The 2012 regular session of the Kentucky General Assembly ended in an all-too-familiar manner last night. With the midnight deadline looming, an impasse between the Senate and the Governor prevented the passage of two critical pieces of legislation – funding for road projects and a measure to combat prescription drug abuse. The Senate refused to pass a road funding bill until the governor signed the road projects bill; the governor refused to sign the projects bill without time for a review or the funding in place to pay for the projects. Though there were indications late that a deal may be reached that would have included a key education measure, compromise again eluded Frankfort and the session ended.
Gov. Beshear has issued a call for a special session to begin Monday to enact the multi-billion dollar road funding bill that supports a number of transportation jobs and provides funding for the Louisville Bridges Project. Beshear will also ask lawmakers to pass legislation to address prescription drug abuse.
The Kentucky Chamber is in the process of performing a detailed review of the 2012 session of the General Assembly and compiling our voting record on key issues. Look for it in your mailbox soon. Below is a list of numerous bills we were following this session and their outcome.
Enacted into Law
Unemployment Insurance
HB 495 prevents a $609 million tax increase on Kentucky employers by creating a permanent mechanism to pay back the interest the state owes the federal government for unemployment insurance. The bill requires the governor to seek a cap on federal taxes and provides additional tax relief in future years. Enacted into law.
Tax Simplification
HB 277 streamlines state business tax filings by creating a one-stop portal for local tax forms on the Secretary of State’s website. Enacted into law.
Retirement Reform
HB 300 modernizes the boards of Kentucky’s various retirement systems and requires investment placement agents to register as executive branch lobbyists. Enacted into law.
Pension Study
HJR 162 creates a pension reform system task force to study the state’s various pension systems with a report to be submitted to the legislature by December 2012. Enacted into law.
Regulatory Reform
SB 157 requires state agencies to use a uniform method of drafting Administrative Regulations and makes publishing information online, instead of printing, the preferred method of notice.Enacted into law.
Automotive Incentives
HB 400 amends the Kentucky Jobs Retention Act (KJRA) by allowing companies with projects related to automobile and parts manufacturing to seek economic development incentives regardless of their location in Kentucky. To qualify, proposed projects must have at least 1,000 full-time employees and an investment of at least $100 million. Enacted into law.
Pseudoephedrine
Unlike the original prescription mandate opposed by the Chamber, SB 3 further limits over-the-counter purchases of cold and allergy medications containing pseudoephedrine in amounts of up to 7.2 grams monthly and 24 grams annually. This legislation is a reasonable compromise to the effort over the past two years to require a prescription for pseudoephedrine, which would have unnecessarily increased employer health care costs and employee absenteeism.Enacted into law.
Career-based Education
SB 38 offers career-based programs of study with enriched career counseling for high school students, potentially keeping more students engaged in school. Enacted into law.
Student Achievement
HB 37 targets improving student achievement by allowing schools to be exempt from certain administrative regulations and to use innovative approaches. Enacted into law.
Redevelopment Incentives
HB 465 provides incentives to businesses to restore blighted properties, encouraging economic growth, increasing surrounding property values and revitalizing communities. The bill extends non-liability protections to property owners seeking to redevelop a site where a release of petroleum, pollutants or contaminants has occurred. Enacted into law.
Protecting Energy Jobs
HB 559 encourages job retention and expansion by endorsing the recycling of uranium tails and spent nuclear fuels at the Paducah Gaseous Diffusion Plant. It would also encourage the production of coal to gas liquefaction at the Paducah plant. Enacted into law.
Energy Efficiency
HB 255 promotes energy efficiency in school construction and provides assistance for small businesses to undertake energy efficiency projects in their own facilities. Enacted into law.
State Employee Wellness
HB 225 creates a pilot worksite wellness program for state employees aimed at reducing state health care costs over the long term. Enacted into law.
Protecting Business Records
HB 496 protects private companies that compete for state contracts from being forced to disclose all of their records under the state Open Records Act. Enacted into law.
Defeated
Arbitration
HB 88 would have severely undermined the arbitration process in Kentucky, forcing employers to litigate before they arbitrate and further increasing legal fees. Passed the House, Defeated in the Senate.
Chiropractic Mandate
HB 202 would have increased health care costs, particularly on small business owners, by mandating a minimum reimbursement rate and co-pays for chiropractic services. This would have created a slippery slope enabling other providers to demand similar privileges. Passed the House, Defeated in the Senate.
