Call to Order and Roll Call
The fifth meeting of the Interim Joint Committee on Local Government was held on Wednesday, November 30, 2011, at 10:00 AM, in Room 171 of the Capitol Annex. Senator Damon Thayer, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Damon Thayer, Co-Chair; Representative Steve Riggs, Co-Chair; Senators Walter Blevins Jr., Jimmy Higdon, R.J. Palmer II, Dan "Malano" Seum, and Johnny Ray Turner; Representatives Julie Raque Adams, Ron Crimm, Mike Denham, Richard Henderson, Brent Housman, Adam Koenig, Stan Lee, Tom McKee, Michael Meredith, David Osborne, Jody Richards, Arnold Simpson, Kevin Sinnette, Rita Smart, and Jim Wayne.
Guests: Mayor Jim Gray, Stan Harvey, and Judy Taylor, Lexington-Fayette Urban-County Government; Judge John Wilson, Judge Tommy Turner, Denny Nunnelley, Shellie Hampton, Carolyn Belcher, and Tim Sturgill, Kentucky Association of Counties; Dawn Bellis, Department of Housing, Buildings, and Construction; Vince Lang, Kentucky County Judge/Executive Association; Richard Tanner, Kentucky Magistrates and Commissioners Association; Jerry Wagner, Kentucky Sheriff’s Association; Ron Wolf, Associated General Contractors of America; William May, Kentucky County Clerks Association; J.D. Chaney, and Tony Goetz, Kentucky League of Cities; Jim Thompson, Education and Workforce Development Cabinet; Dan Walton, Labor Cabinet; and Phillip Hedrick, Boyd County Attorney.
LRC Staff: Mark Mitchell, Joe Pinczewski-Lee, John Ryan, Jessica Causey, Dave Nicholas, Bryanna Carroll, and Cheryl Walters.
Senator Thayer announced that this would be the final meeting of the interim.
Approval of Minutes
Upon the motion of Representative Henderson and second by Representative McKee, the minutes of the October 26, 2011 meeting were approved.
Lexington-Fayette Urban-County Government Legislative Briefing and Civic Center Project
Mayor Jim Gray, Lexington-Fayette Urban-County Government (LFUCG) said that Lexington was not asking for money, but was asking for collaboration and understanding. Lexington is working hard on three areas of urgency: (1) the joint project between Fayette, Jefferson, and 20 additional counties called the Bluegrass Economic Advancement Movement (BEAM); (2) solutions for its pension problems; and (3) the Rupp Arena Arts and Entertainment District. These initiatives are key strategies in the broad themes that are at work in Lexington which are to: (1) create jobs and the conditions for jobs; (2) run government efficiently; and (3) create a great American city.
The unemployment rate in Fayette County in September was 7.7 percent. Jobs were lost in professional, management, and real estate areas. High income job losses translate into declining or flat city revenues.
BEAM is designed to increase jobs in the area. The initiative recognizes some challenges that will have to be addressed including training mid-level workers and research and design workers; combating drug abuse; and making improvements in the “innovation ecosystem.”
In response to a question from Representative Simpson regarding Northern Kentucky’s exclusion from BEAM, Mayor Gray replied that the Brookings Institute, who has developed a template for models in other locations, recommended that Northern Kentucky, in terms of economics, was more oriented with Cincinnati. Mayor Gray noted that he has been meeting with the judges from Boone, Campbell, and Kenton Counties and are working together to address where the project influences Northern Kentucky and where there are common themes. This is the objective that Lexington intends to take.
Representative Simpson commented that he was concerned that Northern Kentucky would be competing against Lexington and Louisville. He added that Northern Kentucky wants to work with Lexington and Louisville.
Senator Thayer commented that he and Representative Riggs attended a meeting with Mayor Gray, Mayor Fisher from Louisville Metro Government, Judge Pendrey from Campbell County, Judge Arlinghaus from Kenton County and Judge Moore from Boone County as a first step toward more commonality and cooperation between the three important regions of the state. The micropolitan/metropolitan issues that are becoming more prevalent in Kentucky were discussed. The micropolitan/metropolitan areas themselves were also discussed, for example, the City of Bowling Green. These gentlemen are committed to working with the General Assembly on issues that are important to those regions. An invitation was extended to all five of those gentlemen to come before the committee at any time, and it was suggested that one of the next steps they take is to meet with the regional caucuses.
