Thefourth meeting of the Interim Joint Committee on Local Government was held on Thursday, October 6, 2005, at 1:00 PM, in Ballroom A of the Galt House Hotel in Louisville, Kentucky. Representative Steve Riggs, Chair, called the meeting to order, and the secretary called the roll.
Members:Senator Damon Thayer, Co-Chair; Representative Steve Riggs, Co-Chair; Senators Walter Blevins, Julian Carroll, Ernie Harris, Alice Kerr, Elizabeth Tori, and Johnny Ray Turner; Representatives Adrian Arnold, Ron Crimm, Mike Denham, Ted Edmonds, Derrick Graham, Jimmy Higdon, Charlie Hoffman, Dennis Keene, Stan Lee, Thomas McKee, Reginald Meeks, David Osborne, Arnold Simpson, Ken Upchurch, and Jim Wayne.
Guests: Representatives Rocky Adkins and Dennis Horlander; Sylvia Lovely, Neil Hackworth, Bill Thielen, Jerry Deaton, Bert May, Phil Huddleston, Bill Hamilton, Robin Cooper, Joe Ewalt, and Craig Maffet, Kentucky League of Cities; Mayor David Cartmell, City of Maysville; Mayor Glen Caldwell, City of Williamstown; Mayor Tom Watson, City of Owensboro; David Peterson, Louisville Center Area; Ken Herndon, Louisville Downtown Management District; Mayor Karen Cunningham, City of Madisonville; Shellie Hampton, Kentucky County Judge/Executives Association; Richard Tanner, Kentucky Magistrates and Commissioners Association; Ron Wolf, Louisville Metro Government; Bob Arnold, Kentucky Association of Counties; and Jay Hall, Myra Lee Cowley-Smith, and Stephanie Stumbo, Governor's Office for Local Development.
LRC Staff: Jamie Franklin, Donna Gaines, Mark Mitchell, Joe Pinczewski-Lee, Brian Wilkerson, Mike Haydon, and Cheryl Walters.
Upon the motion of Senator Harris, seconded by Representative Crimm, the minutes of the September 28, 2005 meeting were approved.
Representative Riggs announced that the committee was meeting in conjunction with the Kentucky League of Cities' annual convention. He then recognized Senator Thayer for an announcement.
Senator Thayer stated that the Legislative Research Commission was pleased to announce the LRC Hurricane Relief Fund Project. He said as part of the project, donations will be accepted in the small collection box located on the stand near the sign-in sheet. Senator Thayer noted that 100% of all contributions will be split equally among the American Red Cross Disaster Relief Fund, Habitat for Humanity Operation Home Delivery, and the Bush-Clinton Katrina Fund.
The first order of business was a presentation of the Kentucky League of Cities' (KLC) legislative platform for the upcoming 2006 session of the General Assembly. Representative Riggs recognized Ms. Sylvia Lovely, CEO and Executive Director of KLC.
Ms. Lovely welcomed the committee and thanked them for meeting during the League's convention. She told members that KLC's theme for 2006 was decision-making at the local level. Ms. Lovely then introduced the president of KLC, Mayor David Cartmell, City of Maysville, for some comments.
Mayor Cartmell thanked the committee for their hard work on 05 HB 413, relating to public safety revenue. He also thanked them for their hard work on tax modernization at the local level.
Ms. Lovely next introduced Mr. Neil Hackworth, Deputy Executive Director of KLC. Mr. Hackworth told the committee that the League's legislative priorities were health care for local government employees, revenue options for local governments, eminent domain and the Kelo decision, additional options for merger of local governments, and unfunded mandates. He then introduced Mr. Jerry Deaton, Director of Governmental Affairs at KLC, to discuss the League's 2006 legislative agenda.
Mr. Deaton told the committee that the first issue to be discussed would be local government employee health insurance. He introduced Mr. Craig Maffet, Legislative Counsel at KLC, to address the committee on this issue.
Mr. Maffet told the committee that KLC is very concerned about local government employees being required to participate in a state self-insurance pool. He noted that local governments have been given no assurance that this pool would provide better benefits at lower costs. Mr. Maffet stated that local government salaries are smaller than state or private salaries and the cost to participate in the state plan may be too costly for local government employees. He also said that it will be difficult for cities to fund salaries and meet these costs. Mr. Maffet mentioned that it will be hard to recruit and maintain law enforcement officers with a potential loss of benefits from current plans. He pointed out that this will increase an additional financial burden for local governments and could lead to local layoffs.
Mr. Hackworth added that local governments are not pushing to be added to the state self-insurance pool during the 2006 session. He said he would like for the state to consider keeping KLC out of the process at this point to see if the new system will work.
Representative Lee asked why does the League think it is bad for local governments to participate in a state self-insurance pool. Mr. Maffet replied that by not participating in a state self-insurance pool, local governments can be more competitive and get lower rates. He added that there is more flexibility at the local level. He noted that it is estimated that there is a $5.00 difference in cost so it would not be worth the trouble to change over.
