Where We Stand 2018

Where We Stand 2018 Legislative Priority Agenda

Advocacy

Letter From Leadership Advocacy is a critical activity for the Northern Kentucky Chamber of Commerce and the 175,000 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.

The 2017 Kentucky Legislative Session was a historic one for the Northern Kentucky region and the entire NKY Chamber membership.

Many long-standing NKY Chamber priorities were signed into law by Governor Matt Bevin, including the passage of performance based funding for post-secondary education, making Kentucky a Right to Work state and repealing Kentucky’s prevailing wage laws.

With the passage of many of these major policy issues, the NKY Chamber Advocacy committees have dedicated countless hours toward developing and refining these recommended legislative policies since the end of the 2017 Session.

Our legislative priority 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.

We ask that our legislators consider our positions when making policy decisions. The hard work, ingenuity and dedication of business leaders in Northern Kentucky have paved the way for economic prosperity. These policy recommendations for the 2018 General Assembly will continue to build healthy businesses, healthy communities and a healthy region.

We look forward to working with you in advancing the Commonwealth and our region in 2018.

Brent Cooper President & CEO NKY Chamber

Rhonda Whitaker Chamber Board Chair Duke Energy

Kristin Baldwin VP, Public Affairs & Communications, NKY Chamber kbaldwin@nkychamber.com c 502.370.5600 | @NKYCCAdvocacy

John Nienaber Vice Chair, Chamber Advocacy Heritage Bank

Where We Stand ‘18

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Pension Reform

Policy Position

The Northern Kentucky Chamber of Commerce supports pension reform that will lead to a healthier business climate and an improved credit rating for our state, while keeping the promise made to public servants.

Guiding Principles

Pension reform should begin with the process of ensuring the viability of Kentucky’s public pension systems into the future and will:

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Halt the out-of-control increases in the state’s pension debt and create a plan to pay off that debt

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Show national credit rating agencies that Kentucky is serious about pension reform, improving the state’s prospects for upgraded ratings and lowering public borrowing costs

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Decrease the severity 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 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 the worst state for aggregate pension underfunding in the nation, the Commonwealth faces an estimated $64 Billion dollars in unfunded pension liability. Due to the inviolable contract between the state and current retirees and 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.

If the pension systems continue down a path of irregular funding, public investment will be severely cut into areas of infrastructure, education, health care, and other key budget line items. By passing meaningful pension reform, the General Assembly will not only address the needs of thousands of current and future state retirees, but also protect key parts of the state appropriation process that allows for proactive investment into Kentucky’s future.

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Where We Stand ‘18

Tax Reform

The Northern Kentucky Chamber of Commerce urges the General Assembly to address the long-term need for comprehensive tax reform. Business leaders in Northern Kentucky continuously express that the tax system is too complex and compliance is too costly.

Economic development experts say our code continues to create a competitive disadvantage because it punishes economic productivity.

If Northern Kentucky is going to truly compete, our tax code must be improved to promote fairness and simplify the tax code.

The tax code should be simplified with the goal of reducing compliance costs for the private sector. Complex taxes impose costs on businesses that, either reduce the return on investment or are passed on to the consumer. Kentucky’s tax system should promote fairness by creating a level playing field on which Kentucky businesses can compete.

We urge consideration of tax changes that specifically put Kentucky on equal footing with competitor states, especially border states.

The figures below demonstrate the current Business Tax Climate according to the Tax Foundation.

Since taxes significantly impact business decisions that lead to job creation and retention, the NKY Chamber supports the following tax policies that will immediately improve job creation and retention in the region.

2018 State Business Tax Climate Index

#29

#9

#45 #19

#16 #33

#31 Source: Tax Foundation

#14 Where We Stand ‘18

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Tax Reform Kentucky Angel Investment Support Programs

Policy Position

The Northern Kentucky Chamber of Commerce supports the continuation of the Kentucky Angel Investment Act (KAIA) and the Kentucky Investment Fund Act (KIFA). These programs promote entrepreneurship by encouraging in-state and out-of-state individual investors to make investments in Kentucky small businesses, create additional jobs and promote the development of new products and technologies.

Background

The NKY Chamber strongly supported the passage of the KAIA in 2014 to complement KIFA. Both programs are jointly funded by a pool of tax credits that were established by the General Assembly in 1999 at a cost of $40 million, 90% of which have been authorized for distribution.

KAIA and KIFA are proven, effective tools that are essential to continuing the momentum of job creation and expansion of small companies in Kentucky’s innovation sector.

