Interim Joint Committee on Appropriations and Revenue


Budget Review Subcommittee on Economic Development and Tourism, Natural Resources and Environmental Protection


Minutes of the2nd Meeting

of the 2005 Interim


 November 2, 2005


The 2nd meeting of the Budget Review Subcommittee on Economic Development and Tourism, Natural Resources and Environmental Protection of the Interim Joint Committee on Appropriations and Revenue was held on Wednesday, November 2, 2005, at 10:00 AM, in Room 113 of the Capitol Annex. Representative John Arnold, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members: Representative John Arnold, Co-Chair; Senators David Boswell and Alice Kerr, Representatives Jim Gooch, Charlie Hoffman, Dennis Keene, and Lonnie Napier.


Guests:   Gene Fuqua, Executive Administrator, Office of the Secretary, Cabinet for Economic Development; and, Tom Hoehner, Fiscal Director, Department of Administrative Services, Cabinet for Economic Development.


LRC Staff:   Kevin Mason, Jack McNear, Tom Willis, and Spring Emerson.


Chairman Arnold introduced Gene Fuqua, Executive Administrator, Office of the Secretary, and Tom Hoehner, Fiscal Director, Economic Development Cabinet. Mr. Fuqua asked the members to refer to a handout in their folders which provides an overview of the Cabinet's 2005-2006 budget as enacted.  He provided an explanation of the use of funds in each appropriation unit.  He also discussed several new initiatives, such as the move of the Small Business Advocacy office from the Commerce Cabinet, the Small Business Lending program, and the future expansion of an international office into China.


Chairman Arnold inquired if the amount for Small Minority Business is what is remaining.  Mr. Fuqua replied that it is the total operating budget for that area.  Chairman Arnold asked if grants are being awarded.  Mr. Fuqua replied that the Small Minority Business unit does not award grants, adding that they come from the Department for  Financial Incentives.  He went on to say that some grants are received by small minority businesses from Financial Incentives. 


Representative Napier requested the name and phone number of the contact person for information regarding the loan pool for small businesses.  Mr. Fuqua responded the contact person is Commissioner Donna Duncan, Department of Financial Incentives, at 502-564-7670.


Chairman Arnold inquired about the Airport Relocation Assistance Fund and the Crispus Attucks Small Business Incubator.  Mr. Fuqua replied that they were both line item projects that were put in the budget by the legislature as pass-through grant funds.  He went on to say that the Airport Relocation Assistance Fund is for moving homes near the Louisville airport, with the latter being a small minority business operation in Hopkinsville.  Chairman Arnold asked if each respective program had received its funding.  Mr. Fuqua stated that the Airport Relocation project had received its funding, but the Small Business Incubator was in process.


Representative Napier asked if there were a large number of small business contacts seeking locations in Kentucky.  Mr. Fuqua replied that the activity level is much higher now than two years ago, and is increasing.  He added that they are locating all over the state, rather than in certain areas.  Representative Napier commented that there is a large building in Lancaster that has been there for seven or eight years, with not much contact.  Mr. Fuqua stated that he will check on it. 


Representative Keene commented that 300 jobs had been lost at Newport Steel in Wilder, Kentucky, to China.  He cautioned the cabinet to be careful in their dealings with China.  Mr. Fuqua replied that the office in China is a trade office for reverse investments, looking for opportunities for American companies to sell products to China.


Chairman Arnold asked what efforts had been made in recruitment of a Federal Research Lab here in Kentucky.  Mr. Fuqua replied that a new Commissioner has been hired for the New Economy initiative, which is now the Department of Commercialization and Innovation.  Chairman Arnold asked if funds have been dedicated to this effort.  Mr. Fuqua answered that $1 million was earmarked, but has not been applied specifically toward that at this time.


Senator Boswell stated that he serves on the University of Kentucky Center for Applied Energy Research Advisory Board, and on behalf of the Board, invited the subcommittee over to see the Research Center and the work that is being done there.  He added that the U.S. Department of Defense has allocated approximately $85 million in their next budget to construct a coal processing plant somewhere in the Illinois Basin area, which includes Kentucky.  The plant will process between 60,000 and 80,000 barrels of coal per day into transportation motor fuels.  Chairman Arnold thanked him for the invitation, adding that staff will look into the possibility of holding a meeting there.


Chairman Arnold asked how much in Coal Severance allocations had been spent from FY 2001 through FY 2005.  Mr. Fuqua replied that he will provide that information at a later date.


There being no further business, the meeting was adjourned at 10:34 A.M.