Tom Martin Q&A: From Pension Changes to Statewide Smoking Ban, State Chamber Reviews 2015 Priorities

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LEXINGTON HERALD-LEADER | TOM MARTIN | DECEMBER 28, 2014

Leaders of the Kentucky Chamber of Commerce have barnstormed the Commonwealth, making stops in cities and towns all across the state to present the business community’s priorities for the 2015 session of the Kentucky General Assembly. Tom Martin talked about those priorities with Chamber President and CEO David Adkisson. Listen here

Tom Martin: The chamber’s agenda for the upcoming session places special emphasis on public-private partnership legislation, also known as “P3.” A bill passed in 2014 but had been amended in such a way as to result in a veto by Gov. Beshear, and we’ll get to that outcome in just a moment, but first what will this legislation do?

David Adkisson: The P3 legislation would create a comprehensive structure by which government and the business community would work together to solve public challenges. Whether it means building dormitories at university campuses or wastewater treatment systems, management of state parks or golf courses, roads, bridges, there is a lot of money in the private community that is available for investment in public projects. A P3 bill would set up the structure by which state government and the business community could work together in a very transparent way so that the taxpayers would know exactly what a business is doing on behalf of government.

Martin: What was the nature of that amendment last year that brought on a veto?

Adkisson: There was an amendment added by a representative from Northern Kentucky to prohibit tolls on any bridge being built or rebuilt between Northern Kentucky and downtown Cincinnati which is the Brent Spence Bridge. That’s a very big issue to our friends in Northern Kentucky. There’s a great concern about paying tolls for that and some people thought P3 was going to allow that, so that amendment was added. It was in one sense a poison amendment because the governor felt that he had to veto the whole bill. He supports P3. His team has been working with us. We would like to come back this time in the 2015 session in January with a clean P3 bill without an amendment like that.

Martin: Any indication that it could happen again?

Adkisson: I think we’re going to have to find a way in which P3 bill is not considered a threat to our friends in Northern Kentucky. In the case of the downtown bridges in Louisville, P3 was used there but not because we have it, we don’t. Indiana has P3 legislation, so we were able to partner with them so that private money could be inserted into that very, very expensive project.

Martin: The state’s pension system. Not a pretty picture. Just how bad is it?

Adkisson: The big storm cloud hanging over Frankfort right now in terms of its impact on the budget and everything else the state of Kentucky wants to do, like operating our schools, is the pension issue. There are two basic pension systems; the Kentucky Retirement System and then the Kentucky Teachers Retirement System.

The Teachers Retirement System has been saying for a couple of years that they need more money from the legislature to get on sound footing. They’ve addressed some of their key issues and they’re not in as bad a shape as the Kentucky Retirement System. But, they need more money and a significant amount: they said 400 million. That’s huge.

On a $10 billion budget, that’s a 4 percent increase.

We’re very interested in seeing more transparency. We want to know more about the fees that are paid to placement agents, we want to know more about the administrative and health-care costs of the Kentucky Retirement System. So, you’ll hear a lot about pensions in the 2015 session.

Martin: The state has adopted new, more rigorous academic standards. What’s the Chamber’s position on these new standards, and are you anticipating any attempts to weaken them in the upcoming session?

Adkisson: We’re very proud of what the legislature did in 2009 by making Kentucky the first state to adopt these new standards. And our teachers have implemented them and I think have done a heroic job of doing that. Our students have been tested for three years now and scores are going up. Initially they were low because these standards are tougher than what we were operating with under the CAT testing system. But now they’re coming up and it’s telling us that more and more of our students are on track to be ready for college and a career when they graduate from high school.

We want to stay the course. There was an attempt in the last legislature to do away with these new standards and create yet another system. We opposed that.

Martin: Any other educational initiatives of particular importance?

Adkisson: You will see charter schools debated again this year. Kentucky is one of only eight states that do not allow charter schools. Our position is that where there are persistently underperforming schools, charter schools need to be an option that parents can depend on. In other words, a tool in the toolbox of our educators. It’s not a panacea. But we definitely believe that charter schools should be an option.

Martin: We’ve become a digital world. What needs to be done in Frankfort to make Kentucky more attractive to investment in a high speed telecommunications infrastructure?

Adkisson: There have been attempts in at least the last three legislatures to modernize our telecommunications laws. The major telecommunications companies — the phone companies — would like to be able to invest more in broadband and to be relieved of some of the outdated regulations requiring landline service. They’re not going to yank anybody’s landline service; as a matter of fact, they have compromised and made guarantees to folks who want to stay with their landlines. I think this time, after working and compromising with the rural communities around the state, there’s significant momentum.

Martin: Coming back in 2015 is a proposed constitutional amendment to permit the local option. Can you tell us about that?

Adkisson: This originated with some of the mayors and county judges. They would like for their local communities to have the option to take a project — a new community center, or a library, or a city hall, to the voters and say, ‘Here’s what it will cost. We’re recommending a 1 cent sales tax increase for X number of years to pay for it. Are you in favor of that, or not?’ and the voters would decide.

Right now, under the Kentucky constitution, cities and counties don’t have the right to take a project to their voters. Our business leaders had a significant debate about that. They ended up in favor of this saying that at the end of the day local communities should have the right to determine their own fates and that voters should have the final judgment on whether or not something should go or not go.

Martin: And this would require a sunset clause, a term limit on the tax?

Adkisson: That’s right. I think it’s safe to say that it would not get through the legislature without a sunset provision. In other words, if you enacted it at a certain time, five years later, seven years later, whatever the stated time period for the project, it would roll off and voters would have control over any other project that would come along.

Martin: A Bluegrass poll conducted earlier this year found 57 percent of Kentucky voters in favor of a statewide smoking ban. Do you sense a momentum behind this?

Adkisson: Our members are very solidly for this — like eight or nine to one in favor of this for two reasons. One is because we like the idea of a uniform statewide law rather than a patchwork and secondly, this is considered by many to be the very best thing that could happen without a nickel of state tax dollars in it for the health of our citizens. As you know Kentucky is not a particularly healthy state and the business community is realizing that because business has to pay for a lot of the private health insurance and they pay their tax bills which encompasses a lot of health-care costs; Medicare, Medicaid, etc.

So, the business community is standing solid behind the coalition of various health groups, health professionals, and others. The Kentucky Hospital Association has joined in and they’re the experts on health care in all of these communities across Kentucky. It’s time to have a statewide law.