Where We Stand 2017

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2017

Where We Stand

Legislative Priority Agenda

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Because the issues affect your business.

See how at NKYChamber.com

Letter From Leadership

Advocacy is a critical activity for the Northern Kentucky Chamber of Commerce and the 250,000 hardworking taxpayers that we represent. Every day, we work to improve the business climate of Northern Kentucky at the local, state and federal levels.

This publication serves as our state legislative agenda and comes directly from our membership—small, medium and large businesses from across a wide spectrum of industries. Since the 2016 General Assembly adjourned, nearly 300 of our member volunteers have dedicated countless hours toward developing and refining these recommended legislative policies.

Our agenda addresses key issues that will accelerate business, create jobs, and continue to position Northern Kentucky as an economic driver that will benefit the entire Commonwealth. Whether its stabilizing Kentucky’s fiscal outlook, promoting tax reforms, endorsing improvements to our education funding models, or updating Kentucky’s labor and employment laws to increase economic competitiveness; the Chamber is there in a variety of ways move our region forward.

We ask that our legislators consider our positions when making policy decisions. The hard work, ingenuity and dedication of businesses in Northern Kentucky have paved the way for economic prosperity. These policy recommendations for the 2017 General Assembly will continue to build healthy businesses, healthy communities and a healthy region. Our goal remains the same: to retain, grow and create jobs here in Northern Kentucky. We believe that by doing so, this region can serve as a catalyst in improving life for all citizens that call Kentucky home.

We look forward to working with you in advancing the Commonwealth in 2017.

Trey Grayson President/CEO NKY Chamber @KYTrey

Bob Heil Chair of the Board KLH Engineers @KLH_Engineers

Jim Parsons Vice Chair, Public Affairs KMK Law @newportjim03

Contact Us Scott Sedmak Vice President of Public Affairs & Communications ssedmak@nkychamber.com 859.578.6386 @ScSedmak

Alex Kraemer Manager of Public Affairs akraemer@nkychamber.com 859.578.6391 @nkychamberAK

Bob Babbage Babbage CoFounder @bobbabbage

Where We Stand

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Kentucky Labor and Employment Law Reform

Policy Position

The NKY Chamber supports adopting fair, measured reforms to Kentucky’s labor and employment laws. We can improve Kentucky’s economic competitiveness by bringing state law into conformity with federal law in three key areas: 1) Equal Employment/Opportunity, 2) Wage & Hour, 3) Claims & Protections

Equal Employment/Opportunity Reform • • • • • •

Include a 300 day period of limitations for filing a lawsuit Change liability to employers, not supervisors, for alleged retaliation Place caps on damages for alleged emotional harm, as they are capped in federal law, to provide reasonable damages for harm Eliminate smokers as a protected class Change Kentucky law on small employers from 8 to 15 employees to align with federal law to protect small, fledgling businesses from claims while also limiting wrongful discharge claims Take old, outdated laws off the books

Wage & Hour Reform • • • • • •

Conform Kentucky law with federal law on: covering businesses with less than $500,000 of revenue and incorporating dozens of federal exemptions for minimum wage and overtime rules Permit implied authorization through course of dealing and loosen the types of permissible wage deductions Permit exceptions for lunch break period requirements in situations that can adversely affect business and safety Correct the omission for wage claims under Kentucky FLSA law to include a reasonable period of limitations parallel to federal law Enact legislation parallel to the Davis Bacon Act on benefit credits for prevailing wage laws to allow credit for actual payments made Remove per day, per employee, per violation language from Kentucky law and impose penalties on employers, not individuals

Claims & Protections Reform • • •

Remove the antiquated arbitration of employment claims from Kentucky statute (US Supreme Court has held that the Federal Arbitration Act pre-empts this type of statute) Limit “protected activity” under Kentucky healthcare statute to circumstances where an employee complains in writing about matters placing healthcare safety in jeopardy to avoid frivolous claims Limit circumstances under which wrongful discharge course of action claims may be brought and reduce the period of limitations substantially and limit damages to economic loss

Where We Stand

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Right to Work: Allow Kentucky’s Economy to Compete on a Level Playing Field

Policy Position

The NKY Chamber urges the General Assembly to enact a Right to Work law to permit freedom of choice for employers and employees when it comes to decisions surrounding labor union participation.