Extend Kentucky’s Retention Initiative Program

Policy Position

The Northern Kentucky Chamber of Commerce supports the expansion of the Kentucky Reinvestment Act (KRA) to include service and technology companies as a retention tool.

Background

A retention incentive for service and technology firms does not exist in Kentucky, unlike manufacturing firms, which are eligible for the KRA to retain operations in Kentucky. This modification would extend the existing Kentucky corporate income tax credit up to 100% for up to 10 years under KRA. The minimum qualifying capital investment needs to be reduced for service and technology firms.

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Where We Stand ‘18

Only a few states have a similar retention incentive.

The goal is to retain targeted primary industry companies such as, but not limited to, headquarters, shared-service centers, research & development operations and data centers in Kentucky.

Stringent requirements under KRA would remain.

Tax Reform Historic Preservation Tax Credit

Policy Position

The Northern Kentucky Chamber of Commerce encourages the Kentucky General Assembly to modernize Kentucky’s Historic Preservation Tax Credit by implementing the following changes: • Increase the total program credit cap • Increase the total credit cap from the current amount of $400,000 • 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 the 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 Preservation Tax Credit a functioning tool to promote the Commonwealth’s cities as attractive places to conduct business.

Competition

In Northern Kentucky, we face intense competition for development from Ohio, which easily out-paces Kentucky with its Historic Tax Credit program. The Ohio program is run by the State’s Development Services Agency and competitively awards applications based on the economic and community benefit they provide.

Kentucky Ohio Per Project Cap $400,000 $5,000,000 Application Deadlines Once a year Twice a year Costs eligible for credit 20% 25% Total Project Cap $5,000,000 $50,000,000

Where We Stand ‘18

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Transportation & Infrastructure

Policy Position

The Northern Kentucky Chamber of Commerce supports long-term, sustainable funding that provides adequate revenues for all impactful modes of transportation so our region can maintain our current infrastructure, build for our future and address our workforce challenges related to transportation.

The NKY Chamber encourages the General Assembly to provide reliable funding solutions to address unfunded mandates related to our aging infrastructure repair/replacement and the associated construction of water, wastewater, and storm water infrastructure to reduce funding gaps and grow the local economy while protecting the environment.

The I-71/75 Brent Spence Bridge and corridor, now functionally obsolete, is a critical economic resource and gateway for linking Kentucky’s businesses with the global economy. This multi-state corridor is a vital conduit for the nation’s commerce and remains a priority project for the Northern Kentucky region. We encourage Governor Bevin and the General Assembly to find a reasonable funding solution for this regionally significant economic development project.

Background

Northern Kentucky’s transportation network of roads, bridges, public transit, airports, river ports and railroads connect the Commonwealth’s businesses to the national and international marketplace by providing multiple safe, cost-effective ways to move goods and deliver services.

Northern Kentucky has landed many high volume economic development projects in recent years and will require a large amount of infrastructure projects to handle the vast amounts of rapid economic growth. Adequate and equitable infrastructure investments must be made in Northern Kentucky to successfully accommodate the rapid economic growth of our region.

The burden of the $2 billion consent decree placed on the Sanitation District No. 1 of Northern Kentucky by the Environmental Protection Agency continues to challenge our region to invest. It is increasingly difficult to grow the infrastructure needed for future development, while balancing the required investment to update our sewer overflow systems.

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Where We Stand ‘18

Improve Workers’ Compensation System

Policy Position

The Northern Kentucky Chamber of Commerce believes Kentucky’s workers’ compensation system should be fair to the employee and employer and designed to return the employee to work as soon as medically appropriate.

Background

Kentucky’s workers’ compensation statutes have not been updated in decades, and it is important for the General Assembly to revisit the law, make improvements and minimize the exposure for costly liability to business.

Guiding Principles

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Employers should be incentivized to provide opportunities that allow the employee to return to work when light duty accommodations can be made, rather than punished.

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The NKY Chamber supports legislation and policies that ensure a balanced and equitable workers’ compensation system that handles claims for workers who are injured while working, require objective medical findings, protect the exclusive remedy doctrine and minimize litigation.

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The NKY Chamber supports legislative and regulatory efforts to control rising medical and prescription drug costs and eradicates prescription drug abuse related to workers’ compensation claims. Research indicates that adopting a drug formulary in the workers’ compensation program will curb the use of opioids and reduce overall prescription costs by as much as 20%.

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Kentucky must enact workers’ compensation subrogation legislation that protects Kentucky employers. The law should protect business from being penalized for the negligent acts of third parties who injure their employees. In order for Kentucky businesses to remain competitive with businesses from other states, Kentucky workers’ compensation subrogation laws need to be consistent with every other state.

Where We Stand ‘18

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Encourage a Healthier Workforce

Policy Position

Improve Health and Lower Costs by increasing the cigarette tax

Background

As a meaningful step to improve the overall public health of Kentucky’s citizens and the workforce, the Northern Kentucky Chamber of Commerce encourages the General Assembly to increase Kentucky’s excise tax on cigarettes by at least a $1.00 to $1.60 per pack.

Regular surveys of business leaders show that healthcare costs are a leading cost driver for businesses. States that have significantly increased their cigarette tax have enjoyed substantial increases in revenue with an initial estimate that $266 million will be generated for Kentucky. More importantly, higher tobacco taxes save employers and the government money by reducing tobacco-related health care costs. In addition, higher cigarette taxes are especially effective in preventing youth under 18 years old from smoking. This is important because 4 out of 5 adult smokers started before they were 18. A cigarette tax increase of $1.00 could prevent 23,200 children in Kentucky from becoming adult smokers, result in 29,400 adult smokers quitting and prevent 14,800 premature smoking related deaths.

At $0.60 per pack, Kentucky’s cigarette tax ranks 43rd lowest among the states and is only 36% of the national average of $1.65 per pack. States with higher cigarette taxes have the lowest smoking rates.

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Where We Stand ‘18

Encourage a Healthier Workforce Addressing the Opioid Addiction Crisis

Policy Position

While much has been accomplished in the past few years with support from important legislation, the issue of opioid addiction continues to face Northern Kentucky and more work needs to be done. The Northern Kentucky Chamber of Commerce supports legislation that will help fund evidence-based initiatives for treatment, enhance law enforcement to reduce supply, assist with workforce reinstatement options and support for employers, and prevent disease.

Background

The Northern Kentucky Chamber of Commerce is concerned about the rising opioid epidemic and its negative effect on Kentucky’s workforce and healthcare costs. The Northern Kentucky region has been significantly affected in recent years with overdoses increasing by over 49% between 2016 and 2017, residents dying from drug use five times more than by car accidents, and the Hepatitis C rates exceeding the national rate by 11.9%. The ability to recruit and retain workers is being challenged. In addition, those associated with family members who are addicted further affects productivity in the workplace.

In response to the crisis, community partners including businesses, law enforcement, healthcare professionals, public officials, and service providers have developed a plan for addressing the epidemic. The Northern Kentucky’s Collective Response to the Heroin Epidemic plan is designed to reduce the supply of heroin through partnerships with regional, state and local law enforcement; advocate for needed legislation; reduce the demand for heroin through prevention, treatment and recovery support; and protect those who use heroin (as well as the general public) from harm due to intravenous drug use.

The plan is centered around four major strategies:

• • • •

Treatment - Develop and implement evidence-based treatment of opioid addiction Prevention - Build systems of community and school-based support and wrap-around services regarding adversity in childhood as a precursor to mental illness and substance use Recovery Support - Improve the process for treatment from beginning through long-term recovery and include supportive services such as housing and workforce initiatives Protection - Develop an accessible distribution network for Naloxone to save lives and reduce the risk for infection because of intravenous drug use

Where We Stand ‘18

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Fixing the Funding Disparity for NKU

Policy Position

The Northern Kentucky Chamber of Commerce supports the final implementation of the performance based funding model for Northern Kentucky University by appropriating the other half of the documented disparity ($5.1 million).

Background

The 2017 General Assembly approved a comprehensive funding model for an outcomes-based funding model to rationally and strategically appropriate Kentucky’s near $1 billion investment to postsecondary education.

The model confirms once again that NKU is substantially underfunded compared to peer universities. The final report produced by the task force acknowledged the disparity should be remedied by providing funding to NKU to achieve a common, equitable starting point.

In Governor Bevin’s 2016 budget proposal, he appropriated an additional $10.7 million in annual funding to NKU to fix the disparity.

Through the legislative process, only half of the disparity was included in the final budget.

Although the $5.1 million appropriated was a step in the right direction, NKU students are still funded at a level lesser than their peers at other state institutions. With this disparity and the implementation of a new performance funding model, it is imperative for the General Assembly to bring NKU to an equal funding level.

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Where We Stand ‘18

Kentucky Labor and Employment Law Reform

Policy Position

The Northern Kentucky Chamber of Commerce 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: Equal Employment/Opportunity; Wage & Hour; and Claims & Protections.

