Interim Joint Committee on Local Government


Minutes of the<MeetNo1> 1st Meeting

of the 2001 Interim


<MeetMDY1> August 22, 2001


The<MeetNo2> first meeting of the Interim Joint Committee on Local Government was held on<Day> Wednesday,<MeetMDY2> August 22, 2001, at<MeetTime> 11:00 AM, in<Room> Room 149 of the Capitol Annex. Senator Albert Robinson, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Albert Robinson, Co-Chair; Representative Steve Riggs, Co-Chair; Senators Walter Blevins, Charlie Borders, David Boswell, Ernie Harris, Alice Kerr, Elizabeth Tori, and Johnny Turner; Representatives John Adams, Adrian Arnold, Scott Brinkman, Jim Callahan, Ron Crimm, Mike Denham, Jon Draud, J. R. Gray, Charlie Hoffman, Stan Lee, Reginald Meeks, Marie Rader, William Scott, Arnold Simpson, Brandon Smith, Roger Thomas, and Jim Wayne.


Guests:  Ronn Padget, Larry Burnett, and James Ishmael, Emergency Management Division; Jack Donovan, Kentucky Emergency Management Association; John Albert Harrison, Joel Day, and Paul Schrader, Kentucky Association of Professional Surveyors; Dan Yeast, Steve Gregory and Lonnie Campbell, Department for Local Government; Dennis Jones, Public Service Commission; David Cox and Bob Fentress, Kentucky Board of Engineers and Licensed Surveyors; Bert May and Bill Thielen, Kentucky League of Cities; David Martin and Shellie Hampton, Kentucky County Judge/Executives Association; Wade Helm, Kentucky Conservation Committee; Wendell Lawrence, Lincoln Trail Area Development District; Tracy Goff Herman, Jefferson County Judge/Executive’s Office; Bob Arnold, Denny Nunnelley, and Tim Sturgill, Kentucky Association of Counties; and Bob Wiseman, Lexington-Fayette County Urban-County Government. 


LRC Staff:  Jamie Franklin, Donna Gaines, Mark Mitchell, Joe Pinczewski-Lee, Alice Carter, Jan Harris, Norman Lawson, Rita Ratliff, Rebecca Mullins, and Cheryl Walters.


Senator Robinson turned the meeting over to Representative Riggs. Representative Riggs stated that the first item of business would be a progress report on the implementation of 1998 HB 453, AN ACT relating to disaster and emergency preparedness plans and disbursement of funding. He introduced Mr. Ronn Padgett, Director of the Division of  Emergency Management.


Mr. Padgett first gave the committee a status report on the latest of Kentucky’s  presidential major disaster declarations. He told members that due to the continuous series of violent storms and flash flooding in July and August in far eastern Kentucky, Governor Patton has asked the president to declare the area a major disaster for Kentucky.  At this time, in  Floyd, Knott, Letcher, Perry, and Pike Counties, the public damages were estimated to be almost $14 million with over $1,500,000 in damages to homes.


Regarding the implementation of 98 HB 453, Mr. Padgett explained that the Division of Emergency Management’s mission is to provide a comprehensive emergency management system for all of Kentucky, which is shared with the local directors of emergency management across Kentucky. He said their challenge is to coordinate people and resources, in ways that protect lives, environment and property. Mr. Padgett stated that it is important for him to emphasize that this is an all-hazards program, whether it is man-caused events, national security issues, such as terrorism, or natural events, such as flooding.  He noted that HB 453 also considers that all four phases of emergency management should be addressed:  mitigation, preparedness, response, and recovery.


Mr. Padgett next told the committee that he sees mitigation requirements, public facilities insurance, thresholds for federal assistance, shortfalls in routine funding, and reduced federal outlays for disasters as a changing federal posture on emergency management.


Mr. Padgett stated that the trends for emergency management were increased public expectations, media attention, rapid communications, complex threats, diverse populations, community development, more costly disasters, and competition for resources.


Mr. Padgett next discussed the funding for local emergency management agencies that passes through the Division of  Emergency Management. He stated that state dollars will increase by $721,000 this year for the local programs. Mr. Padgett noted that the projected shortfall for the next  program year for these programs will exceed $1 million.


Lastly, Mr. Padgett told the committee that all of the counties have a local emergency operating plan in existence and that they can execute those plans in response to storms and floods. He noted that the counties are currently in a four-year upgrade cycle for those plans, and that over half of the counties are ahead of schedule in updating their plans. The other counties are on target with their updates. Mr. Padgett stated that there are 37 full-time directors, 71 part-time directors, and 12 volunteer directors currently in the state. He said this varies from year to year. Regarding search and rescue, 109 counties have appointed a coordinator.


