Call to Order and Roll Call
The fourth meeting of the Interim Joint Committee on Local Government was held on Wednesday, November 20, 2013, at 10:00 AM, in Room 171 of the Capitol Annex. Representative Steve Riggs, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Joe Bowen, Co-Chair; Representative Steve Riggs, Co-Chair; Senators Ernie Harris, Christian McDaniel, Morgan McGarvey, R.J. Palmer II, Albert Robinson, Dan "Malano" Seum, and Damon Thayer; Representatives Ron Crimm, Mike Denham, Richard Henderson, Toby Herald, Adam Koenig, Stan Lee, Brian Linder, Tom McKee, Michael Meredith, Jody Richards, Jonathan Shell, Arnold Simpson, Kevin Sinnette, and Rita Smart.
Guests: LaRue County Judge/Executive Tommy Turner; Warren County Sheriff Jerry Gaines; Denny Nunnelley, and Shellie Hampton, Kentucky Association of Counties; Jonathan Steiner, J.D. Chaney, Tyler Campbell, and Bryanna Carroll, Kentucky League of Cities; City of Midway Mayor Tom Bozarth; Tom Bennett, Auditor of Public Accounts Office; Ron Wolf, Associated General Contractors of Kentucky; and Sara McGown, Louisville Metro Government.
LRC Staff: Joe Pinczewski-Lee, John Ryan, Jessica Causey, and Cheryl Walters.
Approval of Minutes
Upon the motion of Crimm, seconded by Representative Henderson, the minutes of the October 23, 2013 meeting were approved.
Kentucky Association of Counties’ Legislative Platform for 2014 Session of the General Assembly
LaRue County Judge/Executive and President of the Kentucky Association of Counties (KACo) Tommy Turner discussed KACo’s 2014 legislative agenda:
(1) Emergency 911 funding. Emergency 911 funding is the top priority. There is no line item for 911 funding. Revenue comes from local governments’ monthly wireline surcharge called a “landline fee” to help cover the costs of emergency 911 in their community. These range from 50 cents to $4.30. As more Kentuckians abandon land-based phones in favor of cell phones, this revenue is decreasing. Landline fees account for approximately 32 percent of total 911 revenues, or about $31 million to $35 million dollars in FY 2012.
Another source of revenue is the wireless surcharge. The General Assembly established the monthly surcharge for wireless phones at 70 cents in 1998, and it remains at that amount today. Statewide, wireless calls outnumber landline-based 911 calls received at dispatch centers, known as Public Safety Answering Points (PSAPs). The funds are distributed to the PSAPs through the Commercial Mobile Radio Services (CMRS) Board. This accounted for approximately $24 million in revenues, or about 20 percent of the total.
Neither of these sources is sufficient in their current form to cover the total cost of service. Local government general fund dollars are left to pay for the balance of funds needed, or about $42 million in FY 2012. This subsidy accounts for almost half of the revenues needed, but it is an unsustainable amount, given the limits of local governments to raise revenues and increasing demands faced by fiscal courts. While the number of wireless calls received outnumbers the landline calls 2-to1, the revenues received from wireless phones is small compared to landline fees and local general fund dollars. This imbalance must be corrected.
KACo has been working with the Kentucky League of Cities (KLC) on a proposal to improve emergency 911 funding. With current revenues lagging and the eventual roll-out and costs that will be associated with implementation of Next Generation 911, funding needs will continue to rise. KACo’s proposal will ask for an increase in the 70 cent monthly wireless surcharge. This is a fair request given that the majority of incoming emergency calls are generated by wireless devices, the fee has not been increased since its inception, and landline revenues continue to decline. The proposal will also advocate for parity for all carriers to pay the same wireless surcharge amount per subscriber, whether pre-paid or post-paid.
The draft will repeal the cost recovery funding for carriers, as most surrounding states have already done. This would mean another $4 million annually to the CMRS fund.