Right to Work legislation should include provisions that: • Allow every worker the freedom to decide on labor union membership for themselves • Prohibit requiring any potential job candidate to join a labor union as a condition of employment • Permit employers a right of refusal to withhold labor union dues

Guiding Principles

The growing number of states adopting Right to Work makes it vital that Kentucky does so as well. This is an economic competitiveness issue that our region not only needs to promote future economic growth, but also to retain existing jobs that currently fuel our local economy. Right to Work is a economic development tool to enhance Northern Kentucky’s economic growth.

Further, the decision of a worker or potential worker who does not wish to affiliate with a labor union should be no less deserving of protection than the decision of that worker to affiliate with such a labor organization.

Background

According to the Bureau of Economic Analysis, Right to Work states showed a 42.6% gain in total employment from 1990 to 2011, while non Right to Work states showed gains of only 18.8% over the same period. West Virginia became the nation’s 26th Right to Work state in 2016. In Kentucky, there are currently 12 counties (including Boone County) that have passed local Right to Work ordnances.

Where We Stand

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Prevailing Wage

Policy Position

The NKY Chamber supports the repeal of prevailing wage laws in Kentucky to maximize investments in construction projects.

Background

In a time of declining public resources, the General Assembly must revisit the effective use of those resources, including prevailing wage laws. Contractors should be permitted to compete for public works projects in a free market, whether the project is public or private. State and independent studies have shown that prevailing wages inflate the cost of public works projects.

Approach

Remove applicability of all existing prevailing wage laws for all projects fully funded by the state of Kentucky.

Where We Stand

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State Tax Credits Angel & Historic

Angel Investment Tax Credit Policy Position

The NKY Chamber supports a legislative proposal to raise the cap on Angel Tax Credits from its current annual cap of $3 million to $5 million.

Background

The program began in January 2015 and the current funding cap of $3 million was fully allocated by August of that year. The Cabinet for Economic Development has stated that they will support an increase in the annual cap. The program has met its mission, to stimulate angel level investing in the Commonwealth.

The key performance indicators for the program are as follows: • Investors qualified under the program- 183 • Companies qualified under the program- 65 • Investments qualified under the program- 171 • Total credits approved- $3M • Total investments under the program- $6.8M (some investments have not closed, once they close, the total is expected to be $7.5M

Historic Tax Credit Policy Position

The Chamber encourages the Governor and the Kentucky General Assembly to modernize Kentucky’s Historic Preservation Tax Credit by implementing the following changes: • Sunset the availability of awarded credits • Increase the total credit cap • Remove the annual deadline and accept applications on a rolling basis

Background

The Historic Preservation Tax Credit is a critical tool for redevelopment in both urban centers and rural towns. However, in its current structure, the credit lacks predictability and effectiveness. Because of the cap on the amount of credit awarded annually and the proportional allocation of the capped credit to eligible projects, developers, bankers, and investors have no way to anticipate the amount of tax credits which the project will ultimately receive. This makes it difficult to rely on the credit as a financing source for difficult rehabilitation projects and delays redevelopment process.

Historic Preservation Tax Credits create jobs and revive construction trades in addition to creating destinations for heritage tourism. Because Kentucky competes with many bordering states for business development and jobs, it is important to make the Historic Tax Credit a functioning tool to promote the Commonwealth’s cities as attractive places to conduct business.

Where We Stand

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TIF (Tax Increment Financing) Reform

Policy Position

The NKY Chamber supports a legislative amendment to change the definition of a qualifying mixed-use project for state TIF participation to match the definition of a mixeduse project for projects throughout Kentucky, consistent with the definition applicable for projects in Louisville and Lexington.

Background

Currently, qualifying mixed-use projects in locally created TIF districts may be eligible for two pledge of state tax revenues. To be a mixed-use project a project must have at least 2 qualifying uses and each qualifying use must be at least 20% of the project’s net finished floor space, or 20% of the project’s total capital costs.

