Meanwhile, KY's legal climate worsens

Tort reform—comprehensive changes to lessen the practice of "defensive medicine"—is nowhere to be found in the healthcare reform package passed by the U.S. House yesterday. There is no doubt that defensive medicine is a driver of healthcare costs. Too add insult to injury, there are no malpractice caps in Kentucky, which means physicians in the state pay very high malpractice insurance premiums.

Today, the U.S. Chamber's Institute for Legal Reform issued its annual state-by-state rating of how reasonable and balanced the states' tort liability systems are perceived to be by U.S. business. It found that Kentucky has fallen from the 29th worst to 40th. This is not good news; it's not good for attracting business and industry to Kentucky, and it's not positive for businesses to expand operations.

What are the numbers? According to the Kentucky Administrative Office of the Courts, the number of civil lawsuits filed in the state’s circuit courts, which decide civil cases seeking over $4,000, surged from 39,439 in 2002 to 63,958 in 2009, a jump of 60%.2. Kentucky’s district courts, which hear civil cases seeking less than $4,000 and small claims, experienced a similar surge of civil suits from 97,871 in 2002 to 138,982 in 2009, a 42% rise.

Meanwhile, Indiana is ranked much better at 5th on the list. Tennessee, to our south, is ranked 19th. See the whole report here:
http://www.instituteforlegalreform.com/lawsuit-climate.html

Highways in limbo

Amid growing concerns about the national debt, conflicting priorities and overall D.C. gridlock, the nation's system of funding its surface transportation networks is in serious limbo. Every five to six years, Congress has provided the states with a roadmap of what it will fund. The last such bill was passed in 2005--remember the "bridge to nowhere" in Alaska?--and "expired" last September. Since then, it's been extended with short-term "fixes" that have become a political football.

Earlier this week, I joined economic development leaders from northwest Kentucky, southwestern Kentucky and southeastern Illinois for the first-ever tri-state D.C. fly-in. One of our priorities was Interstate 69, which will cut through the heart of our region. There's been significant progress in Indiana and Kentucky for I-69, but the next reauthorization bill holds the promise of major funding that the states can't afford on their own.

Problem is, no one we talked with in D.C. knows when a new bill will be passed. Too many other issues such as healthcare reform are dominating the landscape. Another issue is the very real concern that the highway bill has been funded in the past by the federal gas tax. With cars getting better mileage and hybrids and electric cars becoming more mainstream, there's less tax being paid. The federal gas tax has become unreliable to sustain the highway system, much less build badly-needed new bridges and roads.

Very uncharacteristically, the U.S. Chamber board has approved a ten-cent increase in the federal gas tax, which hasn't been increased in 17 years. Anyone who follows the U.S. Chamber knows the very aggressive pro-business group almost never advocates tax increases. That fact alone speaks to the seriousness of adequate funding for highways.

SB54 is a bad bill

It's not a good year for incumbents. Politicians at every level--federal, state and local--have drawn many opponents and it's in this atmosphere that Senate Bill 54 is making its way through the Kentucky General Assembly. The bill, sponsored by Sen. Carroll Gibson, would mandate that public agencies that require employees to wear uniforms must use garments from American-made sources. Other "safety equipment" is also covered in the legislation. The bill is being pushed by a 300-employee Larue County garment manufacturer and sounds innocent enough. Legislators from both sides of the aisle sense a political victory with a "good old U.S.A." bill.

The problem is that the vast majority of garment manufacturing left the U.S. a long time ago. The bill might have been a good idea in 1990, but that ship has already sailed. In fact, there's other Kentucky employers that stand to lose if this bill is passed. Companies like Unifirst in Owensboro employs 300+ and Sitex in Henderson employs 160+. These companies employ Kentuckians, provide benefits and are good corporate citizens. They stand to be punished, however, by SB54 because they often use materials made outside the U.S. They have no choice to be competitive.

A similar bill passed the Minnesota legislature with little debate and took effect in January. Public agencies are crying foul there because garments they can source in the U.S. are usually twice as expensive as those produced elsewhere. Law enforcement agencies who use and have training programs designed around the Austrian-made Glock pistols are wondering if they can still buy them. Kentucky's own LRC issued a local mandate opinion that SB54 could result in "substantial costs" to government agencies--just what they need in these difficult financial times.

SB54 passed the Senate in late January with only Sen. Dorsey Ridley of Henderson voting against it. Good for him. It appears it will be heard in the House State Government Committee this Thursday. That's too bad for good Kentucky employers like Unifirst and Sitex. Maybe common sense will prevail. Maybe not.