Economy

Big Rivers Electric Corporation plans to sell wholesale power to Nebraska customers in hopes of cutting costs to current customers.

Big Rivers has lost about two-thirds of its revenue after aluminum smelters in Hawesville and Sebree stopped purchasing power.  Since then, the Kentucky Public Service Commission has twice approved rate increases.

Big Rivers Spokesman Marty Littrel says revenue from Nebraska contracts will help pay a portion of Big River’s fixed operating costs.

“The benefit to west Kentucky is the fact that we have been able to land a deal that we anticipate – we’re not sure, it’s still early – but we think it’s projected to provide our members, which again are the consumers, a $65 million benefit over the life of the agreement," explained Littrel.

Big Rivers has around 114,000 Kentucky customers. The company will begin selling wholesale power to around 11,000 Nebraska customers in 2018.

Report: Poverty Afflicts 1 in 4 Kentucky Youth

Jul 21, 2015

A new report says poverty remains the biggest problem facing Kentucky children, a trend affecting all other aspects of child well-being.

Terry Brooks, executive director of Kentucky Youth Advocates, says the Annie E. Casey Foundation's 2015 KIDS COUNT report shows poverty afflicts one in four Kentucky youngsters. Brooks says reducing poverty is the single most impactful way to improve overall child well-being.

The Lexington Herald-Leader reports the findings generally used figures from 2013.

Brooks says the way to help families build assets include ensuring they have access to responsible lending and financial services, along with providing a more integrated approach to benefits. He says tax reform would also make a difference.

Kentucky has General Fund Surplus, but Road Fund Deficit

Jul 10, 2015

Kentucky taxpayers got good news and bad news on Friday on the state's budget.

The good news is the state finished the fiscal year with a $165.4 million surplus in the general fund. But the bad news is the state's road fund has a $20 million shortfall.

The results were not unexpected. State budget officials had predicted a general fund surplus just two months ago. State officials also predicted a deficit in the road fund after falling gas prices automatically cut the state's gas tax rates. State lawmakers agreed to freeze the gas tax in March, preventing what could have been a larger deficit.

Democratic Governor Steve Beshear said the surplus is a sign that Kentucky's economy continues to grow and is moving in the right direction.

An estimated additional 70,000 Kentuckians would be eligible to receive overtime pay if a new U.S. Department of Labor rule goes into effect.

President Obama this week proposed a rule that would raise the salary threshold for those who can receive overtime from $455 per week to $970 per week. The Department of Labor estimates that if implemented, 4.7 million workers would become eligible for overtime pay if they work more than 40 hours per week.

Kentucky Center for Economic Policy director Jason Bailey said the rule also means employees are less likely to be pressured to work more than 40 hours per week.

“When folks are working beyond that it really strains their ability to take care of family, take care of children, participate in their community, have some rest,” Bailey said.

About 800 state workers in Kentucky will get a raise after Democratic Governor Steve Beshear decided to increase the minimum wage to $10.10 per hour.

The increase affects only workers in the executive branch of state government and will cost taxpayers about $1.6 million. The current minimum wage is $7.25 per hour. Tipped workers in state parks will be paid $4.90 per hour, up from the current $2.19 per hour. Private companies with state service contracts will have to pay its workers at least $10.10 per hour. But that won't take effect until the current contracts come up for renewal.

Beshear said about a third of the affected employees work in state nursing homes caring for military veterans. Most of the other affected workers work in behavioral health centers and state parks.

GM

A study measuring the economic impact of Kentucky’s automotive industry finds $1 out of every $13 in the state’s economy is tied to the industry.

Governor Steve Beshear joined industry leaders Wednesday in releasing results of a six-month study conducted by the University of Louisville.

"The industry directly employs about 80,000 people and when you add the indirect jobs, it's about 136,000 people all across this state," explained Beshear.  "The average salary is about $60,000."

The study was commissioned by the Kentucky Automotive Industry Association, a group formed last year to address the industry’s challenges and to raise its profile.

"While folks think of Kentucky as the home of bourbon and the Derby, most of them don't know that we're the third largest producer of cars and light trucks in the country," Beshear said.

Kentucky is home to the Toyota plant in Georgetown, the Ford plant in Louisville, and the Corvette plant in Bowling Green. 

Kentucky’s exports for vehicles and parts were up 28 percent in the first quarter of this year.

The state will host its first automotive conference in September.

This week, Kentucky’s labor cabinet announced that the state’s exports are up by 11 percent this year, but some are worried that in the long run, the strong U.S. dollar could squelch demand for Kentucky goods.

There’s been a lot of good news for the Kentucky economy lately: the manufacturing sector added 1,100 jobs in April, Corvette announced an expansion of its factory in Bowling Green and and the unemployment rate fell to 5 percent, the lowest it’s been in 15 years.

However, State Office of Employment and Training Economist Manoj Shanker warns that continued strength of the U.S. dollar makes it difficult for countries to afford Kentucky-made goods.

“What’s helped us really, the reason we’re doing all these exports is because energy costs are low, which means the cost of making goods is lower in Kentucky and in the U.S. but what hurts us is that the dollar is strong so it’s more difficult to export," explains Shanker.

While Kentucky and the U.S. economy have rallied since the Great Recession, Shanker says much of the rest of the world is still struggling to catch up.  This phenomenon has led to a trade deficit in the United States that has grown to $51.4 billion according to the U.S. Commerce Department.

Lisa Autry

A major expansion is in the works at the Bowling Green Corvette Assembly Plant. 

General Motors announced today a $439 million investment for facility upgrades, including a new paint shop.  Construction will begin this summer and take about two years to complete. 

Plant Manager Jeff Lamarche says the investment shows GM’s commitment to the Bowling Green facility.

"It's really clear that GM is not just committing for years ahead, but committing to the community, the plant, and the men and women here in Bowling Green," Lamarche told WKU Public Radio.  "It's basically recognition for the great job everybody's done."

The new paint shop will be 450,000 square feet, almost half the size of the current assembly plant.  The expansion is not expected to create any additional jobs. 

Thursday's announcement follows nearly $135 million invested in the plant over the last four years for the new seventh generation Corvette and the Performance Build Center. 

Last month, GM announced it would invest $5.4 billion in its U.S. facilities over the next three years.

Kentucky officials collected more than $1 billion in state taxes and fees in April for the first time in state history.

State Budget Director Jane Driskell predicted Kentucky will end the budget year on June 30 with a $46.1 million surplus. The state ended last year's budget with a $90 million shortfall.

The state's general fund is made up mostly of state income and sales taxes. Collections grew 23.3 percent compared with April of last year. With just two months left in the fiscal year, Driskell said revenues can fall up to 7.8 percent and the state would still meet its budget forecast.

Kentucky's road fund, however, will likely have an $11.1 million shortfall. Gas tax revenues dropped 12.8 percent in April.

The unemployment rates in all of Kentucky’s 120 counties declined from March 2014 to March 2015, but only a few actually saw an increase in employment over the past few years.

Only 28 Kentucky counties have more people employed in March 2015 than in March 2007, according to a recent analysis by the Kentucky Center for Economic Policy.

Job growth has been concentrated in parts of Kentucky with industries that have enjoyed recoveries in the wake of the recession—namely, healthcare, education and the auto industry, said Jason Bailey, the executive director of KCEP.

“We have a very uneven recovery, a recovery where wealthy parts of the state, places that have more infrastructure, more connections to industries that are growing and recovering are seeing job growth,” Bailey said.

Scott County, near Lexington, saw the largest growth with a 16 percent increase in the number of people employed.

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