Interim Joint Committee on State Government


Minutes of the<MeetNo1> 4th Meeting

of the 2012 Interim


<MeetMDY1> October 24, 2012


Call to Order and Roll Call

The<MeetNo2> fourth meeting of the Interim Joint Committee on State Government was held on<Day> Wednesday,<MeetMDY2> October 24, 2012, at<MeetTime> 1:00 PM, in<Room> Room 154 of the Capitol Annex. Senator Damon Thayer, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Damon Thayer, Co-Chair; Representative Mike Cherry, Co-Chair; Senators Walter Blevins Jr., Alice Forgy Kerr, Gerald Neal, R. J. Palmer II, and Dorsey Ridley; Representatives Linda Belcher, Kevin Bratcher, Dwight Butler, Larry Clark, Tim Couch, Will Coursey, Danny Ford, Derrick Graham, Mike Harmon, Melvin Henley, Jimmie Lee, Mary Lou Marzian, Brad Montell, Lonnie Napier, Sannie Overly, Darryl Owens, Tanya Pullin, Tom Riner, Carl Rollins II, Bart Rowland, Steven Rudy, Sal Santoro, John Tilley, Tommy Turner, and Brent Yonts.


Guests:  Anthony Wilhoit and John Schaaf, Kentucky Legislative Ethics Commission; William Thielen and Jennifer Jones, Kentucky Retirement Systems.


LRC Staff:  Judy Fritz, Alisha Miller, Karen Powell, Brad Gross, Greg Woosley, Kevin Devlin, and Peggy Sciantarelli.


Approval of Minutes

The minutes of the September 27 meeting were approved without objection, upon motion by Representative Rudy.


Recognition of Guests and Staff

Senator Thayer recognized and commended LRC staffer Bryanna Carroll, who is leaving LRC for a position with the Kentucky League of Cities. Representative Ford introduced his guest in the audience, David Meade, successor to Representative Ford’s uncontested District 80 seat in January 2013.


Recommended Changes to Code of Legislative Ethics

Guest speakers from the Legislative Ethics Commission were Judge Anthony Wilhoit, Executive Director, and John Schaaf, Counsel. The Commission’s June 22, 2012, submission of recommendations to LRC noted that most were included in a longer list submitted in prior years but that this year the Commission is submitting only five recommendations that Commission members agree are the most important ethics law changes for consideration by the General Assembly.


Recommendation #1: Repeal the provision allowing each lobbyist and employer to spend up to $100 annually on food and beverages for each legislator and his or her immediate family, and prohibit lobbyists and their employers from paying for out-of-state travel, food, or lodging expenses for legislators or candidates. Judge Wilhoit said the amount that lobbyists and their employers spend on food and beverages for individual legislators does not appear to be an ethical problem. Last year the total spent was only about $300—in some years less than $100. Because of reporting requirements, this provision has become an administrative problem not only for the Commission but also for legislators, lobbyists and employers of lobbyists. In lieu, the Commission proposes a “no cup of coffee” approach to prohibit lobbyists and their employers from paying for food and beverages for individual legislators.


As a matter of public perception, lobbyists and their employers should be prohibited from paying for out-of-state travel, food, or lodging expenses for both legislators and candidates for legislative office. This type of spending amounted to less than $4,000 during the past year, but the Commission feels that legislators’ travel expenses should be borne by taxpayer rather than lobbyists.


Responding to questions from Representative Riner, Judge Wilhoit said this recommendation would not affect the ability of lobbyists and their employers to sponsor events for groups of legislators. Mr. Schaaf said that thus far in 2012 about $135,000 has been spent on events to which all legislators or committees of the General Assembly are invited. The usual annual total is approximately $180,000-$190,000.


Judge Wilhoit said that last year over $15 million was spent on lobbying; the amount this year, to date, is $13 million. Typically, 90 percent of this money is used to pay lobbyists’ salaries. Mr. Schaaf explained that money spent on lobbying has increased in recent years because there are more lobbyists, and they generally are spending more time on lobbying than in past years.


Recommendation #2: Treat candidates in the same manner as legislators by limiting the interaction between lobbyists and candidates who have filed to run for election to the Kentucky General Assembly. When asked by Representative Pullin, Judge Wilhoit said the Commission recommends that legislative candidates who have won election but not yet assumed office should be treated the same as members of the General Assembly. Responding to Senator Thayer, he clarified that this recommendation pertains to giving “anything of value,” not campaign contributions.


