Call to Order and Roll Call
The 5th meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on Wednesday, June 1, 2016, at 10:00 AM, in Room 129 of the Capitol Annex. Representative Wilson Stone, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator C.B. Embry Jr., Co-Chair; Representative Wilson Stone, Co-Chair; Senators Carroll Gibson, Dennis Parrett, Robin L. Webb, and Whitney Westerfield; Representatives Mike Denham, Tom McKee, Jonathan Shell, and James Tipton.
Guests: Warren Beeler, Executive Director, Governor’s Office of Agricultural Policy, Bill McCloskey, Director of Financial Services, Governor’s Office of Agricultural Policy, and Michael Plumley, Assistant Attorney General.
LRC Staff: Lowell Atchley, Kelly Ludwig, and Marielle Manning, Committee Assistant.
Upon motion made by Representative Tipton and seconded by Senator Embry, the May 4, 2016 minutes were approved, upon voice vote.
Governor’s Office of Agricultural Policy
Mr. Warren Beeler, Executive Director, and Mr. Bill McCloskey, Director of Financial Services, Governor’s Office of Agriculture Policy (GOAP), presented the projects receiving Agricultural Development Board approval at its May 2016 meeting. Those included approved amendments, modifications and new equipment for a production plant, cost-shares with 4-H and/or FFA students, a small livestock building, an open span livestock building, On-farm investments, Environmental Stewardship, Shared-use programs, and major statewide or regional projects.
GOAP representatives responded to committee members’ questions about the diagnostic lab at Murray State, hemp production and the Shared-use funding commitments.
Responding to Representative Stone’s question about the diagnostic lab in Hopkinsville and Kentucky Department of Agriculture’s funding, Mr. Warren Beeler explained the budget was $366,000 of general funds for operating. Murray State had $2.2 million for operating the lab.
Responding to Representative McKee’s question about last year’s hemp production grant in Winchester, Mr. Warren Beeler explained that 22 counties put up money and were matched for $242,000 for seed processing of tallow oil at the Winchester plant.
Responding to Representative Stone’s question about On-Farm Energy Programs, GOAP officials said the approved funds go towards projects such as grain dryer updates. GOAP officials explained that applicants are eligible for half of the cost up to $10,000 per year and up to $25,000 lifetime. Most of these projects are dairy and poultry related.
The committee received reports on five regional projects: (1) Fish Market, Inc., approved by the board for $427,550 in state funds, as a 2 percent loan, for building renovation and to purchase breeding, freezing, meat processing and filling line equipment; (2) Jessamine County FFA Alumni Association, approved by the board for $8,000 in Jessamine County funds to cost-share with 4-H/FFA students on agriculture-related projects; (3) Cumberland County Extension District, approved by the board for $5,000 in Cumberland County funds to construct a 24’ x 24’ post frame building to house small livestock for educational use; (4) Cumberland County 4-H Council, approved by the board for $24,000 in Cumberland County funds to cost-share with youth participating in the Cumberland County 4-H Agricultural Entrepreneurship Program; and (5) Allen County Fiscal Court, approved by the board for $67,450 in Allen County funds to construct a 72’ x 150’ open span building including plumbing, electricity, wash racks and panels.
The GOAP representatives described two funding denials: (1) Kentucky Wineries Association, Inc., turned down for $147,700 in state funds to hire a fulltime Executive Director, promote the Kentucky Wine Trail, produce the KWA WineFest, and help individual wineries market their products with traditional and social media advertising. Concerns about duplication of services were mentioned as reason for denial; (2) Route 52 Moonshine, LLC, turned down for $35,125 in Estill County funds and $35,125 in State funds to increase production at their distillery in Estill County. Concerns about limited producer impact were mentioned as reason for denial.
Responding to Representative McKee’s question about the corn market in Estill County, GOAP officials said about 1 ton of corn/week is produced for the market.
Update on the Master Settlement Agreement
Mr. Michael Plumley, Assistant Attorney General, and Mr. Mitchel Denham, Civil Branch, Kentucky Attorney General’s Office, gave an update on the Master Settlement Agreement (MSA), tobacco settlement enforcement, and the effects of provisions contained in HB 512 (2015 Regular Session).
In response to a question from Representative McKee, Mr. Plumley explained payments will be down in the future due to the fact there will be only one more supplemental payment in 2017. Furthermore, payments will be reduced by increased amounts in 2017. MSA cigarette sales in general are declining due to electronic cigarettes, pipe tobacco, and little cigars, which are all taxed differently than cigarettes, combined with reduced smoking rates. The sales markets are down.
Responding to Representative Stone’s question about escrow payments and distribution, Mr. Plumley explained some money can be recovered over time, but they will look for ways to go after that money.
Documents distributed during the meeting are available with meeting materials in the LRC Library. There being no further business, the meeting was adjourned.