Call to Order and Roll Call
The sixth meeting of the Interim Joint Committee on Local Government was held on Wednesday, November 29, 2017, at 10:00 AM, in Room 171 of the Capitol Annex. Senator Joe Bowen, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Joe Bowen, Co-Chair; Representative Rob Rothenburger, Co-Chair; Senators Ralph Alvarado, Christian McDaniel, Morgan McGarvey, Dorsey Ridley, and Wil Schroder; Representatives Danny Bentley, Ken Fleming, Kelly Flood, Toby Herald, DJ Johnson, Kim King, Adam Koenig, Stan Lee, Brian Linder, Michael Meredith, Jerry T. Miller, Phil Moffett, Steve Riggs, Arnold Simpson, and John Sims Jr.
Guests: Jefferson County Circuit Court Clerk David Nicholson; Kenton County Circuit Clerk John Middleton; Commonwealth’s Attorney Rob Sanders; Henderson County Attorney Steve Gold; Leslie County Clerk James Lewis; Floyd County Clerk Chris Waugh; Bill May, Kentucky County Clerks Association; Larue County Judge/Executive Tommy Turner; Vince Lang, Kentucky County Judge/Executive Association; Christian County Jailer Brad Boyd; Renee Craddock, Kentucky Jailers Association; Scott County Magistrate David Livingston; Boone County PVA Cindy Arlinghaus Martin; Mack Bushart, PVA’s Association; Grant County Sheriff Chuck Dills; Jerry Wagner, Kentucky Sheriff’s Association; Shellie Hampton and Roger Rectenwald, Kentucky Association of Counties; Mayor Jim Barnes, City of Richmond; Mayor Teresa Rochetti-Cantrell, City of Mayfield; Corey Bond and Tom Sanders, City of Elizabethtown; Jonathan Steiner, Michele Hill, Bert May, and Bryanna Carroll, Kentucky League of Cities; Tony Hatton and Daniel Cleveland, Energy and Environment Cabinet, Peter Goodmann, Jory Becker, Greg Goode, and Claude Carothers, Division of Water; Angela Evans and Michael Kurtsinger, Kentucky Fire Commission; Dustin Miller, State Farm Insurance, and Judy Piazza, Finance and Administrative Cabinet.
LRC Staff: Mark Mitchell, John Ryan, Joe Pinczewski-Lee, and Cheryl Walters.
Approval of Minutes
Upon the motion of Representative Simpson, seconded by Representative Sims, the minutes of the October 25, 2017 meeting were approved.
Kentucky Association of Counties’ Legislative Platform for 2017 Session of the General Assembly
Jefferson County Circuit Court Clerk David Nicholson, President of the Kentucky Association of Counties (KACo), discussed the role of KACo in coordinating policy for its constituents and provided an overview of some primary agenda items it plans to address in the 2018 Regular Session of the General Assembly which included amendments to the County Employees Retirement System and related systems, tax reform efforts, and unfunded mandates. KACo is willing to engage in discussions of the agenda issues, and is grateful to the General Assembly members for their efforts.
Representatives of each of KACo’s affiliate groups presented their particular priorities for session.
Scott County Magistrate David Livingston and board member, representing the Kentucky Magistrates and Commissioners Association, indicated that jail funding is a priority. The housing in jails of drug offenders and their needs puts financial pressure on counties. The second priority is multi-modal transportation infrastructure funding for city, county, and rural roads and airports. Counties are responsible for maintaining 40,000 miles of roads and 5,000 bridges. The economy depends on roads. The Association has partnered with the Kentucky Infrastructure Coalition which supports long-term, sustainable funding for all modes of transportation. The motor fuels fee is the fairest fee to provide funding for the roads.
Kenton County Circuit Court Clerk John Middleton and President of the Kentucky Association of Circuit Court Clerks told the committee that salary levels of deputy clerks and attorneys, court designated workers, pretrial release were substantially below equivalent jobs in the executive branch. In addition, the association had the following concerns or preferences with the current draft of the pension legislation:
· The addition of the 3 percent cost for health insurance and retirement in that it reduces take home pay;
· The exclusion of sick time from retirement service time calculations;
· Allow Tier 3 persons to remain in the plan without changes; and
· Allow retired clerks and deputy clerks to return to service and maintain their present retirement. Presently when they do so, it is with a substantial pay cut and no participation in a retirement fund.
