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Narrow-minded policy offers fatal imbalance

State officials showcase a fatal imbalance in their economic-development approach by focusing most of their energy on offering tax incentives to lure alternative-fuel companies to Kentucky.

 While politicians love the “photo-ops” provided by such tax-incentive announcements, chief executive officers have loftier concerns.

 This isn’t to say that such incentives don’t factor in. It’s just that they often aren’t the only or even critical component in a company’s decision to land or stay in any state.

 Plenty matters more than government handouts: a well-educated and qualified workforce; business-friendly tax structures and reasonable labor policies.

 Considering Kentucky’s performance in these areas, state policymakers hope Gregory Boyce, Peabody Energy Corp. CEO, cares most about handouts waved in his face.

 But what if he knows that half of the students entering Kentucky universities require remediation courses before they start college courses? And what if he knows that state officials have no real plan – beyond spending more money – to improve that?

 Helen Carroll, a community-relations manager for Toyota, isn’t impressed with the state of the state.

 Carroll recently said that only 15 out of every 100 current ninth-graders in Kentucky would graduate from college.

Will companies needing workforces with knowledge of physics keep Kentucky on their lists, considering Carroll’s report that the state only graduated one physics teacher last year?

 Boyce better not learn that 38 states have a better tax climate. Frankfort’s salesmen are keeping their fingers crossed that he won’t discover the Tax Foundation’s State Business Tax Climate Index ranking. It ranks even West Virginia with a better tax climate than Kentucky.

Finally, if its education and tax policies don’t kill a deal, Kentucky’s antiquated labor policies will.

 The Bureau of Labor Statistics reported that CEOs already know Kentucky remains the only Southern state without a law protecting employees from being forced to join labor unions. The bureau reports five nearby right-to-work states averaged nearly 287,000 new jobs between 1996 and 2004. Kentucky added a measly 83,477 jobs during that same period.

 A narrow-minded focus on tax incentives offers short-term benefits from politicians concerned about the next election. But it’s fatal for Kentucky’s chances for future prosperity.

Contact the Bluegrass Institute, Kentucky's free-market think tank, at (270) 782-2140. Read past Shine the Light articles at www.bipps.org.

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