The City of Glasgow and Barren County Fiscal Court are lending their voices in support of proposed state legislation that would send economic development funds to counties served by the Tennessee Valley Authority.
Glasgow City Council passed a resolution Monday at its regular meeting identical to one passed by the county government last week urging state Sen. David Givens, R-Greensburg, and state Rep. Johnny Bell, D-Glasgow, to pass BR 138, a bill prefiled by state Rep. Wilson Stone, D-Scottsville, in the 2014 General Assembly.
The legislation would redirect certain funds from the state budget to economic development organizations in counties that are part of the TVA service area.
TVA provides power or holds other assets in all or a portion of 36 counties, according to the resolution, which goes on to note TVA provides electricity to more than 200,000 households in a coverage area of 10,000 square miles of Kentucky’s land and waterways.
Additionally, the resolution states, “TVA manages recreational, natural and other cultural resources on more than 60,000 acres of public land around Kentucky Reservoir, partnering with local and regional stakeholders to improve water quality and conditions.”
TVA paid more than $45 million to Kentucky in lieu of taxes in 2012, and the purpose of that money is to improve the communities the utility serves “by creating jobs and economic expansion to help perpetuate the viability and growth of TVA services in the region,” but recent economic recession in the United States “caused substantial financial hardships on all of Kentucky’s families and businesses,” the resolution states.
The document cites unemployment in TVA counties as of August at 8.6 percent, compared with 7.8 percent statewide, and states that those TVA counties “often lack the necessary funds to provide the local match requirements [of] most grant programs.”
Glasgow Mayor Rhonda Riherd Trautman said the in-lieu-of tax payments go into the state’s general fund rather than being specifically allocated as the program was originally designed.
The legislation would split half of the state’s portion of in-lieu-of tax payments equally among county or regional economic/industrial agencies “in order to create necessary jobs and provide economic development opportunities in the region.”
Industrial Development Economic Authority of Glasgow-Barren County would be the organization to receive the money here, and Trautman said IDEA had asked the local governments to pass the resolution in support of the legislation.
An information sheet from IDEA was attached to the resolution.
It explains that when the pool funding was established in the Depression/ World War II era, it collected a small percentage of each electric bill and the revenue went to the state pool that distributed about 70 percent of $40 million to county governments and school districts and the remaining 30 percent goes to the state’s general fund, which today is approximately $12 million, the IDEA document states.
The in-lieu-of system is meant to reimburse states for land where development cannot occur.
Councilman Joe Trigg asked Trautman whether schools get some of the in-lieu-of tax funds.
Trautman said they get some from the 70 percent of the in-lieu-of tax money not staying at the state level, with the county receiving approximately $46,000 annually, and the city getting “less than a thousand dollars annually.”
IDEA’s information sheet states, in larger, bolder type than elsewhere, that the 70 percent of the $40 million already going to local governments and school districts would not be affected by the proposed legislation.
Trautman emphasized that the half of the 30 percent that would be redirected from the state would go directly to IDEA, in this case, to be used for economic development and job creation.
The funding shift would not be totally implemented until 2019, at which time each county’s share is projected to be $167,000, according to the IDEA document.
On Tuesday, Givens said he supports the legislation “in concept,” but his vote would depend on the form it’s in by the time it reaches the Senate. The commonwealth is in a time of limited revenue, “largely because of the downturn in the economy, so any claim on general fund revenues is going to have a difficult time making it through the process,” he said, “but in concept, these are local tax revenues that are flowing into the general fund when they could best be used at the local level.”
He described the next budget as “a really tight situation,” adding that the projected general fund revenue for the fiscal year ending in 2016 has decreased by more than $300 million since August 2011.
Bell said it’s a “great idea” in principle, but he also could not commit his support completely until he had a better picture of how it would impact the commonwealth’s budget and could consider any potential amendments.
“I think we need to do all we can do produce jobs in our community,” Bell said, emphasizing how competitive the recruiting of new businesses and industries is. Having that money in the hands of local development organizations would help with the incentives they could provide, and bringing in new, “good-paying” jobs would broaden the tax base and add revenue back into the state’s general fund, he said.
“There’s no way it can prevent bringing in more revenue,” Bell said. “In a way, it’s an investment.”
On the other hand, he said he would not want to see cuts to specific priority items in the general fund budget, such as education and veterans programs, that have already taken hits, so his support of BR 138 would be tied to how the budget would be reconfigured to address the change.
Attempts to reach Dan Iacconi, executive director of IDEA, on Tuesday were unsuccessful.
Although the resolution is specifically targeted at Givens and Bell, it states a copy is also to be given to each member of the state legislature and the governor.
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