2012 Session Fell Short

By Dave Adkisson

The 2012 regular session of the Kentucky General Assembly and the subsequent special session illustrate that progress and compromise on key issues remain difficult to achieve. After spending much of the session trying to craft new legislative districts, the legislature made substantial progress on many issues; however, a number of priorities fell short.

The good news is the legislature passed a two-year budget on time that was, by nearly all accounts, a fiscally responsible plan to fund government services without higher taxes. The legislature implemented a number of Kentucky Chamber recommendations by reducing the state’s debt level and eliminated a substantial portion of the structural imbalance by relying on fewer accounting gimmicks and the use of one-time monies for recurring expenses – a practice common in recent sessions.

The top priority for business was legislation to address the interest on the debt the state owes to the federal government for unemployment insurance. Without a mechanism to repay this interest, Kentucky employers would have faced a disastrous $420-per-employee tax penalty for a total cost to business of more than $600 million. Legislators addressed this problem in a bipartisan way that provides for the interest payment and opportunities for future tax relief. Legislators also passed a career-based education initiative and legislation to simplify local business tax filings. Progress was made on addressing concerns with the public pension system. Lawmakers crafted incentives for auto manufacturing jobs and a law to improve the regulatory process. They also passed a reasonable compromise that addresses the proliferation of meth labs.

In the waning hours of the regular session, an impasse over road funding turned what would have been a successful conclusion into a disappointing end with a contentious blame game and a special session. The transportation budget and prescription-drug-abuse legislation failed in the regular session, so Gov. Beshear called lawmakers back to address these issues. Both were successfully addressed in the five-day special session, but a number of other issues will have to wait until next year. In addition to bills passed, another way to measure any legislative session is to note whether any anti-job business legislation is enacted. Fortunately, a number of such measures that were opposed by the Kentucky Chamber of Commerce were defeated, including legislation that would have increased health and legal costs for businesses.

Despite a number of compromise proposals, lawmakers left town without passing legislation to prevent 16-year-olds from dropping out of high school. They also failed to enact charter school legislation to address persistently low-performing schools and rejected several Senate measures to improve the quality of teachers in the classroom.

Lawmakers also failed to address one of the most persistent problems faced by our signature Thoroughbred industry. For years, other states have been out-competing Kentucky and threatening our position as Horse Capital of the World. Expanded gaming in nearly every other horse-racing state has resulted in significant job losses for Kentucky – a trend that will continue as long as our industry is denied a level playing field.

The General Assembly also had opportunities to improve the health of Kentuckians that did not pass. A measure to limit smoking in public places, a proposal to provide incentives for wellness plans in the workplace and a measure to limit frivolous lawsuits that raise healthcare costs all fell short.

Kentucky faces persistent challenges that demand our attention. The public pension and Medicaid systems pose the greatest fiscal challenges to our prosperity. Our tax code, which is being evaluated by a gubernatorial commission right now, needs reform to make Kentucky more competitive. We must also ensure our labor policies are not a hindrance to job growth as we see neighboring right-to-work states out-compete us. Finally, we must ensure our legal climate is not one that allows frivolous claims to become impediments to job creation. The legislative process is designed to be deliberate; however, these and many other issues require swift action to make the progress necessary to create a competitive workforce and enact the policies that will foster job creation and prosperity in Kentucky.

Dave Adkisson is president and CEO of the Kentucky Chamber of Commerce.

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