This week, You Decide, Kentucky! Executive Director Lena Muldoon had the honor of taking our cause to the Kentucky Association for Economic Development Forum during a panel discussion on tax modernization.  She appeared with the Kentucky League of Cities Executive Director J.D. Chaney and State Representative Michael Lee Meredith.

The General Assembly has prioritized modernizing Kentucky’s tax codes at the state level and the economic development community has seen the effects, with Kentucky setting record highs in recent years in job creation and economic investment.  Lena’s message to the panel was that modernizing our local tax codes will continue to increase our competitiveness with other states in the region and make it possible to continue to build upon that success at the local level.

Kentucky’s local communities are disproportionately dependent on income taxes.  Our cities average generating 59% of their revenue from occupational taxes while the counties get 44% from the tax option.  The average local government nationally gets between 8%-9% from income taxes (which is generally very rarely levied at the local level nationwide).  We are one of just 12 states that don’t offer revenue flexibility for local governments and Indiana, the only state bordering Kentucky that doesn’t, is currently considering implementing the modernized approach.

That lack of diversification leaves Kentucky’s cities and counties more vulnerable to economic downturns and leaves revenue on-the-table that could be invested back into the community to improve everything from utilities to public safety.

Economic development professionals frequently talk about the importance of competitiveness; without modernizing our local tax codes, Kentucky will remain less competitive to other states for larger-scale investment.

Economic development isn’t just about how much money in incentives a state can provide businesses.  In order to attract the best and brightest employees, they have to locate themselves in places that are desirable for employees to live, work, and raise a family.  Modernizing our tax codes will give local governments the revenue they need to provide the quality-of-life economic development professionals need to sell their communities to investors, and the competitive tax structures to attract residents to enjoy them.