Beech Tree News Network

Numerous issues await lawmakers when the 2014 legislative session convenes Tuesday, from crafting a biennial budget amid meager revenue growth to considering again a constitutional amendment to allow expanded gaming.

Their decisions — pending Gov. Steve Beshear’s veto pen — will have far-reaching ramifications for Kentucky. Some pieces of legislation will wither on the vine while others will appear to wilt, only to spring to life at the 11th hour.

This list is by no means exhaustive, but includes some major storylines to keep in mind as the 60-day session gets underway:

Two-year budget

K-12 education will be front and center as legislators draft a biennial budget. Beshear has said he hopes to restore per-pupil spending to fiscal year 2009 levels — $3,866 per pupil compared to $3,827 currently — in the upcoming budget, even if that means further cuts to state agencies and programs.

The Kentucky Department of Education has requested an additional $336.3 million in the next two-year spending cycle, with Education Commissioner Terry Holliday warning that hundreds of public school teachers could be laid off without more money.

Lawmakers have pledged to make full employer contributions to the state pension system in a reform package passed during the 2013 session. But covering mandatory retirement, health insurance and Medicaid increases alone will devour the roughly $500 million in two-year revenue growth projected by the Consensus Forecasting Group, Holliday told The State Journal.

Additional funds, some of which would be restored to prior levels, are needed to maintain new student assessment standards passed as Senate Bill 1 during the 2009 session, Holliday said.

“Teachers won’t be able to have the resources they need to help kids reach these higher expectations, so we’ll take anything we get,” he said. “We’re very happy with any restoration of funds, but we gave a bare-bones minimum on this request, and if we don’t get the funding we need then I’m afraid our education progress will go backwards.”

The Kentucky Retirement Systems will see an increase in employer contributions from the state expected to cost more than $100 million. 

But KRS isn’t the only pension system seeking additional money in the upcoming budget. The Kentucky Teachers’ Retirement System is requesting an extra $790 million in the biennium, with KTRS Executive Secretary Gary Harbin floating a possible $1 billion pension obligation bond sale to remain solvent.

Expanded gaming

Pro-gambling advocates see 2014 as the best chance to pass a constitutional amendment allowing casinos to operate in Kentucky, a major plank in Beshear’s 2007 and 2011 gubernatorial campaigns.

But historically, the Legislature has scoffed at opening the state’s borders to casino-style gambling. Those against expanded gaming say attitudes in the General Assembly, namely the Republican-controlled Senate, have not thawed with time.

Louisville private equity investor Jonathan Blue — co-chairman of Kentucky Wins!, a group led by business leaders supporting efforts to legalize casino-style gambling — said expanded gaming would prove an economic boon to the state. 

He cited a 2011 study by Spectrum Gaming Group that estimated expanded gambling would generate $541.3 million in tax receipts and create nearly 11,000 jobs within the first year.

“This is very needed right now in the state,” Blue said. “We have this several hundred million dollar shortfall, and this is the only way to solve that shortfall and bring in new revenue to this state without raising taxes. There’s no other way.”

Kentucky’s horse industry, which Blue said would benefit from expanded gaming, has coalesced behind a proposal that would not bind casinos and racetracks constitutionally, but would instead give tracks the ability to top the highest casino license bidder by a certain percentage at the end of the bid process to obtain the permit in their regions.

Churchill Downs officials have told Kentucky Wins! that the racetrack would build a standalone casino in downtown Louisville rather than modifying the track to a “racino,” Blue said.

But Martin Cothran, spokesman for the Family Foundation of Kentucky, dismissed the notion that casinos would help the horse industry, arguing money spent at betting windows would instead be pumped into slot machines or at blackjack tables. He also rejected Spectrum Gaming Group’s financial estimates.

Cothran said he foresees no significant shifts in the General Assembly’s attitudes about expanded gambling, adding that one pro-gambling legislator, Democrat Sen. Joey Pendleton of Hopkinsville, was replaced by Republican Sen. Whitney Westerfield, who opposes expanded gambling.

Sexual harassment fallout

Allegations of sexual harassment against former Democratic Rep. John Arnold of Sturgis brought by two Legislative Research Commission staffers in August not only sparked Arnold’s abrupt resignation from the chamber, but also launched a civil suit in Franklin Circuit Court and an investigation by the Legislative Ethics Commission.

House Speaker Greg Stumbo, D-Prestonsburg, empanelled a special committee to investigate the claims against Arnold, but the committee disbanded without taking action in December after its attorney said it had no authority to punish a former House member.

Stumbo received a letter Friday from Rep. Jeff Donohue, a Fairdale Democrat who chaired the committee, detailing the panel’s actions and rationale.

“I can tell you as a former prosecutor, if I had been in charge of that committee, I think it probably would’ve gone a different direction,” Stumbo said. 