The circuit clerks noted their collective monitoring of the implementation of the Real ID Act and how drivers licensing legislation affects their ability to support their charity, the Trust for Life.
Kenton County Commonwealth’s Attorney Rob Sanders and Legislative Chair of the Kentucky Commonwealth’s Attorneys Association, noted the functions of the Commonwealth’s Attorneys and indicated that further cuts to their budget will result in a reduction of personnel or massive reduction in salaries which would itself result in a loss of personnel. The 17% tentatively proposed budget reduction would effectively shut the offices down on March 1st. Maintaining an experienced staff promotes efficiency and can positively affect jail costs and other costs when considering incarcerations while persons await the completion of their trials.
Henderson County Attorney Steve Gold and President of the Kentucky County Attorneys Association, reiterated the budget issue as expressed by the Commonwealth’s Attorney’s Association. He noted the roles county attorneys play in county government and in policy-making when the opportunity presents itself.
Mr. Bill May, Executive Director of the Kentucky County Clerks Association, introduced Leslie County Clerk James Lewis and Chair of the Kentucky County Clerks Association’s Election Committee. Mr. Lewis noted the following proposals for statutory change:
· KRS 132.017, relating to recall elections ballot printing timeframes;
· KRS 117.035, relating to allowing County Board of Elections to meet only when needed;
· KRS 117.343, relating to increasing actual voter reimbursements to the clerks;
· KRS 117.075 and 117.085 relating to absentee voter application efficiency; and
· KRS 116.055, relating to closing a new voter registration loophole that allows a voter to cancel his or her registration and sign up as a new voter under another party affiliation.
Larue County Judge/Executive Tommy Turner and Legislative Chair of the Kentucky County Judge/Executive Association noted his association’s preference for maintaining the inviolable contract and the separation of the County Employees Retirement System (CERS) from other state run retirement systems. Any financial obligations resulting from pension reform should be allowed to be implemented by the counties over time to help with budgeting. Additionally, transportation infrastructure needs are critical. Over the last 20 years, county costs have increased as much as 300% for certain items, especially materials while the commensurate revenue has only increased 20 percent. The group advocates for sufficient funds for maintaining infrastructure. In addition, jail funding will always be a priority with the association. The last item is tax reform. The group asks that any elimination of a tax be replaced with a revenue source of similar growth potential. The association favors local optional sales taxes, legislation addressing the offset of local occupational license taxes for counties over 30,000 in population, returning a higher percentage of coal and mineral funding to counties found primarily in the East and West coal fields, and allowing Tennessee Valley Authority “in lieu of” revenue be distributed to allow economic development for local governments.
Christian County Jailer Brad Boyd and President of the Kentucky Jailers Association, told the committee that the bed allotment has decreased 22 percent in the past ten years from around $14 million to $11 million. The fund helps jails with covering the cost to house inmates. Regarding the per diem, jails are paid $29.50 per inmate and $1.91 a day for medical expenses. It has been a decade since the last time it has been raised and it is time to begin the conversation about raising the per diem. There is an overpopulation in jails due to minor offenses—many dealing with drugs and many who are repeat offenders. Programs designed to reduce recidivism cost money and fiscal courts cannot pay for them alone. The state must help. Many inmates in the jail system have a future, but that future cannot be met without funding. Kentucky jailers want to be more than landlords; they want to help. The jailers ask for an increase in the per diem rate to continue the good work, expand the programs, and help inmates successfully reenter society.
Boone County Property Valuation Administrator (PVA) Cindy Arlinghaus Martin and Chair of the Kentucky PVA Association’s Budget Committee, and Mr. Mack Bushart, Executive Director of the Kentucky PVA Association, both addressed the committee. Ms. Martin told the committee that the General Assembly directly funds PVA offices in the budget and when there is a reduction in budget, that reduction directly affects staffing. Cities and counties do serve as funding sources, but at present 51 percent of the moneys given to the PVAs from the cities and counties goes back to the state to plug the hole that has been created. Other entities, such as school districts and special districts that use PVA assessment data do not pay anything to the PVA, and the budget subsidizes those entities in that regard. PVAs generate revenue at an 11 to 1 ratio on the investment to the state. Adding in the total revenues generated by PVA assessment (including cities, counties, schools and special districts) that figure rises to 51 to 1.
