Special Session

Posted: Thursday, June 25, 2009
Blog: Legislative Update

Legislative Special Session - No Racinos but small business gets a break, finally!

Richard Vincent & John Brazel, AGC of Kentucky

 

As Senate leaders had warned, the Beshear-proposed and House-passed racetrack slots bill was defeated in the upper chamber this week, failing to get out of the Senate A&R committee, but the other three items on the governor's call were agreed upon and passed in good order as the 2009 special session wrapped up work in eight legislative days.

 

Passed: An economic incentive-package probably best known for seeking to lure a major NASCAR event to Northern Kentucky, along with an AGC of Kentucky and Small Business Caucus supported tax credit for small businesses who hire one additional employee and invest $5,000 in equipment or technology. The $25,000 tax credit is targeted at existing small businesses in Kentucky and has been on our legislative agenda for the three previous sessions but failed to pass in the 2009, 2008 & 2007 regular sessions.

 

We greatly appreciate the efforts of Rep. Tanya Pullin (D-South Shore) and Sen. Gary Tapp (R-Shelbyville) whose leadership and perseverance on this important issue has led to its final successful passage.

 

Also passing was the so-called 'Bridges Bill' to create a finance-and-control authority for massive transportation megaprojects like the $4.1 billion Ohio River twin-bridges project in Louisville, and a rebalanced state budget to fix what Gov. Steve Beshear and some predictors called a near-$1 billion shortfall in the coming fiscal year.

 

The economic-incentive measures lawmakers agreed to include $75 million to boost existing incentives that encourage the expansion of businesses already operating in Kentucky. Plus, in addition to tax credits to help Kentucky Speedway in Gallatin County land a NASCAR Sprint Cup race, it also includes tax incentives to attract the Breeders' Cup horse racing championships to Louisville, and creates a tax credit for small businesses (see above) and for film and TV productions shooting in the Commonwealth. It also exempts active-duty military from state income taxes.

 

The initial reason Beshear called the special session for June 15 was to revise the state budget. His proposal called for using $741 million in federal stimulus funds to fill most of the projected shortfall. He also proposed across-the-board spending cuts for most state agencies — but sparing education — of 2.6 percent. Those steps lawmakers approved.

 

But in the agreement reached between House and Senate negotiators late Tuesday, the governor's proposal to suspend three paid holidays for state workers making less than $50,000 a year and five holidays for those making $50,000 or more was deleted from the final bill.

 

Overall, observers hailed the session as highly productive, given quick and relatively painless agreement on three major issues. But the biggest newsmaker in the room — video lottery terminals, or video slots — came up short when it landed in the Senate.

 

The governor had added VLTs to the session call to help save the state's troubled Thoroughbred industry, by drawing more patrons to tracks and injecting new money into race purses. The hope was to keep racetracks open, and horses and horsemen in the state.

 

The VLT idea has been bubbling under the legislative surface for a decade or more, but no full chamber has ever actually voted on it — until the House voted 52-45 last week to approve the measure. But House leaders added a sweetener this year: a sudden proposal to tie most slots revenues to debt service on bonds for more than $1 billion in school-building construction, both at state colleges and in school districts statewide where crumbling elementary and secondary buildings need replacement.

 

However, Senate leaders felt relying on slot-machine revenue was bad public policy, and had their own proposal to help the horse industry without expanded gambling: Taxing state lottery sales and adding a surcharge for simulcasting signals from Kentucky horse racing tracks.

 

In the end, neither chamber could agree to the other's proposal and the session concluded yesterday sine die.

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