“But be that as it may, I think that the House will ultimately have to decide what happens — whether that letter is considered a report, whether that report is adopted or not and whether a new committee’s to be appointed or the old committee’s to go back and finish its work.”

Legislation sponsored by House Majority Caucus Chair Sannie Overly has been pre-filed that would require sexual harassment training for lawmakers and mandate any workplace harassment investigations conducted by LRC be reported to legislative leaders.

Bluegrass Pipeline

With proposed construction of the Bluegrass Pipeline — a natural gas liquids pipeline that would transport drilling byproducts from northeastern mining regions to the Gulf Coast — questions arose about the joint company’s ability to claim land through the state’s eminent domain law. 

Williams and Boardwalk Pipeline Partners have said state law gives them authority to use eminent domain to obtain land for the pipeline, which is expected to travel through Franklin and nearby counties.

Tom FitzGerald, director of the Kentucky Resources Council, worked with Sen. Jimmy Higdon, R-Lebanon, and Rep. David Floyd, R-Bardstown, on legislation limiting the ability of eminent domain to pipelines carrying either oil or gas taken from the state or already refined. He also met with Rep. John Tilley, D-Hopkinsville, on his bill that would require Public Service Commission approval before enacting eminent domain.

FitzGerald said he would further like to see legislation establishing a regulatory board similar to those in Minnesota, South Dakota, North Dakota and Montana.

“There are legislators who are concerned that there’s no effective regulatory oversight over the routing of the pipeline, and then there are those who are concerned pretty broadly with the fact that if someone wants to build a pipeline that is simply passing through the state in order to move their product from the producing formations down to the gulf, they need to negotiate with landowners without this specter of eminent domain hanging in the air,” FitzGerald said.

Tom Droege, spokesman for Williams, said the partnership has obtained easements for more than 50 percent of the Bluegrass Pipeline’s path and would only use eminent domain as a last resort.

He said the pipeline would have significant oversight from agencies such as the Federal Energy Regulatory Commission, U.S. Army Corp of Engineers and the Kentucky Department for Environmental Protection.

“We believe that current state law is more than sufficient to deal with all aspects of the pipeline’s construction and operation in the Commonwealth of Kentucky,” Droege wrote in an email to The State Journal.

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By Kevin Wheatley

The State Journal

Kentucky Press News Service

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Kentucky minimum wage bill to go before lawmakers

Upping the state’s minimum hourly wage from $7.25 to $10.10 will be a top issue for House Speaker Greg Stumbo, who announced Friday the legislation would be designated House Bill 1 in the upcoming session.

HB 1 will mirror a bill before the U.S. Congress, said Stumbo, D-Prestonsburg. If passed, he said HB 1 would gradually increase the minimum wage within three years. The last minimum wage increase came in 2009.

HB 1 will also include provisions prohibiting wage discrimination on the basis of gender, sex or national origin, an issue championed by Rep. Mary Lou Marzian, D-Louisville, in recent years, Stumbo said.

“If a worker works a 40-hour week he or she is expected to work, at the minimum wage of $7.25 an hour, that worker makes barely over $15,000 a year,” Stumbo said. 

“Now that’s not a living wage by any stretch of the imagination, and I just believe — and I think my colleagues in the House believe for the most part — that there needs to be something done to help level the playing field for people who work for minimum wage.”

Stumbo noted New Jersey voters recently approved a referendum raising the state’s minimum wage. The Newark Star-Ledger reported New Jersey voters approved the measure, which raises the minimum wage from $7.25 to $8.25 and ties future increases to inflation, with nearly 61 percent support.

He also cited a poll by Small Business Majority showing 67 percent of responding small business owners supported an increase in the minimum wage and allowing it to rise in relation to inflation.

Backlash from GOP lawmakers was swift. House Minority Leader Jeff Hoover, R-Jamestown, dismissed HB 1 as evidence of “Obama-style liberal leadership” supported by Stumbo, and he said raising the minimum wage would hinder job prospects for young adults.

“Democrats see government as the answer to rebuilding our economy,” Hoover said in a statement. “Republicans see creating conditions for employers in the private sector to create and add jobs as our top priority.”

It’s unlikely the proposal will gain traction in the Senate. Senate President Robert Stivers said the General Assembly should focus on job creation policy rather than raising the minimum wage.

“He (Stumbo) wants to trap people in minimum wage jobs; he thinks that’s going to replace all the jobs that’ve been lost in this state because of the policies at the federal level,” Stivers, R-Manchester, said. 

“Again, we welcome him to the discussion, but I think we need to be much more broad based in what we’re doing than what the speaker is being very narrow minded in proposing.”

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By Kevin Wheatley

The State Journal

Kentucky Press News Service