Over 300 business leaders gathered at the Kentucky Chamber’s Legislative Preview Conference in November to hear from legislators and the governor on top issues heading into the 2023 session.
Kentucky Chamber Senior Vice President of Public Affairs Kate Shanks kicked off the conference by recapping the successes of the 2022 legislative session, which included policies to improve Kentucky’s tax code, unemployment insurance system, and access to child care.
A panel focused on health care had a conversation on the critical impact of the workforce shortage on the industry and what will happen if the shortage is not alleviated.
“Time is coming shortly when you might show up to a hospital and there is no one there to take care of you,” said Sen. Ralph Alvarado.
While discussing the contributing factors to the workforce shortage, Alvarado stated that Kentucky is now second in the country for lawsuits per capita, which is a key reason Kentucky is struggling to attract providers.
During a conversation on substance use disorder, Rep. Kim Moser said “we’ve done a good job of getting treatment into place.” However, she said Kentucky needs to do a better job of getting people into treatment, pointing to services like transportation that are critical to eliminating barriers for individuals that need help.
As Kentucky is ranked among the lowest in the nation in many health areas, panelists talked about the need to meet individuals where they are and the importance of providing incentives and access for those individuals to seek care.
Following the monumental tax reform legislation that was passed in the 2022 legislative session, a panel provided an update on how House Bill 8 will impact the Commonwealth, which starts in January 2023 with a reduction in Kentucky’s income tax from 5 to 4.5 percent.
Panelists talked about misconceptions that lowering the income tax will create the need to raise the sales tax. Rep. Brandon Reed said that if Kentucky continues to keep its budget reserve trust fund at a good level, that will not happen.
House Appropriations and Revenue Committee Chair Jason Petrie said every half point the income tax lowers, $600 million remains in the pockets of Kentuckians. He said “those are simply investments” when talking about the impact that has on local communities across the Commonwealth.
Referring to the major announcements happening in different areas of the Commonwealth, Rep. Reed said, “if we combine the opportunities that are coming from the investments in our communities with these tax reforms, Kentucky is fixing to grow.”
On the topic of growing local communities, Rep. Michael Meredith discussed the opportunities that would come from providing more flexibility to local taxing authorities. House Bill 8 was designed to complement local tax reform, he said, and this issue is part of the overarching effort to shift Kentucky to a broader, consumption-based tax system.
As for what comes next, the panelists said the legislature will take a methodical approach, including bringing many groups to the table, to ensure the best path forward.
As the education system continues to recover from the coronavirus pandemic, a panel of lawmakers, including Rep. Steve Riley, Rep. Josie Raymond, Rep. Killian Timoney, and Sen. Maxwell Wise discussed the key areas that will help improve education in Kentucky in a panel moderated by Goodwill Industries of Kentucky President and CEO Amy Luttrell.
After a crisis event like COVID-19, Timoney said it is critical to do a needs assessment—look at the data to find out what worked for some students and what did not work for other students. The panelists agreed that family involvement is essential to student success, and that has been evident before, during, and after the pandemic.
Rep. Raymond stressed that improving salaries is a key step to addressing Kentucky’s teacher shortage and improving outcomes for the education system and along the same lines, Rep. Riley encouraged a shift in the message around teacher recruitment and retention. “We have to go out and say this is an honorable profession, and you can do great things in it,” he said.
Panelists discussed the need to educate students on all professions that are available to them and what it will take to get them there, whether that includes a four-year college degree, a certification, or another form of postsecondary education.
Sen. Wise pointed to the innovative programs across Kentucky providing technical training and highlighted the efforts by chambers of commerce in promoting those programs.
Programs like this will be key to filling the jobs that are coming from economic investments like the new Ford battery plant, said Rep. Raymond.
When asked what Kentucky can do to make the state more attractive, lawmakers said it is crucial to continue making the Commonwealth as business-friendly as possible and take advantage of Kentucky’s geographic advantage.
Senate President Robert Stivers and House Speaker David Osborne opened their conversation with Kentucky Chamber President and CEO Ashli Watts by recapping the outcomes of the 2022 election, which included growth in the Republican majorities in the House and Senate and failure of both constitutional amendments on the ballot.
The legislative leaders discussed the important work of the legislature during the 2022 special session to provide relief funds and help the communities impacted by the historic tornadoes and flooding across Kentucky.
Osborne credited the work of House A&R Chairman Petrie in crafting the state budget in such a way that it provides opportunities for the legislature to pass legislation like the relief package.
Similarly, President Stivers commended both Chairman Petrie and Senate A&R Chairman McDaniel for their mindset of, “let’s not budget for the next year; let’s budget for the next 15 years.” Stivers said that kind of thinking by the General Assembly will move Kentucky forward.
Speaker Osborne pointed to the fact that 2023 will be the first time in four years that the legislature will not craft a budget, which will provide time to focus on other priorities.
