Commerce Lexington Inc. Blog

​This past week, a priority issue important to Commerce Lexington Inc. passed its first hurdle in the legislative process. HB 441, sponsored by Rep. Ruth Ann Palumbo, provides authorization to the Lexington-Fayette Urban County Council to increase the transient room tax an additional 2.5 cents for the renovation and expansion of the Lexington Convention Center. The bill passed out of the House Economic Development Committee with bi-partisan support.  It now heads to the full House for a vote. This legislation is critical to the local funding of the $250 million project.
 
In his budget proposal, Governor Bevin provided $60 million in state funding for an investment partnership with the City of Lexington for the project. The arrangement includes a guaranteed repayment of funds to the state using .5 cents of the transient room tax.  In order for the Lexington Convention Center to remain competitive and meet its potential as an economic engine, Lexington and the state must make needed investments. Industry experts forecast that expanding the Convention Center will generate more than $57 million in annual economic impact, an increase from $42 million today.
 
State Budget Update
With less than 25 legislative days remaining in the 60-day session, the House has not released its version of the budget. Legislators continue to hear testimony from state officials about the impact of the Governor's proposed cuts to various state agencies.  The Governor's proposal included 4.5 percent budget cuts for the rest of the current fiscal year and 9 percent cuts for the next two fiscal years for most of state government, including higher education. The savings are aimed at helping meet financial obligations to the state pension systems and Medicaid. 
 
Many Capitol observers now anticipate the House will present its budget in mid-March after the special elections next week. Special elections for four vacant House seats will be held on Tuesday, March 8. Currently, Democrats hold a slim majority (50-46) in the chamber.

As the 60-day legislative session surpasses the mid-point, the state's next two-year budget remains the priority issue for legislators.  The House and Senate continue to review the Governor's budget proposal and consider changes based on legislative priorities. The House is expected to present its version of the budget in early March.   House Speaker Greg Stumbo has said in recent comments that the House is looking for ways to restore investments to higher education.  
 
Last week, Commerce Lexington hosted a policy briefing in Frankfort to provide members engaged with public policy efforts an opportunity to learn more about some of key issues from top-level policy leaders. Speakers included: Senate President Robert Stivers, House Speaker Greg Stumbo, State Budget Director John Chilton, Energy and Environment Secretary Charles Snavely, Education Commissioner Stephen Pruitt and Andy Hightower, chief of staff for Education and Workforce Development Cabinet.  Members of the Fayette County legislative delegation also attended and interacted with attendees.  

ACTION ALERT FOR P3 LEGISLATION:
Public-private partnership (P3) legislation (HB 309 | SB 132) has passed the House but continues to await action in the Senate.  The Kentucky Chamber of Commerce has asked members of the business community to contact their Senators and urge support for P3.  
 
This legislation would create a clear and transparent framework under Kentucky's procurement code to allow state and local governments to use a P3 to provide services, facilities and transportation infrastructure to the public. It also includes reasonable oversight measures to safeguard taxpayer dollars at the local and state level. The legislation is supported by the Kentucky League of Cities, Kentucky Association of Counties and many business organizations.

• P3 provides an important tool for our state and local governments.  
• P3 could mean more private sector jobs with fewer tax dollars expended for critical projects.  
• Commerce Lexington is supporting this legislation to create more business opportunities and to help local governments operating on limited budgets to do more with less.  
• All of Kentucky's surrounding states have authorized the use of P3.  

Please take a few minutes to e-mail the Senators representing Fayette County and urge them to support P3 legislation.
 
Senator Alice Kerr
Senator Reggie Thomas
Senator Ralph Alvarado
Senator Tom Buford
Senator Jared Carpenter

This past week, several issues important to Commerce Lexington moved forward in the legislative process, such as bills dealing with public-private partnerships (P3), education, workforce development and workers compensation. House Budget Review Subcommittees continue to meet as legislators review the Governor's budget proposal and analyze state agency budgetary needs, including those of the University of Kentucky and KCTCS. 

Local Option Sales Tax:
HB 2, the local option sales tax constitutional bill, was also introduced. The proposal would allow local governments to enact up to an additional 1% sales tax for specific, voter-approved capital projects.  When the projects are finished, the tax would sunset. Local option sales tax legislation, also known as LIFT, is supported by Commerce Lexington. The chamber has visited several cities, including Oklahoma City, on the annual Leadership Visit, and our leaders have seen firsthand the positive impact of transformative community projects from local option sales tax. 

In December 2015, Commerce Lexington assembled a group of diverse business and community leaders for an envisioning process to generate potential project ideas - if the Urban County Council, with local voter approval, had the ability to utilize this investment tool. Some of the top ideas included: education and workforce training center, sportsplex facility; and enhanced green spaces, parks and trail systems.

Public-Private Partnerships:
Commerce Lexington Inc.-supported legislation (HB 309) dealing with public-private partnerships (P3's) passed out of the House this week.  It now heads to the Senate for consideration. This legislation creates a transparent and explicit framework under Kentucky's procurement code through which the state and local governments may use a public-private partnership to provide services, facilities and transportation infrastructure to the public. The bill provides an alternative method for project financing to help local governments operating on limited budgets provide more efficient and effective services.  The bill eliminates tolling as an option for the Brent Spence Bridge project in Northern Kentucky -- a point of contention among officials last session.

​This past week, bills related to the state pension systems, prevailing wage, and economic development  moved through the legislative process.  A federal judge in Western Kentucky also struck a local right-to-work ordinance in Hardin County, noting that federal law limited action on this issue only to states - not local governments. Legislation (SB 3) to make Kentucky a right-to-work has been filed in the Senate. This bill would give workers a choice regarding joining a union and prevent the requirement that employees pay union dues as a condition of employment.  Kentucky is one of 25 states that do not have a right-to-work law. 
 
Commerce Lexington Inc.-supported legislation (HB 309/SB 132) dealing with public-private partnerships (P3's) is expected to be heard in House and Senate committees this week.  This legislation creates a transparent and explicit framework under Kentucky's procurement code through which the state and local governments may use a public-private partnership to provide services, facilities and transportation infrastructure to the public. The bill provides an alternative method for project financing to help local governments operating on limited budgets provide more efficient and effective services.  The bill eliminates tolling as an option for the Brent Spence Bridge project in Northern Kentucky -- a point of contention among officials last session. 

​Last week, Governor Matt Bevin delivered his budget address to the General Assembly members and outlined his spending and policy priorities for the next two years.  The Governor placed emphasis on restoring financial stability and prioritizing investments in Kentucky's future. 

According to Governor Bevin, the Commonwealth faces a $500 million funding shortfall to meet the financial obligations that must be addressed - including state pensions and Medicaid costs.  To find additional monies, the Governor proposed spending cuts across most state agencies but did not recommend any tax increases.  The Governor also prioritized and reallocated state dollars to Kentucky Employees Retirement System (KERS), Kentucky Teachers' Retirement System (KTRS), K-12 education, workforce development, social workers and law enforcement. 

Specific to Lexington, Governor Bevin provided $60 million in state funding for an investment partnership with the City of Lexington to help with the renovation and expansion of the Lexington Convention Center. The arrangement includes a guaranteed repayment of funds to the state. The convention center serves as an economic engine for Lexington and the region. The project is expected to generate an additional $28 million in annual economic impact.