January 28, 2022 8:45am
Op-ed: Kentucky lawmakers must sustain and accelerate economic momentum during 2022 session
This opinion piece originally appeared in Louisville Business First on January 28, 2022
Last year, Greater Louisville’s regional economy proved we were not only open for business, but ready for unprecedented growth.
New and existing businesses in our region announced nearly $7 billion of new investments and the creation of more than 9,000 new jobs. That historic level of investment will be a tough act to follow, but Greater Louisville is hungry for continued growth and ready to harness this unparalleled momentum.
To keep on this upward trajectory, we should be looking at how we can reinvent our economy to be bigger, stronger, and more diverse. To make that a reality, our state lawmakers must prioritize forward-thinking policies and take action to create solutions for long-term problems in our regional economy.
First, we need to maximize our competitive advantage over peer markets. Greater Louisville is continually ruled out of major corporate headquarter relocation and expansion opportunities because our state and local tax structures are not as competitive as neighboring states.
Lawmakers should seize this opportunity to resume tackling overdue tax reforms, like decreasing the state’s outdated reliance on production-based taxes and allowing for comprehensive tax reform at the state level. Lowering the income tax rate would make our region more attractive to top talent, which would not only grow our population, but bring in more workers to fill jobs from these substantial investments. Supporting a stable pool of skilled talent will lead to more investment in our region and kick-start a cycle of continued economic growth.
Right now, Kentucky’s income tax is 1% to 2% higher than our competitor states. As we market Greater Louisville to prospective talent through our Live in Lou initiative, having a competitive income tax rate will help us highlight our region’s affordability and quality of life — two important decision-making criteria.
Additional flexibility is needed at the local level, but the General Assembly’s hands are tied by the Kentucky Constitution when it comes to changing local tax structures. While undertaking statewide tax reform, the General Assembly should also make reforms to give city and county governments more autonomy to develop forward-thinking, business-friendly tax systems to compete and thrive for economic investments.
By passing a constitutional amendment to allow for local tax reforms, the General Assembly would then be able to pass guidelines that allow local municipalities to create smart tax structures that work for their local economies and taxpayers.
While tax policies are a top concern for many businesses and are needed to ensure our region’s long-term economic success, the General Assembly must also address more acute and pressing issues. Specifically, comprehensive solutions to aid our state’s struggling child care sector and alleviate deteriorating workforce shortages should be a top priority.
Lack of accessible and affordable childcare has negatively impacted Kentucky’s workforce participation for many years, but the pandemic has further strained this industry. Last year, the state reported an 8% decrease in childcare availability and since 2012, Kentucky childcare providers have decreased 46%.
This has led to long wait lists and exorbitant costs. When the costs of childcare take the majority of a person’s wages, there is no logical reason or driving factor for them to work. This is keeping a large portion of the population out of the workforce and making it harder for businesses to fill open positions.
Kentucky must fully leverage available state and federal resources to stabilize the childcare sector and make the necessary investments to ensure its long-term success and stability. GLI supports significant expansion of high-quality childcare and early childhood education services.
Investment to address dire staffing shortages must also be prioritized, along with resources to increase access to and efficiency in the Child Care Assistance Program, including increasing reimbursement rates and eligibility.
Childcare is only one factor in our region’s growing workforce crisis, but it is keeping much of our skilled workforce on the sidelines. We know that businesses will not invest in communities where they cannot find people to fill jobs. That’s why addressing childcare shortages and affordability is critical to quelling our current workforce crisis and spurring continued economic growth.
In addition to these pressing measures, the General Assembly must continue to take meaningful steps in reforming our state’s criminal justice system to reduce recidivism and get justice-involved individuals back into the workforce.
Legislation to expand KEES scholarship eligibility to those with past felony convictions and reforming Kentucky’s cash bail system are two of several important measures lawmakers should prioritize this year. Measures that promote second-chance employment and focus on substance use recovery will also be instrumental in addressing our talent shortage.
The docket for the 2022 legislative session is filled with several big-ticket items that legislators must address, not to mention passing a biennial budget which will be larger than ever due to substantial federal aid and infrastructure package dollars.
Greater Louisville’s business community urges lawmakers to pursue a strong mix of innovative policies and solutions to long-overdue problems that will allow our region and economy to reach its full potential in the years ahead.
— Sarah Davasher-Wisdom is president and CEO of Greater Louisville Inc.