By W. P. Butler
COVINGTON — Elimination of the income tax will be a huge benefit to Kentucky’s economic growth, one of the best resolutions I have witnessed, and courageously pro-active on the part of our political officials. However, there are more actions that should be taken to ensure and facilitate all the positive impacts hoped for.
First, there are major commitments in place involving big risks and obligations by developers; projects that rely heavily on income tax revenues. They must be “grandfathered.” Specifically, Signature TIF’s for major projects of scale around the state will be harmed if a provision is not enacted soon to hold them harmless from loss of income tax revenues. Bonds associated with projects that involve billions in financial investment will be put in jeopardy of default.
Secondly, with an eye to the future, the tax reduction action dictates that corresponding actions to accelerate growth throughout the Commonwealth should be aggressively undertaken. Substitute taxes on revenues generated from sales taxes and other similar top-line sources are intended to overcome lost future income tax revenue. Growth is the only way to avoid overtaxation from those replacement sources. Creative growth initiatives are the key to solving most financial issues in Kentucky, while simultaneously fueling quality of life enhancements, as well the enhancement of Kentucky’s perception.
Several well-done articles in January’s Lane Report on the matter of income tax reduction as such relates to growth triggered my mind, and heart too, on several subjects:
- We could use this planning opportunity to address poverty and drug-related concerns in the Eastern counties. The handwriting is on the wall about the future of coal as a significant industry. It is obvious that coal as a primary fuel will become extinct, and this reality cannot be fought successfully, only delayed. So, as a true Commonwealth, we should pro-actively develop effective training, educational programs to provide confidence, hope, and ability to step up to different types of jobs for those people who currently rely on the mining work for their life support. We as a state could invest in ready-to-use buildings combined with special incentives for those affected areas to secure alternative opportunities. Let us use the opportunity to creatively cause those areas of our state to redevelop and prosper by helping those citizens to expand personally and gainfully with quality jobs located right there in their communities. It is a long but fruitful endeavor, but very doable and affordable for our state in these times given current and anticipated budget resources.
- Construct “Kentucky’s Vision for the Future,” document it. Conduct a broad-based process to develop a vision. Paint the picture. I have expressed to some of our former Governors the concept of developing a futuristic vision document for Kentucky. Who we are. Who we are not! Who do we want to be? How do we Kentuckians want to be perceived? How do we get from here to there? But alas, my concept has not yet caught on. Seeing the value in such an ominous endeavor escapes the mind too easily.
Build a clear vision
We in OneNKY, Northern Kentucky that is, know the value of a well-constructed vision document. We have undertaken the process not less than three times in the past 40 years and we can point to those documents and the process involved itself for the accelerated progress and the bonding effect they have had on us as a unified community. OneNKY is accelerating. The visioning process brought people together around a common purpose, and the blueprints and pathways to progress has proven valuable. It has worked for us. It could work for the state of Kentucky.
- In addition to more job growth, we in Kentucky need higher quality jobs in white collar and forward cutting-edge sectors. The distribution of goods is perceptively misleading. Warehousing uses large land masses, but does not add many jobs and not higher paying jobs, nor do the massive structures do much for the community landscape. Each distribution center looks like progress, but when compared to other opportunities for growth, they pale.
While we are acting to advance the mining industry workers to elevated skills in manufacturing and services, we should target selective future technical sectors that we could effectively attract and orient our economic growth vehicles accordingly. Selectively target the business sectors we want to build our future on; and then pass creative legislation, tax and other, targeted to those businesses. Such is only one example of what comes out of having a collective documented “Vision for Kentucky.” What do we want the future to be for our citizens? My view is that we, as the current citizens, have a responsibility to pave the way for future generations. It is a noble deed to do.
To undertake proactive steps to support growth in coordination with tax reduction measures is worthwhile, maybe even essential. Eliminating income taxes in itself, will be most helpful to such endeavors. Acting to help those citizens who will suffer the most from environmental change while at the same time accelerating growth adds a higher order of purpose to the vision and to the mission.
W. P. “Bill” Butler is Chairman/CEO of Corporex Companies, a privately held investment and development firm based in Covington that has developed world-class hotels, Class A offices, luxury residential and mixed-use developments in 22 states across the U.S..
