2001 Kentucky Annual Economic Report 

Full Document 

  (1,867kb !) 

The Adobe Acrobat Reader is used to view and print PDF files. 

It is free and can be down loaded from Adobe Systems World Wide Web Site

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

In this article, I discuss the performance of the U.S. economy in 2000 and draw some inferences as to what will happen in 2001. In short, the U.S. economy should continue growing but at a slower rate than has been observed over the last two years as the Federal Reserve’s interest rate hikes finally take a bite out of the economy. In the second half of this article, I discuss the microeconomic and macroeconomic impact of the ‘new economy’. While the microeconomic impact has been dramatic, with regards to important macroeconomic data, the new economy appears to be more style than substance

Kentucky, in many respects and perhaps more than many states, has an extremely diverse economy. Variations in economic conditions among Kentucky counties generate significant differences in another important aspect of the state’s economy, its tax base. Here we provide a measure of differences in tax bases among Kentucky counties, incorporating both municipal and school districts. We apply a measure of the extent of a county’s tax base referred to as tax capacity, developed by the Advisory Commission on Intergovernmental Relations, to compare the level of tax bases among states. After comparing the tax capacity of local governments, we introduce a measure of Revenue Capacity in which we adjust the tax capacity of local governments within a county to account for the state aid received by the local governments within the county. Finally, after considering how the tax bases differ for local governments among the counties of Kentucky we examine how tax effort varies among local governments in Kentucky counties.

We find that tax capacity varies dramatically among counties. However, once we adjust for aid from the state government to local governments and calculate revenue capacity, tax capacity and aid per capita, the gap among counties narrows dramatically. In fact, several counties go from being well below the average tax capacity to above it while some counties above the average tax capacity actually fall below the average in revenue capacity. Somewhat surprisingly, there seems to be little relationship between tax capacity or revenue capacity and tax effort.

As electronic commerce in the United States continues to expand yearly, estimates of the magnitude of these sales remain elusive, particularly at the state level. This article reports the latest Kentucky figures from a recent survey of Kentucky businesses. The discussion is framed in the light of the most recent national estimates. Approximately 15% of responding Kentucky businesses with 100 or more employees report that they sell their product or service online. Comparison with previous years’ survey results show that while online sales in the state are still growing, they are doing so at a slower pace. Also, fewer responding businesses indicate that they plan to implement online sales in the near future, or are at least contemplating doing so. Finally, the debate over taxation of Internet sales is addressed.