Mr. Padgett then introduced Mr. Jack Donovan, local director of emergency management in Georgetown/Scott County and executive vice-president of the Kentucky Emergency Management Association. Mr. Donovan told the committee that the demands on local emergency management agencies continues to increase but the funds are decreasing.  He noted that there is no state disaster funding available for the citizens of Kentucky. He said Kentucky has to rely on the Federal Emergency Management Association (FEMA). For example, in order for Scott County to qualify for FEMA assistance, there must be 100 homes that need help. Mr. Donovan asked the committee to look at avenues to set up a state disaster and emergency fund for Kentuckians.


Representative Riggs asked if there had been any joint appointments of local emergency management directors as mentioned in HB 453. Mr. Padgett stated that it has not happened. Representative Riggs said it concerns him that it has not happened. He asked Mr. Padgett if he could encourage joint appointments. Mr. Padgett said he could.


Senator Tori asked how many other states have disaster and emergency funds. Mr. Padgett replied that the number is small but increasing. He estimated that there were about 15 states that have those funds. Senator Tori stated that the committee needed more information as to how Kentucky compares to other states. Mr. Padgett said he would see that the committee got that information.


Senator Boswell asked who makes the determination regarding the threshold of 100 homes when trying to qualify for FEMA assistance. Mr. Padgett replied that it was an unofficial rule of thumb that FEMA has used. Senator Turner asked if the individual assistance was for the individual home owners. Mr. Padgett replied yes.


Senator Robinson stated that the committee needed to know more specifics as to how the Division of Emergency Management is involved, what they do, and how they operate given a situation like the one that happened in his hometown of London. Mr. Padgett said the City of London and Laurel County worked very well together in light of the recent tornadoes. He noted that there was very timely and rapid response by all of the city and county services. The state agencies, especially Transportation, and the National Guard were also quick with their help. Mr. Padgett stated that the key though, was the quick local response. In that case, the assistance of choice was the small business administration’s low interest loan program. He said the last he heard, there were about 20-plus people that had applied for and were going to receive those loans.


Representative Smith told Mr. Padgett that he would like to see some of the sources of funding for disaster and emergency that have been considered. He wondered that if such a fund was created, would it be set up as a superfund, who would manage it, would each county be in charge of their own, or would it be done as a state project. If so, who would manage it and how would it be disbursed, and would there be reimbursement by the recipients. Representative Smith said if that has to happen, he would like to see that it be for a limited time only until we get enough money into a fund to let it begin to manage and fund itself. He said he would also like for Mr. Padgett to get the committee some working figures which includes a good safety net. He asked if Mr. Padgett would provide that information to each member of the committee.


Representative Riggs thanked Mr. Padgett and Mr. Donovan for appearing before the committee. Representative Riggs then turned the meeting over to Senator Robinson. Senator Robinson stated that the next order of business was a discussion relating to the elected constitutional office of county surveyor. He asked Senator Harris to introduce the next speaker.


Senator Harris introduced Mr. John Albert Harrison, Oldham County Surveyor and President of the Kentucky Association of Professional Surveyors (KAPS). Mr. Harrison also recognized Paul Schrader and Joel Day, with the Kentucky Association of Professional Surveyors, and David Cox and Bob Fentress with the Kentucky Board of Engineers and Licensed Surveyors.


Mr. Harrison told the committee that the county surveyor’s office is one that was created by the Constitution of Kentucky. He said it was of considerable value originally, but over the years has diminished in value. Mr. Harrison explained that at one time, the county surveyor was responsible for surveying and handling engineering issues within a given county. However, in 1939, a professional licensure act was passed for engineers and the professional engineers took over the engineering work, and also at that time, became surveyors by virtue of being engineers. In 1966, a licensure act was passed for surveyors which created the surveyor profession again.


Mr. Harrison stated that KAPS sees the county surveyor as becoming a very vital part of a statewide effort that is currently going on in state government concerning Geographic Information Systems (GIS). He noted that Susan Lambert, with the Governor’s Office of GIS, is a very integral part of the surveying activities. Her grand vision is that in some point in time, 120 counties will have their own independent systems, but they will all link together so the state will have its own Kentucky GIS. Mr. Harrison said the county surveyor is the logical person to be involved in the development of that system in each one of the counties, and that it is especially important for a qualified person to be in that position.


Mr. Harrison pointed out that one of the problems they currently have is that there are no professional qualifications for the office of county surveyor. He said anyone can put their name on a ballot and if elected, can serve as county surveyor if they get a letter from the circuit judge saying they are qualified to hold that office. Mr. Harrison told the committee that the KAP is proposing, along with the assistance of the state licensure board, that there be a slight change in the law that would supplant the circuit judge from making that qualification determination, and let the licensure board do it. He noted that it would be done after someone is elected, but before they are allowed to sit in that position in the county. Basically, if a person is licensed by the state to practice land surveying, that person would be qualified to hold the office. It would not rule out anyone and it would not prohibit an incumbent who is reelected from sitting in that position.