(2) Biennial budget priorities. Catastrophic medical coverage is needed for inmates housed in county jails. This coverage helps counties with significant inmate medical costs and is part of the compromise reached with House Bill 463 in 2011. This was not fully funded in the last biennial budget. The compromise reached between the state and counties required counties to accept the loss of hundreds of state inmates to early release provisions from House Bill 463. The amount pledged for the Catastrophic Medical Fund was $960,000 per year, but the fund actually only received $80,800, equating to only one month of inmate medical needs. The expansion of Medicaid to cover inmates will only cover a hospitalization of 24 hours or more. The first 23 hours and 59 minutes are not reimbursable by Medicaid unless the “more than 24 hour" threshold is met. KACo is asking that the agreement between the state and counties be met.
There is much discussion on what the next step should be for those counties that receive and are heavily dependent on coal severance tax dollars. KACo looks forward to the discussion on what would be most beneficial for the communities in Eastern Kentucky, and applauds the efforts of Representatives Leslie Combs and Fitz Steel for their prefiled bill to change the severance distribution formula.
Another area of the budget is restoration of funding for prosecutors and PVA offices. Like most areas of the state, prosecutors' offices have had to absorb multiple budget reductions. PVAs spend about 80 percent of their operating funds to supplement the PVA deputy budget allocation. The only alternative is employee layoffs, which translates into an inability to maintain accurate and current assessments, which in turn results in fewer tax dollars collected. For every dollar spent on the PVA budget, $13 is collected in tax revenues.
One possible initiative would allow local voters to determine a temporary tax increase to fund capital projects such as water and sewer lines, senior citizens centers, or a combination of projects deemed important to a community and quality of life. The Local Investment for Transformation (LIFT) proposal would allow citizens to vote and have a voice in projects that would be funded with a sunset of the revenue stream upon payment of the debt. This is local control at its best, and keeps local officials from making the trip to Frankfort every time they need to finance a project. The LIFT legislation would require a constitutional amendment, but KACo is convinced it would be a valuable option that counties could utilize as needed. KACo urges the General Assembly to give this legislation a closer look.
KACo would also like to see the legislature’s support behind the “Kentucky Wins” effort that seeks the authority to let the people of Kentucky decide if they favor expanded gaming. If approved, the additional revenue streams would help reinstate some of the lost revenues that all agencies are experiencing.
(3) Pension payment coming due for KERS. While the pension plan was changed last session from a defined benefit plan to a hybrid cash balance plan for new employees as of January, that bill and the process all stakeholders participated in to secure passage, strongly supports the legislature in its stated goal to make a fully funded Actuarially Required Contribution (ARC) payment starting with FY 15, to begin shoring up the Kentucky Employees Retirement System. While everyone is challenged in this economy, KACo urges the legislature to begin paying the full amount due each year to get the overall system healthier.
In response to a question from Representative Riggs, Judge Turner replied that Joe Barrows is the director of the CMRS Board but that he did not know the number of CMRS Board employees or the amount of its budget. Representative Koenig said that the CMRS Board has three employees, including Mr. Barrows.
Senator Bowen said that the public perceives the 911 fee on landlines and on cell phones as a double tax. Judge Turner said that the device and not the person is the charge.
In response to a question from Representative Riggs, Judge Turner said he would estimate about 30 to 40 percent of calls are non-emergency. Some jurisdictions levy a charge for repeated non-emergency use of 911 services, such as false alarms. Warren County Sheriff Jerry Gaines said the person making a call at the time thinks it is an emergency, but about 20 percent of the calls are non-emergency.
Representative Linder commented that Grant County farms out emergency 911 service to the State Police, thereby operating on a surplus. Grant County has been able to cut costs by 60 percent. Other counties could look into farming out their emergency 911 services. Judge Turner said that was a good idea. Some counties have regional emergency 911 service centers, and some cities and counties have merged their emergency 911 services.
In response to a question from Representative Riggs, Ms. Shellie Hampton with KACo said there were 116 call centers, with 86 being county PSAPs. Representative Riggs said that there seems to be too many call centers and that merging them would make sense to relieve the burden of funding them. Judge Turner said that, even without a call center in a jurisdiction, infrastructure is still required in each county for call routing purposes. Personnel costs are significant.
In response to a question from Representative McKee, Judge Turner replied that the surcharge on prepaid cell phones averages to be around $0.39 per month. There needs to be uniformity. There has been legislation in the past that has not passed, and counties are losing money.
