2012 Session Begins

The 2012 session of the Kentucky General Assembly kicked off last week, during which a number of important, high-profile issues are expected to be addressed. More than 350 bills and resolutions have been filed for consideration. The Kentucky Chamber’s public affairs team is reviewing these and will be reporting regularly to Chamber members and voicing our support or opposition to the General Assembly based on how these issues will impact businesses in the Commonwealth.

 Redistricting

The decennial task of redrawing House, Senate and Congressional districts is underway following the release of the detailed U.S. Census data last year. Legislators are working to tackle this difficult and often very political task before the candidate filing deadline at the end of January.

Gaming

In his State of the Commonwealth Address, Gov. Beshear renewed his push for expanded gaming to help Kentucky’s signature horse industry. He is working with legislators to finalize details of a Constitutional Amendment to let the citizens of Kentucky decide this issue. Due to expanded gaming in other states that support horse racing, Kentucky is losing jobs and investment to our competitor states. The Kentucky Chamber supports expanded gaming as a reasonable and responsible reaction to the actions of other states to protect Kentucky’s horse industry and recover some of the revenue flowing across our borders to surrounding states.

Budget

On Jan. 17, Gov. Beshear will submit his proposed biennial budget. The Governor has described this as the most difficult budget of his administration, and it will include significant cuts and will not be based on any new anticipated revenue. The Kentucky Chamber has offered a number of suggestions in our recent Building a Stronger Bucket report. In it, we outline five spending principles that will guide our review of the state budget. The Chamber believes that to achieve sustainable and healthy growth in our economy and the well-being of our citizens, the state should prioritize spending on education and workforce development first, with economic development and infrastructure a close second.

 Tax Reform

At the Kentucky Chamber’s Annual Chamber Day dinner last week, Gov. Beshear announced the formation of the Blue Ribbon Commission on Tax Reform to be chaired by Lt. Gov. Jerry Abramson. The Commission will review how Kentucky compares to other states regarding business taxes and identify ways to improve business tax competitiveness. The Chamber’s Competitiveness Council, along with a tax working group, has been working for the better part of a year to reach out to members and seek input on taxes. The Chamber’s position on competitive business taxes can be found here.

Prior to last week’s announcement, two competing tax proposals had been filed. HB 127 (Wayne) would extend the sales tax to selected services, raise the income tax on individuals and small businesses, and provide relief to low-income individuals through an earned income tax credit. HB 120 (Farmer) would expand the sales tax to a number of services (including legal, accounting and advertising), broaden and lower the individual income tax, eliminate the state’s corporate income tax, and tax all pass-through entities at a flat rate of 2.5%. The Chamber will be following these proposals closely.

Education

Two pieces of education legislation would go a long way in improving the education attainment level of Kentuckians. Both Kentucky Chamber priorities, these bills would keep more students in high school and offer them a more rigorous and relevant experience. SB 52 (Higdon) and HB 216 (Greer) would incrementally raise the compulsory school attendance age to 18, sending a message to students that dropping out is not an option. SB 38 (Westwood), HB 28 (Yonts) and HB 75 (Belcher) would provide a career-based program of study for students making their high school years more relevant to their future as a working adult.

Health care

The General Assembly should consider health insurance exchange-enabling legislation to comply with the Affordable Care Act. If Kentucky does not take action to develop an exchange in 2012 – whether through legislation, executive order or regulation – the federal government will operate its own exchange for the state. The Chamber supports a state-operated exchange with market-based principles.

The ailing Medicaid budget, including the managed care implementation process, will be evaluated by the legislature and closely monitored by the Chamber. The General Assembly will also consider a statewide smoking law that prohibits smoking in public places, a measure supported by the Chamber.

The Chamber will continue to oppose health insurance mandates that circumvent the private negotiation process and cause health care costs to increase for small businesses. HB 202 (Sinnette) is one such mandate already moving quickly in the House.

Pension reforms

There have been numerous bills filed this session to deal with legislative pensions. HB 65 (Crimm), HB 117 (Cherry), HB 149 (Housman), SB 27 (Higdon), SB 28 (Parrett) all deal with the process of the “high three” where legislators can earn additional retirement benefits by taking a job within state government and their top three years of income determines their amount of retirement benefit. SB 27 would also create a defined contribution plan for new legislators that are elected and enter the state retirement system after July 1, 2012.

Drug abuse

A couple of bills have been filed in the 2012 Session to help curb Kentucky’s prescription drug abuse problem. HB 134 (Pullin) would require the Kentucky Board of Medical Licensure to have a more regional statewide representation on the board. Currently the board is made up of members from urban areas. SB 42 (Higdon) would require pain management clinics in Kentucky to be licensed. A larger, comprehensive bill is expected to be filed in the upcoming weeks. The Kentucky Chamber supports efforts to curb Kentucky’s prescription drug abuse problem.

SB 56 (Jensen) and HB 79 (Belcher) will increase health care costs for employees and increase employee absenteeism by requiring a doctor’s prescription for medication with pseudoephedrine. The Kentucky Chamber offered a number of other solutions to legislators that could be more effective in combating the state’s meth abuse problems. Many of these solutions are included in HB 80 (Yonts), which is a more reasonable approach to addressing Kentucky’s meth problem because it does not penalize the vast majority of pseudoephedrine users who use the products legally. Learn more about this issue and contact your legislators at stopmethnotmeds.com.

Throughout the 2012 session, we will continue to closely track these and other issues that impact the business community. Feel free to let us know how pending legislation will affect your business. Contact us at legislative@kychamber.com or visit our blog at kychamberblog.com.

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