2000 Kentucky
Annual Economic Report |
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Full Document
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NOTE: Non-postscript printers should have their Graphics Mode set (in Printer Properties) to Raster rather than Vector mode before printing these PDF files. |
Contents |
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| Kentucky’s Per Capita Income: What Should be the Goal? | ||
| Mark C. Berger and Glenn C. Blomquist | ||
| We investigate the effects of cost of
living and quality of life differences across states on per capita income rankings. We
recalculate Kentucky’s per capita income relative to the U.S. average after adjusting
for cost of living and quality of life differences across states. This analysis allows us
to adjust Governor Patton’s long-term goal for Kentucky’s per capita income
relative to U.S. per capita income. We find that after taking into account Kentucky’s
cost of living and quality of life, the state needs only to reach 92 percent of the U.S.
per capita income to be equivalent in real terms. This occurs because Kentucky has a
combination of lower cost of living and higher quality of life than the typical U.S. This
revised goal is more likely to be accomplished over the 20-year period originally set by
Governor Patton than the original goal of 100 percent of U.S. per capita income.
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| Expanding
Health Insurance to the Uninsured in Kentucky: Estimating Participants and Costs |
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| Steven N. Allen | ||
| Many states have recently offered health
insurance benefits to low-income populations who have previously been uninsured or
underinsured. This article describes a methodology that can be used to estimate the
potential number of participants and costs for expanding health insurance to low-income
populations in Kentucky. This process involves three main steps: 1) estimating the
eligible population based upon specific eligibility criteria, 2) applying a participation,
or “takeup,” rate to the eligible population to determine how many eligible
persons actually participate in the program, and 3) applying per person cost estimates to
obtain an overall estimate of the total program cost. I use a combination of national and
Kentucky-specific data on the number of uninsured, takeup rates, and health benefit costs
to provide estimates for expanding health insurance to certain low-income populations in
Kentucky. I also discuss other factors that must be considered, such as the “crowding
out”of private insurance, varying costs over time, and consideration of federal
matching dollars if programs are implemented as Medicaid expansions.
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| Taxes and Income: Where Does Kentucky Stand? | ||
| William H. Hoyt | ||
| Much recent debate has focused on the
substantial tax “burden” on lower-income households in Kentucky relative to
other states and relative to higher-income households in Kentucky. I address these issues
by focusing on the “regressivity” of the Kentucky tax system relative to other
states and regions in the United States. Two distinct issues are addressed: How much taxes
do lower-income households pay within a state relative to higher-income households? And
how much taxes do lower-income households pay in absolute terms, that is, what is the
average payments in taxes? I analyze these issues by looking at sales, income, and
property taxes separately and in total. I find that the Kentucky tax system, while
regressive, is less regressive than those of most states, particularly among those in the
Southeast. In part this occurs because Kentucky relies more on the most progressive of the
taxes, the income tax, and less on the more regressive sales and property taxes than many
states. Lower-income households do bear a lighter tax burden relative to higher-income
households in Kentucky and compared to most states. But because incomes in Kentucky are
lower than in most states, these households still pay relatively high taxes as a
percentage of their incomes.
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| Electronic Commerce at Businesses in Kentucky | ||
| Jonathan D. Fisher | ||
| Electronic commerce in the United States
has expanded in recent years. Estimates show online sales surpassing $2 billion annually
and growing quickly. State-level statistics are difficult to find, however. This article
helps to fill this void by reporting the results of a recent survey of Kentucky
businesses. About 14 percent of responding firms in Kentucky sell their products or
services online. While online sales still represent a small portion of these
businesses’ total sales, the overall view of online sales has been positive. Kentucky
businesses also use the Internet for advertising, which should increase online and offline
sales since many customers research products online but purchase goods offline. Also, the
future of online sales in Kentucky looks promising. Growth of online sales should occur
within firms as security and other concerns dissipate. Also, growth should occur as more
Kentucky businesses begin online sales. Of those firms not currently selling online,
almost one-quarter plan to sell online and over 40 percent may sell online in the future.
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| Quarterly Forecasts for the Kentucky Economy, 2000 - 2002 | ||
| Eric C. Thompson | ||
| The Kentucky economy is forecast to see
moderate to strong growth from 2000 through 2002. The rate of economic growth, however, is
expected to slow relative to the past few years in both Kentucky and the nation. Real
gross state product in Kentucky is forecast to grow at a 2.5 percent rate in 2000, while
real total personal income is forecast to grow by 2.3 percent, total employment by 1.5
percent, and total population by 0.8 percent. For the entire 2000 to 2002 period, real
gross state product is forecast to average 2.5 percent growth each year, compared to 2.1
percent annual growth for real total personal income. This strong rate of income growth
will be fueled by strong gains in wage and salary earnings. Annual employment growth over
the three-year period is forecast to average 1.3 percent, or 24,300 jobs each year. The
services industry, forecast to add 11,600 jobs each year, is expected by itself to account
for nearly half of this employment gain. The retail trade sector is forecast to add 5,100
jobs per year, while the manufacturing sector is forecast to lose 200 jobs per year on
average from 2000 through 2002. The manufacturing industry, however, is forecast to
account for roughly one-third of all growth in real gross state product.
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| Kentucky Composite Economic Indicators | ||
| Greg Harkenrider | ||
| Most states are constitutionally bound
to submit and maintain a balanced budget. Since the state revenue bloodline flows from the
pulse of the real economy, it becomes vitally important to properly measure the current
and immediately pending short-term state economy. This article will illustrate the
methodology employed in the development of a state model of leading and coincident
economic indicators. The novel aspect of the Kentucky model lies in the link between the
real and fiscal economies. Many state agencies have an interest in real economic variables
only insomuch as these factors are used as exogenous inputs into state revenue forecasts.
The job of translating an economic forecast (employment, personal income, etc.) into a
revenue forecast constitutes a second level of modeling, often done casually with rough
elasticities. By including fiscal variables directly into the composite reference series,
forecasters can preempt the classical problem of translating changes in the real economy
into revenue impacts. Thus, the interpretation of the leading and coincident indices has
an embedded revenue component that will provide direct, timely information about likely
short-term revenue flows. These projections can then complement more extensive quarterly
econometric models to give states a short and long view of the fiscal economy.
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| ...And the Band Played On: The U.S. Economy in 1999 | ||
| Christopher J. Waller | ||
| The U.S. economy continued its long
growth march during 1999 despite a stumble in mid-year. Volatile gas prices, rising
interest rates, and a negative savings rate were the headline makers. The Federal Reserve
reversed its interest rate cuts in 1998 by raising the federal funds rate three times in
1999. The Fed also spent a lot of time worrying about an asset bubble in financial markets
and whether or not they should prick it to avoid a larger collapse in the future.
Internationally, Asia appears to have recovered from its financial crisis but the U.S.
trade deficit continued along its explosive path. In this article, I review each of these
events in detail, discuss why a bubble probably does not exist in the financial markets,
and discuss why the Federal Reserve will take a low profile in the coming year.
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