Mr. Harrison introduced Mr. Paul Schrader, a member of KAPS who also sits on the GIS Advisory Council. Mr. Schrader told the committee that he currently chairs a subcommittee which deals with digital submittal standards that ties in with this discussion because many of the local governments are starting to implement GIS’s. He noted that Kentucky is in the forefront of implementing geographic information. The county surveyor's role would be to make sure that the new information being submitted is accurate by providing county control monumentation.


Mr. Harrison concluded by saying that it is the position of KAPS that the office of county surveyor should be definitely retained in the state and feel that it should be strengthened in the individual counties. He also said the office of county surveyor should be held only by people who are qualified and licensed by the Commonwealth of Kentucky to practice land surveying. Representative Riggs asked Mr. Harrison if there is ongoing training for county surveyors. Mr. Harrison replied yes.


Representative Meeks asked what training is available with GIS. Mr. Harrison answered that the county surveyors attend the state GIS conference and there are ongoing training seminars throughout the year.


Representative Riggs asked Mr. Harrison how he would feel if the office of county surveyor was appointed rather than elected. Mr. Harrison said it would not be a problem.


Senator Boswell asked if the jurisdiction of county engineers and surveyors overlapped. Mr. Harrison replied that there is not a turf battle between the two offices.


Representative Riggs thanked Mr. Harrison for appearing before the committee.


The next order of business was a discussion regarding special district fee assessments. Representative Riggs introduced Mr. Dan Yeast, Manager of the Cities and Special Districts Branch within the Division of Financial Services, of the Department for Local Government (DLG), and Mr. Dennis Jones, Manager of the Water/Sewer Revenue Requirements Branch, with the Public Service Commission (PSC).


Mr. Yeast began by referring members to some materials that he had prepared. He first pointed out a list that identified all of the special districts that are recorded within the state.  Mr. Yeast noted that currently, there are 1,039 individual entities. Next, he referred members to a list that gives the number of special districts by type. More pertinent for the meeting, Mr. Yeast said he had prepared a list of special districts that are defined by statute as special districts and lists them alphabetically by type, statutory authority to create the district, whether they have taxing authority or not, and their other source of revenues. He said the information is self-explanatory and that he would be glad to answer any specific questions.


Representative Riggs commented that in his area, the Metropolitan Sewer District has the authority to raise its fees on taxpayers by up to seven percent a year without approval of any government body or local elected official. He asked if that was an unusual circumstance, or do all special districts have an ability to raise their fees as and when they see fit. Mr. Yeast replied that is somewhat unusual. He said the taxing districts obviously, are by and large governed by the provisions of HB 44, which limits the amount of taxes they can raise. Mr. Yeast stated that DLG has been working with the PSC and Kentucky Infrastructure Authority (KIA) on a cost-based accounting system that will be done through a justification process. He explained that this would provide, perhaps, more accountability from that standpoint. Mr. Yeast said he did not have any intimate knowledge of MSD’s operation.


Representative Riggs also asked, if water or soil and conservation districts, for example, can, without local government’s permission, establish a new fee. He asked if they have the power to establish and invent a brand new fee for any purpose they deem fit. Mr. Yeast said each special district has its own unique statute. Mr. Jones replied that for water districts, any fee or charge that they levy, must be approved by the PSC before they can make that charge, and they have to be able to justify the rate or the fee that they are going to levy. He explained that any regulated utility that comes under the PSC’s jurisdiction, has to get prior approval from the PSC in order to levy any charge or fee, and that charge has to be included in its tariff.


 Representative Riggs asked if there are any water districts that are not subject to PSC approval. Mr. Jones said municipal water systems are not subject to the PSC’s jurisdiction, but the PSC does have jurisdiction over all of the other water districts, water associations, and private companies. Representative Riggs asked Mr. Jones if he was aware of any fees that are being charged by water districts without the PSC’s written and bonafide approval. Mr. Jones replied yes, they come across them from time to time and when they do, the water districts are required to cease charging the fee until they get the PSC’s approval. Also, they generally are required to refund any money they have collected. Representative Riggs asked Mr. Jones if he could cite an instance where he has used his authority to stop these water districts from charging the taxpayers new fees and required a refund. Mr. Jones said he could not recall any right at the moment. He noted that it is not a common occurrence, but it does happen.


