Legislative Update | March/April 2014
When a delegation of agribusiness leaders traveled to Frankfort March 6 for updates on the progress of important legislation, the report on bills that had been signed into law was a brief one.
With just four out of 700-plus bills enacted, Sen. Paul Hornback, R-Shelbyville, made no effort to conceal his frustration, as he greeted the group.
"We've been up here for the better part of two months and haven't really done anything," Hornback said. "As a farmer and a businessman I don't think I'll ever get used to that. Our system is seriously flawed right now."
There's no doubt that Sen. Hornback, who produces grain and tobacco on his Shelby County farm, had been doing his part to advance key legislative initiatives. He had sponsored bills dealing with telecommunications reform, providing local governments new revenue options, extending weight limit exemptions to farm trucks, and outlawing the sale of e-cigarettes to minors.
But he had also been busy cautioning against overly ambitious requests, whether by the agriculture industry or his local constituents, explaining that a super-tight state budget allowed for little wiggle room on new spending or more generous tax exemptions. He's a supporter of expanded gaming in Kentucky, noting the prospect for an influx of needed budget dollars and assistance to the equine industry. But he also supports repeal of state requirements that local schools and public agencies pay prevailing wages on capital projects. That change would save over $200 million a year in wasted government spending, he said.
In the weeks following our AIN Frankfort visit, predictably, the legislative pace picked up as the deadline for adjournment came and went. A week later, the House passed its version of the two-year state budget, including an outlay for new vet center facilities in Western Kentucky.
But that left little time for Senate consideration of the spending blueprint, including a number of proposed bonded capital projects and cuts to several state agencies proposed by Gov. Steve Beshear. Eventually that chamber passed a slimmed-down version and the differences had to be ironed out by a House-Senate conference committee, which completed its work just prior to adjournment.
A major unknown for the budget despite the legislature's action, is the fate of funding from the federal Master Settlement Agreement to pay for ag development projects, bonds for water and sewer improvements and other obligations.
The MSA dollars come from a fund set up by major tobacco companies to compensate for state spending on smoking-related expenses. But last year an arbitration panel ruled that Kentucky had not "diligently" enforced the MSA, an apparent reference to compliance gaps with small-scale cigarette manufacturers. As a result, the state's MSA funding could be reduced or even eliminated pending an appeal of the ruling.
Complete elimination could lead to a roughly $25 million hole in the 2015-16 budget, not to mention the end of hugely popular cost-share programs that have helped farmers diversify into new enterprises and improve farm productivity.
The state has appealed that ruling, hoping to have full MSA funding restored, but at this writing no decision has been announced. Governor's Office of Ag Policy officials have notified county oversight boards of funding estimates for the next two years, but those could rise or fall depending on the arbitrator's ultimate decision and other factors.
Gary Huddleston | AIN Chairman