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Perspective: Put Out Welcome Mat to New Problems

Kentucky again needs better education, job training—to meet need for thousands of workers.

By Mark Green

We have problems. New problems. Good problems.

Bluegrass State leaders and residents are in the right place at the right time doing the right things, riding the front edge of a rising industrial wave—a global, generational shift toward electric vehicles that is bringing transformative jobs and investment.

It’s taken years of diligent effort, but our commonwealth is about to take a permanent step up on the economic ladder—perhaps several steps.

Kentucky is arriving. It’s about time.

For decades, our economic and financial underperformance relative to the national average has been a nagging worry for public and private leaders. Kentuckians’ incomes have clocked in at 18 to 20 percentage points under the U.S. average. This in turn restricts investment in education and other systems that create the ladders to climb higher financially. With studies statistically linking education and income, Kentucky has taken steps several times to improve our education system. It takes money. But those steps were undone when state finances tightened.

Our commonwealth is actually doing good things incrementally and steadily improving, but so is everyone else, leaving us lagging.

With the view that there is little chance to organically grow our economy to national levels, the focus has leaned to entrepreneurship. With enough vigorous entrepreneurship, there eventually will be a big win here: an Apple, Microsoft, Google, Netflix, Walmart, Proctor & Gamble or Salesforce that creates thousands of well-paying jobs that create wealth.

While waiting for this slot-machine strategy to hit, the state also has been pumping its quarters into other mechanisms that are paying off. It has grown its key businesses clusters, especially advanced manufacturing and specifically vehicle production. It made its economic development incentives more competitive.

Kentucky recently made its tax structure more business friendly, shifting in steps from income tax toward sales tax revenue—taxing consumption rather than production. It adopted a system of tax cuts triggered only when state budget goals are met.

This is working.

Ford, Toyota, GM and suppliers have invested billions and created hundreds of jobs in Kentucky. Aluminum and steel companies put several billion into operations here.

Amazon built its first air hub—the largest single investment in its history—at the Cincinnati/Northern Kentucky International Airport. UPS expanded its Worldport hub in Louisville. Product packaging makers are attaching to the logistics sector. EV battery makers have chosen Kentucky more than any other state.

The commonwealth’s problem now is how to improve its education/workforce training systems and population health because thousands of jobs are on the way. And this time the state has the resources to do so.

Kentucky’s tax collections and budget surpluses have set records. Legislative leaders said in mid-November that state revenues are on track to bring another half-percentage point cut in the income tax. This fiscal year is on track to be $1.357 billion in the black.

With steady work and progress on the education, training and health issues, those numbers are only going to get better. Incomes will grow, wealth will increase, tax bases will grow and there will be public resources to feed a virtuous cycle.

This is likely to bring more “problems.” And we’ll take them.