Representative Riggs stated that LRC has approved the creation of a new subcommittee that will deal with metropolitan issues. Senator Thayer added Chairman Riggs and himself will be appointing members to that subcommittee in the very near future.
In response to a question from Representative Wayne regarding why no one on the BEAM Board of Directors has expertise in drug abuse, Mayor Gray stated that the composition of the board was really focused on private sector companies and public institutions which have a high level of familiarity with the advanced manufacturing challenges. The full structure of this working enterprise will include working committees with special disciplines to address the issues that emerge through the study.
In response to a question from Representative Wayne, Mayor Gray stated that while the BEAM Board of Directors has no union representative, the expectation is that a broad representation of interests through the working committees on the BEAM project will be included. He challenged the characterization of board members being anti-union because there are several of the manufacturing institutions represented there that have organized labor representation, such as Ford and General Electric. They are bringing a point of view of the working relationship. So it is the full intent to work with labor all across the board.
Representative Denham commented that as co-chair of the Rural Issues Subcommittee, he wanted everyone to remember the rural communities.
Representative Sinnette commented that Ashland has industrial parks and hard working individuals who are begging and looking for jobs. He told Mayor Gray if he finds situations where a manufacturer cannot fit in his local area that he would look beyond the bounds of those particular areas.
Mayor Gray continued his discussion by telling the committee that Lexington is facing challenges related to its pension system. The pension system is under statutory control by the state, but run by the local government. The 2008 legislature changed state administered systems, but left Lexington police and fire unchanged. Lexington’s pension system is currently underfunded by roughly $400 million for retirement and health insurance. Lexington bonded $110 million during 2010 and 2011 with little impact because of lower than anticipated returns on investment. A pension task force made up of police, fire, administration, and community stakeholders are working to find compromises and solutions. Mayor Gray asked that as the legislature deals with reforming state retirement systems that it remembers Lexington.
Mayor Gray told the committee that Lexington is considering changes to Rupp Arena and will have a decision from a task force assisting with the process at the end of January. The new feasibility study about the future of Rupp Arena shows that it is still very possible to retain the extraordinary energy of Rupp Arena while actually getting far more for the city for less money than a new arena would cost. There are four steps to changing the Lexington Center and Rupp Arena: (1) finalize task force recommendations; (2) secure state and private sector support; (3) create business plan and solicit consultants; and (4) begin design and engineering.
Regarding Lexington’s workforce needs, Senator Seum commented that he noticed in looking at the BEAM Board of Directors that there are no public school superintendents on the board. He also commented that if something is going to be done about the drop-out rate in schools, a vocational school system would help because that is where the workers are going to come from. Kentuckians need to be thinking about a strong vocational system. Mayor Gray stated that at the first board meeting, Al Smith, a journalist and retired host of KET Comment on Kentucky, asked “Where are the teachers, where are the public schools represented, where are the vocational schools represented?” It is hoped that, through this project, Lexington will be able to work strategically on the problem.
Representative Richards commented that he had to speak up for Bowling Green, which is the third largest city in Kentucky. He said he was not opposed to what Lexington is doing but it needed to be remembered that northern Kentucky is a very important area and western Kentucky has been projected to be one of the fastest growing areas in the state. It is important to connect those two areas as well.
Representative Henderson commented that he supports the Rupp Arena project. In response to a question from Representative Henderson, Mayor Gray replied that it is premature to say if there was going to be a potential rate increase for the attendance of events.
Consideration of Referred Administrative Regulations
The committee considered referred Administrative Regulations 815 KAR 4:010&E relating to annual inspection requirements and fees for elevators; 815 KAR 4:025&E relating to the permitting and inspection fees for newly constructed, installed or altered passenger and freight elevators; 815 KAR 4:030&E relating to licensure requirements for elevator contractors; 815 KAR 4:040&E relating to licensure requirements and fees for elevator mechanics; 815 KAR 4:050&E relating to continuing education requirements for renewal, reinstatement, and reactivation of elevator licenses for elevator contractors and mechanics; 815 KAR 4:060&E relating to the approval of continuing education courses and the procedures for becoming approved elevator continuing education providers; 815 KAR 4:070&E relating to fee payments and refunds under the Kentucky Elevator Safety Act; 815 KAR 7:120 relating to the Kentucky Building Code; and 815 KAR 8:007 relating to the Board of Heating, Ventilation, and Air Conditional Contractors budget review and responsibility. Senator Thayer stated that a written report of the review will be submitted to the LRC.
