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Commentary on life in Kentucky

By wmadministrator

State Government – A Penchant for ‘Feel Good’ Pension Reform
State government failed taxpayers and state employees by wimping out on the necessary changes to make Kentucky’s grossly underfunded retirement benefits system actuarily sound.  After last month’s special legislative session reforms, current estimates by state Sen. Tom Buford, R-Nicholasville, project a $33 billion retirement benefits deficit in 2025.

Kentucky’s elected politicians should have voted to do what is best for the long-term financial security of the retirement benefit plans, Kentucky’s credibility with financial markets, and Kentucky’s taxpayers. Our lawmakers took the easy way out. They didn’t want to irritate future school teachers and government employees or risk losing
their votes and possibly not being re-elected.

In the minds of our lawmakers, a mediocre effort apparently is better than doing nothing or taking a bold initiative. The leaders of state government passed “feel-good” legislation that did little to reform the long-term financial deficits related to future state employees’ pension and health-care benefits. These legislative actions are essentially fiscally irresponsible and jeopardize Kentucky’s future prosperity.

Cost of Dropouts? $4.2 Billion for Kentucky
If the high school dropouts from Kentucky’s Class of 2008 had instead earned diplomas along with their classmates, the state’s economy could have benefited from an additional $4.2 billion in wages, taxes, and productivity over these students’ lifetimes, according to conservative calculations by the Washington-based Alliance for Excellent Education in its updated brief “The High Cost of High School Dropouts: What the Nation Pays for Inadequate High Schools.”

The average annual income for a high school dropout in 2005, according to the U.S. Census Bureau, was almost $10,000 less than that for a high school graduate.
The Alliance’s updated brief argues that dropouts drain the state and nation’s economy by lowering tax revenues and increasing the cost of social programs. High school graduates, on the other hand, make higher wages, are healthier, and live longer. They are less likely to be teen parents, commit crimes, or rely on government assistance.

“The High Cost of High School Dropouts: What the Nation Pays for Inadequate High Schools” is available at http://www.all4ed.org/files/HighCost.pdf

Manufacturer Favors Kentucky Over China
Major trend alert! Turns out there’s a silver lining in the dark mood hovering over those of us shocked by skyrocketing energy prices. It was reported last month – on Friday the 13th – in The Wall Street Journal. Transportation costs are fueling a rethink by manufacturers, who are deciding to bring jobs back from China. And Kentucky is benefiting.

Bowling Green heating products maker DESA LLC was cited on Page 1 of the WSJ as an example of what we hope we see more of. DESA has moved production of its residential gas heater products as well as some of its construction heaters back to Kentucky from China. That means more jobs for commonwealth workers.
“We’re looking at more products moving back,” said Claude Hayes, president of DESA’s retail heating division. “It’s a dynamic environment that we’re in.”

Rising energy prices, currency exchange rate fluctuations, even Chinese tax policy all are pushing in directions that favor U.S. manufacturing. Foremost, the cost of shipping a standard 40-foot cargo container from China has risen from $3,600 last summer to $5,400 in June – and it’s expected to hit $5,600 by the end of July, Hayes said.

The exchange rate between the dollar and the yuan was allowed to float last fall, producing a 15 percent cost appreciation for DESA in China since, Hayes said. And changes in China’s value-added tax beginning a year ago further eroded the benefits of manufacturing there.

“More and more companies are finding it more practical to build in the U.S. compared to China,” Hayes said, noting that the tipping point for his company occurred about five months ago. “We want to bring as many jobs back to Bowling Green as we can,” citing the local quality of life and the support the company receives from state and local government, the chamber of commerce and others.

DESA products built in Kentucky have only a third the failure rate of those made in China. Meanwhile, the commonwealth is closer to its customers, allowing the company to be more responsive. Bowling Green is within 10 hours of nearly 75 percent of the U.S. population.

With a new three-year labor contract in place, Hayes said, DESA has added several hundred seasonal union workers on top of the 250 to 300 year-round employees it has in Kentucky.

