Commentary on life in Kentucky – February 2011

By wmadministrator

Venture Club Starting Up Kentucky’s Future
Lexington Venture Club efforts to build a community of start-up companies in Central Kentucky are gaining traction. Its annual event recognizing entrepreneurs who are experiencing success attracting financial support for taking their ideas into the marketplace was able to present an impressive set of statistics for 2010.

Last year, 89 early-stage companies received more than $65 million in funding from a variety of sources. Those mostly high-tech companies hired 240 people in 2010 – 154 full time and 86 part time – bringing their total jobs numbers to 537 full-time and 211 part-time employees. Average full-time salaries at these companies are $63,500.

The numbers were up from $47.5 million in recessionary 2009, slightly surpassing 2007’s $64 million level before the global financial crisis struck.
These entrepreneurs and their companies are catalysts for growing new businesses and jobs for the knowledge-based economy in Kentucky. These are the enterprises that hold potential for breakthroughs in the marketplace that bring large-scale job- and wealth-creation in the commonwealth. Their business sectors include biotechnology and healthcare; energy and biomass; advanced manufacturing; education and media; and business services. Succeeding, however, first requires connecting good ideas with experienced management teams and interested investors, which is where Lexington Venture Club and counterpart organizations in other parts of the state play vital roles.

We wish them all well – the creative energetic entrepreneurs and the venture capital facilitators. If they achieve their goals, it will lift the quality of life across Kentucky.

Above: University of Kentucky President Lee Todd Jr., second from left, received a lifetime achievement recognition from the Lexington Venture Club at its annual funding celebration. A UK and MIT graduate, Todd founded Projectron Inc. and DataBeam and has been an entrepreneurship booster in Kentucky. With him are, from left, Len Heller of the UK Commercialization and Economic Development; Lexington Mayor Jim Gray; and Bob Quick of Commerce Lexington.

Louisville Businesses Go ‘Weird’ in a Good Way
For the fourth year in a row, a national survey of independent businesses found those in communities with active buy-local campaigns had stronger revenue growth than those without.

Louisville Independent Business Alliance’s “Keep Louisville Weird” campaign is working, the survey found: 51 percent of independent Louisville businesses reported increased holiday sales, and 63 percent said annual sales increased in 2010.

Eighty-two local independent businesses participated in a national survey in January that gathered data from 2,768 independent retailers, service providers, restaurants and others.

Business owners in cities with active buy-local campaigns reported a wide range of positive impacts. Almost half said local campaigns brought new customers, and 55 percent said they made existing customers more loyal. Two-thirds said local media coverage of independent businesses had increased, and 51 percent said local government officials were now more aware and supportive of the needs of independent businesses.

Local business alliances in more than 140 U.S. cities and towns have launched buy-local campaigns. Independent retailers in these locales reported an average holiday sales increase of 5.2 percent versus 0.8 percent in cities without buy-local initiatives.

In Louisville, LIBA launched an annual Holiday Passport Contest in 2008 to create awareness about the importance of buying locally, and to give consumers incentive to do so. People who collected five receipts from LIBA members were entered to win $1,000 to spend at those businesses. Nicole Beeson won.

“I have always liked unique, local shops,” Beeson said. “But this contest really drove home the idea that shopping at independent stores is in our best interest – more of the dollars stay local.” She donated part of her winnings to Dreams with Wings and a cancer support center.

Todd Brashear, owner of specialty Wild and Woolly Video in Louisville, said he found that 36 percent of customers during the contest said they’d shopped places they never been before, and half said it made them more aware of the importance of buying locally.

This stuff works, everyone (See full survey results at tiny.cc/pn4db). Let’s get busy helping ourselves.

Corrections Trends Turning in the Right Direction
Kentucky’s prison inmate recidivism is trending downward, according to statistics out last month, and that’s good news – especially for taxpayers. With two- and three-year recidivism rates their lowest in about a decade, the state prison population ended 2010 at 1,097 fewer inmates than it began. That equates to about $20 million less incarceration costs.
Corrections Commissioner LaDonna Thompson credits better work by parole and probation staff along with courts using alternative sentencings that include more use of home incarceration, drug courts and mental health courts.
The 24-month recidivism rate is at a 10-year low: 29.5 percent. DOC’s three-year recidivism rate is 40.3 percent for those released in 2007, which is the lowest mark since the rate for 2002 releases reported in 2005. Recidivism rates had been rising the past decade, and state corrections costs had risen markedly with prison populations.

“We very pleased to see the drop in recidivism, especially since the reduction is so significant,” Thompson said.

Prisons are integral to our society and upholding the rule of law, and the setting the right judicial and corrections policies and managing them effectively will always be a challenge.

According to National Institute of Corrections, Kentucky’s crime rate is 21 percent lower than the U.S. average, with our violent crime rate 35 percent less. However, our incarceration rate of 4.84 per 1,000 residents is 8 percent above the U.S. figure, and various studies show our prison population growth rate since 2000 at the top of the charts.

The overall per inmate cost for Kentucky was $19,980 each for 2008, according to National Institute of Corrections, which sources its numbers on figures from a variety of state and federal agencies and private corrections associations.
In fiscal year 2010, according to the Kentucky Department of Corrections, it cost an average $21,712.82 per inmate in state-run prisons, $17,858.62 in private prisons, which tend to hold a less-dangerous convicts.

What to Watch for in 2011:
The Good, the Bad and the Positive

Publisher Ed Lane spoke to several organizations during the past few months and at the end of his presentations he made several predictions for the coming year.  The editors of The Lane Report have summarized the publisher’s forecasts for your reading pleasure.

Retail
A decline in the number of small retail businesses will raise the vacancy rate for retail showroom premises.

Office
Mergers, downsizing and technology will increase vacancy and reduce future  demand for office premises.

Government
Watch for prepackaged bankruptcies for cities, counties and states unable to pay contractual obligations for employee’s pensions and healthcare. The trend could start in California, Michigan, New Jersey or New York.

Education
University enrollment levels will continue to increase in Kentucky. The number of postsecondary students enrolled in state universities has increased 40 percent since 2000 (up from 193,700 students in 2000 to 271,400 students in 2010).

Population trends
More people will move from rural areas of Kentucky to the major cities because of quality of life issues and job opportunities. In-migration to metro areas will create major financial problems for rural cities and counties as the population, educated workforce and tax base in these communities declines.

Healthcare
Mergers and alliances will boost the availability, quality and cost effectiveness of services provided by healthcare providers throughout Kentucky. Healthcare costs will substantially increase due to federal government mandates.

Exports
The United States is still a major exporter. The top five U.S. export countries are Canada, Mexico, China, Japan and Britain. Global logistics are essential, and Kentucky has excellent international transportation providers.

Politics
The 2011 governor’s race is too close to call. Economic factors and Kentucky’s employment levels could be the tie breaker. Higher employment levels would favor incumbent Gov. Steve Beshear.

Automotive
Higher U.S. automotive sales will boost employment at Kentucky’s manufacturing and assembly plants and substantially lower the state’s unemployment rate. Government will earn more sales and income taxes but not enough additional revenue to bail out underfunded (and generous) pension and healthcare benefits for government employees.

Conclusion
Calendar year 2011 may surprise Kentuckians if the U.S. automotive industry is able to boost production over 13 million cars annually. A few auto analysts think 14 million new cars are possible in 2011 because auto financing will be readily available to car buyers. In either case, the good news will be higher employment, higher tax revenues, and higher per capita incomes for Kentucky.

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