In projects located in Louisville and Lexington if a project has more than two qualifying uses, one use must meet the 20% requirement, and the other uses may be added together to meet the 20% requirement. The recommended change would allow the definition of a mixed-use project currently applicable only in Louisville and Lexington to be consistent for projects across the state.

This change will make other projects eligible for a pledge of state incremental tax revenues and will encourage increased development throughout the state. It will also make development projects in other areas of the state be on a level playing field with those located in Louisville and Lexington.

Where We Stand

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State Tax Reforms

Expansion of the Retention Initiative and the Research & Experimentation Credit

The NKY Chamber supports the expansion of the Retention Initiative and the Research & Experimentation Credit.

Background

Expand Retention Initiative: Expand the scope of the KY Economic Development Finance Authority (KEDFA) KY Reinvestment Act (KRA) to include “service and technology” companies. The tax incentive of a tax credit up to 100% of corporate income or limited liability entity tax liability generated by or arising from the project is available for up to 10 years from the date of final approval (or when the authorized incentive amount is realized, whichever comes first) • Only a few states have a retention incentive • This is aimed at keeping companies here if they would otherwise move • Company still has to meet all requirements. This just expands scope to include the types of companies we want Research & Experimentation Credit: There is a federal credit of 7-9% for certain expenses: “transfer pricing”. This encourages R&D and involves attraction of talent. Some other states, including Indiana, have aggressive incentives.

The recommendation: • KY to mirror the eligibility standards and methodology of the federal program, like most other states.

• KY should become a leader in promoting new innovation nationally, offering a grant, in lieu of the credit at 75% of the otherwise eligible tax credit. The total grant should be capped at $5M annually; $250K per company

Single Portion Sale Apportionment Tax Reform

The NKY Chamber urges the state to study the impact of the Single Portion Sale Apportionment. We need to ensure that the change would not hurt school funding and also need to focus on “good” jobs.

Background

Kentucky needs more simplicity and to be more competitive with other states, especially Ohio. This shifts more tax burden onto businesses located outside of KY that conduct business here. About 24 states are already using single factor.

• Provides tax cut to corporations housing large share of nationwide property and payroll in KY but large share of sales outside KY • Creates the potential for tens of thousands of new jobs • Opposition: KY Center for Economic Policy, which questions the economic development benefits

Where We Stand

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Final Implementation of Outcomes-Based & Equity Funding for NKU

Policy Position

The NKY Chamber supports the implementation of the recently passed outcomes-based and equity funding model for Northern Kentucky University. While funding has been set aside for such a program during the 2016 Legislative Session, the 2017 session has work to do in establishing the exact formula for these dollars in the 2017-18 fiscal year.

This implementation should: • • •

Establish a fair starting point Include a short list of clear priority performance metrics Support and reward institutions for their performance

Background

A postsecondary education Outcomes-Based Funding Model has the potential to accelerate Kentucky’s economy by producing more talent that matches the needs of Kentucky employers. It will focus our universities’ education and research on those areas that matter most to Kentucky’s future growth and development. Accelerated degree production, that strategically matches Kentucky’s talent need, is one of the most critical components of business growth and development. Where there is a concentration of appropriate talent, there will be economic success and opportunities for Kentucky’s citizens.

Currently, over two-thirds of the country have outcomes-based plans in place, are transitioning to a plan, or are having formal discussions. All of the surrounding states have a funding model or are transitioning to it, with the exception of West Virginia.

Kentucky does not have a postsecondary education funding model, and hasn’t had one for some time. It’s time to remove politics from driving postsecondary investment and implement a rational, Outcomes-Based Funding Model. It’s the right thing to do for students, our economy and the state.

Where We Stand

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Medical Review Panels

Policy Position

The NKY Chamber supports the establishment of a medical review panel process that provides an independent, expert review of proposed claims against healthcare providers.

Background

Healthcare costs are on the rise. In order for Kentucky to have the business climate needed for economic growth, these costs must be mitigated. A Medical Review Panel process is a proven way to add a layer of accountability for healthcare providers to combat unnecessary costs in the healthcare system.