E-verify
HB 5 would have created a more onerous requirement in Kentucky than other states by requiring any company doing business with a public agency – including any state or local government, school board, university or publicly created board – to use the federal E-Verify system. Passed the House, defeated in the Senate.
False Claims
HB 401 would have created lucrative financial incentives for employees to become “whistleblowers” to allege fraud and would have encouraged frivolous lawsuits against employers who do business with the state. Passed the House, Defeated in the Senate.
Utility Rate Increases
HB 41 would have driven up the cost of residential and business utilities by removing franchise fee agreements between local municipalities and utilities and spreading the costs of those agreements among the utilities’ entire rate base. Defeated in the House.
Energy Cost Increases
HB 404 would have driven up electric rates by treating coal ash that comes from the generation of electricity at power plants similar to hazardous waste. Defeated in the House.
Unfinished Business
Prescription drug abuse
HB 4 addresses the prescription drug epidemic that drives up medical costs for employers and creates serious workplace safety issues by strengthening the state’s KASPER system and requiring pain management clinics to be owned by a practicing physician. Prescription drug abuse is not only a social issue; it is a business issue. Compromise failed in the waning hours of session.
Expanded Gaming
SB 151 would have given Kentuckians the opportunity to vote on a constitutional amendment to expand gaming as a way to help stem the loss of jobs in the Commonwealth’s signature equine industry. Failed in the Senate.
Limiting Debt
SB 1 would have capped cap the state debt limit at 6% of General Fund revenues. Although SB 1 did not become law, the biennial budget passed by the General Assembly significantly reduced debt levels. Passed the Senate; not considered by the House.
Medical Review Panels
HB 361 would have established an independent medical review panel process for lawsuits against long-term care facilities, providing a screen for frivolous lawsuits without limiting access to the courts. Rising costs associated with medical malpractice liability continue to take a significant financial toll on Kentucky’s health care industry, resulting in increased costs for businesses and consumers. Not considered by the House.
Charter Schools
HB 77 would have authorized charter schools which are independent schools designed to provide tuition-free public education choices to parents and students. Charter schools could help areas with consistently low-performing schools. Not considered by the House.
Raising the Dropout Age
HB 216 would have phased in a process to raise the mandatory school attendance age to 18, keeping students in school and working toward a diploma. SB 109 would have made raising the dropout age to 18 optional for local districts. As amended in the House, the bill would have phased in the requirement that all students attend high school until age 18 after the initial optional period for school districts. Attempts to compromise were unsuccessful. HB 216 passed the House; not considered by the Senate. SB 109 passed the Senate prior to amendment; passed the House as amended; not reconsidered by the Senate as amended.
Investing in Great Teachers
SB 11 would have provided financial rewards for teachers and students of Advanced Placement courses in science, technology, engineering and math. with a goal of encouraging students to pursue STEM careers. Passed the Senate; not considered in the House.
Early Graduation
SB 86 would have allowed students who meet specific academic criteria to graduate high school early and attend a public two-year or four-year postsecondary institution. The bill was amended to include a requirement that all students attend high school until age 18. Passed the Senate prior to amendment; passed the House as amended; not reconsidered in the Senate as amended.
Improving the Teacher Workforce
SB 122 and SB 132 would have made great strides in correcting two antiquated personnel policies that can make it difficult to remove poor performing teachers from the classroom: automatic tenure and the termination and suspension appeals process. These measures would have helped ensure we have qualified teachers in every classroom, increasing the quality of education for our future workforce. SB 122 not considered by the Senate. SB 132 passed the Senate; not considered by the House.
Worksite Wellness Program
HB 549 would have helped address high employer health care costs by giving companies a nonrefundable tax credit equal to 50% of the cost of offering a wellness program to employees.Not considered by the House.
Angel Investment
HB 113 would have extended tax credits to individual investors who further the establishment or expansion of small businesses, create additional jobs and foster the development of new products and technologies. Not considered by the House.
Employee Misclassification
SB 77 would have clarified the definition of an independent contractor, creating a fair, straightforward procedure that streamlines compliance and ensures a level playing field for employers. Passed the Senate, not considered by the House.
Smoke-free
HB 289 would have created a statewide smoke-free policy that prohibits smoking in indoor public places. Smoking is not only killing us, it is bankrupting us through higher productivity costs, insurance premiums and tax bills. Not considered by the House.
