Tobacco Settlement Agreement Fund Oversight Committee


Minutes of the<MeetNo1> 8th Meeting

of the 2004 Interim


<MeetMDY1> November 9, 2004


The<MeetNo2> 8th meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Tuesday,<MeetMDY2> November 9, 2004, at<MeetTime> 1:00 PM, in<Room> Room 131 of the Capitol Annex. Senator Vernie McGaha, 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, Dan Kelly, Joey Pendleton, and Richard Sanders Jr; Representatives Carolyn Belcher, James Comer, Thomas McKee, and Tommy Turner.


Guests:  Keith Rogers, Brian Furnish, Catherine Ball, David Bratcher, and Tim Hughes, Governor's Office of Agriculture Policy; Dean Wallace, Coucil on Burley Tobacco; Jeff Harper, Kentucky Farm Bureau; Michael Plumley, Office of the Attorney General; Gay Dwyer, Kentucky Retail Federation.


LRC Staff:  Lowell Atchley, Biff Baker, and Rhonda Carter.


Following approval of the minutes, the Committee agreed by voice vote to accept the Tobacco Settlement Agreement Fund Oversight Committee’s interim report, which was to be presented to the Interim Committee on Agriculture and Natural Resources the following day.


Chairman McGaha then asked Mr. Keith Rogers, and Mr. Brian Furnish, director and deputy director respectively of the Governor’s Office of Agricultural Policy (GOAP), to present the list of funding applications that the Agricultural Development Board (ADB) acted on during its October meeting. Information about the projects is on file with the meeting materials in the LRC Library.


Mr. Rogers told the Committee that the ADB did not act on state-funded programs during its earlier meeting, conducted in conjunction with a board retreat at Lake Cumberland State Park, but did act on model programs. He summarized those. The Committee members had no questions.


Next, Mr. Rogers turned to a review of the Agricultural Development Board’s October retreat. Mr. Rogers said the board discussed a number of issues during the retreat, and formalized decisions on three topics, which he subsequently discussed. Mr. Rogers indicated the board would be taking up other issues in its November and December meetings, including some decisions regarding the Agricultural Finance Corporation and the creation of some new model programs. The ADB was anticipated to take up the new model programs in its December meeting.


Mr. Rogers then described the new agri-tourism competitive awards program for 2005. The agri-tourism program will provide $1 million in competitive funding for agri-tourism businesses and regional agri-tourism marketing efforts. Applicants will be accepted in two rounds in 2005. Applications will be scored according to pre-determined, specified criteria, with the highest points awarded to projects that show viability and have significant impact on multiple producers, according to information supplied to the Committee.


In reference to a listing of costs that will not be covered with agri-tourism funds, Chairman McGaha asked if that list was all-inclusive. Mr. Rogers responded that it was not, but the items were some the ADB identified when discussing the issue.


Responding to a question about the impact on tobacco producing counties, Mr. Rogers said the program is aimed at farm-related projects and not urban ventures. He also indicated the program has a tiered forgiveness aspect that allows the loan amount to be reduced based on purchases of products either grown in Kentucky or value-added from Kentucky grown products.


Next, Mr. Rogers turned to the farmers’ market competitive grants program. Under the program, $1.5 million will be set aside for grants to regional and community farmers’ markets across the state. Money also will be available for feasibility studies. Applications for the grants will be accepted in two rounds in 2005.


Mr. Rogers said the program is an outgrowth of an earlier Department of Agriculture study on farmers’ markets. He told the Committee the program would enable farmers’ markets to receive state funds in addition to county funds, which they had been receiving.


Representative Belcher asked how they planned to advertise the availability of the funds. Mr. Rogers indicated that would be done through the agency’s Web site, press releases and other media. Also project analysts with GOAP will be knowledgeable about the accessibility of the moneys.


Responding to a question from Representative Thomas, Mr. Rogers said there would be no limit to the amount that regional markets can access, and all the regional funds could be given to one regional market. But he added that most inquiries for funds for farmers’ markets had been for small county markets. Mr. Furnish added that market ventures could still apply for funds from local councils, in addition to the state funds.


Representative McKee asked if GOAP is tracking the success of farmers’ markets. Mr. Rogers responded that they do keep track of the ventures and also require reports from those who receiving funding. Mr. Furnish added later that the Department of Agriculture monitors farmers’ markets, with the two most successful being one in Boone County and another in Lexington.


Chairman McGaha asked about preference to applicants from tobacco dependent counties. Mr. Rogers responded that the ADB would need to decide that in relation to the competitive scoring process.


Mr. Rogers next outlined provisions in a new ADB policy statement on advanced agriculture. Advanced agriculture will generally focus on plant made pharmaceuticals. According to Mr. Rogers, the ADB’s creation of the policy coincides with the Governor’s formation of a new life sciences consortium. Representative Thomas said he was excited about the idea and it was something that he had promoted. But he said he was disappointed the policy did not talk about involving Kentucky agriculture producers.


Following that discussion, the Committee heard an update on the Kentucky Agricultural Finance Corporation (KAFC) from Mr. Tim Hughes, business and marketing coordinator, and Mr. Rogers.


Mr. Hughes reviewed the history of the KAFC and, in particular, discussed the recent affiliation of KAFC under the auspices of the Governor’s Office of Agricultural Policy. He described the different loan programs within KAFC, including the link-deposit program that utilizes funding from the unclaimed property account of the state. Mr. Hughes described efforts to publicize the KAFC loan programs through publicity and meetings with interest groups in the state. He said the Agricultural Development Board would consider some recommendations regarding the program during an upcoming meeting.


Following the presentation, Senator Pendleton asked how Kentucky bankers had perceived the program. Mr. Hughes responded that bankers are favorable to situations in which KAFC assists with high-risk borrowers or partner in situations that improve their position, but bankers do not want to the agency to “cherry-pick” their best customers. Mr. Hughes said bankers have told him that they want to meet, discuss each situation, and devise a loan plan appropriate for that situation.


Responding further to Senator Pendleton, Mr. Rogers said that KAFC currently has about $3 million in its account and is expected to see a return in the future of the $17 million diverted for budget purposes. As for the link-deposit program, Mr. Hughes said there might be about $15 million available, but he is awaiting a definitive accounting of the amount.


There being no further business, the meeting adjourned at approximately 2:20 p.m.