Commerce Lexington Inc. Blog

Commerce Lexington Inc. is appreciative of members of the Kentucky General Assembly for addressing priority issues for the business community this session.  Those issues include: workers’ compensation reform, fully funding the actuarial required contributions (ARC) to the public employee pensions systems, making historic levels of investment in K-12 education, reducing cuts to higher education, and taking steps to address pension and tax reform.  Enacting policies that improve the state’s fiscal outlook, business competitiveness and skilled workforce are critical to Kentucky’s economic future. 

Commerce Lexington has long advocated for comprehensive tax reform that improves Kentucky’s competitiveness for business investment and job growth, creates a predictable and equitable business environment that encourages economic activity, and provides sufficient revenues to meet critical priorities.  We are encouraged that the leadership of the House and Senate, and members of the General Assembly are taking steps to address pension and tax reform, two of the most important public policy issues facing Kentucky. Over the past year, we have worked with legislators, the State Budget Director and other chambers to provide input for comprehensive tax reform.  These are conversations that must continue in order to strengthen the Commonwealth’s economic vitality.  States that deal with consequential issues, like pension and tax reform, are the states that move forward.

Because tax reform is complicated, there can be unintended consequences.  While no legislation is perfect, HB 366 is a start to improving Kentucky’s business climate and transforming our ability to make investments in education, infrastructure, economic development, healthcare and public safety.   Since this bill moved quickly through the process, we continue to reach out to a cross-section of our membership, including small businesses, to better understand its impact and solicit feedback. 
 
Although we recognize that a number of businesses will benefit from the reforms, while others may not, we believe this to be a first step in the process to modernize Kentucky’s tax code.  We strongly urge the Governor, legislative leaders and business to continue to come together through open dialogue about how we can further improve tax policies and Kentucky’s competitiveness.
 

A top priority bill for business, House Bill 2, is expected to be heard in the State Senate tomorrow (March 21, 2018).  The legislation makes important updates to the state's workers' compensation system to clarify laws and set guidelines that will help businesses avoid premium increases in the future.  No significant statutory changes have been made to the system since 1996. 

House Bill 2 would:

• Clarify that the limitation on reopening claims already in Kentucky's law will be applied.
• Set appropriate limits for filing claims on injuries identified years after exposure.
• Ensure the proper standard of care through treatment guidelines.
• Address the state's opioid addiction problem through formulary guidelines.
• Encourage employers to bring workers back to work quickly.
• Establish appropriate durations of payment of medical claims.

To learn more about the bill, see the one-page fact sheet. 
 
If this issue is important to your business, Commerce Lexington Inc. encourages members to contact their State Senator.  Please urge them to vote YES on House Bill 2 to modernize Kentucky's workers' comp system. 

Call 1-800-372-7181 to contact your legislator. 
Click here to find your legislator. 
Click here to email your legislator.

If you have questions or concerns, you may contact Andi Johnson, CLX Chief Policy Officer, at 859-226-1614.

As the 2018 Regular Session of the Kentucky General Assembly enters March, several priority issues are in motion including crafting the next two-year State Budget, six-year road plan, and legislation to reform the state’s financially troubled public pension systems (SB 1).  At press time of this issue, the state House was continuing to review the Governor’s budget proposal.  There are significant budgeting challenges, such as modest projected tax revenue growth, enormous obligations to public employee pension systems and higher costs associated with prison and Medicaid populations.  The Governor’s plan called for 6.25 percent cuts to many state agencies and programs, including the University of Kentucky.  Although the proposal held harmless the per pupil funding for K-12 (SEEK formula), local districts would be required to make cuts in administrative budgets to cover additional costs.  

The Governor's budget calls for program reductions that impact UK programs important to economic development in the region, such as the Center for Applied Energy Research ($2.63 million) and the Center for Entrepreneurship ($612,900), which funds the Small Business Development Centers across the state. 

This session, Commerce Lexington Inc. is also supporting legislation related to medical liability reform (HB 4, SB 2) to lower health care costs, essential skills curriculum for K-12 education (HB 3), workers compensation system modernization (HB 2), and extending angel investor tax credit programs (HB 312) that help local technology start-up businesses. Business-friendly legislation related to modernizing the state’s unemployment insurance system is also expected to receive attention this session. 

Commerce Lexington continues to monitor legislation and provide regular e-mail updates about activity in Frankfort to keep you informed about the issues impacting the business community.  If you have questions or concerns, contact Andi Johnson, CLX Chief Policy Officer, at (859) 226-1614. 

House Bill 227 seeks to update current "net metering" laws for private solar power generation for small scale systems. The current "net metering" law requires utilities to credit private solar developers generating 30 KW or less of solar power (i.e. residential, small commercial businesses) at 300% of the market value for the excess energy pushed back on the grid.  Ultimately, the costs of net metering are paid by other customers on the utility grid through higher bills.
 
The goal of the legislation is to: 1) promote fairness in the system, 2) keep electricity rates affordable for all customers, and 3) prevent cost-spiking issues like those seen in other states where solar subsidies have significantly increased costs for residents or businesses who do not generate solar power.  
 
Why to Support HB 227:

• HB 227 reduces the subsidy that credits rooftop solar at 300% of the value of energy in Kentucky.  It provides a credit that will continue to support solar power generators but avoid costly increases for other customers.
• The bill does not put an end to rooftop solar. 
• It holds harmless all existing net metered customer systems and rates. The modernization only applies to new systems generating 30 KW or less of solar power. New generators will still receive a 1:1 credit for the power they use, but any excess power they feed onto the energy grid will be valued the same as any other energy the utility must purchase -- at the average wholesale rate. 
• HB 227 seeks to protect all customers from unfair costs caused by outdated net metering policies.

