Both sides agree - Reform economic-incentive policy
FRANKFORT -- In 153 years, Kentucky will be average.
If the state continues plodding on the same economic path
of ever-so-slow improvement that it has trudged since 1984,
it'll be 2160 before the average Kentuckian will have an
income that equals the average American's, according to
a report released last fall by the Kentucky Science and
Technology Corp.
A century and a half is too long to wait for the title
of average, said Kris Kimel, executive director of KSTC.
"Absent bold ideas and bold strategies, we're not
likely to achieve a high level of competitiveness,"
Kimel said. "Without a series of strategic breakthroughs,
data suggests there is no reason to believe that there will
be anything demonstrably different 25 years from now."
A growing number of advocacy groups has come to the same
conclusion. In a rare move, advocates from opposite ends
of the political spectrum are lobbying lawmakers for reform
of the state's economic development policies and hope to
make the issue a key factor in the forthcoming governor's
race.
Their efforts come as the state's longtime secretary of
the Cabinet for Economic Development, Marvin E. "Gene"
Strong Jr., prepares to step aside at the end of January,
just as researchers at the University of Kentucky are expected
to complete a major report on the effectiveness of Kentucky's
job-creation programs. By statute, a national search must
be conducted for Strong's replacement.
The Herald-Leader reported in late 2005 that the Cabinet
spent more than $1.2 billion recruiting jobs over the previous
25 years. The newspaper determined that the Cabinet focused
heavily on industrial recruitment, had done little to gauge
the effectiveness of its incentives, was more secretive
than counterparts in many other states, and sometimes loosely
monitored its programs.
Strong "was so rigid and so dominated by the moneyed
corporate interests it was hard for him to understand the
workers' needs and the need for transparency," Democratic
Rep. Jim Wayne of Louisville said this month.
Wayne, one of the legislature's most liberal members, and
other House Democrats are expected to file a proposal in
early February that would give Legislative Research Commission
economists the ability to scrutinize economic development
incentives the state offers companies. The proposal was
axed from the state's two-year budget in the final hours
of closed-door negotiations among legislative leaders last
spring.
"It's a priority with the entire Democratic caucus,"
said Rep. Don Pasley, D-Winchester. "We don't know
if we're doing a good job or not. We're in the dark."
Meanwhile, one of the legislature's most conservative members,
Rep. Joe Fischer of Fort Thomas, filed a bill this month
that would require full public disclosure of economic development
incentives taken by companies.
Anyone would be able to search a state-maintained Web site
to see how much in tax breaks and grants an individual company
receives. North Carolina and Illinois already have such
sites.
Kentucky releases aggregate numbers showing how much in
taxes companies were able to avoid, but no company-specific
information is divulged.
"The taxpayers deserve to know how their money is
spent and who is obtaining tax breaks," said Fischer,
who realizes that his bill is a long shot for passage in
the current legislative session, which ends March 27. "This
type of disclosure will become inevitable."
A spokeswoman for the Cabinet for Economic Development
declined to comment on the bill, saying the agency was still
reviewing its contents. The cabinet has opposed disclosure
measures in the past, saying companies would be hesitant
to consider locating in Kentucky for fear their financial
data might be publicly aired.
Fiscally conservative groups such as the Bluegrass Institute,
a free-market think tank in Bowling Green that worked with
Fischer on his bill, feel confident that taxpayers would
revolt if they knew how much money businesses are able to
avoid paying in taxes.
"We think that would bring restraint to the wasteful
spending of taxpayer dollars in the name of economic development,"
said Jim Waters, the institute's director of policy and
communications.
While lawmakers discuss stronger disclosure laws, the Mountain
Association for Community Economic Development and the liberal-leaning
Kentuckians for the Commonwealth are teaming up for a broader
campaign to make fundamental changes in the way Kentucky
develops its economy.
They're hoping one or more gubernatorial candidates will
push a platform that de-emphasizes tax breaks for low-wage
industries and bolsters funding for entrepreneurship and
small-business assistance.
A recent survey suggests Kentuckians would most likely
embrace a candidate willing to change economic development
policies. When the Kentucky Long-Term Policy Research Center
asked how Kentucky is doing in its fight to end poverty,
only 12 percent of respondents said the state is making
progress.
Likewise, only 23 percent of the 855 Kentuckians surveyed
said they thought the state was making progress toward a
goal of having "diversified long-term development that
stresses competitiveness and a rising standard of living
for all citizens while maintaining a quality environment."
Details of the forthcoming public relations campaign are
still under wraps, but an announcement is expected in mid-February.
"We're concerned about getting this on the agenda
for gubernatorial candidates," Wayne said.
2%
economic growth seen in '07