Presentation of the Kentucky Association of Counties Legislative Platform for the Upcoming 2012 Session of the General Assembly
Judge John Wilson, Garrard County Judge/Executive and President of KACo, first explained KACo’s legislative committee process. Each affiliate organization of KACo has one vote on the legislative committee. There are ten affiliate organizations: Kentucky Circuit Clerks Association, Kentucky Commonwealth Attorneys Association, Kentucky Coroners Association, Kentucky County Attorneys Association, Kentucky County Clerks Association, Kentucky County Judge/Executives Association, Kentucky Jailers Association, Kentucky Magistrates and Commissioners Association, Kentucky Property Valuation Administrators Association, and Kentucky Sheriffs Association. In order for KACo’s legislative committee to either support or oppose legislation, 75 percent of the members in attendance must vote to take that position.
Judge Wilson next discussed three of KACo’s six legislative issues: (1) KACo and its affiliate members advocate for a strengthening of statutory options to further regulate the operators and the opening of pain clinics to separate the legitimate practitioner from those seeking only quick, illegal financial gain; (2) KACo and its affiliate members advocate a funding stream update for the continued operations and maintenance of Emergency 911 service. KACo awaits the results of 2011 SB 119, authorizing a study of all public safety answering points and current funding mechanisms in order to proceed with legislation; and (3) KACo and its affiliate members advocate removing all statutorily designated powers and duties from the Office of Constables.
Judge Tommy Turner, LaRue County Judge/Executive and KACo President-Elect, discussed the remaining three legislative issues: (1) KACo and its affiliate members advocate allowing the provisions of 2008 HB 1 more time to work before making significant changes to the retirement system; (2) KACo and its affiliate members advocate for local and state tax reform to be taken up as a whole. With limited options at the local level and an outdated tax code at the state level, much could be done to achieve a more efficient and equitable system. State and local governments can only make progress toward smarter tax laws by working simultaneously; and (3) KACo and its affiliate members advocate for additional funding of jails, enabling counties to reduce their deficits due to jail operations and maintenance.
Senator Thayer commented that as a strong proponent of pension reform, he does not think there is time for 2008 HB 1 to work. Kentucky has a $30 billion unfunded liability in pension plans and in talking to local officials in his district, pension costs at the local level continue to cut into the dollars that they have available to provide the services that constituents receive. But he does understand the challenge KACo has in reaching a 75 percent threshold on a very controversial issue and respects its position.
Representative McKee commented that KACo presented a very precise legislative agenda. He was not sure how many of those goals the legislature could actually accomplish though.
Representative Koenig complimented KACo for getting the constable issue through the process and was glad to see they were on board with it. He added that he stands ready to help them.
Representative Lee commented that constables were used quite a bit in Fayette County and would not want that to come to an end.
In response to a question from Representative Lee, Judge Turner stated that it would be difficult to say exactly what tax reforms KACo would advocate for because a lot would depend on what the state does. That is why the legislature and KACo have to work together.
Representative Lee commented that the state cannot afford to wait around any longer on the issue of retirement.
Representative Simpson commented that he recently attended a Banking and Insurance Committee meeting and it was stated that the sheriff’s office is no longer sending out tax bills to lenders to facilitate the payment of the real estate taxes. In response to a question from Representative Simpson, Judge Turner stated that to his knowledge, the sheriff is required to send the tax bill to the entity who is the legal owner of the property and as a result the mortgage company may not be receiving it because they are not listed on the deed as the legal owner of the property. As a result, in some cases, the tax bill is going to the property owner of record and is not making it to the mortgage company. Jerry Wagner, Executive Director of the Kentucky Sheriff’s Association, agreed with that assessment.
Senator Higdon commented that he has filed the legislation regulating retail narcotics sales again. Judge Wilson stated that KACo stands ready to work with him on that issue.
Representative Henderson commented that he was opposed to KACo’s stance on constables. He said he was in favor of there being the option for counties to have constables.
There being no further business, the meeting was adjourned at 12:00 p.m.