Background

Kentucky imposes heavier legal burdens on employers than its surrounding states and, in many cases, heavier than even the federal government. Kentucky’s employment laws include confusing, inconsistent employer mandates, many of which resulted from uncorrected drafting errors occurring decades ago. Updating statutes to avert unjust employer treatment will enhance Kentucky’s competitiveness, delivering a powerful message of fairness, justice and respect for commerce.

Where We Stand ‘18

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Address the Subsidization of Private Solar by Non-participants

Policy Position

In addition to providing ongoing, strategic investment in the Commonwealth’s energy infrastructure, policymakers must also ensure the costs to support and maintain this infrastructure are allocated fairly among all users of the system. How customers use this infrastructure is changing as the adoption of distributed energy resources (DERs) – such as privately-owned solar generation -increases across the Commonwealth. Existing policies that, years ago, were originally adopted to incentivize the implementation of new technologies, such as distributed solar generation, should be re-examined to ensure all the costs to support and maintain reliable operation of the energy infrastructure are shared fairly.

Guiding Principles

Attempts in other states to address the issue of private solar subsidization, after the market is inundated with rooftop solar, demonstrates why it is urgent that Kentucky address the growing problem before it becomes too big to fix. Currently, there are nearly 800 private solar customers in Kentucky that each receive an estimated $1,660 in subsidies from non-participants each year. While this program was started to help a new technology gain traction in the market, the price of rooftop solar has since dropped dramatically, while the price of energy has continued to climb at a moderate pace.

Businesses and individuals that choose not to participate in rooftop solar for socioeconomic reasons, or otherwise, should not be forced to pick up additional expenses relating to the grid for those that do.

Background

Kentucky started a private solar credit program called “net metering” in 2004 to boost the Commonwealth’s nascent solar industry.

Initially, participants were limited to 15 kilowatts per system. In 2008, the cap on a system was raised to 30 kilowatts. Utilities & Cooperatives are currently required to provide credits for any excess power generated by private solar customers which are carried forward on future bills and for the life of the account. Private solar credits were given the retail rate, which is nearly 300% higher than the competitive market rates. For instance, in 2014 the wholesale energy average price in Kentucky was $38.58 per megawatt hour.

Yet private solar users were paid $100.50 per megawatt hour for the energy they produced. This excess payment means that non-participants were paying for the cost to distribute the power needed to participants when their rooftop solar was not meeting the needs of their business or household.

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Where We Stand ‘18

2018 Northern Kentucky Consensus Committee

List of Projects Since its inception in 1989, the Northern Kentucky Consensus Committee has been charged with analyzing the myriad of capital projects that have been proposed for the eight county region and determining which of those projects should be the focus of the Northern Kentucky Legislative Caucus in preparation for the upcoming budget session of the General Assembly. In some years in which the Committee has delibrated, it has included road projects along with other capital projects, which is the case this year. It’s clear from our results that road projects are top of mind to our citizenry. The Northern Kentucky cities, counties and major institutions recognize that capital project funding is severely limited as our state government wrestles with how to address our pension crisis. However, limited road fund dollars could be available for some of the many projects that have been proposed in our region. Also, it is recognized that projects of varying expenditure levels need to be included to provide the General Assembly with the flexibility they need as they allocate scarce resources. Below is the list of projects that the NKY Consensus Committee advocates as the top priorities for the 2018 Session of the General Assembly:

• • • • • • • • • • • •

I-71/75 Brent Spence Bridge Corridor – New Bridge and Rehab Existing Bridge I-275 at Mineola Pike to Donaldson Rd. – Improve Roadway Widening of U.S. 42 over I-71/75 in Florence Replace aging NKY Water Infrastructure I-275 & Graves Rd. – New Interchange near CVG and Amazon Prime Air Facility I-71/75 & I-275 – Improve Interchange Realignment of Turkeyfoot Rd. & Thomas More Pkwy.

Adolescent Substance Abuse Facility at Children’s Home of NKY New Connector from Pleasant Valley Rd. to Mall Rd. I-471 from U.S. 27 to Ohio – Reduce Congestion Transitions Treatment Expansion Project - Former Pleasure Isle Property I-71/75 at Mt. Zion Rd. (KY 536) – Reconstruct Interchange

Where We Stand ‘18

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Our Mission and Vision.

Our mission is to promote and support the development of strong businesses and a vibrant economy in the Northern Kentucky region, through leadership and advocacy, resulting in a better quality of life for all.

AT&T is proud to support the Northern Kentucky Chamber of Commerce.

Our vision is to be the premier membership organization driving Northern Kentucky’s pursuit to be a world-class region in which to start, develop and grow thriving businesses.

