Economy

Kentucky LRC

The director of one of Kentucky’s leading non-profit economic policy think tanks says the recently-passed state budget fails to address the state’s revenue problem.

Jason Bailey, the director of the Kentucky Center for Economic Policy, says the budget, which includes five percent cuts to over a dozen state agencies, reflects the 14th round of harmful cuts since 2008, and doesn't do enough to generate new revenue.

“There are areas that have been time after time after time, so I think for higher education, for human services, for areas like environmental and public and worker protection, I think those systems will be frayed even further by the cuts that we’ve seen.”

Bailey adds that the revenue bill passed by the legislature that gives tax breaks to the bourbon industry and beer and wine wholesalers aren’t worth the cuts to important state agencies.

An effort is underway in the Kentucky General Assembly to enact a state Earned Income Tax Credit in addition to the federal one. 

A state EITC is part of the tax reform proposal being considered this session, and it’s also included in stand-alone legislation. 

Democratic Lieutenant Governor Jerry Abramson says the federal EITC  most often is used to purchase basic necessities and has a ripple effect in the local economy.

"What you find from the federal earned income tax credit is that it's probably the number one item that's spent immediately upon being received by working families who qualify for the earned income tax credit," explains Abramson.

The tax reform plan calls for a state EITC at 7.5% of the federal credit.  Separate legislation filed by Senator Morgan McGarvey, a Democrat from Louisville, would allow at state EITC of 15% of the federal credit.

"This is an opportunity to encourage all the right values - work, responsibility, family, and fairness," comments McGarvey. "Ronald Reagan called the EIC the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress, and we need to embrace that opportunity in Kentucky."

If approved by the legislature, Kentucky would be the 25th state to have a state EITC.

A new report shows over half of Kentuckians are living paycheck-to-paycheck, and would fall below the federal poverty line if they lost their job.

The numbers come from the Corporation for Enterprise Development, a non-profit based in Washington D.C. that has released a scorecard focusing on the financial well-being of households in each state.

The numbers for Kentucky aren't good.

Fifty-two percent of Kentuckians wouldn’t have enough money to get by at the federal poverty level if they lost their job. The report says that means more than half of households in the commonwealth “are one crisis away" from financial devastation.

Sixty-percent of Kentucky residents have sub-prime credit, which is defined as a credit score below 570.

Kentucky Center for Economic Policy Director Jason Bailey says the report is proof that the commonwealth has steeper economic challengers compared to many other states, because of Kentucky’s traditional reliance on low-wage jobs.

An economic think-tank says a raise in the minimum wage would benefit reduce child poverty and help about a quarter of Kentucky workers.

The Kentucky Center for Economic Policy says a $10.10 an hour minimum wage would lead to a boost in consumer spending. That, they say, would spur job creation, and allow low-income families to make ends meet.

Opponents argue higher wages would force layoffs or cause businesses to raise prices. But center director Jason Bailey says it would actually keep employees in what are currently lower-paying jobs. That cuts the costs businesses pay to hire and train new workers.

“The lack of consumer spending is a big impediment to additional hiring; that additional money in people’s pockets, low-wage workers’ pockets at this time, money that they will then spend, could actually result in a small job gain," Bailey said.

Bailey supports a bill filed by House Speaker Greg Stumbo that would raise the state’s minimum wage from $7.25 an hour to $10.10. A new Public Policy Polling survey shows that 57 percent of Kentuckians support the idea.

Stumbo’s measure would also require pay equity for women, who earn 77 cents for every dollar earned by men.

Kentucky's pension systems are slated to have to pay out more than $17 billion that the state doesn't have.

The numbers come from Kentucky Retirement Systems director William Thielen, who testified before lawmakers in Frankfort Monday. He says the state's various pension funds have only a fraction of what they need to pay all potential retirees.

Thielen says if lawmakers make good on a promise to fund the pensions with the recommend amount, known as the ARC, it'll take a few years before the unfunded liability starts to drop.

“It’ll bottom out around 2018 or ‘19, and then start increasing. But, again, that depends on the full ARC being paid and for us meeting all of our assumptions, and most importantly our investment assumptions," Thielen told lawmakers.

Gov. Steve Beshear has appropriated about $200 million for KRS over the next two years.

Kevin Willis

Kentucky’s bourbon distillers are celebrating a record number of visitors in 2013.

