With the revelations from ProgressLex this past week that the soon-to-be unveiled economic strategy report prepared by Angelou Economics for Commerce Lexington and the city of Lexington was a cut-and-paste job, many have wondered about Commerce Lexington and its relationship to city government.
The now disgraced report cost $150,000 to produce. Half of that was paid by LFUCG and half of it by Commerce Lexington.
Commerce Lexington, in turn, is funded in part by the LFUCG -- receiving half a million dollars per year in taxpayer money, as the Herald-Leader has reported:
Under previous Mayor Jim Newberry the city transferred much of the responsibility for development to Commerce Lexington, which was formed in 2004 and is partially funded by the Lexington-Fayette Urban County Government.Formerly the Lexington Chamber of Commerce, Commerce Lexington is headed by an extensive board of directors. These directors include the Mayor and Vice Mayor, the President of UK, as well as a host of other businesspeople and community leaders.
The city paid Commerce Lexington $509,070 in fiscal 2010 and has budgeted $508,000 for fiscal 2011. The group considers itself to be private and does not publicly disclose its finances.
In addition to the taxpayer money they get, Commerce Lexington collects dues from its 1,800 members.
In addition to their rank-and-file members and their Board of Directors, Commerce Lexington also maintains a Board of Trustees, ranked by their level of investment. All firms "investing" at $2,000 or more are named to the Board of Trustees. There are four levels of investment: Bronze (presumably for $2,000); Silver ($5K? 10K?); Gold (25K? 50K?); and Platinum (50K? 100K? More?). All these dues and "investment" dues added up to $1.3M in 2009, according to Commerce Lexington's publicly available 990 Tax Form (see below).
The Platinum Level trustees of Commerce Lexington -- the division of Lexington government deciding economic development strategies for the city -- are Wal-Mart and JP Morgan Chase.
The Gold Level trustees include Anthem and Ashland Oil, while the Silvers include such folks as Alliance Coal, Kentucky American Water, and the Webb Companies.
Speaking of the Webb Companies, at the annual Commerce Lexington dinner last month, Woodford Webb was presented with the "Public Policy Advocate of the Year" award. Here's the video they showed at the dinner:
As you'll notice in that video, Woodford was honored specifically for re-establishing regional tours, which brought Lexington business leaders to Eastern Kentucky and "led to refinements in our organizations policy statements."
You see, in addition to its role as the LFUCG economic development wing, Commerce Lexington is a business advocacy group that lobbies local, state and federal governments on behalf of business interests. (So, LFUCG is paying the group to lobby LFUCG on behalf of business).
As such, Commerce Lexington has a Public Policy Team and a chief lobbyist. This is their mission:
In today's political and economic times, it is critical that your business have representation to monitor and lobby on your behalf the important issues that face you at a local, state and federal level. Commerce Lexington's Public Policy Team has the experience and resources to represent you from City Hall to our nation's Capitol. Most Commerce Lexington members can't afford a full-time staff person and/or lobbyist to monitor every bill and regulation that moves through Frankfort which can dramatically impact business.That Commerce Lexington Public Policy team made news in December 2009 when they announced refinements to their standing policy statements:
Several direct coal industry endorsements were added, including:Bob Quick, president of Commerce Lexington and who has in recent days taken to the media to stand up for the consultancy group behind the cut-and-paste development report, told the Herald-Leader's Tom Eblen that the shift in policy to an explicitly and actively pro-Coal agenda "was prompted by a two-day bus tour of Eastern Kentucky by nearly 70 Commerce Lexington members that 'opened our eyes.'"
" ... the most immediate threat to Kentucky's business climate is the pending energy legislation and regulatory obstacles that place an undue burden on states like Kentucky that rely heavily on coal-fired generation plants for electricity. ... Commerce Lexington opposes any legislation and regulations that would have a significant negative impact" on coal-industry jobs.
More recently, last November, Commerce Lexington sent its taxpayer supported and member funded lobbyist to the EPA:
Commerce Lexington Inc. recently submitted public comments to the United States Environmental Protection Agency (U.S. EPA) expressing its opposition to a proposed regulatory change regarding coal ash that could significantly affect utility rates and energy production in the Commonwealth. The proposed regulatory change for the "Coal Combustion Residual (CCR) Rule" would permit U.S. EPA to classify coal ash waste from power plants as hazardous waste under Subtitle C of the Resource Conservation and Recovery Act (RCRA).
During the month of September, Tyler Campbell, Vice President of Public Policy for Commerce Lexington, testified in Louisville before U.S. EPA regarding the proposed regulatory change to the CCR Rule. During testimony, Campbell stated Commerce Lexington's opposition to regulating coal ash as a hazardous waste...
In addition to lobbying the federal government on behalf of Lexington taxpayers that toxic coal ash isn't toxic, Commerce Lexington's recently released 2011 Public Policy Statements make clear the groups stance on several other key issues:
- THE EPA: Commerce Lexington continues to oppose U.S. EPA's attempts to overstep its regulatory oversight role and impose an extraordinary number of federal mandates that will undoubtedly have a significant negative impact on the business community.
- HEALTH CARE: Commerce Lexington Inc. believes that both business owners and employers should have the opportunity to provide for themselves and their employees quality affordable health insurance available from the private market, not government. This opportunity to provide health insurance should provide adequate choices, not place an economic burden with either high taxes or undue government regulation.
- "Right to Work": We support legislation to prohibit requiring any worker to join a union as a condition of employment.
- GOV. SCOTT WALKER: Commerce Lexington Inc. strongly opposes public employee collective bargaining.
The issue isn't really what Lexington's Chamber of Commerce stands for. Businesses should get together and collectively protect their interests.
There's nothing particularly wrong with members of Lexington's business community getting together and collectively deciding that the unregulated destruction of Eastern Kentucky is something they all want to stand behind and spend their money on. (Though, one wonders if all the dues-paying members are fully aware of how their money's being used.)
But it's more than a little ridiculous that such a group -- headed by Wal-Mart and JP Morgan Chase -- requires $500,000 in taxpayer money each year to do what they'd probably be doing anyway.
And it's positively insane to hand over to the same group of pro-coal, anti-union, anti-health care reform, etc., power brokers the keys to the future of Lexington's economic development.
Paying Commerce Lexington to simultaneously mold the city's economic development and lobby the government against business regulation is obviously a bad idea.
The Angelou cut-and-paste report simply cements this fact. Let's be clear:
The city paid $75,000 and Commerce Lexington paid $75,000 to receive an unoriginal document in which the central original recommendation was to hand even more power and control to Commerce Lexington.
A strong working relationship is needed between city government and our major businesses, but it's important to know which one is calling the shots, and what the people of Lexington are paying for -- something Mayor Jim Gray is apparently keenly aware of:
The original request-for-proposals set a June 1, 2010, deadline but that was pushed back until after the November elections.
"We've been waiting on the report for months, so basically we've been in suspended animation from a strategic point of view," Gray said. "We need a business plan that can really help Lexington. I've observed our economic development efforts as a businessman, as a volunteer, as vice mayor and now as mayor. We have a lot of work to do and all options are on the table."
Those options might include the city taking more control of economic development or more oversight over of Commerce Lexington.
Those both seem like good ideas. And who knows, maybe the revised Angelou report they're banging out in a matter of days will make just that recommendation.
You can sign the ProgressLex petition to get Lexington's money back for this report.
Commerce Lexington's 2011 Public Policy Positions:
Commerce Lexington's Form 990 Tax Return, for year 2009, filed 2010, public record: