The Closing Bell: LIFT in a deep freeze, Mercy under contract, Yum! wage pressure, Derby wine, local stocks and more
Welcome to The Closing Bell. This is your last stop for biz scoops and big news before the weekend — a roundup of stories that can’t wait till Monday.
If you’re still snowed in and feeling behind the curve, we’ve got you covered. This week, we’re checking the pulse of LIFT in Frankfort and reading some tea leaves (and, apparently, coffee grounds) on Yum!’s near future. We’ve got a big real estate update on East Broadway and a check-in from Brookings on the state of our advanced manufacturing workforce. And speaking of local talent, U of L and Velocity have a synergy thing going on, while a pair of local stocks are burning it up on Wall Street.
On to it…
Local option sales tax in a deep freeze as Frankfort digs out
As Frankfort shut down under thick layer of snow late this week, it appears the prospects of a constitutional amendment to enable a local option sales tax have done the same.
While HB 1 passed the state House by a wide margin, the so-called LIFT initiative — to enable local governments to put project-specific tax increases on the ballot — has stalled in the Senate. Most insiders believe it would pass with the necessary three-fifths majority if it reached the Senate floor; however, it didn’t get a hearing in the last regularly scheduled meeting of the Senate’s State and Local Government Committee on Wednesday.
Insiders tell IL it’s dead this session.
Committee Chairman Sen. Joe Bowen has said that while he supports the bill, he hasn’t called for a vote on HB 1 because it does not have the support of the Senate Republican caucus’ leadership. Bowen had left open the possibility for a special committee vote on the bill if Republicans such as Floor Leader Damon Thayer have “an epiphany.” But after the General Assembly convenes again on Monday, there are only three days left for that to happen.
Though HB 1 has the support of every chamber of commerce around the state, it is opposed by retailer and heavy industry organizations who say an increase in their sales tax and utility rates would hurt business. Some Republicans are opposed because they view it as yet another way to increase taxes, even though that rhetoric — which doomed LIFT last year — seemed to fade this session, giving way to a “local control” argument that garnered more Republican support.
LIFT is without question the No. 1 policy priority of Louisville Mayor Greg Fischer, whose spokesman told Insider Louisville, “we continue to work with Republican leadership in the Senate to get a committee vote.” Another loss in Frankfort certainly stings.
As with most important issues in Frankfort, its fate will likely be decided at the last second. Count us shocked if it moves.
**Correction: A previous version of this item referred to LIFT being on the ballot in 2015. As a constitutional amendment, it would be on the ballot in 2016. IL regrets the error.
Yum! downgraded, may need to raise pay for low-level workers
The analysts at Robert W. Baird have downgraded Louisville fast food giant Yum! Brands to a “neutral” rating from what had been a “outperform” rating. At the same time, Baird raised its target price on where it thinks Yum’s stock should be, from $80 to $84 per share. As of the morning of March 3, the stock was trading at $80.71 cents.
Baird downgraded Yum! because of its ongoing travails in the crucial China market, where the taint of a bad-meat scandal continues to plague the company’s recovery there.
Stateside, there are macro-indicators pointing toward the possibility that Yum! and similar companies may soon have to pay higher wages to lower-level employees.
The Federal Reserve’s latest Beige Book, a fascinating collection of economic indicators in and of itself, gave clues as to why Walmart has announced it’s upping its bottom wage — and why Yum! might have to follow. The upshot: It’s getting harder to attract and keep entry-level employees. At the same time, hiring has remained steady in the service sector, and average wages are rising faster than they have been.
Here’s a link to the current edition of the book, issued March 4. And here’s a key excerpt:
“Wage pressures were moderate across most Districts, but some contacts reported increased wages to attract skilled workers for difficult-to-fill positions … Service sector firms in the New York District noted increasingly widespread reports of wage hikes … A staffing firm in the Chicago District reported some companies were also willing to raise rates for unskilled workers to reduce turnover, and contacts in the Atlanta District noted increasing entry-level wages.”
And in yet another piece of Yum! related-news, KFC is planning to sell premium coffee in China, in a shot across the Starbucks bow. According to the Financial Post, KFC will offer premium coffee in 2,500 KFCs in China by the end of 2015, which would surpass the 1,500 current Starbucks locations in China. There are 4,500 KFCs in China, so there’s still more room to grow. Also, a premium KFC coffee would sell for about $1.60, roughly half the cost of a similar coffee from Starbucks.
There’s more than one way to get around tainted meat.