The eight facilities that make up the Kentucky Bourbon Trail saw a 12 percent jump in visits last year, with nearly 572,000 visitors touring facilities such as Four Roses,  Maker’s Mark, and the recently-opened Evan Williams Bourbon Experience in downtown Louisville.

Kentucky Bourbon Trail director Adam Johnson  attributes part of the tourism draw to the efforts distillers have made to improve their facilities.

“Name the distillery, and they’ve put some serious money in expanding that experience for their visitors," Johnson told WKU Public Radio. "Woodford Reserve, for example—they’re working hard on their place and hope to be open in the spring with a much more expanded experience, just like Jim Beam has done, just like Maker’s Mark has done, just as Wild Turkey has done.”

Johnson says the rising popularity of bourbon and other Kentucky-made spirits has also trickled down to the commonwealth’s growing list of smaller craft distilleries. Nearly 62,000 visits were made last year to members of the Kentucky Bourbon Trail Craft Tour, including Corsair Artisan Distillery in Bowling Green, and Limestone Branch in Lebanon.

Here is a list of the member distilleries that are a part of the Bourbon Trail and Craft Tours:

U.S. Rep. Harold "Hal" Rogers says the federal government should have a role in spreading high-speed Internet access to the region's struggling coalfields.

The Kentucky Republican said Wednesday that the spending bill passed by Congress last week included $10 million to expand broadband access to distressed areas of central Appalachia.

Rogers said he hopes that's the start of federal investments for broadband access in hard-hit coal regions. As chairman of the U.S. House Appropriations Committee, Rogers will have an influential voice in that debate.

Rogers was at the Kentucky Capitol to support a plan outlined by Gov. Steve Beshear in his budget speech to lawmakers Tuesday night. Beshear is proposing a $100 million project to expand broadband access in Kentucky.

The proposal would be supported by $60 million in state bonds.

President Obama Names Southeast Kentucky a 'Promise Zone'

Jan 8, 2014

President Barack Obama will announce five "Promise Zones" this week as part of his effort to focus on income inequality in the lead-up to his State of the Union address.

Promise Zones are areas where the federal government provides tax incentives and grants to help communities tackle poverty. Obama first announced the initiative during last year's State of the Union speech.

On Thursday, Obama will announce the first Promise Zone locations. They're in San Antonio, Texas; Philadelphia; Los Angeles; southeastern Kentucky and the Choctaw Nation of Oklahoma.

The White House says Obama believes investing in and rebuilding economically challenged communities is crucial to helping children have a chance at success.

Kentucky Lawmakers Facing Major Budget Gap in 2014-15

Dec 16, 2013
Kentucky LRC

New revenue in Kentucky’s upcoming biennial budget will not be enough to account for an estimated $450 million shortfall.

Lawmakers expect about $230 million in new revenue to be available for the budget. But House Speaker Greg Stumbo recently told a group of Kentucky’s top business leaders that more than half of that money will be used to pay down the state’s pension debt

“In about a $12 billion budget, it looks like there might be somewhere around a $100 million of new dollars, which is not even gonna allow us, quite frankly, to maintain status quo because just the cost of inflation," the Democratic House Speaker said.

Stumbo’s comments echoed those made by State Budget Director Jane Driskell, who has warned that budget cuts can be expected.

The Consensus Forecasting Group will meet this Thursday to provide the legislature with final budget numbers.

Kentucky Lt. Governor Jerry Abramson is still fighting for the legislature to take recommendations from his Blue Ribbon Commission on Tax Reform.

Abramson says he has delivered 59 speeches to encourage constituents to lobby their representatives and senators to take up the issue.

The commission’s report includes 54 suggestions to reform the state tax code and generate an estimated $660-million annually. “The Governor’s working with the leadership to find areas to find common ground to agree on, said Abramson." "I’m out on the trail trying to gin up the involvement of the average guy and gal in a community and I’m asking them to call their legislator, go see their legislator and tell them that they will support that kind of vote."

Abramson says lawmakers are frightened about voting on taxes especially in an election year. He wouldn’t offer odds on whether or not the legislature will take up the issue in January.  The Commonwealth has cut more than $1.6 billion in the last six years.

Abramson has two years remaining as Lt. Governor, but this is his last feasible opportunity to push for tax reform.  Passing tax reform is procedurally less challenging during the upcoming budget session than garnering a two-thirds vote in an off budget year.

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