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NKY Legislative Caucus Kentuck State Senate

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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

Where We Stand ‘18

NKY Legislative Caucus 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

Where We Stand ‘18

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NKY Chamber Board of Directors 2017-2018 Rhonda Whitaker James Parsons Robert Heil Philip Schworer Geralyn Isler

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Chair of Board, Duke Energy Chair- Elect, Keating, Muething & Klekamp Past Chair of Board, KLH Engineers,PSC Treasurer, Frost Brown Todd Secretary, Business Benefits Insurance Solutions

Chair-appointed Executive Committee Members Mark Exterkamp Jay Wuest Greg Greene Dave Spaulding John Hawkins

2017-2018 Executive Committee Members

Elected Members

Wonda Winkler Vice Chair, Women’s Initiative,

Brighton Center Inc., Dan Cahill Vice Chair, Business Growth &

International Trade, HORAN John Nienaber Vice Chair, Advocacy, Heritage Bank Jason Payne Vice Chair, Leadership LNK

Advisory Council, Republic Bank Dustin DiChiara Vice Chair, Workforce, Chick-fil-A Shelley Funke-Frommeyer Vice Chair, Membership, Waddell & Reed

Shannan Boyer Matt Bowen Paul Hemmer Michael Hall Tom Prewitt Richard Tiberi Tim Slaughter Carri Chandler Richard Field Melissa Lutz Ryan Heitkamp Paul Ritter Alan Majchrzak Caroline Weltzer Jim Lokesak

Where We Stand ‘18

BB&T PNC Bank Strategic Advisers Turner Construction Pathfinder/MPI Consultants

Scooter Media Company, LLC Fidelity Investments Paul Hemmer Companies Citi Graydon Head 5/3 Bank Castellini Group of Companies St. Elizabeth Healthcare, Edgewood Post Glover Champlin Architecture ARMOR USA CTI DHL Viox & Viox Skyline Chili

NKY Chamber Board of Directors 2017-2018 Standing Members Candace McGraw Paul Meier Garren Colvin Jay Brewer Dr. Fernando Figueroa David Armstrong Gerry St. Amand Elizabeth Fricke

Ex-Officio Members Cincinnati/NKY International Airport City of Crestview Hills St. Elizabeth Healthcare, Edgewood Superintendent Dayton City Schools NKCES Gateway Community and Technical College Thomas More College Northern Kentucky University Legacy, Children, Inc.

Judge Executive Gary Moore Judge Executive Steve Pendery Judge Executive Kris Knochelmann Eric Summe Daniel Tobergte Karen Finan

Boone County Fiscal Court Campbell County Fiscal Court Kenton County Fiscal Court meetNKY, NKY CVB Northern Kentucky Tri-ED NKY Regional Alliance

One Year Appointments Jordan Huizenga John Hengelbrok Brian Jones Pamela Schmitt Patrick Hughes Laura Lyons Matt Olliges Charlie Vance Katrina Ward

Children, Inc. Baker Stamping C.K. Ash Insurance RiverPoint Capital Management DBL Law ATech Automotive Tech Zalla Companies Erigo Employers Solutions Huntington Bank

Where We Stand ‘18

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2017-2018 Business Advocacy Council Casey Barach Jim Beatrice Gary Bentle Stephen Brunson *Dan Cahill Adam Caswell Matt Davis Jim Dressman *Dustin DiChiara Karen Finan Jay Fossett Donald Fritz Pam Goetting Mike Hammons

B. Stephen Harper David Hatter Ted Heckmann David Heidrich *Bob Heil Chuck Heilman *Patrick Hughes *Geralyn Isler Patrick Keal Jason Keller Jason Kershner Polly Lusk Page Ron Lovan Brian Miller

Rich Miller John Muller Rosanne Nields *John Nienaber Candace Novak *Matt Olliges *Jim Parsons Randy Poe Justin Sanders *Phil Schworer Scott Sedmak Debbie Simpson *David Spaulding Scott Smith

Advocacy Policy Committee Chairs John Nienaber, Chair of Business Advocacy Council (BAC) Steve Brunson, Chair of Energy, Environment & Infrastructure Committee Rosanne Nields, Chair of Healthcare Committee Patrick Keal, Chair of Political Involvement Committee Pam Goetting, Chair of Business Competitiveness Committee Dustin DiChiara, Chair of Workforce Advisory Council Karen Finan, Chair of Northern Kentucky Education Action Team 22

Where We Stand ‘18

H. Lytle Thomas *Dan Tobergte John Toebben Justin Vanderglas *Charlie Vance Thomas Vergamini Tom Voss *Rhonda Whitaker Jim Willman Ted Zalla * Indicates current member of the Board of Directors

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