Tobacco Settlement Agreement Fund Oversight Committee


Minutes of the<MeetNo1> 4th Meeting

of the 2003 Interim


<MeetMDY1> August 14, 2003


The<MeetNo2> 4th meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Thursday,<MeetMDY2> August 14, 2003, at<MeetTime> 1:30 PM, in<Room> Room 131 of the Capitol Annex. Representative Roger Thomas, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Vernie McGaha, Co-Chair; Representative Roger Thomas, Co-Chair; Senators Charlie Borders and Joey Pendleton; Representatives Carolyn Belcher, James Comer, Thomas McKee, and Tommy Turner.


Guests:  David Bratcher, Kara Keeton, Joel Neaville, and Brad Wellons, Agricultural Development Board; Steve Coleman, Director, Division of Conservation; Mark Farrow, Kentucky Department of Agriculture; Hugh Archer, Division of Natural Resources; Ed Nelson, Shana Herron, Community Farm Alliance; Patrick Jennings, Kentucky Farm Bureau; Scott Wegenast, Kentucky Action.


LRC Staff:  Dan Risch, Biff Baker, and Kelly Blevins.


Representative Roger Thomas, Co-Chair of the committee, asked for and received approval of the minutes of the July 8, 2003 meeting. He then asked Mr. David Bratcher, representing the Agriculture Development Board, to present the projects considered for funding at the Board's July 18 meeting.


Mr. Bratcher first presented a list of the projects approved for model program funding from the county accounts. He then presented projects approved by the Board to receive state funds or a combination of state funds and county funds. Senator McGaha asked about one of these projects at the Maysville Community College.


Mr. Bratcher explained that the college had requested state funds for a greenhouse project. He said tobacco growing families could use workshops conducted in the greenhouses, both to learn new growing techniques and to earn an agriculture/horticulture certificate. Senator McGaha asked what was the nature of the certificate. Mr. Bratcher said he would have to find out.


Representative Thomas asked if this was the first time state funds were used for greenhouses. Mr. Bratcher said it was the first at a community college. Previously state funds had been used for a greenhouse project at Western Kentucky University.


When explaining funding that had been approved for the Kentucky Grape and Wine Council, Mr. Bratcher was asked how employees would be paid after the two year funding from the Board ends. Mr. Bratcher said that the University of Kentucky has been asked to provide for paying the employees in the University budget. Representative Thomas observed that there was a suggestion in the project description that a percentage of the excise tax on wine sales be earmarked for the Grape and Wine Council. Mr. Bratcher responded by saying that some individuals in the industry would support a legislative initiative to earmark the funds. He added, however, that studies have indicated the effort would not raise enough money to make a material difference unless wine sales substantially increased.


In the next projects explained by Mr. Bratcher, one submitted by the Kentucky Beef Network and the other by Goodinview Farms, Senator McGaha, Co-Chair of the committee, asked how many tobacco growers would be helped by these projects. Mr. Bratcher said he would find out and report back. Representative James Comer also expressed a view similar to that of Senator McGaha that state projects should focus on assisting tobacco farmers. Representative Thomas observed that it is important to understand what is meant when one refers to a tobacco farm. He pointed out that many farms will have sold off their tobacco base in the last few years.


The last funded project to be explained was a $20 million grant to the Kentucky Agricultural Finance Corporation. Mr. Bratcher pointed out that this is the single, largest grant that has been awarded by the Board. He explained that the Corporation would use the money to make low interest loans or to create other incentives to assist farmers and value-added farm businesses.


Representative Thomas observed that the legislature several years ago established a program, called the linked-deposit program, which had also been designed to provide financing for farms. He said that program failed to achieve its goals because it was underfunded and because local banks wouldn't participate in making loans. He asked Mr. Bratcher how the Kentucky Agricultural Finance Corporation (KAFC) would avoid these problems.


Mr. Bratcher said one point distinguishing the two programs, is that under the KAFC program the banks will make the credit decisions. He also said that the KAFC seems inclined to focus on incentives for value-added agriculture business rather than on producer loans.


Senator McGaha asked if tobacco dependency is a qualifier to receive assistance from the KAFC. Mr. Bratcher said there is no such qualifier in the KAFC statutes but staff does advise the Board to consider tobacco dependency in making its decisions.


Next, Mr. Bratcher explained projects that had been denied funding by the Board. He said the request for state money by the Barren River Regional Livestock Center was turned down because the Board wishes to promote aspects of stockyards that increases efficiency and expands marketing. He also observed that the Board has noted the beginning of a trend away from stockyard sales of livestock toward the use of the internet and video to make sales. He added that county fund requests for the same project are still under consideration.


Mr. Bratcher also explained that other projects were denied, even though a county council assigned a high priority to the project, when county funds were not committed to the project.


Next, Senator McGaha introduced Mr. Steve Coleman, the Director of the Division of Conservation within the state Department for Natural Resources. Mr. Coleman gave a brief report on the Environmental Stewardship Program. The program has received tobacco settlement money which is awarded to farmers to pay for farming practices that protect water quality. Materials presented by Mr. Coleman are on file in the LRC library with the meeting materials.


Also, Senator McGaha noted for the members correspondence from Dr. Kim Townley. Dr. Townley administers the Division of Early Childhood Development and was responding to specific questions asked of her when she appeared at the committees July 8 meeting. Dr. Townley's correspondence is also with the meeting materials on file in the LRC library.


Finally, staff reviewed maps on state funded projects and water line extensions.


The meeting adjourned at approximately 3:15 p.m.