Commerce Lexington Inc.

In central Kentucky, it’s not unusual for large corporations, like Lexmark, to accept college interns for a summer, semester or school year. However, small businesses haven’t gotten as much into internships. But that’s about to change.

With seven possible legislative days remaining in the session, several important bills are still in play including the passage of the state budget and road plan.

Late Monday afternoon, the Senate passed its version of the state’s next two year, $20 billion executive branch budget. The significant differences between the Senate version and the House approved budget bill include the restoration of general fund appropriations to universities, lower debt levels, and cuts to authorized bonding for capital construction projects (such as Rupp Arena and the Lexington Convention Center). The next step in the process is the appointment of a conference committee of House and Senate members to work out differences in the two bills.

Not too long ago, the Kentucky House of Representatives passed the State Budget bill, which now moves on to the Senate. Read more legislative session news here.

KY Legislative Alert: Oppose SB 137 – Negative Impact on Manufacturers

This bill will increase workers comp premiums for employers!

Senate Bill 137 is legislation before the Kentucky State Senate which will directly increase workers’ compensation costs for all employers in the Commonwealth. This is essentially a direct tax on all employers to benefit attorneys who profit from our workers’ compensation system.

The total fiscal impact of this bill is UNKNOWN at this time. However, it is clear there will be additional workers compensation system costs (i.e. increased litigation and benefits) that would then be passed to employers in the form of higher premiums.

Please take a moment to contact Senator Alice Forgy Kerr and Senator Reginald Thomas and urge them to oppose Senate Bill 137 because of its negative impact on business. To contact Senator Kerr and Senator Thomas, please call (502) 564-8100 or send an email to alice.kerr@lrc.ky.gov and reginald.thomas@lrc.ky.gov.

WHAT DOES SENATE BILL 137 DO?

SB 137 will DOUBLE attorney fees:
—> SB 137 increases attorney fee percentage to 25 percent of total award up to $50,000 
—> SB 137 doubles the maximum attorney fees from $12,000 to $25,000
—> Attorney fees are paid out of the injured worker’s settlements – not by employers.

SB 137 will encourage trial attorneys to reopen litigation against employers:
—> SB 137 incentivizes attorneys to reopen workers’ compensation cases by allowing a $12,000 fee to attorneys.
—> These fees will be taken from the injured worker’s settlement.

SB 137 will drive up workers’ compensation insurance premium costs (Section 2, subsection 4):
—> SB 137 will drive up costs for Kentucky employers’ workers’ compensation insurance premiums by extending the eligibility age for workers’ compensation coverage to 70 years of age or 5 years of date of last exposure.
—> Current Kentucky law requires employers to cover workers’ compensation costs for
employees up to the date of employees eligibility for Social Security (65) or two years.
—> There is nothing in the bill to offset the increased medical liability cost to the employer.

SB 137 is an unfunded mandate on Kentucky’s local governments and school districts:
—> Kentucky’s city and county governments and local school districts must pay workers’ compensation insurance premiums for their employees just like the private sector.
—> SB 137 places an unfunded mandate on ALL of Kentucky’s city and county governments and local school districts by requiring them to pay the increased workers’ compensation premiums.

BLOG POST SUBMITTED BY ANDI JOHNSON, VICE PRESIDENT - PUBLIC POLICY, ajohnson@commercelexington.com

For those in and around the Lexington, Kentucky area today: Get your business on the fast track to success! Hear about certification and best practices at TONIGHT’S Opportunity Exchange, featuring representatives from the Small Business Administration, Tri-State Minority Supplier Development Council, and the Kentucky Finance Cabinet. Location: Clarion Hotel (1950 Newtown Pike). Time: 4:30-6:30 p.m.

For those in and around the Lexington, Kentucky area today: Get your business on the fast track to success! Hear about certification and best practices at TONIGHT’S Opportunity Exchange, featuring representatives from the Small Business Administration, Tri-State Minority Supplier Development Council, and the Kentucky Finance Cabinet. Location: Clarion Hotel (1950 Newtown Pike). Time: 4:30-6:30 p.m.

If you’re snowbound today, don’t fret! The March issue of Business Focus magazine is already available on-line. Get a head-start on all the great upcoming programs and events, including the @330 Series focused on mobile apps & websites, Annual Dinner recap with photos, a Good Morning BG featuring Toyota’s Wil James and FCPS Superintendent Tom Shelton on March 20th, and an unbelievable travel opportunity to Dubai with CLX in October! Happy reading!

KY Legislative Session Update | Feb. 17, 2014

Legislative Session Nears Mid-Point; Budget Process Continues

As the legislative session nears the halfway point, the House budget review subcommittees continue to meet and work through the process of reviewing sections of the Governor’s budget, comparing them with agency requests and hearing from impacted groups such as the University of Kentucky and KCTCS. The Governor’s budget also contained $65 million in state bonds for the renovation of Rupp Arena and the Lexington Convention Center. This project has the possibility of transforming downtown Lexington, creating jobs and enhancing economic development opportunities.

Restoring Cuts to Higher Education:
Commerce Lexington, Inc. believes education is one of the most important functions of government, and therefore urges policymakers to make education funding a top priority in the 2014 state budget. Having a highly educated and capable workforce is essential to attracting and retaining business and creating jobs.

The Governor’s proposed budget reduces funding for higher education by 2.5 percent for public institutions. For example, to UK this equates to a $7.1 million loss to its base, operating budget. To put this in perspective, UK’s state appropriation would be $57 million less per year than it was in 2008 if this is enacted.

In addition, the Governor’s budget does contain some positive elements for UK and KCTCS that advocates are working to keep in the House budget and hoping the Senate will also consider.