Senator Robinson asked if Mr. Jones was saying that municipalities answer to no one at all, and that they can do whatever they want. Mr. Jones replied that the PSC has jurisdiction over wholesale rate that the cities may charge to regulated utilities. He noted  that is as far as their jurisdiction goes.


Representative Adams stated that Kentucky has too many water districts and asked what the PSC was doing to consolidate them. Mr. Jones replied that the PSC is encouraging merger wherever possible.


Representative Crimm asked what is the justification of people being charged outrageous monthly fees for having a sprinkler system if it does not discharge during that month. Mr. Jones stated that the PSC currently has Administrative Case 385 pending in which they are investigating that very thing. He said the PSC is investigating the charges, rates, and service requirements that those utilities are levying, and are currently in the information gathering stage of that investigation. Representative Crimm told Mr. Jones that once this investigation is done, he would like to see a report come back to this committee so that they could more fully understand the issue. Mr. Jones referred members to an interim report based on the responses to some information requests that they issued to their jurisdictional utilities. He pointed out that there are no conclusions included in that interim report. Mr. Jones told Representative Crimm that when the PSC is finished with the investigation and comes up with its final product, they will be happy to provide the committee with a copy. Representative Crimm commented that he would like for the committee to keep in touch with the PSC so they can come back to the committee with their findings.


Representative Riggs requested that Mr. Jones send Ms. Franklin a copy of Administrative Case 385 when it finished, and that she will make sure committee members receive a copy.


Regarding the stand-by fees that are charged businesses and individuals that have sprinkler systems, Representative Lee stated that, according to Mr. Jones’ earlier testimony, it was his understanding that any new fee had to be approved by the PSC. He asked Mr. Jones if any of the water districts or water companies had come before the PSC  and asked for approval for these stand-by fees. Mr. Jones replied yes, because they are in the tariff,  but a lot of these fees may have been included prior to the PSC being involved.


Representative Riggs asked Mr. Jones what he meant by tariff. Mr. Jones stated that any charges that are authorized by the utility, have to be included in their tariff. He said, for example, if the PSC issues an order saying that a utility may charge X number of dollars per month for a stand-by fee, the utility still cannot charge that fee until it has filed a tariff with the PSC laying that fee out, referred to as a “filed rate doctrine.” Mr. Jones explained that the document has to be on file with the PSC. He noted that he personally has not been involved in any stand-by fees for sprinkler systems. Mr. Jones stated that he could only say that his best guess is that those fees at one time were approved by the PSC.


In conjunction with what Representative Crimm requested, Representative Lee asked that when Mr. Jones provides this information concerning Administrative Case 385, that he also provide the committee with the rate filings for the stand-by fees, the amended tariffs, and the documents on file that show that water districts or companies may have authority to do that.


Representative Lee also asked what standard the PSC employs for water districts or companies to justify the rates used for stand-by fees. Mr. Jones explained that when a water district applies to the PSC for a change in its rates, the PSC staff will review the utility’s operating revenues and expenses, recommend any changes that they think need to be made to those categories to reflect ongoing levels of  expenses, and make sure the utilities are provided with sufficient revenues in rendering the regulated service. Once the PSC comes up with a revised or normalized revenue and operating income, they would determine the amount of revenue the utility needed. He noted that 99% of the time, they use a debt service coverage method for determining the total revenues that the utility needs to earn. Mr. Jones stated that it is based on their average annual principle and interest payment plus any additional coverage that may be required in order for the utility to issue parity bonds and the total of operating expenses that the PSC has deemed reasonable. Once the PSC comes up with that total number, they then back out any income that the utility would earn from interest income that was not restricted or any other operating income that they may have earned from returned check charges or something like that. For water districts, the PSC staff will generate a staff report that lays out their recommendations as far as the water district’s adjusted revenues, adjusted income, an estimate of their total revenue requirement, and what the staff recommends for the rate for that utility. That staff report then gets issued to the utility and any other parties of record and to the PSC. That is just the staff’s recommendation to the PSC, and obviously the PSC can change it if they would like.


The last order of business was an update on Executive Order 2001-609, relating to renaming the Division of Training and ADD Services within the Department for Local Government. Representative Riggs introduced Mr. Steve Gregory, General Counsel for the Department. Mr. Gregory said the Division of Training and ADD Services had assumed additional responsibilities since the time of its creation and the name no longer adequately described the programmatic responsibilities of that Division. He said Executive Order 2001-609 renamed the Division to the Division of Local Resources and took effect on July 18.


There being no questions from the committee, Representative Riggs thanked Mr. Gregory for his information and attendance.


Representative Riggs announced that the next meeting of the committee would be September 26, 2001 at 10:00 a.m.


There being no further business, the meeting was adjourned at 12:50 p.m.