Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> May 11, 2011


Call to Order and Roll Call

The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> May 11, 2011, at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Senator Paul Hornback, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Paul Hornback, Co-Chair; Representative Wilson Stone, Co-Chair; Senators Vernie McGaha, Dennis Parrett, and Joey Pendleton; Representatives Royce W. Adams, Tom McKee, Fred Nesler, and Tommy Turner.


Guests:  Roger Thomas, Joel Neaveill, Bill McCloskey, Angela Blank, Christi Marksbury, and Sandra Gardner, Governor’s Office of Agricultural Policy; Dean Scott Smith and Drew Graham, University of Kentucky College of Agriculture; Dr. Gary Palmer, Dan Grigson, Ted Johnson, Doug Shepherd, and Jeff Smith, University of Kentucky Agricultural Extension Agents.


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

The April 13, 2011 minutes were approved, by voice vote and without objection, on a motion made by Senator Pendleton and seconded by Senator Parrett.


Governor’s Office of Agricultural Policy

The presiding co-chair, Senator Hornback, called on Mr. Roger Thomas, Executive Director, and Mr. Joel Neaveill, Chief of Staff, and Bill McCloskey, Director of Financial Services, Governor’s Office of Agricultural Policy (GOAP), to review the projects considered by the Agricultural Development Board (ADB) in its April meeting.


Prior to the GOAP report, Co-chair Stone reported on a recent biofuels fact-finding trip to Missouri that involved GOAP staff, representatives of the Energy and Environment Cabinet, state legislators, and others from Kentucky and other states.


During the report on previous project amendments, Mr. Neaveill indicated to Representative McKee that an additional $29,400 approved for use by Robertson County would be incorporated into the county’s regular allotment.


The GOAP officials reviewed projects voted on at the previous ADB meeting, beginning with the Meade County Riverport Authority, which received a low-interest loan of up to $2 million in state Master Settlement Agreement (MSA) funds to help build a regional port authority for grain and other types of agriculture shipments. Other projects included: Western Kentucky University Department of Agriculture, $5,000 in state funds to establish an apiary at the WKU farm; Eastern Kentucky University, $44,130 in state funds and $1,000 in county funds for a honeybee queen nutritional study; Jessamine County FFA Alumni Association, which received $8,000 in Jessamine County funds for a youth cost-share program; and Jessamine County Fiscal Court, $40,000 in Jessamine County funds to help build a covered arena at the county fairgrounds.


Several committee members asked questions and commented on aspects of the Meade County project, including the operational structure and relationship between parties involved in the project, pricing offered to farmers, regional benefits of the project, the status of a separate bond issuance, the need for larger projects benefitting farmers, and the lien arrangement related to the board’s commitment of MSA agricultural development funds. Responding to committee members, the GOAP officials described the contractual relationship between the authority and Consolidated Grain and Barge, the firm that will handle barge loading and unloading services. Co-chair Hornback expressed some particular concerns about charges that farmers may be facing when shipping commodities through the facility.


The GOAP officials pointed out to the committee that ADB commitment will not exceed $2 million. The Meade County Fiscal Court will be asked to issue $4 million in bonds to help finance the project. Annual income from the stevedoring agreement is estimated at $110,000.


Senator Parrett, who was familiar with the project, indicated some positive aspects about the endeavor, in particular the services it will offer to farmers in that region. The facility should be competitive in pricing compared to other facilities, according to his testimony.


The GOAP officials responded to questions by Co-chair Stone, who asked about the lien that the board would hold. It was pointed out that a $6 million facility would be securing the $2 million loan.


After completing the projects summaries, Mr. Thomas made some other announcements. He indicated that local agricultural development funds from the 2011 MSA payments are available in county accounts. He also reported on the Governor’s recent request for disaster aid from the United States Department of Agriculture because of spring flooding and the like.


County Agricultural Extension Agents Presentations

Prior to the presentations, Dr. Scott Smith, Dean of the University of Kentucky College of Agriculture, made some remarks to the committee about the history of the agricultural development segment of the MSA program and extension agents’ roles in administering programs in counties. Beyond the agricultural development aspect segment, according to Dr. Smith, the program has helped develop new leaders, fostered education, and created teachable moments. He indicated the program remains a good one.


Speaking to the committee were: Mr. Dan Grigson, Lincoln County, chair of an extension agents advisory committee to the GOAP and ADB, and committee members Mr. Ted Johnson, Lee County, Mr. Doug Shepherd, Hardin County, and Mr. Jeff Smith, Fleming County.


Mr. Grigson, who chairs the advisory group, began the presentation by talking about the impact that the agricultural development funds have had on Kentucky agriculture. During his remarks, he gave an example of a beef producer in his area who benefitted from the advice and funds available through the county program.


Mr. Grigson also discussed the work of the advisory committee in providing input and advice to the ADB and GOAP regarding issues and concerns in various regions of the state.


The agents discussed the makeup of their country agricultural development councils, funds received through the years, and reviewed how County Agricultural Improvement Program funds are used in their counties. They also talked about some of the regional projects in which their counties have been involved.


Each of the agents mentioned the positive aspects of the overall program and its impact in helping farmers diversify away from tobacco production.


During the discussion, Mr. Johnson indicated to Chairman Hornback that the end of the tobacco buyout payments may not be as drastic as the downturn after the MSA enactment, but predicted a downturn nevertheless. The senator predicted it will be difficult throughout the state.


Senator Pendleton thanked the extension agents for testifying before the committee and noted the vision of the program is being fulfilled. He mentioned that planning will be needed to deal with the end of the buyout payments.


Following the agents, the committee heard from Dr. Gary Palmer, UK Agriculture Extension Director. Dr. Palmer pointed out the advisory committee would be spelled with a “little a” and not a “big A.” He indicated he was pleased with the role the advisory committee was playing.


Representative McKee commended the agents and pointed out, as did Dr. Smith, that agents were told in 2000 when Kentucky’s tobacco settlement legislation was being considered, that their job duties would grow as a result of the program. The agents were okay with that, according to the representative.


According to Representative Stone, commenting later, when it was envisioned that local participants would be involved in the agricultural development program, it was important that some funds go to the local level.


Documents distributed during the committee meeting are available with meeting materials in the LRC Library.


The meeting adjourned at approximately 11:45 a.m.