As for priorities for the upcoming session, the leaders touched on pro-business issues including tax reform, signature industries, sports wagering, and infrastructure.
President Stivers touted the tax reform package that was passed during the 2022 session and the impact it will have on Kentucky when competing with other states. This will be what businesses and individuals will look at when choosing whether to locate here, he said.
During the lunch keynote, attendees had the opportunity to get to know some of the new faces they will be seeing in the legislature.
Coming off the most recent elections, Representatives-elect Amy Neighbors and Wade Williams and Senator-elect Amanda Bledsoe joined freshmen lawmakers Reps. Keturah Herron and Sarge Pollack to have some fun discussing their campaign slogans, what they learned from on the campaign trail, what song that describes them, and much more.
Outside of getting to know the new lawmakers personally, Rep. Pollock, who moderated the discussion, asked each panelist what they want to pursue during their time in office.
Bledsoe said in Lexington, there are many cases of people shooting firearms into occupied homes and cars. Currently, that is not a violent offense, and she would like to see legislation to make sure it is. Herron shared similar sentiments as she said she will be spending most of her time working on ways to end gun violence, possibly even by working to build an office similar to the Office of Drug Control Policy to ensure statewide efforts.
Neighbors and Williams both pointed to areas of health care they would like to focus on, which include ensuring providers can attract, train, and retain staff and address assaults in healthcare settings. Williams also stated he would love to work on policies that will help the state become more economically competitive.
Wrapping up the session, Pollock gave the new lawmakers some lighthearted advice including doing their homework on issues, not explaining their vote more than once a week as a freshman, and more.
Energy and Environment
A panel of energy leaders including Rep. Jim Gooch, Rep. Josh Branscum, and Kentucky Energy and Environment Cabinet Deputy Secretary John Lyons had a conversation on priorities to ensure Kentucky maintains affordable and reliable energy rates.
Chairman Gooch discussed a policy that has yet to pass the General Assembly that would ensure Kentucky does not have more stringent regulations than the federal government. He also spoke about a new study relating to alternative rate mechanisms which could impact legislation as well as securitization.
Deputy Secretary Lyons said their priorities include reauthorization of the hazardous waste fee, and a dam safety program, among other plans to help address aging infrastructure across the Commonwealth.
Rep. Branscum said that when regulations are being reviewed, it is important to consider whether the rules are going to help or hurt businesses. He also spoke about his legislation related to ensuring solar projects are decommissioned appropriately and bonding is provided to do so should they be needed.
Dep. Sec. Lyons also talked about the EPA’s “Good Neighbor” regulation and expressed the cabinet’s concern. He also expressed concern regarding the EPA’s proposal to regulate PFAS as hazardous materials.
Discussions also included building advanced nuclear power and concerns regarding deregulating the electricity markets.
Kentucky has experienced a significant amount of devastation over the last year with tornados hitting western Kentucky in December 2021 and flooding in eastern Kentucky this July.
A panel of lawmakers from the regions including Rep. Richard Heath from western Kentucky and Reps. John Blanton and Angie Hatton along with Sen. Jason Howell from eastern Kentucky discussed where things stand in their regions in a discussion moderated by AT&T Kentucky President Carlos Sanchez.
The lawmakers each pointed to the fact that their communities were already dealing with population loss or stagnant populations, and both eastern and western Kentucky had seen their local leaders come together to build on economic development, tourism and other efforts before the natural disasters hit and so much was lost.
Discussing legislation that has been passed to help the communities, the legislators said they want to see the General Assembly build upon the progress of bills passed during the 2022 special and general sessions where great bipartisan work was done to help the regions. The lawmakers said they feel those laws have been very successful in keeping the communities going.
Some of the progress they would like to see moving forward includes an increased focus on housing and revitalizing communities. Also, the lawmakers would like to look at what policies would have been beneficial to have in place when the disasters hit and what new laws can be implemented after learning from the experiences.
While so much devastation came from both natural disasters, the lawmakers discussed ways that their communities are rebuilding, such as making downtown areas even more attractive to businesses and individuals, as well as planning new housing to help avoid people being in the path of disaster again, especially in eastern Kentucky.
“This may knock us back a few feet, but it won’t knock us down. And we will be stronger than before,” Blanton said, encouraging businesses to locate and invest in eastern Kentucky.
Kentucky Transportation Cabinet Secretary Jim Gray provided an update on the Infrastructure Investment and Jobs Act one year after its passage. Secretary Gray stated that federal funding from the highway administration has increased from $700 million to $900 million as a result of the legislation, which will help expand Kentucky’s capabilities and capacity.
As the country rapidly moves from traditional gas-powered vehicles toward electric and hybrid vehicles, state transportation leaders are trying to stay ahead of the curve in terms of preparing for the future, especially when it comes to collecting a tax or user fee on said vehicles.