Recommendation #3: Prohibit employers of lobbyists and political action committees from making a campaign contribution to a legislative candidate or a legislator during a regular session of the General Assembly. Allow a candidate or legislator to return such a contribution within 30 days after the contribution is required to be reported to the Registry of Election Finance. Prohibit lobbyists from directly soliciting contributions for an election campaign of a legislator or legislative candidate. Mr. Schaaf said this recommendation would not only improve public perception but also protect legislators from unintended consequences. The intent of the Commission is to be proactive and address potential problems before they arise. When asked by Representative Belcher, Mr. Schaaf said this recommendation would not pertain to special sessions. Responding to Representative Marzian, he explained that the Commission’s interpretation of this recommendation is that it would apply to caucus campaign committees, in the absence of statutory language to exempt them. She agreed with this interpretation because it would help avoid the perception of potential conflict of interest during regular sessions.


When Senator Thayer asked what other states do regarding fundraising during legislative sessions, Mr. Schaaf said most states do not prohibit lobbyist contributions year round, as Kentucky does. One of the cornerstones of Kentucky’s ethics law is the prohibition against lobbyists donating directly to legislators. Some states strictly prohibit fundraising during sessions from anyone—not just lobbyists and their employers—and some states do not allow raising money from lobbyists during a session.


Representative Rudy asked about fundraising for legislators who are candidates in special elections that occur during legislative sessions. Mr. Schaaf said that proposed legislation could include an exemption for special elections during a regular session. He also noted that the recommended prohibition only applies to employers of lobbyists, since members of the General assembly cannot raise money from lobbyists any time. Answering questions from Senator Ridley, Mr. Schaaf explained that the recommendation, as written, only applies to entities that are registered to lobby; it would not apply to individuals who work for or are affiliated with a group that employs a lobbyist. Fundraising from persons without a lobbyist connection would still be allowed during sessions.


Representative Graham questioned whether this recommendation would place legislators whose seats are contested in May primaries at a disadvantage. Mr. Schaaf said he did not think it would have a huge impact. Fundraising could still occur during a session—though not from lobbyists or their employers or political action committees. The restriction would also apply to the legislator’s opponent.


Responding to Senator Palmer’s questions, Mr. Schaaf clarified that “employer” of a lobbyist means the organization/entity that is registered to lobby but not an official of that organization.


Recommendation #4: Require reporting of the cost of advertising which appears during a session of the General Assembly, and which supports or opposes legislation, if the cost is paid by an employer of legislative agents or a person affiliated with an employer. Mr. Schaaf said the Consumer Health Care Products Association, for example, has reported spending about $1 million on lobbying since 2010. It appears that that entity, however, has spent even more on advertising relating to particular pieces of legislation. This is another form of lobbying that is expected to grow. The Commission feels that since regular lobbying—direct contact with legislators—is reportable, lobbying that encourages contact with legislators regarding specific bills should also be reportable.


Recommendation #5: Authorize the Legislative Ethics Commission to dismiss a complaint without prejudice if the complaint or preliminary inquiry is publicly disclosed by the complainant, or the complainant comments publicly about the complaint. Mr. Schaaf explained that this recommendation would address complaints that are politically motivated. It would not prohibit such complaints or preclude the complainant from refiling later.


There were no further questions. The co-chairs thanked the Commission for bringing the recommendations and commended the decision to reduce the number being proposed for the 2013 Regular Session. Mr. Schaaf complimented the General Assembly for its ethics initiatives.


Administrative Regulations of Kentucky Retirement Systems (KRS)

Present from the agency were William Thielen, Executive Director, and Jennifer Jones, Interim General Counsel. On October 3, 2012, the following KRS administrative regulations were referred to the Committee for review: 105 KAR 1:400 & E (Federal taxation limitation year); 105 KAR 1:420 [401(h) account established under 26 USC 401(h)]; and 105 KAR 1:430 (General compliance with federal tax laws). The regulations were reviewed and amended by the Administrative Regulation Review Subcommitee (ARRS) on September 17, 2012.


Mr. Thielen explained that the regulations were amended to comply with various federal laws and Internal Revenue Service (IRS) requirements relating to determination letters that establish tax-qualified status for the three KRS plans—KERS, CERS, and SPRS. There were no questions, and the Committee took no action on the regulations. Senator Thayer advised that the Committee has fulfilled its statutory role by reviewing the regulations.


Subcommittee Report – Task Force on Elections, Constitutional Amendments, and Intergovernmental Affairs

Senator Thayer, Co-Chair of the Task Force, read a brief subcommittee report of the October 23 meeting.



With business concluded, the meeting adjourned at 2:00 p.m.