Mr. Bushart noted that since 2014 to 2017, the assessments the PVAs conduct have increased the valuation of real property in Kentucky $22 billion. This has come from reassessments and new growth. It translates to $11 million to the state and $51 million to local governments, schools, and special districts. Adding a 2.5 percent to the state property tax rate would allow taxes to pay for taxes and keep the PVA offices funded.
Grant County Sheriff Chuck Dills and board member of the Kentucky Sheriffs Association, told the committee that the office of the sheriff was a fee office. The sheriffs have no control over the income brought into the office. Sheriffs’ main responsibilities include tax collection, court security, auto inspections, security of justice centers, service of process, and prisoner transport. The state provides reimbursement for these statutorily-required duties, but the sheriffs perform these functions almost at a loss based on the money received. The primary issue the sheriffs wish to address is dealing with rehiring of retired peace officers. Retired peace officers are already trained, and having to send them back through training is expensive and takes a long time.
Senator Bowen commented that he recognizes the dire need for pension reform. There needs to be change, and without change, there can be no reform. Budget needs must be addressed, but there has to be pension reform first.
Representative Riggs commented that the act of voting in Kentucky is the bedrock of democracy. The voting turnout needs to improve in Kentucky. Six o’clock a.m. to six o’clock p.m. is not long enough.
In response to a question from Representative Riggs, Mr. Lewis said the County Clerks Association would be glad to put together a task force to come up with ideas for improving voter turnout.
Regarding the CERS being separate from the KERS, Senator McDaniel commented that KRS 78.852, dealing with the inviolable contract of the Commonwealth, should apply to employers.
In response to a question from Senator McDaniel, Mr. Vince Lang, Executive Director of the Kentucky County Judge/Executive Association, that the he did not know how that statute would be interpreted, but that he believed the responsibility rests upon the counties.
In response to a question from Representative Fleming, Mr. Nicholson replied that KACo should be in a position by January 1st to offer suggestions for tax reform. Representative Fleming encouraged KACo to submit their concerns to the General Assembly.
In response to a question from Representative Miller, Mr. Boyd said the Jailers Association would rather have the daily per diem increase for prisoners rather than taking prisoners out of jails.
Kentucky League of Cities’ Legislative Platform for 2017 Session of the General Assembly
Mr. Jonathan Steiner, Executive Director of the Kentucky League of Cities (KLC), Mayor Jim Barnes, City of Richmond and KLC President, and Mayor Teresa Rochetti-Cantrell, City of Mayfield and KLC First Vice-President, addressed the committee on the KLC 2018 legislative agenda.
Mr. Steiner made note of how the 2018 legislative agenda was formed. Cities need more flexible revenue sources, and want more control over local pensions.
Mayor Barnes said that local government is the most efficient and is held accountable by its citizens.
Separation of the County Employees Retirement System (CERS) from the other retirement systems is the top priority. Employees are there to serve the citizens, but it takes money to keep the employees in service. Fifty percent of Richmond’s budget goes to hazardous duty pay for retired personnel. Separating CERS will allow cities to manage their self-funded pension funds and allowing the local governments to select board members will insulate the board from politics and provide consistency.
The road fund formula is another priority. County roads are vitally important and are arteries into the cities. City road maintenance is more than the actual blacktop. The road must be milled and curbs and gutters must be maintained. Milling is just as expensive as the blacktop. KLC urges being allowed to keep 35 percent of the increase in revenues when road fund revenues exceed $828 million.
Unfunded liabilities are not fair. An example of unfunded liabilities would be newspaper publication requirements. The General Assembly is encouraged to look at reducing unfunded mandates for cities.
Lastly, amid cities’ residents’ increased demands for services, cities want to be able to expand the permission to levy the restaurant tax to all cities which besides being able to bring in more revenue is an issue of fairness. A restaurant tax in Richmond would bring in an additional $2.5 million a year that could be spent on capital improvements.
Mayor Rochetti-Cantrell noted additional KLC priorities:
· KLC has diverse proposals for increasing economic development opportunities.
· KLC wishes to see fire and police supplemental pay codified into law, and to have the additional costs to cities from that supplement be reimbursed from the fund to the cities.