The infrastructure investment panel heard from Kentucky Transportation Secretary Jim Gray, Senate Transportation Committee Chair Jimmy Higdon, and House Transportation Committee Chair Ken Upchurch at a panel moderated by Seth Cutter of CVG Airport Monday in a discussion that covered a wide range of topics in the infrastructure sector.
Secretary Gray pointed to the fact that electric vehicle sales have increased by around 70 percent in the last year.
“This year alone, electric vehicle sales are up 70 percent nationwide and are now being offered at a very affordable price,” Gray said. “This is not something that’s coming slowly or gradually. It’s coming very quickly, and getting ready for that is exactly what we’re doing.”
Senator Higdon said that Kentucky was looking at miles-driven technology, which would require some sort of tracker on each vehicle, saying they had been meeting with several other states who have employed pilot programs around this technology.
“We still have a long way to go to figure this out,” Higdon noted.
While challenges remain in collecting revenue, panelists remain excited about the announcements of electric vehicle production plants and battery plants near Elizabethtown and Bowling Green will make Kentucky the “electric vehicle battery capital of North America,” according to Secretary Gray.
Gray also said positive progress was being made toward a Brent Spence Bridge companion bridge in Northern Kentucky through the help of the federal infrastructure bill that passed in 2021.
Other topics covered by the panel included tackling ongoing workforce challenges and stressing the importance of other modes of transportation to our economy such as rail, riverports, and aviation.
Floor Leader Panel
The Republican floor leaders from the House and Senate said they will really focus on smaller issues in 2023 after monumental changes and new laws in recent sessions.
“Lower your expectations,” Senate Majority Floor Leader Damon Thayer told the crowd about the 2023 session while he and House Majority Floor Leader Steven Rudy discussed the monumental new laws in Kentucky around tax reform, unemployment insurance reforms, school choice, child care, and much more.
At the same time, moving into the 2023 session there are 25 new members entering the state House and six new state Senators. Thayer said he sees the General Assembly returning to the intent of a short, 30-day session and not passing a ton of bills in 2023.
“I hope that we don’t open the state budget, don’t open the road plan, and really make the main focus tweaks and improvements to existing laws,” Thayer said.
Rudy said he believes the most significant and impactful thing that will happen in 2023 will be follow-up to House Bill 8 and the triggers lowering the personal income tax.
“We already know we are going from 5 to 4.5 percent in January 2023. That is happening. And we, as the General Assembly, can take action to go from 4.5 to 4 percent in 2024. I think it is very cool for new legislators that the first vote they take will be to lower Kentucky’s income tax,” Rudy said.
As for what will not be tackled in 2023, Thayer and Rudy agreed there likely will not be an appetite to vote on any constitutional amendments, especially following the failure of both amendments on the ballot in the 2022 elections. “What’s the rush?” Thayer asked, discussing a potential local tax reform amendment and pointing to the fact that any amendments cannot appear on the ballot until 2024.
Other issues they are each interested in, Thayer said he is ready to tackle sports wagering and thinks it’s “a little embarrassing” Kentucky doesn’t have it. “We are a sports-crazy state. And I know some people say it’s not a lot of revenue but I think if we ever pass it, it will be a home run and wildly popular,” he said.
Rudy said a significant portion of the House caucus retreat will be spent discussing recommendations coming out of many interim committees around things like bourbon and other issues.
Giving the audience a “scoop” after the 4:00 pm deadline, Thayer said no one has filed to run against him for his leadership role. And discussing the 2023 governor’s race, Rudy joked that Thayer will not be his running mate in the election because he will not be on the ballot. Thayer followed up by saying “we may be the only two Republicans in the state not running for governor.”
“These last few years have been hard and it’s okay to admit they were hard,” Beshear said, first pointing to the COVID-19 pandemic which has claimed so many Kentucky lives and was so challenging for all. But Beshear also took a moment to thank Kentucky businesses for doing their very best during the pandemic and putting the health of people first.
Kentucky has also faced natural disasters, and we all came together to help our fellow Kentuckians to be there during the most difficult times, he said. On top of those struggles, Kentucky and the nation struggle with inflation which is incredibly hard on families, and now a war in Europe with so many economic repercussions.
But, the governor said, Kentucky is also seeing so many opportunities and has such a bright future.
He celebrated huge economic development announcements in recent years bringing new investments and jobs of the future to the state.
“People are picking Kentucky,” Beshear said.
As for policies the governor says he’s focused on, Beshear pointed to giving Kentucky teachers a raise to fill vacancies and ensure educators are not having to work more than one job to survive, implementing universal pre-K to help with workforce and so many more issues, a focus on supporting Kentuckians with career paths and options for the future, improving the health of citizens and get them off of disability, second chance employment by ensuring stable employment to those coming out of treatment, and more.
“We are at a fundamental moment where we have a chance to truly improve the Commonwealth and be a top ten state economy,” Beshear said.