Diversifying the economy of Appalachian Kentucky will require financial resources to pay for needed new investments. The coal severance tax is one of the largest pools of economic development resources in the region. But what role has the severance tax played in helping the region's economy transition, and what role can it play in the future?
New data showing that eastern Kentucky lost 4,000 coal jobs last year should raise alarm among public officials about the longstanding need for an economic transition plan. So should the big drop in eastern Kentucky coal severance tax receipts, which are 33 percent lower over the last 12 months than the previous year.
Hardly a month goes by without the release of another index supposedly ranking states on their economic competitiveness. One prominent such report comes from the American Legislative Exchange Council (ALEC), a controversial national corporate lobbying organization. But a new analysis by a University of Iowa economist shows that ALEC's prescription of tax cuts for the wealthy and corporations, reductions in public services and curtailment of workers’ rights has no correlation with state prosperity.
Put into context, the findings of a consulting group report to the Kentucky legislature suggest that state economic development incentive programs are not a very cost-effective way to create jobs—a result that is in line with other studies on this topic.
The report is the outgrowth of House Joint Resolution 5 in the 2011 Kentucky General Assembly, which required a study of the state’s incentives to attract business. Anderson Economic Group produced the report under contract with the legislature.
Two new reports released this week call attention to the growth of state economic development tax incentives and the lack of accountability mechanisms that would enable states to know what they are getting for those subsidies.
Forecasts predict dramatic declines in eastern Kentucky coal production in future years, heightening the need for a strategy to transition the region’s economy. A permanent coal severance tax fund, as implemented in other natural resource-rich states, could help extend investment over the long-term and create a permanent financial asset for the region's future.
The energy sector is on the path to a gradual but dramatic transition that presents both opportunities and challenges for Kentucky. This report by KCEP parent MACED takes a closer look at the job opportunities in clean energy for Kentucky, focuses in on the role of workforce development as part of an overall approach, and highlights the need for stronger state energy policy in order to spur job growth and sustain job opportunities.
An estimated one out of every three working families in Kentucky is low-income. As this report by KCEP parent MACED reveals, Kentucky’s economic challenges are rooted in part in insufficient policy to support these families. The report finds that state budget shortfalls and policy barriers in the areas of higher and adult education, workforce development, economic development and work supports are keeping low-income families from making progress, and holding back economic gains for all of Kentucky. “Investing in Kentucky’s Working Families” concludes with a set of recommendations to boost state progress through better policy targeting low-income families.
Kentucky’s economic development efforts have increased considerably over the last twenty years, but there is very little understanding of their effectiveness because most of the spending happens “off the budget” in the form of tax expenditures. This report by KCEP parent MACED found that 71 percent of Kentucky’s $800 million in economic development spending is in the form of tax expenditures that receive very little reporting or public scrutiny, and that the state’s economic development approach is too narrowly focused on recruiting industry. The report calls for a more diversified development strategy and more attention to accountability and evaluation of economic development efforts.