This process would introduce an independent panel of medical experts to review claims against healthcare providers. The panel provides a timely independent medical opinion on the standard of care that is admissible in court, without limiting, delaying, or denying a patient’s access to court. Kentucky has one of the nation’s most litigation-friendly environments, and it is costing all taxpayers. Medical Review Panels offers a fair and proven solution to abusive healthcare litigation.

Where We Stand

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Pension Transparency

Policy Position

The NKY Chamber supports a two-tiered approach to public pension transparency during the 2017 Legislative Session of the Kentucky General Assembly. Comprehensive reform of the retirement system should include: •

A broad performance audit of the Kentucky Employee Retirement System (KERS) Non-Hazardous Fund

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Increased transparency across all Kentucky public pension funds in accordance with prevailing national standards

Guiding Principles

These reforms will begin the process of ensuring the viability of Kentucky’s public pension systems into the future and will: •

Decrease the likelihood of future funding cuts to other parts of the state budget including investments into transportation infrastructure, P-12 & postsecondary education, and healthcare programs, capital projects, and others

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Protect the cash flow of current and future retirees, which creates a positive economic impact into Northern Kentucky’s economy on a daily basis

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Respect the commitment made to outgoing retirees who are already vested in the public pension system

Background

The lack of funding within Kentucky’s public pension funds has reached crisis levels.

Considered to be among the least healthy public pension systems in the nation, the Commonwealth faces a multi-million dollar pension shortfall. Due to the inviolable contract between the state and current retirees & vested active employees, there exists a legal obligation to fund future payouts to these groups. This will happen even if it means cutting other vital parts of state government operations.

While we are happy the 2016 General Assembly funded public pensions at higher levels than pervious years, the underlying structural problems remain.

Where We Stand

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NKY Legislative Caucus Kentucky State Senate

Senator Julian Carroll District 7

Senator John Schickel District 11

Senator Damon Thayer District 17

Senator Paul Hornback District 20

Senator Chris McDaniel District 23

Senator Wil Schroder District 24

Kentucky House Of Representatives

Representative Rick Rand District 47

Representative Sal Santoro District 60

Representative Brian Linder District 61

Representative Philip Pratt District 62

Representative Diane St. Onge District 63

Representative Kim Moser District 64

Representative Arnold Simpson District 65

Representative Addia Wuchner District 66

Representative Dennis Keene District 67

Representative Joe Fischer District 68

Representative Adam Koenig District 69

Representative Mark Hart District 78

2016-2017 Business Advocacy Council Jim Parsons (Chair), KMK Law Kori Andrews, Smith Management Group David Bailey, St. Elizabeth Healthcare Jim Beatrice, Business Benefits Insurance Solutions Gary Bentle, CENGAGE Learning, Inc. Steve Brunson, Forcht Bank Dan Cahill, HORAN Adam Caswell, Northern Kentucky University Brent Cooper, C-Forward, Inc. Dustin DiChiara, Chick-fil-A Don Fritz, VonLehman & Company, Inc. Trey Grayson, NKY Chamber Mike Hammons, Children, Inc. Steve Harper, Harper Oil Products, Inc. David Hatter, Mayor, Fort Wright David Heidrich, Zalla Companies Bob Heil, KLH Engineers

Chuck Heilman, J.A.C.C., Inc./SD1 Board Patrick Hughes, Dressman Benzinger LaVelle psc Geralyn Isler, Business Benefits Insurance Solutions Jason Keller, Time Warner Jason Kershner, Cincinnati USA Regional Chamber Alex Kraemer, NKY Chamber Brian Miller, Home Builders Association

of Northern Kentucky Rich Miller, CT Consultants, Inc. John Muller, Carespring John Nienaber, Heritage Bank Candace Novak, UC Health Matt Olliges, Zalla Companies Polly Page, Northern Kentucky Education Council Randy Poe, Boone County Schools

