Legislative Update- February 23, 2015

Workers’ Compensation bill passes House committee, despite business concerns

House Bill 294 passed out of the House Labor and Industry Committee on Monday, despite serious concerns from the Chamber and other business groups. Kentucky Chamber Director of Public Affairs Ashli Watts joined other business groups to testify against the bill.

The main provision of HB 294 is to double the maximum attorney fee in workers’ comp cases from $12,000 to $24,000. Additionally, it includes a provision that will allow for additional increases and includes a provision to ensure lawyers, not the injured worker, receives their payment as a lump sum payment. The Chamber and other business groups have serious concerns that these provisions will significantly add cost to the workers’ compensation system and negatively affect employers in Kentucky, without any improvements to the system overall.

The bill now moves to a vote on the House floor. Please call your legislator at 1-800-372-7181 and let them know that you do not support HB 294.

Senate committee passed Chamber supported Senate Bill 130 and pension spiking measure

Chamber supported SB 130, sponsored by Sen. Chris Girdler, passed out of the Senate State and Local Government meeting Monday upon adjournment after much debate.

There were 6 yes votes, 1 no vote and 4 pass votes. SB 130 would require government entities to conduct a study to determine what impact the sale of commercial products and services would have on the local community before the government could enter the retail market.

Sen. Girdler filed this bill in response to the city of Somerset opening a gas station last year. In addition to the study, Senate Bill 130 would also require a public hearing on the proposed sale of a commercial product or service. It would require governments to keep accounts for commercial products and services separate from all other government accounts or funds in order to preserve its integrity and promote transparency, should the local government continue its pursuit to compete with the private sector. Sen. Girdler said that he filed the legislation to level the playing field, so if a government entity chooses to compete in the retail marketplace, they follow the same tax obligations, bookkeeping requirements, and market pressures that taxpaying business owners encounter daily.

The bill now moves to a vote on the Senate floor. Please call your legislator at 1-800-372-7181 and let them know that you support SB 130.

The committee also passed SB 157, sponsored by Senator Chris McDaniel, which addresses Kentucky retirement benefit spiking. Pension spiking occurs when an employer receives significant increases in pay immediately prior to a retirement that results in higher lifetime benefit payments. According to the Kentucky Retirement System (KRS), spiking costs less than $2,500 are 73% of all notices sent to KRS employers. The bill passed unanimously and now heads to the Senate floor.

House passes KTRS Bonding Bill and All STARS quality rating system

The House passed HB4, sponsored by Speaker Greg Stumbo, with a vote of 62-31. Being a revenue bill in a non-budget year, the bill required 60 votes to pass. HB 4 would bond $3.3 billion of the KTRS debt.

In March 2014, the Kentucky Chamber called for the creation of an interim legislative study group to conduct a thorough review of KTRS funding issues, using independent outside experts, and recommend reasonable strategies to address the funding gap and unfunded liabilities. The issue was not addressed at the time or in the interim, and now legislators are being asked to bond a substantial amount of debt while interest rates are low.

Many in the business community are skeptical of additional bonding, especially since taxpayers have not had the benefit of vetting such a major initiative. This discussion focuses solely on the funding side and does not include a comprehensive review of the costs and sustainability of the benefits structure over time. For now, it would be imprudent for the business community to support such a proposal without a significant amount of open, public deliberation. House Bill 4 now heads to the Senate.

HB 234, which directs the Early Childhood Advisory Council to implement a quality-based rating system for licensed childhood providers, passed the House today 81-16.

According to the 2014-15 Kentucky Kindergarten Readiness Screen of 49,089 kindergarten students in all 173 school districts, 50 percent of Kentucky’s kids entering school in 2014 were less than prepared to do Kindergarten work.

Economic research makes it clear that investments in quality early childhood programs return strong dividends. Kentucky must invest in early childhood education and enhance child care programs for Kentucky’s developing youth.

This Chamber supported bill now awaits action in the Senate. Please call your legislator at 1-800-372-7181 and tell them you support HB 234.