Representative Lee also asked how many local government employees there were that would be utilizing the self-insurance pool. Mr. Hackworth said around 30,000.
Senator Harris asked how many local government retirees were in the state insurance plan. Mr. Hackworth replied there were approximately 5,000 local government retirees.
Representative Riggs asked if all non-certified school employees were insured. Mr. Hackworth stated that they were insured by the school district.
Mr. Deaton next introduced Mr. Bill Thielen, General Counsel for KLC, to address the issue of eminent domain and the Kelo decision. Mr. Thielen told the committee that the U.S. Supreme Court recently ruled that cities have the ability to condemn blighted private property for public good. He said that KLC believes that wholesale changes to Kentucky's condemnation statutes would be detrimental to government's ability to protect the health, welfare and safety of our citizens. Mr. Thielen stated that people need to be educated on the impact of the Kelo case. He emphasized that eminent domain is a vital tool and that the response to the decision should not be an overreaction. He made the following suggestions regarding eminent domain: the eminent domain laws should be codified as such in statute; they should protect the right to allow for urban renewal of blighted slum areas; there should be a definition of blighted area in the statutes; all of the definitions relating to eminent domain need to be tightened up in the statutes; and there should be a time frame established for the exercise of eminent domain for urban renewal.
Senator Carroll stated that he agreed with Mr. Thielen's assessment of the court decision and that the concept needs to be codified into law. He suggested that a referendum should be considered where property owners could approve economic development opportunities to cities.
Mr. Deaton next discussed revenue options for local governments. He told the committee that the League was concerned with local governments' ability to raise revenue. Mr. Deaton said KLC is looking at a one time catch up provision for HB 44, a local option sales tax, a constitutional amendment to provide revenue sharing between state and local governments, and the expansion of the restaurant tax to larger cities in the state.
Mayor Tom Watson, City of Owensboro, told the committee that it is an issue of fairness. He noted that the City of Paducah's Mayor William Paxton, would like the restaurant tax expanded so he could use it for his parks. He said the larger cities would like the opportunity for this revenue because it is designated for "quality of life" issues.
Representative Graham commented that the key is for local governments to have the option. He applauded KLC for their part in this effort.
Senator Carroll commented that home rule was given to cities and now it has been taken away. He said local governments should be allowed to take care of local projects and let the state take care of state projects.
Senator Thayer pointed out that the Task Force on Local Taxation has been extended to meet until July 6th and will be discussing this issue.
Senator Thayer commented that the repeal of prevailing wage would save local governments a lot of money. He asked where the League stands on that issue. Mr. Deaton replied that KLC has been working with others on the issue of prevailing wage and what to do about it. He noted that the League would like to see it addressed this session.
Representative Arnold commented that the bill to allow all cities to take advantage of the restaurant tax failed because it was considered a tax increase.
Regarding the issue of additional options for merger of local governments, Mayor Watson told the committee that local governments want a fair chance for a unified government.
Representative Riggs suggested that the League get a bill prefiled regarding that issue. Mayor Watson said they are ready to do just that.
The last order of business was review of 06 BR 49, An Act relating to management districts, prefiled by Representative Riggs. Representative Riggs explained that the initial bill was passed in 2005, but a housekeeping bill is needed to fine tune the earlier version. He recognized Mr. David Peterson, President of the Louisville Central Area, and Mr. Ken Herndon, Executive Director of the Louisville Downtown Management District, to discuss BR 49.
Mr. Peterson told the committee that as the Commonwealth's only business improvement district, the Louisville Downtown Management District (LDMD) began delivering supplemental safety, cleaning, and ambassadorial service in April 1992 to a 41-block area in the heart of downtown Louisville. He said in 1999, the LDMD expanded to 61 blocks and its scope of services as well, making the public way as enjoyable and as convenient as possible. However, Mr. Peterson stated that the LDMD would like to do more. As the LDMD expands its work program to follow the vision and opportunity of state and local laws, he explained that it is crucial that LDMD have the ability to accomplish the following: enhance participation by property owners and their representatives who are paying the assessment directly; control the direction of the district including expansion of its boundaries or dissolution if appropriate; and have the ability to do long-term financing for both capital and/or operating programs. Mr. Peterson pointed out that these small, yet critical enhancements to the existing legislation will permit the LDMD to more adequately meet the challenges of a growing urban center by using the LDMD as an example of the private sector stepping up to work in even closer concert to supplement and compliment the services provided by Metro Government in downtown Louisville. He noted that Metro government leadership has indicated their strong support for these proposed improvements in the legislation, and that the board of directors and the assessment payers in downtown urge passage of the language in 06 BR 49.
Representative Arnold asked if other cities in the U.S. have downtown management districts. Mr. Peterson replied that 16 cities throughout the U.S. have downtown management districts.
Representative Lee asked how many property owners there were in the LDMD. Mr. Peterson said there were approximately 300 property owners.
There being no further discussion, Representative Riggs moved, seconded by Representative Crimm, to approve 06 BR 49 as prefiled. The motion passed unanimously on a roll call vote.
There being no further business, the meeting was adjourned at 1:55 p.m.