These capital projects include state bonding for the renovation and expansion of UK’s College of Law building and a much needed research facility on UK’s campus, as well as KCTCS’s BuildSmart proposal, a public-private partnership investment initiative that will provide a total of $194 million in funding for the top capital project at each of the 16 KCTCS colleges - including $24 million in agency bonds for Bluegrass Community and Technical College’s Newtown Campus expansion phase II design.

As the House develops its version of the state budget, it is important for members of the business community to express support for higher education because of its importance to workforce development and economic competitiveness.

Please take a few minutes to contact your State House member and urge support for higher education by calling 1-800-372-7181 or by e-mail. Visit the Voter Information Center to verify your legislative district and representatives.

Minimum Wage Increases Passes Kentucky State House:
House Bill 1 (Stumbo), which seeks to raise the state’s minimum wage from $7.25 to $10.10 per hour, has passed the State House (54-44) despite the objections of many business groups including Commerce Lexington. HB 1 would put Kentucky businesses at a competitive disadvantage with surrounding states and force higher labor costs on Kentucky employers. Additionally, this bill includes a very subjective “equivalent job” standard, which could lead to many lawsuits against employers.

This bill now goes to the Senate for consideration. If this issue is important to your business, please contact your State Senator by calling 1-800-372-7181 or by e-mail. Visit the Voter Information Center to verify your legislative district and representatives.

Workers Compensation Special Fund Assessment:
Every employer in Kentucky currently pays a “Special Fund Assessment” rate (6.28%) on all workers compensation premiums paid. This special fund assessment is intended to pay off previous debt incurred from special fund workers compensation claims (claims prior to 1996). However, over the last several budget cycles, there has been a trend to increase the amount taken from this assessment to fund the Labor Cabinet - above what many in business feel are appropriate administrative costs. This bill now goes to the Senate for consideration.

Senate Bill 63 (McDaniel) is intended to correct this issue and ensure these funds are used for what was originally intended. It would also prohibit the siphoning of funds out of the special fund to fund the day-to-day operations of the Labor Cabinet and encourages one-time settlements on claims before 1996 - which ultimately will help lower the costs of workers compensation assessments for employers. This bill passed out of committee and now waiting action by the Senate.

If this issue is important to your business, please contact your State Senator by calling 1-800-372-7181 or by e-mail. Visit the Voter Information Center to verify your legislative district and representatives.

Governor’s Tax Reform Package:
This past week, Lt. Governor Jerry Abramson discussed the Governor’s tax proposal to a House budget committee. The Kentucky Competes tax reform plan consists of more than 20 different proposals to restructure the state tax code through a mixture of tax reductions/credits and revenue generating measures including an expansion of the sales tax on selected services. If implemented, the plan is estimated to generate approximately $210 million in new revenues each year. For more details, VISIT HERE for the fiscal impact and VISIT HERE for the impact of the expansion of sales tax on selected services.

Local Option Sales Tax:
Two bills were introduced (SB 135; HB 399) in the House and Senate to amend the state’s constitution to allow local governments the ability to enact up to a 1% local option sales tax for voter approved capital projects with a sunset provision. Thirty-seven other states allow local citizens to vote for or against new projects paid for by a temporary local option sales tax. Drafts of the enabling legislation are still being discussed by interested parties. Lexington Mayor Jim Gray has expressed support for this concept.

BLOG POST BY ANDI JOHNSON, VICE PRESIDENT OF PUBLIC POLICY FOR COMMERCE LEXINGTON INC. | ajohnson@commercelexington.com

Great new promotional video about Lexington, KY produced by Bullhorn Creative.

KY Legislative Session Update | Feb. 5, 2014

Governor Beshear Announces Tax Reform Plan

Governor Steve Beshear announced his legislative plan to modernize Kentucky’s antiquated tax code and make the Commonwealth more competitive for jobs. Based on recommendations from the Governor’s Blue Ribbon Tax Commission, the Kentucky Competes tax reform plan consists of more than 20 different proposals to restructure the state tax code through a mixture of tax reductions/credits and revenue generating measures.

If implemented, the plan is estimated to generate approximately $210 million in new revenues each year. In a recent CN2 Politics interview, House Appropriations and Revenue Committee Chairman Rick Rand (D-Bedford) said the plan may help “fill in gaps” in state budget. Rand is expected to file legislation containing the Governor’s tax reform plan in the State House. Senate President Robert Stivers (R-Manchester) said in a Courier-Journal interview the proposal is “a beginning…a point to start the discussion” and reiterated the importance of understanding how the proposal impacts the business community and job creation.

Below are some highlights from the Governor’s tax reform plan. For a complete description of the proposal, CLICK HERE (plan details) and CLICK HERE (fiscal impact).

GOVERNOR’S TAX REFORM PLAN HIGHLIGHTS:

• Broadens the sales tax to include selected services such as the labor associated with installation and repair of taxable goods, certain recreational activities, and certain commercial, residential and personal services. CLICK HERE for more information this proposal.
• Increases tax on cigarettes to $1.
• Reduces retirement income exemption for those with an annual gross income over $80k.
• Applies sales tax and transient room taxes to the entire hotel accommodation price.
• Reduces individual income tax rates.
• Enacts a refundable earned income tax credit for low wage earners.
• Lowers the top corporation income tax rate from 6% to 5.9%.
• Phases in ‘single factor apportionment’ solely on sales for corporation income tax.
• Creates an angel investor tax credit.

Help for Kentucky’s Signature Industries
• Creates an income tax credit for the bourbon industry.
• Exempts sales and use tax on certain equine products, similar to other livestock - and exempts sales tax on pharmaceuticals for food animals.
• Lowers wholesale tax on beer, wine and distilled spirits.

If you have any questions, concerns or comments about this plan, contact Andi Johnson, Commerce Lexington Inc.’s vice president of public policy.