Founded in 1951, DESA came to Bowling Green in 1962. It produces products sold under a variety of brands, including Master, ReddyHeater, Glo-Warm, Comfort Glow, Vanguard, Fmi, Remington and All Pro.

Oil Cartel Versus the Free Enterprise System
The free enterprise system will defeat the oil cartel and financial speculators, provided our politicians allow American’s entrepreneurial spirit to be unleashed. With exorbitant prices, every user of petroleum products will start creating ways to reduce consumption. New and more efficient gasoline engines, alternate fuels, mass transit, expanded exploration, new extraction technology and conservation efforts on a cumulative basis by consumers will have a significant worldwide impact to reduce the demand for petroleum products.

High oil prices will be the motivation for invention and provide a profit incentive for individuals and companies to create new products, technology and initiatives to replace or reduce the need for petro products.

Kentucky can benefit by using technology to convert coal to clean alternative fuels and cellulose to ethanol. Making fuels in Kentucky would be good for the state’s rural areas.  Finding and making fuels in the United States would strengthen the dollar by reducing the negative balance of trade caused by oil imports.

The free-market system is better than government intervention. Ronald Reagan liked to cite that old truism that some of the most feared words are – “I’m with the government and I’m here to help you!”

If the U.S. government would remove the restraints on the exploration and creation of new energy sources in an environmentally safe way, the free market economy could again prove that free enterprise can beat an oil cartel – every time!

Markey Foundation Golf Tournament Sets Record
The fourth annual Markey Golf Classic in Lexington last month set a new record by raising more than $550,000, the profits of which will go toward cancer research and patient support programs at the UK HealthCare Markey Cancer Center [www.markeycancerfoundation.org].

More than 100 golfers took part. The kick-off dinner at Mt. Brilliant Farm, home of Becky and Greg Goodman, featured great food, live music and a live auction. First place winners were Alex Boone and Michael Hebron from Audi of Lexington. Kentucky head men’s basketball coach Billy Gillispie and teammate Charlie O’Connor from Ashford Stud/Coolmore America finished second, and Nick Nicholson of Keeneland and Bill Farish of Lane’s End Farm were the third place finishers. The closest to the pin overall was John J. (Bud) Greely III and the women’s winner was Robin Cline of Shawnee Farm. The longest drive was by Dwayne Rogerson of Hagyard Equine Medical Institute.

“The Thoroughbred community is honored to continue its association with the Markey Cancer Foundation,” said Farish. “This special event allows us to give back to Kentucky by supporting the cancer care and research conducted at the Markey Cancer Center.”

Gifts to the Markey Cancer Foundation are used to advance cancer research programs, foster innovative patient care, purchase state-of-the-art scientific equipment, and endow chairs and professorships to recruit and retain exceptional doctors at the Markey Cancer Center.

“I am thrilled that this year’s Markey Golf Classic has exceeded all previous years,” said Sally Humphrey, chairman of the Markey Cancer Foundation Board of Trustees. “Credit must be given to our committee, our board and especially our generous sponsors.”

Sarah Craig Joins The Lane Report as Summer Intern
Lexington resident Sarah Craig is working with The Lane Report this summer as an intern. Craig, a graduate of Henry Clay High School, is a student at the University of Richmond in Virginia, a private liberal arts college. Craig is pursuing a degree in rhetoric and communication studies with a minor in Spanish. In addition to The Lane Report, internship duties include work with Lane Communications’ other publications, including Next, an annual guide for college-bound high school students.

The Lane Report and its sister publications are accepting applications for internships for the fall. For information on internships with Lane Communications, contact Mark Green at markgreen@ lanereport.com

The June issue incorrectly identified one of the participants in ceremonies marking the rollout of the six millionth barrel at Buffalo Trace Distillery in Frankfort. Harlen Wheatley, left, is the current master distiller. Elmer T. Lee is the retired master distiller.