Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> May 1, 2013


Call to Order and Roll Call

The<MeetNo2> Tobacco Settlement Agreement Fund Oversight Committee met on<Day> Wednesday,<MeetMDY2> May 1, 2013, 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; Senators Carroll Gibson, Jimmy Higdon, Dennis Parrett, Robin L. Webb, and Whitney Westerfield; Representatives Mike Denham, Tom McKee, Terry Mills, Ryan Quarles, and Jonathan Shell.


Guests: Mr. Roger Thomas, Mr. Joel Neaveill, Mr. Bill McCloskey, Mr. Brian Murphy, and Mr. Biff Baker, Governor’s Office of Agricultural Policy; Ms. Aleta Botts, Mr. Brent Lackey, Mr. Nathan Routt, and Mr. Rich Laing, Kentucky Center for Agriculture and Rural Development.


LRC Staff: Lowell Atchley, Kelly Ludwig, and Kelly Blevins.


The April 2013, minutes were approved, without objection, by voice vote, upon a motion by Senator Hornback, seconded by Representative Quarles.


During the meeting, Co-Chair Stone introduced the newest member of the committee, Representative Shell, who replaced former committee member, Representative Tommy Turner.


Governor’s Office of Agricultural Policy

Mr. Roger Thomas, Executive Director, Mr. Joel Neaveill, Chief of Staff, and Mr. Bill McCloskey, Director of Financial Services, Governor’s Office of Agricultural Policy (GOAP), testified about project funding decisions made by the Agricultural Development Board (ABD) during its April meeting.


Mr. Neaveill summarized funding allocations for the previous month under the County Agricultural Improvement (CAIP), Deceased Farm Animal Disposal Assistance, the On-Farm Energy, and Shared-Use Equipment programs. Responding to Co-Chair Stone, Mr. Neaveill detailed how a Montgomery County livestock carcass removal program would work, and also described the equipment to be purchased under a Madison County shared-use equipment project.


The officials, responding to Representative McKee, indicated a detailed listing of counties that have established dead farm animal removal programs with the use of tobacco settlement funds will be provided.


 Mr. Neaveill also noted the distribution to committee members of a chart showing Kentucky Agricultural Development Fund county account balances as of April 19, 2013. The chart showed among other data, the funds received under the 2013 Master Settlement Agreement payment to Kentucky. Barren County received the most funds in 2013, $374,517; Martin County the least, $1,086.


Mr. Neaveill summarized projects receiving state and county funding commitments in the April board meeting: Henry County Cattlemen’s Association, $1,750 to conduct a feasibility study to establish a meat animal processing facility in that part of the state; Kentucky Association of Food Banks, up to $75,000 in state funds and matching county funds for the “Farms to Food Banks” program, which buys edible surplus produce and seconds from farmers and distributes it to the state’s food banks; Jessamine County FFA Alumni Association, $8,000 in Jessamine County funds to assist school students in their agriculture-related projects; Meade County Riverport Authority, up to $2 million in state funds in the form of a 1 percent loan to build and establish a regional river port facility in Brandenburg.


Regarding the Henry County feasibility study, Co-Chair Stone noted the difficulty in finding places to establish meat processing facilities. Co-Chair Hornback noted the enthusiasm for the project on the part of local officials in the Henry County area.


Commenting on the Farms to Food Banks funding commitment, Representative Stone noted the positive aspects of the program in distributing food to the needy and creating markets for producers.


Representative McKee described HB 141, which passed in the 2013 legislative session as a part of SB 1. The bill established a tax credit for farmers who donate produce to charitable organizations.


In a reply to Senator Webb, the GOAP officials said details on counties in which producers marketed to the Farms to Foods Banks purchasing program will be provided. In his earlier remarks, Mr. Neaveill said the program distributed under a million pounds of surplus produce across the state in 2012; a total of 217 farmers participated.


Representative Stone and Senator Webb commented on the Jessamine County scholarship program. Senator Webb stressed that agricultural education should include information on animal agriculture.


The Meade County Riverport Authority project elicited questions and comments from committee members. Under the project, a regional port facility will be established for grain producers. The funding will be in the form of a 1 percent loan to be held by the Kentucky Agricultural Finance Corporation. To secure the $2 million state loan, the facility will be leased to Consolidated Grain and Barge and a usage fee will be paid for cargo entering or leaving the port. The total cost of the project is $5.6 million, with Consolidated providing $3.6 million for the construction and installation costs. The remainder will be covered by the loan.


Replying to Co-Chair Hornback, Mr. Thomas said a copy of the memorandum of agreement detailing the riverport lease arrangement with the Meade County Riverport Authority and Consolidated Grain will be provided. Senator Hornback indicated he had some concerns about how much competition the endeavor will create in the marketplace.


Senator Gibson expressed his appreciation to the board for committing funds to the project. He said the project will be a plus for farmers and businesses in the area.


Mr. Thomas described to Senator Gibson how it was not uncommon to grant low-interest loans to companies undertaking agricultural business endeavors. He said the current financial strategy has been to change from granting tobacco settlement funds for projects to approving low interest loans. Senator Gibson indicated his approach would be to offer zero-interest loans for similar projects.


Senator Parrett applauded the board for approving the loan. He mentioned the number of meetings that were conducted related to the project and also said the local officials were pleased to receive the low-interest loan. He has concerns about Consolidated Grain’s competitiveness considering other grain terminals in the area.


Mr. Thomas said the responsibility will be to protect the $2 million and ensure repayment.


The committee heard from Ms. Aleta Botts, Executive Director of the Kentucky Center for Agriculture and Rural Development (KCARD).


Ms. Botts discussed KCARD’s mission, the organization and partnerships, KCARD services offered, including business development, business maintenance and support, and educational opportunities, performance measures, and challenges the organization faces. She provided examples of businesses or groups that have been assisted through the years.


Senator Webb said that, in her law practice, she often gets questions about governmental regulatory practices and taxes. Responding to the senator, Ms. Botts said KCARD also receives those types of questions, and while the organization does not have specialists on those matters, it can pull together information and references. She gave an example of referring food safety questions on to the experts on food safety matters.


            Responding to Senator Webb, Ms. Botts said KCARD received $175,000 from the U.S. Department of Agriculture last year, plus other funding, which includes funding from the Agricultural Development Board.


            She commented to Senator Webb on the increasing activity and pressure from governmental agencies directed toward businesses.


Co-Chair Stone mentioned that KCARD had assisted an established agritourism business in his area, Chaney’s Dairy Barn.


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