Justin Sanders, Ziegler & Schneider Phil Schworer, Frost Brown Todd Scott Sedmak, NKY Chamber Chuck Session, Duke Energy Debbie Simpson, Multi-Craft David Spaulding, Turner Construction Lytle Thomas, Heritage Bank Dan Tobertge, Northern Kentucky Tri-ED John Toebben, Toebben Companies Justin Vanderglas, Clark Schaefer Hackett Tom Vergamini, Taft, Stettinius & Hollister LLP Tom Voss, DHL Global Forwarding (Retired) Rhonda Whitaker, Duke Energy Carl Wicklund, Wagstaff Jim Willman, Ashley Quarters Ted Zalla, USI Insurance

2016-2017 Board

Bob Heil, Chair of Board, KLH Engineers, PSC Rhonda Whitaker, Chair-Elect, Duke Energy David Heidrich, Past Chair of Board, Zalla Companies Philip Schworer, Treasurer, Frost Brown Todd Geralyn Isler, Secretary, Business Benefits Insurance Solutions

2016-2017 Executive Committee Members

Tom Prewitt, Graydon Mary Miller, Jancoa Janitorial Guy van Rooyen, Donna Salyers’ Fabulous-Furs Richard Tiberi, Fifth Third Bank Tim Slaughter, Castellini Group of Companies Carri Chandler, St. Elizabeth Healthcare Foundation Shelley Funke-Frommeyer, Waddell & Reed

Standing Members

Candace McGraw, Cincinnati/Northern Kentucky International Airport Wonda Winkler, Vice Chair, Brighton Center Inc., Paul Meier, City of Crestview Hills Women’s Initiative Garren Colvin, St. Elizabeth Healthcare Jim Parsons, Vice Chair, Keating Muething & Jay Brewer, Superintendent Dayton City Schools NKCES Klekamp PLLC , Advocacy Dr. Fernando Figueroa, Gateway Community and Dan Cahill, Vice Chair, HORAN, Technical College Business Growth & International Trade David Armstrong, Thomas More College John Nienaber, Vice Chair, Heritage Bank Geoff Mearns, Northern Kentucky University Communication, Events, Membership Dan Hunt, LEGACY, Ziegler & Schneider Jason Payne, Vice Chair, Republic Bank, Leadership LNK Advisory Council One Year Appointments Dustin DiChiara, Vice Chair, Chick-fil-A Jordan Huizenga, Children Inc. Workforce Ryan Heitkamp, Armor USA

Chair-appointed Executive Committee Members Mark Exterkamp, BB&T Richard Field, Post Glover Jay Wuest, PNC Bank Greg Greene, Strategic Advisors Dave Spaulding, Turner Construction

Elected Members

Shannon Boyer, Scooter Media Company, LLC Kevin Canafax, Fidelity Investments John Hawkins, Pathfinder/MPI Consulting Paul Hemmer, Paul Hemmer Companies Jean Loftus, Loftus Plastic Surgery Center Alan Majchrzak, DHL Rob Strub, Citi

John Hengelbrok, Baker Stamping Brian Jones, C.K. Ash Insurance Pamela Schmitt, RiverPoint Capital Management Patrick Hughes, DBL Law John Muller, Carespring Health Care Management Katrina Ward, Huntington Bank

Ex-Officio Members

Judge Executive Gary Moore, Boone County Fiscal Court Judge Executive Steve Pendery, Campbell County Fiscal Court Judge Executive Kris Knochelmann, Kenton County Fiscal Court Eric Summe, Meet NKY, Northern Kentucky CVB Daniel Tobergte, Northern Kentucky Tri-ED William Scheyer, Skyward

Advocacy Policy Committee Chairs Jim Parsons, Chair of Business Advocacy Council (BAC) Kori Andrews, Chair of Energy, Environment & Infastructure Committee (EEI) Jim Beatrice, Chair of Healthcare Committee Dan Cahill, Chair of Allies for Economic Grwoth (AEG) Dustin DiChiara, Chair of Workforce Advisory Council (WAC) Mike Hammons, Chair of Northern Kentucky Education Action Team (NKEAT) Jim Willman, Chair of the Political Action Committee (PAC)

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Bar Sponsor: Frost Brown Todd LLC

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