Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> October 14, 2009


The<MeetNo2> 8th meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> October 14, 2009, at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Representative Dottie Sims, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Carroll Gibson, Co-Chair; Representative Dottie Sims, Co-Chair; Senators Vernie McGaha, Joey Pendleton, and Damon Thayer; Representatives Royce W. Adams, James R. Comer Jr., Charlie Hoffman, Tom McKee, and Tommy Turner.


Guests:  Debby Milton and Kelly Rice, Kentucky Infrastructure Authority; Steve Coleman, Kentucky Division of Conservation; Joel Neaveill, Angela Blank, Sandra Gardner, Governor’s Office of Agricultural Policy, Tim Hughes, Kentucky Agriculture Finance Corporation; Drew Graham, University of Kentucky College of Agriculture; Mac Stone, Kentucky Department of Agriculture.


LRC Staff:  Lowell Atchley, Biff Baker, Stefan Kasacavage, and Kelly Blevins.

The September 9, 2009 minutes were approved by voice vote and without objection on a motion made by Senator Gibson, seconded by Senator Thayer.


The presiding co-chair, Representative Sims, invited Mr. Joel Neaveill, Chief of Staff, Governor’s Office of Agricultural Policy, to appear before the committee and report on the Agricultural Development Board’s actions from the previous month. His report included the County Agricultural Investment Program allocations and the Deceased Farm Animal Disposal Assistance Program.


According to Mr. Neaveill, responding to Representative McKee, counties set up their deceased animal programs in different ways, thus the total amounts in the programs will vary. He said the GOAP program is a temporary fix for a larger problem. According to Representative McKee, solutions to the problem should be sought at this time.


Mr. Neaveill also responded to a question from Senator Gibson regarding the potential use of Agricultural Development Fund moneys to assist young farmers wanting to take welding or mechanical training at local technical schools. Mr. Neaveill indicated ADF moneys have been approved for several county programs aimed at providing welding classes to those who produce or have produced tobacco.


Appearing next before the committee was Ms. Debby Milton, Financial Analyst, Kentucky Infrastructure Authority (KIA), who reported on the agency’s appropriation of tobacco settlement funds to assist water and sewer projects. During her testimony, Ms. Milton reported on tobacco settlement-related line item grants approved in previous legislative sessions. She also discussed different types of projects funded in committee members’ districts.


During her testimony, Ms. Milton explained to Co-chair Sims why local systems are upgrading from 4-inch water lines to 6-inch. Ms. Milton said local systems upgrade for several reasons, additional pressure for fire protection, factory needs, and aging lines. She said local entities decide if they want to upgrade.


Ms. Milton responded to a series of questions from Senators McGaha and Thayer regarding the use of federal stimulus funds received under the American Recovery and Reinvestment Act of 2009. According to her testimony, KIA applied for and received $70 million in stimulus funds. KIA used the federal money to help fund 61 projects that were preparing for construction. She told Senator McGaha that the funds did not replace other funding. She said some of the projects were funded totally with the stimulus money, but for most of them, the funds were part of a larger funding package.


Ms. Milton indicated to Senator Thayer that the 61 projects were not previously approved by the General Assembly; rather they were on a priority list in KIA’s State Revolving Fund. Over 300 entities applied for the funding, with the list narrowed down to the 61. Also, the KIA board has the statutory authority to approve and appropriate funding outside the General Assembly. Once projects are selected to receive funding, they go before the legislative Capital Projects and Bond Oversight Committee for review, according to testimony. She indicated individual projects selected by the General Assembly are not prioritized, but all are ultimately funded.


Ms. Milton said she would send committee members a listing of the 61 projects benefitting from the federal stimulus dollars. 


Next, the co-chair called on Mr. Steve Coleman, Director, Division of Conservation, who appeared to update the committee on the Kentucky Soil Erosion and Water Quality Cost Share Program, and Environmental Stewardship Program, which receive tobacco settlement funds. Mr. Coleman also discussed the Green River Conservation Reserve Enhancement Program (CREP), under which 100,000 acres is set aside in 14 south central Kentucky counties.


            Following the formal presentation, Mr. Coleman responded to committee members that the Green River CREP is closed for additional sign-ups, but there exists the possibility that fund may be obtained for other areas.


            Responding to Co-chair Gibson, he said the division works closely with the federal Natural Resources Conservation Service in abiding by land conservation practices.


            Senator Gibson described complaints that he had received from farmers in his area. The farmers have complained about noxious weeks growing on the set-aside land. Mr. Colman indicated warm season and native grasses are suggested for propagation, but those plants must complete with other plants to survive and become established.  


            The senator also asked about requirements affecting endangered species. Mr. Coleman indicated that the endangered species are protected under the program. He indicated they work with landowners to enable them to harvest timber in keeping with the Endangered Species Act. Responding to Co-chair Sims, he indicated the biodiversity is unique in the Mammoth Cave area.


            Mr. Coleman responded to Representative Comer that they are not “leaving federal funds on the table” with the program. He said they could gain additional federal funds if they had more money to utilize. He gave an example of going from 20 conservation advisory positions to 40 positions.


            Representative McKee thanked Mr. Coleman for his work. He recalled that during the 2000 session and the drafting of HB 611, the General Assembly appropriated $9 million to the division to help farmers comply with the state Agriculture Water Quality Act. But, according to Representative McKee, the need for the annual appropriation remains. Representative McKee noted Representative Comer’s emphasis on the idea that increasing state funding for the program would lead to additional matching federal funding. Mr. Coleman responded that the farming situation in the state has changed. In the last 15 years, he said, Kentucky has grown as a beef cattle production state.


            Co-chair Sims commented that she is receiving letters from conservation districts in her area who are asking for additional funding.


            Speaking next, Representative Hoffman indicated that, given the residential growth that is taking place, it is imperative that programs the division implements remain intact. He mentioned the necessity for maintaining funding. He also mentioned the work of the General Assembly’s Land Stewardship and Conservation Task Force and its quest to determine dedicated funding for land set-asides. Mr. Coleman responded by mentioning the division’s association with the state Purchase of Agricultural Conservation Easement program and the creation through the years of voluntary agricultural conservation districts, which to date, involves about 3,000 landowners and some 300,000 acres.


            Responding further to Representative Hoffman, Mr. Coleman noted that the current Farm Bill makes available matching funds for farmland preservation.


            Next, Representative Adams asked about the cost-share requirements for practices eligible for assistance under the soil erosion and water quality environmental stewardship programs. Mr. Coleman said the cost-share ratio varies with the practice. For example, animal waste structures are more expensive.


            Mr. Coleman explained their expenditure process to Representative Adams. He said a landowner has a year to complete a practice and seek reimbursement. But some practices can take longer and extensions are granted, meaning the work will extend into multiple years. Also, sometimes landowners will cancel projects, meaning funds are rolled over for subsequent sign-ups. According to Mr. Coleman, the division has set aside $1 million to assist farmers who participate in the federal Environmental Quality Incentives Program (EQIP). The division has placed an emphasis on animal waste control, according to Mr. Coleman, who noted that the $1 million allocated has resulted in the receipt of $5 million in federal funds.


Documents distributed during the committee meeting are available with meeting materials in the LRC Library. The meeting adjourned at approximately 11:30 a.m.