In response to a question from Representative Simpson, Judge Turner replied that he is unfamiliar with what other states are doing to fund 911 services. Some counties are adding charges to other utilities.
In response to another question from Representative Simpson, Judge Turner said 85 to 90 percent of the 116 call centers are supplemented due to lack of funds from surcharges.
In response to a question from Representative Lee, Judge Turner said any amount of money would help in the funding of emergency 911 call centers.
In response to another question from Representative Lee, Judge Turner said that the difference between calling 911 and calling the police directly is that 911 can pinpoint a person’s location using a cellphone’s GPS capabilities. 911 systems are also beginning to accept text requests.
Representative Henderson said that there should be a fair and level playing field. Cellphone service is not available in some rural areas, and this can affect the provision of 911 services. Additional fiscal considerations may be warranted.
Representative Richards said that timeliness is important to consider in regards to response times. The services do not need to be sacrificed for efficiency’s sake.
Representative Koenig said that it is not fair that citizens must pay more taxes on landlines than cell phones. There is also the administrative burden of assuring the tax money goes where it is due.
Representative Smart said that funding for emergency 911 should be a top priority. Everyone should come together and put their differences aside.
Representative Crimm said that the amount of money needed to fund emergency 911 needs to be worked out because that aspect of funding scares him.
In response to a question from Senator Seum, Judge Turner said that emergency 911 is a separate service from the police department.
Senator Thayer said that many entities are asking for more money. Everyone must remember that the money comes from the taxpayers. The legislature has to be very cautious in promising money because funding and budgeting will not be easy processes.
Regarding KACo’s budget priority concerning the bed allotment formula for county jails, Representative Linder said that the jail issue is very important to counties. There are too many luxuries that county jails cannot afford.
Regarding a question from Representative Simpson, Judge Turner stated that KACo has discussed the number of counties in Kentucky. There has been some consolidation of services, but he does not believe counties will ever consolidate.
Representative Simpson inquired whether the office of jailer should be eliminated in counties that do not have a jail. He disagreed that counties do not want to merge. Sheriff Gaines noted the expenses of jails. Judge Turner commented that the jailer’s salary is capped in counties without jails, and that the jailer still has transportation duties in those counties.
Representative Meredith said that eliminating the jailer’s office will not solve the problems. The prisoners of the county still need to be placed somewhere.
Senator Bowen said that KACo’s challenge of funding is not with the legislature but with the soccer moms with calculators.
City Reclassification
Jonathan Steiner, Executive Director and CEO of the Kentucky League of Cities (KLC), said that a bill on city reclassification has been discussed for three years and is very important to KLC. The present system has been in place for over 100 years.
J.D. Chaney, Chief Governmental Affairs Officer of KLC, said that the 1891 Constitution created six classes of cities. One hundred years before home rule, cities had to petition the General Assembly for authorities for their government. Many diverse laws are gauged on city classification. In 1994, voters approved the ability of the General Assembly to devise a new classification system. There has not been a uniform proposal since then to change the classification system. City populations do not always match the statutory requirements for the classification of the city. Cities want to be fourth class cities because they have more flexibility with the alcohol and restaurant tax laws as well as fewer mandates. Legal challenges brought by citizens of Elizabethtown were in part responsible for prompting this recent discussion. The courts sided with the city and affirmed that reclassification is in the purview of the legislature.
KLC formed a committee, chaired by Midway Mayor Tom Bozarth, to propose a new classification system. The proposal would: (1) create three classes of cities based on the form of government (mayor-alderman, city manager; and mayor-council and commission); (2) repeal more than 50 statutes that are outdated or no longer needed; and (3) create a structural basis to change the classification system. Controversial policy debates would be left for future sessions.
In response to a question from Senator Robinson, Mr. Chaney said the statutes require that the repealed section of the Constitution be followed for reclassification.
Representative Simpson commended KLC for its work on the city reclassification.
Senator Palmer commented that, until all cities are treated the same, the problem of reclassification is never going away. It will not be fixed until cities get the tools they need.
There being no further business, the meeting was adjourned at 12:00 p.m.