David W. Osborne

As my colleagues and I began the second week of the 2009 Extraordinary Session, we were uncertain if we would be able to accomplish our foremost mission, addressing our $1 billion budget shortfall. With the Senate approving one version of the budget and the House approving vastly a different one, many were unsure about the bill’s fate.  Yet, after only one day, the conference committee emerged from negotiations with two bills geared towards economic recovery and fiscal discipline.  It was my pleasure to have been one of only three House Republicans that was selected to serve on the conference committee.

In an effort to spur economic development and provide a launch pad for mega-transportation projects, the revamped House Bill 3 was approved by an 86-10 vote.   This final version of the legislation includes many provisions of the original proposal, such as incentives aimed at attracting a Breeders’ Cup Challenge race to Louisville, tax-free renovation expenses at the Kentucky Speedway to prepare for a NASCAR Sprint Cup Race, $75 million added to existing incentives to encourage the expansion of Kentucky based small businesses and tax credits for the Commonwealth’s film industry.  These measures only affect revenues that will occur in the future and do not impact the bottom line of the state budget.

We added a provision that will provide a tax credit of up to $5,000 for individuals who purchase new homes in the hopes this would aid job creation.  This credit is only applicable for one year and will be capped at $25 million.  Further additions include an income tax exemption for active duty military members.  This exemption will greatly help to level the playing field between Kentucky and Tennessee as a potential place of residence for the soldiers stationed at Fort Campbell, with a majority currently choosing to reside in Tennessee which has no state income tax.  

Also included is a tax credit to stimulate the lagging car industry. Individuals who trade in a used car to purchase another used car or new car will pay sales taxes based solely on the difference of the value between the two automobiles. Similar to the home-buyers tax credit, this practice will be in effect for one year and limited to $25 million. 

The largest, and most contentious, addition to House Bill 3 recreates the bridges bill, which will establish both a funding mechanism and authority for high dollar transportation projects, such as the $4.1 billion Ohio River Bridges project.  While this does not establish tolls, it does provide a system for establishing a tolling authority, should it be required in the future.

The last day of this Extraordinary Session afforded us the opportunity to vote on the very legislation we were originally called to address, the restructuring of our state’s budget.  In total, the House Bill 4 compromise, approved 97-0, utilizes approximately $740 million federal stimulus dollars while reducing previously appropriated project funding by $200 million to mend our shortfall.

Each branch of state government will also take a hit, with most executive branch agencies being cut by 2.6 percent.  The judicial branch will see $22.6 million erased from their budget while the legislative branch will give back more than $2.6 million.  By doing so, state employees will not be forced to take unpaid holidays, as the Governor had requested, and the woefully underfunded budgets for prosecutors and public defenders would experience a financial transfusion.  Moreover, K-12 SEEK funding, colleges and universities, local jail funding and Medicaid will remain fully funded and protected.

Two provisions which were part of the original language to House Bill 3 were transplanted to the budget bill.  These include granting the University of Kentucky permission to use private money to build new baseball and football facilities on campus, as well as allowing the Commonwealth to lease land to construct a cell-battery plant in Hardin County.

The most controversial issue addressed during the special session was the only one that did not become law; allowing Kentucky’s race tracks to install video lottery terminals.  While the bill did pass the House, it was defeated in the Senate Appropriations and Revenue Committee.  I supported the measure because of the clear evidence that Kentucky’s horse industry is in dire straits and we are losing the battle to surrounding states that have enhanced their horse industry through expanded gambling.  The overwhelming majority of Oldham County residents also support this issue. This bill would have given Kentucky the same tools that nearly every other racing state in the country has at its disposal and stopped the unimpeded flow of Kentucky dollars across our borders. I have always fought against widespread proliferation of gambling and this measure would have contained gambling in the same exact locations as it is presently conducted.  These institutions have conducted gambling in a responsible manner for over 100 years.

While some will argue that are horse industry is not worth saving, I will not stand by and watch it be devastated by unfair competition.  The industry provides tens of thousands of jobs and billions of dollars of economic activity in our state.  Not only is it and economic engine for our state, it is our heritage.  It is important to our state and it is a vital part of Oldham County.  It provides millions of dollars to our local economy, creates hundreds of jobs and protects nearly 10,000 acres of farmland.  I will continue my efforts to find other ways to level the playing field for our horse industry.

Although this Extraordinary Legislative Session began shrouded in controversy, our eight days in Frankfort produced viable solutions that will allow our Commonwealth to continue treading through these turbulent times.  While we have not found a permanent solution to our economic woes, I believe we have taken the first important steps towards laying the groundwork that will enable us to regain our financial footing.  I am committed to continuing my fight for a leaner, more efficient government.  I will also continue to work to improve our antiquated tax system.

Over the next few months, my colleagues and I will resume interim committee meetings, with our work undoubtedly focused on legislation for the 2010 Regular Session.  The schedule for these meeting can be found on the LRC website at www.lrc.ky.gov, or by calling 1-800-633-9650.  In the meantime, I invite you to stay contacted with me.  I am always available at home, you may leave a message for me by calling 1-800-372-7181 or you may reach me via e-mail at david.osborne@lrc.ky.gov.