being no further business, the meeting was adjourned at 3:45 p.m.