Regulatory Reform
HB 450 would have provided that administrative regulations promulgated by the executive branch would not impose undue costs and fees on Kentucky businesses. Not considered by the House.
Alternative Fuel Incentives
HB 246 would have created incentives for the construction of the components used in alternative energy production and energy efficiency projects. Passed the House; not considered by the Senate.
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Kentucky Chamber Blog
It is blatantly obvious to anyone paying attention that the 2/3rds tolling scenario is fatally flawed. The preliminary tolling studies relied on irrationally optimistic assumptions that raise serious questions about out the financial model. IN the CDSmith preliminary toll studies the Value of Time assumption for Louisville, KY was 66% higher than was used for the Washiington, D.C. metro area in 2009, where median income is $72,800. Their model actually predicts the same amount of river-crossings as under a $3 tolling scenario. This fails the common sense test. CDSmith’s track record displays a consistent optimism bias. The last 12 tolling studies done by this firm have been off by a collective 127%. The estimated revenue was more than double what the states actually collected in tolls. The revenues from tolls will not be adequate to cover the bond payments and with the data indicating toll revenue starts dropping at raise just over $2 it will be necessary to toll additional points. CDSmith, both state’s transportation cabinets, and local leadership are fully aware that the Sherman-Minton bridge must be tolled. In fact the memorandum of understanding between Governors Beshear and Daniels allows for tolling additional points with specific reference to Sherman-Minton bridge. It is not legal or ethical to intentionally distort important financial projections but our city’s complacent local media will not hold them accountable.
This is what Terry Maynard, an economist working for the Reston Citizens Association, had to say about the accuracy of CDSmith’s toll studies:
“The forecasts of revenue seem tailored to what the operators want to be forecasted as a revenue stream rather than its real world potential – which is going to be the same regardless of who is looking for revenue and why.
In other words they look more like a dressing up of the client’s wishful thinking in the garb of professional analysis than an objective assessment of revenue potential.
Selling bonds on this basis looks problematic.”
The intentionally optimistic tolling studies are being used to fund a tolled 2 bridges project that the public clearly does not support. This subversion of democracy is a direct consequence of the political power of a small but powerful special interest group, Riverfields, a group whose president happens to be the wife of the top editor at the local paper of influence. The ultimate result of this crime against democracy is an undeniably regressive project. In Prospect there is a $795 million, 1.4 mile 4-lane luxury highway. What little money had been budgeted for aesthetic improvements downtown has been removed while the KY east end portion of the project retains all aesthetic treatments, including the $250 million+ tunnel and its annual maintenance/electrical bills. The ultimate insult to Louisvillians is that this project is building 100 year infrastructure that exclusively connects to a 1950s style elevated waterfront expressway on the the city’s image defining gateway, central business district riverfront, and historical heart.
Wilbur-Smith, now CDSmith’s track record alone is enough to know that the ORBP tolling studies suffer from an extreme level of optimistic bias. The last 12 tolling studies done by this firm have been off by a collective 127%. That’s right, the estimated revenue was more than double what the states collected in tolls. The preliminary toll studies displayed a complete lack of integrity with such absurd assumptions as the average local resident valuing his/her commute time at an absurd $21.60. In 2009 the same company used a Value Of Time assumption for the Washington D.C. metro area, median income $72,800, that was 66% lower. One study actually assumed the total number of bridge crossings would be the same under a $3 tolling scenario as in a toll-free scenario. This fails the common sense test.
It is blatantly obvious to anyone paying attention that the 2/3rds tolling scenario is fatally flawed. To cover the inevitable shortfalls from the financially irresponsible toll revenue projections, the Bridges “Authority” required one important stipulation:
(ii)Additions to the LSIORB toll revenue system of facilities including potentially the Sherman-Minton Bridge.
Those 14 words allow for over $700 million in bonds to be sold. Those 14 words are the difference between a financially solvent project and bankruptcy. In fact, if toll rate increases and the inevitable tolling of the Sherman-Minton bridge does not result in a financially solvent project then this stipulation allows for tolls on spaghetti junction. It is not legal or ethical to intentionally distort important financial projections but our city and state’s complacent local media will not hold them accountable.
Correction: the cost of the absurd tunnel is actually well over $300 million but the existence of the tunnel necessitates significant cuts into the hillside and the removal of large quantities of earth and rock. This project is truly a crime against democracy and if not corrected will lead to over 100 years of economic stagnation in Louisville..