Numerous business organizations including Commerce Lexington Inc. support this legislation to keep Kentucky's low-cost electricity rates, a key competitive advantage in attracting businesses to the state.  The bill is expected to be voted on in the House Energy Committee this week.   To support HB 227, please call your legislators at 1-800-372-7181.

​House Majority Leader Jonathan Shell is championing "essential skills" legislation again this session. Filed last week, House Bill 3 is expected to receive a hearing in the House Education Committee on Tuesday. Leader Shell has been a strong proponent of legislation to encourage K-12 schools to make essential skills curriculum a priority. Th goal is to help address a skills gap concern of many employers; finding workers with necessary "soft" skills to be successful in the workplace. The bill identifies and defines essential skills, gives schools credit who are already addressing this skills gap, allows schools the flexibility to use their own program or resources provided by the Kentucky Deptartment of Education, and brings education and business together to provide best practices and resources to schools who want assistance in essential skills programming.  It also creates a Kentucky Work Ethic Certificate that will be used to help deem students transition ready.

​House Budget Review Subcommittees continued to hear testimony from cabinet and agency officials, and university and college presidents about the impact of the Governor's proposed budget on their operations. In the weeks ahead, House members will decide what adjustments, if any, to make to House Bill 200 before sending the budget bill to the Senate for consideration. Lawmakers and advocacy groups also continue to await the introduction of legislation reforming the state's public employee pension systems. 

​Last Tuesday was a significant day in Frankfort and Lexington. It was the deadline for candidates to file for local, state and federal offices in 2018. In the non-partisan race for Lexington's Mayor, seven candidates filed to run. They are: former Public Safety Commissioner Ronnie Bastin, former Vice Mayor Linda Gorton, Skip Horine, former Mayor Teresa Isaac, LFUCG Council Member Kevin Stinnett, Ike Lawrence and William Weyman. The top two vote-getters will advance to the November General Election.
 
In the General Assembly, all 100 House seats and 19 of 38 Senate seats are on the ballot this year. The overwhelming majority of House and Senate incumbents face opposition. Of the Fayette County delegation, Rep. Robert Benvenuti and Rep. Sannie Overly are not seeking re-election. It is yet to be seen how these political dynamics will impact legislative issues in Frankfort like pension reform or budget negotiations.
 
In the 6th District Congressional race, Congressman Andy Barr faces Chuck Eddy of Lexington in the Republican Primary. There is a six-way Democratic Primary between Lexington Mayor Jim Gray, State Senator Reggie Thomas, Amy McGrath, Theodore David Green, Daniel Kemph and Geoff Young. The primary winners will advance to the General Election.
 
View all Fayette County Election Filings
 
The Primary Election is on May 22, and the General Election is on November 6.

Commerce Lexington Inc. joined the Kentucky Chamber of Commerce and other local chambers in signing a support letter to both U.S. Senate Majority Leader Mitch McConnell and U.S. Senator Rand Paul urging the passage of federal tax reform to help our job creators. 

VIEW THE LETTERS HERE:
U.S. Senator Mitch McConnell Letter
U.S. Senator Rand Paul Letter
 
Commerce Lexington Inc. has a long-standing position of supporting tax reform to improve Kentucky’s competitiveness, including lower corporate tax rates.  We were pleased to see Congressman Andy Barr and the U.S. House of Representatives pass federal tax reform and encourage the Senate to continue to move forward with this critical issue. 
 
In expectation of progress being made, the Kentucky business community believes that:

• A lower corporate tax rate would better allow U.S. businesses to compete in today’s globalized marketplace.
• The best means of achieving a more competitive tax system is through a reduction in the U.S. statutory corporate tax rate, currently the highest in the industrialized world.
• A lower corporate tax rate would benefit both domestic and multinational companies and would increase incentives to invest in the U.S., enhancing economic growth and benefitting American workers, consumers, and small businesses.
• A lower corporate tax rate will result in increased economic growth, but the Chamber recognizes budget responsibility and is willing to put all tax expenditures on the table to achieve a globally competitive rate.
• Further, we recognize small businesses, which are critical to Kentucky’s economy, are often organized as pass-through entities. We believe tax reform should also consider the tax burden of small businesses by simplifying the code and reducing costs to ensure small businesses do not incur a greater tax burden.

The University of Kentucky (UK) was awarded a prestigious $11.2 million biomedical research grant from the National Institute of Health (NIH) to study the link between cancer and obesity.  The grant will fund UK's Center for Cancer and Metabolism over the next five years, and exemplifies the critical role UK plays as a change agent and economic development engine for Kentucky. 
 
Kentucky has disproportionately high incidences of both cancer and metabolic disorders.  The state leads the nation in cancer deaths and is in the top 10 for highest obesity rates in the country.  NIH funding supports the lion’s share of research at UK, and has a large impact on the state.  

​According to the “United for Medical Research” report, NIH awarded $163.6 million in grants and contracts in FY2016 that directly supported 2,886 jobs and $431.6 million in economic activity in Kentucky. For every $1 million in NIH awards, 12.95 jobs are created.  Read more about the announcement from UK Healthcare.
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