Dave Adkisson is president and CEO of the Kentucky Chamber of Commerce. He recently sat down with Tom Martin to discuss the chamber's 2014 legislative agenda.
Tom Martin: The Kentucky Chamber's 2014 legislative agenda covers eight broad areas of interest including education, health care, energy, taxation, business climate and competitiveness. Speaking on behalf of the business community of Kentucky, what do you consider absolute musts for this session of the General Assembly?
Dave Adkisson: An absolute must for this session is the budget. I think that issue will suck a lot of the air out of the room in terms of news coverage, interest and conversation. The legislature has to do a budget. In previous years they have sometimes failed to do a budget. The governor has had to call them back into special session. But with the personalities we have in place and with the urgency right now, my prediction is that they will accomplish a budget in this session. The economy is growing modestly in Kentucky, which means Frankfort will have a modestly greater amount of money than last year. I would guess that that's going to be in the $300 million range. Sounds like a lot of money, but when you think about the absolute requirements of the budget just to maintain a status quo and to pay for the pension system that they agreed earlier in the 2013 session to fix, that pension requirement is going to come due.
Educators are asking for funding to get school funding back up to the 2008 level. All that put together represents about a 5 percent problem. Based on a $9.5 or $9.6 billion dollar budget of anticipated revenue, they will need to find about $450 million, give or take $25 million.
Martin: The governor has asked the legislature to restore some of the education funding that was cut after the recession hit the state. Sounds like business and state leadership are on the same page on that particular issue.
Adkisson: Right. Improving education is the top strategic goal of the business community of Kentucky. We share that goal with Governor Beshear and many legislators. The education establishment is calling for new money for education simply to get back up to the 2008 funding level. That will require $120-$130 million extra per year. We should try to achieve that in this session. We think that it should be accompanied by some greater accountability on education spending so that taxpayers have an assurance that it's actually getting to the classroom and that student achievement is factored into how we evaluate our schools. How do you pay for it? Our answer, in part, would be that we should expand gaming. There seems to be a bipartisan consensus toward revisiting that issue.
Martin: If it becomes necessary to make cuts elsewhere in order to boost funding for education and other top priorities, what sacrifices would be acceptable to your membership?
Adkisson: You can always look at efficiencies. Some in Frankfort would say, 'Hey, we cut eight times, how much more efficient do you want us to be?' And indeed there have been significant cuts. The economic development staff, for example, the people who are out there trying to recruit new jobs for Kentucky — it has probably been cut by a third. You look at the court system, various other things, functions that you and I depend on as citizens of Kentucky, and they've been hammered. So that's a very difficult situation. Our option would be rather than to continue to cut essential services, put a laser focus on efficiencies. There are still things in Frankfort that are antiquated. Work rules that are antiquated. You can't get rid of inefficient workers, for example, because of work rules.
In terms of revenue, I think gaming, and we favor an increased tax on cigarettes. The legislature has been hesitant to address that because of opposition in rural areas. But we think that's the very best thing that can happen for the health and wellness of Kentuckians. And coincidently, it would produce revenue for the state of Kentucky. But it's going to take some political consensus and some backbone among legislators to get that done.
Martin: What could be done in Frankfort to support the creation of good jobs, those that pay a living wage and offer decent benefits?
Adkisson: We're certainly supportive of the efforts by the state of Kentucky to recruit new companies, but ultimately most new jobs will be created by the businesses that are here in Kentucky right now. We need to make sure our tax system, our regulations, our judicial climate support the creation of new jobs. The uncertainty in the business community stems from several things. One is ObamaCare. Secondly, the credit markets. Things have tightened up. The new rules have made it so restrictive that even though banks have money to loan, businesses that want to expand — add a third shift, or a new product line, or two more salespeople or a bookkeeper — are having trouble borrowing money.
Martin: The mayors of Lexington and Louisville have partnered on a 22-county initiative called BEAM — Bluegrass Economic Advancement Movement — and advanced manufacturing is at its heart. Do you support this concept?
Adkisson: Yes. If you go to the biggest county in Kentucky, Jefferson County, or to the smallest county, Leslie, Clay or Pendleton, and you talk to community leaders about the economy and jobs, within 10 minutes I guarantee you the conversation will have become a workforce conversation. In other words, how do we train our young people, how do employers get the skilled workers that they need? That's an issue we're going to have to be very aggressive on. It won't just happen because we graduate "X" number of people every year from high school and college. We are going to have to be very, very strategic about what we are suggesting that students might study for their own benefit. I don't think we should try to control that. People need to be able to pursue what they want to pursue. But at the same time if there are, let's say, 500 accounting jobs available in the state of Kentucky over the next five years, there's probably not a lot of point in training five times that many. Nor do we want to train half that many. We need to try to find sophisticated methods by which we match what we know about the job market with the dollars we're spending to train people.
Martin: What is the Chamber's position on the proposal to amend the constitution to allow cities and towns around the state to enact a local sales tax option?
Adkisson: Louisville and several other mayors and county judges and chambers of commerce around the state have endorsed the idea of local communities having the ability to take a project or projects to their citizens on a public vote to ask them if they are willing to pay for it with a 1 cent sales tax just in that local area. And that sales tax would expire after five years, six years, eight years, whatever. We had a very robust debate about that within our organization. We represent businesses all over the state. Big ones, little ones, you name it. And our board of directors voted solidly in favor of supporting that, not so much because of the tax revenue but because it would be a local community determining its own future.
Martin: What is the Chamber's position on Right to Work legislation?
Adkisson: We favor Right to Work and have consistently for years. Here in Kentucky, if you go to work for Kroger, if you go to work for UPS, those companies are represented by a union, and you must join the union, you must pay union dues. A Right to Work law would allow you to work there and make your own decision. We feel like the lack of Right to Work law in Kentucky is costing several thousand jobs per year in this state. I have personally been involved with industrial prospects that have gone to other states because Kentucky was not Right to Work. I have been in the room when those kinds of conversations have occurred. I was in Alabama when Alabama beat Kentucky for a major plant and Right to Work was certainly a factor. Every time Alabama presented its case it reminded the prospect that Kentucky was not Right to Work. We're now surrounded. Indiana has passed the Right to Work, and of all things Michigan has passed Right to Work.
Martin: Governor Beshear is pushing for a statewide smoking ban. ... For or against?
Adkisson: We're for it. Why? Kentucky is not a very healthy state. It's costing employers money in their insurance premiums and their tax bills. We survey our membership every year, and this year over 90 percent of our members support a statewide smoking ban for public places like bars, restaurants, etc.
Martin: Frankfort is always a politically charged place, but all 100 seats in the House and 19 of the Senate's 38 eight seats will be up for grabs in November. Can you get anything done in such a highly charged atmosphere?
Adkisson: Yes, I think we've got the right personalities in Frankfort right now. Senator Robert Stivers, Speaker Stumbo, Governor Beshear — they have shown that even with their philosophical differences they can hammer out constructive consensus and solve problems. So that's my hope for the 2014 session.