A Senate bill that was vetoed by Gov. Andy Beshear last week, but was later overridden and passed into law, will establish a new arm of the Department of Agriculture that will focus on economic development within agricultural sectors of the Commonwealth.
Senate Bill 28 is a bi-partisan piece of legislation sponsored by 1st District Senator Jason Howell (R), 3rd District Senator Craig Richardson (R) and 18th District Senator Robin Webb (D). According to the summary of the original version of the bill, it set out to create a new section of the Kentucky Revised Statutes (KRS) in order to introduce “a new agricultural economic development program within the Department of Agriculture,” and “establish the agricultural economic development board,” as well as “create the agricultural economic development fund.”
The bill received unanimous support from the Senate with a committee substitute on Feb. 20. It picked up another committee substitute and a floor amendment in the House of Representatives before eventually passing unopposed on March 13.
After the Senate concurred with the House committee substitute and floor amendment, SB 28 was on its way to the Governor’s desk where it received a veto on March 25.
Before outlining the reasoning behind the Governor’s decision to veto, let’s take a moment to explore exactly how SB 28 would look in practice. According to the language of the bill, sponsors seek to establish the agriculture economic development board in order to encourage the expansion of agricultural development in the Commonwealth and provide an economic stimulus that will “bolster in-state production of vital sustainable products and services,” among other initiatives.
In terms of structure, the Commissioner of Agriculture will serve as chair, with a board consisting of six members appointed by the Commissioner. This board must contain at least one representative from each of the following ag sectors: Livestock/poultry, row crops, specialty crops and local economic development, with lists of potential candidates being provided by the Kentucky Association for Economic Development, the Kentucky Agricultural Finance Corporation, and the Agricultural Development Board. Board members are to serve two-year terms with meetings taking place on a quarterly basis.
SB 28 also establishes the agricultural economic development fund, which will be a “revolving account within the State Treasury” consisting of monies received from repayment of low-interest loans awarded as an incentive, state appropriations, gifts, grants, federal funds, and/or any returned monies.
The bill outlines that up to 20 percent of the monies appropriated to the fund during a fiscal year may be used for “eligible projects to retain or create innovative or high-technology jobs in the agriculture industry that are directly associated with developing more diverse energy sources within the Commonwealth.”
The exact details of the project application process are still forthcoming, but the board will look primarily for the following: Creditworthiness of the eligible company, proposed capital investment to be made, projected tax receipts, support of the local community, and an evaluation of the likelihood of economic success.
Applications will be asked to include: Name of applicant, description of project (including location and total capital investment), and, for eligible projects with an existing location in the Commonwealth considering expansion, certification that the incentives are necessary for said expansion to occur. Also, there will need to be a letter of support from a local governmental entity (city or county) where the eligible project will be located.
Getting back to the Governor’s veto, he said in his veto message that, “Senate Bill 28 violates the Kentucky Constitution and will lead to the disclosure of confidential information on economic development projects.”
The Governor went on to voice several more concerns, including, but not limited to, SB 28 leading to, in his assessment, “violations of current and future contractual agreements between the Cabinet for Economic Development and businesses by requiring specific information about projects that is confidential to be shared with the Commission of Agriculture without any protection.”
Beshear also voiced concern over the creation of a board that gives the Governor zero appointments, saying this “infringes on the Governor’s appointment authority under Sections 69 and 76 of the [Kentucky] Constitution.”
Gov. Beshear’s veto of SB 28 was overridden in the House and Senate on March 27. For additional details, go online to www.legislature.ky.gov.
