Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> October 5, 2011


Call to Order and Roll Call

The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> October 5, 2011, at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Representative Wilson Stone, 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; Senator Vernie McGaha; Representatives Royce W. Adams, Tom McKee, Fred Nesler, and Tommy Turner.


Guests: Roger Thomas, Joel Neaveill, Bill McCloskey, Christi Marksbury, Jennifer Hudnall, Michael Tobin, and Angela Blank, Governorís Office of Agricultural Policy; Mac Stone, Kentucky Department of Agriculture; Steve Coleman, Kentucky Division of Conservation; and Drew Graham, University of Kentucky College of Agriculture.


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

The September 7, 2011, minutes were approved, without objection, by voice vote, upon motion made by Co-Chair Hornback and seconded by Representative McKee.


Governorís Office of Agricultural Policy

The committee received the monthly report from Mr. Roger Thomas, Executive Director, Mr. Joel Neaveill, Chief of Staff, and Mr. Bill McCloskey, Director of Financial Services, Governorís Office of Agricultural Policy (GOAP), regarding project funding decisions made by the Agricultural Development Board (ADB) in its previous meeting.


Mr. Neaveill summarized the funding allocations made under the County Agricultural Improvement, Deceased Farm Animal Disposal Assistance, and Shared-use programs from the previous month. He also recapped amendments approved for previously funded projects.


State projects that received funding approvals included: Wayne County Fiscal Court, which was approved for $25,000 in state tobacco settlement funds to construct an open-air pavilion for the Wayne County farmersí market; Hart County Chamber of Commerce, $13,500 in state funds to build an open air pavilion for the Hart County farmersí market; city of Morgantown, $3,500 in Butler County funds for enhancement of an education/training room at an agricultural exposition center; Butler County Board of Education, two projects for $2,558 and $1,100 respectively to help fund an aquaculture education program, and to buy some scales for youth livestock sales; Green River Cattlemenís Association, $12,500 in Green County funds to enhance a local agriculture and marketing center.


Responding to committee membersí questions, the officials indicated that two of the applicants, Wayne County and Hart County fiscal courts, received grants under a farmersí market infrastructure competitive grant program. They noted that an applicant could receive up to $25,000; funding received cannot exceed half the total cost of a farmersí market project.


Representative McKee lauded the farmersí market competitive grant program, noting that agricultural development funds had benefitted an endeavor in Harrison County, giving market operators there a central location from which to sell their farm commodities.


Mr. Thomas provided committee members with a listing of communities that have agricultural development funding for farmersí market endeavors beginning in 2001.


In discussion later, the GOAP officials indicated that a Somerset Farmersí Market Association application was not funded because of uncertainties related to the marketís location and other issues, but that did not mean the project could be evaluated at a later date. Representative Turner said he supported the decision since there were lingering questions about the undertaking.


Responding to Co-chair Stone, the GOAP staff described the facility ownership arrangements for the city of Morgantown, Butler County Board of Education, and Green County Cattlemenís Association applications.


During discussion about another projected denied funding, Mac Farms Inc., Taylor County, the committee witnesses said GOAP staff had advised the applicants about tax incentives for their energy-related projects, plus other financing possibilities, including the Agricultural Finance Corporation.


GOAP responded to committee membersí questions and comments concerning the status of a Bracken County feasibility study to determine the viability of building and operating a biofuel pellet mill in the Bracken County Industrial Park. The mill would process switchgrass and other crop residues.


Mr. Thomas informed the committee that the agency has posted on its Web site and in hard copy a report of statewide forums conducted by the ADB this year. The forums sought input from the public regarding the future direction of Agricultural Development Fund investments.


Division of Conservation

††††††††††† Mr. Steve Coleman, Director, Kentucky Division of Conservation, reported on the soil and water quality cost share, and soil stewardship programs, which receive tobacco settlement funds. Mr. Coleman talked about the history of the program, funding through the years, the types of soil and water practices that are eligible for funding, and current funding levels. He also discussed the Agricultural Water Quality Act, the Green River Conservation Reserve Enhancement Program, partnerships with other agencies, and the status of the new Mississippi River Basin Healthy Watersheds Initiative 2010.


††††††††††† According to Mr. Colemanís report, the cost-share program administered by the division has assisted more than 12,500 landowners with undertaking best farming practices over the past 17 years. A total of $119 million has been put into the program, although the total value of the program would be higher because landowners contribute funds as well. Tobacco settlement funds currently make up most of the total funding, with the General Assembly appropriating $9 million in FY 2010 and in FY 2011.


††††††††††† Mr. Coleman described to Co-chair Stone the status of conservation work in the Red River watershed, which straddles portions of southern Kentucky and northwest Tennessee. He indicated the division is working with Tennessee conservation staff to prepare a funding proposal that will be submitted to the U.S. Department of Agriculture.


††††††††††† Responding to Co-chair Hornback, Mr. Coleman described the status of land set-aside contracts signed under the Green River Conservation Reserve Enhancement Program. The 10-year program resulted in some $110 million committed in federal, state, and private funds.


††††††††††† Senator Hornback mentioned the idea of a flexible payment system that would reflect current grain prices. Mr. Coleman responded that that idea has been discussed. He said some of the land has been planted in trees, which may serve to keep the ground in the program for a longer period of time.


††††††††††† Mr. Coleman responded to Representative McKee, who asked about the status of the Licking River watershed in northeast Kentucky. The Licking River watershed is included in the larger Mississippi River Basin Healthy Watershed Initiative, a multi-state effort that has a goal of reducing, mitigating, and controlling nutrient levels in groundwater that ultimately ends up in the Gulf of Mexico.


††††††††††† According to Mr. Coleman, the Licking River watershed will have contracts involving farmland that will be ďworking landsĒ that stress precision agriculture and use natural buffer zones to control runoff.


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


The meeting adjourned at approximately 11 a.m.