· KLC advocates for changes in workers compensation law as it pertains to employees on temporary total disability (TTD). KLC wants changes to the law that ensures when someone on TTD returns to work, on modified duty for instance, has those wages factored into his or her workers compensation benefits. KLC also seeks to address the Kentucky Supreme Court ruling that invalidated the termination of workers compensation benefits at the Medicare eligibility age.
· Current law requires cities to publish notices in newspapers for actions like ordinances and budgets, notices of public hearings and audits. That requirement costs the taxpayers money for a medium that is no longer the first form of communication for most people in Kentucky. KLC advocates for a bill to no longer require newspaper publication, and to use other methods of notice.
· KLC seeks to address the usage of police body cameras. It seeks to clarify when a video should be released and who should be able to obtain a copy.
· KLC also seeks to amend the state’s alcohol regulatory license fees law to allow all cities the right to impose one.
· KLC’s agenda also includes either eliminating the office of constable, or having the ability to restrict the constables’ use of police powers within city limits.
Senator Bowen noted the balance and interaction of state taxes versus local taxes.
Senator Schroder thanked the mayors for mentioning unfunded mandates as it related to newspapers. He encouraged them to talk to members of the General Assembly.
Division of Water’s Report on 2017 HJR 56 relating to Package Sewer Treatment Plants
Mr. Anthony Hatton, Deputy Commissioner of the Department for Environmental Protection, and Mr. Peter Goodmann, Director of the Division of Water, reported pursuant to the mandate found in 2017 HJR 56 where the Division was directed to study and provide recommendations for legislative and other solutions to the issue of failing or at-risk of failing package sewer treatment plants.
Deputy Commissioner Hatton told the committee that there were privately owned package sewer treatment plants that for a variety of issues that affect their sustainability. In many instances they are older than their design life and there is insufficient capital to maintain them. Many of the collection systems that bring inflow to the plant have problems, too. The costs to maintain the systems have increased over time, while revenue streams have stayed the same or may have decreased. Some systems are not sustainable in the long term because of financial, administrative, and technical challenges.
Deputy Commissioner Hatton noted the convention of stakeholders as was required in the resolution and the methods they used to satisfy the resolution mandates.
Mr. Goodmann told the committee that there were 180 small, privately owned package sewer treatment plants, excluding business and school operations, and expanded on financial risks, technical indicator risks, and abandonment likelihood risk indicators. Identifying these risk factors allowed the Division to rank these plants in terms of being at-risk of failure.
The following are the Division’s legislative recommendations:
· Provide the cabinet certain authorities over financial issues related to management of the plant, such as ensuring funding for proper operations and maintenance, and facility contingency funds for failure, or catastrophic failure;
· Provide funding to facilitate regionalization, consolidation, replacement of a system, or continued operation by a third party;
· Provide cabinet authority to have court appoint a receiver, custodian, or fiduciary to assume management and operation of a system that presents a threat to continuity of service, public health, or a threat to the environment;
· Provide cabinet with the authority to require in permitting structural analyses be conducted at designated times.
The following are actions the Cabinet is preparing to take:
· Use the report to educate officials about the locations and risk factors that jeopardize public health, continuity of service, and environment;
· Continue to regularly inspect small systems and prioritize the enforcement of violations;
· Explore the development of a pool of potential receivers, custodians fiduciaries, and experienced operators to deal with failed or failing facilities;
· Identify non-financial incentives to facilitate regionalization or consolidation or management of the small systems;
· Possibly develop a contingency plan for addressing environmental emergencies resulting from small systems’ failure.
Senator Bowen commented that package sewer treatment plants is a very important health and safety issue. The aforementioned report will be made available to members via email.
In response to a question from Representative Rothenburger, Mr. Goodmann said local governments are being educated regarding the planning and zoning process to control package sewer treatment plants.
Representative Riggs commented that he was concerned by the recommendations to the legislature that involve state funding. The funding should come from the local governments, not the state.
Senator McDaniel commented that the most successful societies have trash removal, clean drinking water, and waste removal.
Consideration of Referred Kentucky Administrative Regulation
The committee considered referred Administrative Regulation 739 KAR 2:050, promulgated by the Kentucky Fire Commission, which relates to volunteer fire department aid. Ms. Angela Evans, Legal Counsel for the Kentucky Fire Commission, explained the regulation.
Senator Bowen stated that a written report of the review would be submitted to the LRC.
There being no further business, the meeting was adjourned at 12:15 p.m.