Many payments that traditionally were made by cash or check are now being made electronically through the Federal Reserve’s Automated Clearing House (ACH) or through private electronic payment networks such as Visa or MasterCard using credit or debit cards. Electronic transactions in the public sector have lagged behind the private sector but there has been significant growth in recent years. Electronic payments are used for the procurement of goods and services by government agencies as well as for the collection of taxes and fees. This paper summarizes the results of two recent studies regarding the use of these payment options by state governments. The studies sponsored by the Association of Government Accountants and the Council of State Governments found that the use of purchase cards has become "common practice" for the procurement of small items by state agencies. Meanwhile, the use of electronic payments for the collection of taxes and fees is increasing but faces a series of policy issues described in this report.

The U.S. economy grew faster than expected during much of 2007, despite a prolonged slowdown in the housing market and the related sub-prime mortgage crisis, crude oil prices approaching $100 a barrel, and declining consumer confidence. In this article, we discuss economic events in Kentucky and the U.S. as a whole during 2007, and their implications for the state and national economies in 2008. With some caveats, we are confident that both economies will continue growing in 2008 at moderate – but not spectacular – rates.

The Kentucky Manufacturing Business Confidence Survey is produced each year through the joint efforts of the Kentucky Association of Manufacturers and the Center for Business and Economic Research. The survey asks businesses to report on their actual performance over the past year and to make predictions for the next year in areas such as employment, sales, profits, capital expenditures and industry production. Among other finding, the 2007 survey reveals a slow down in growth compared to previous years. This is consistent with last year’s prediction that business performance was unlikely to show much improvement in 2007. Last year’s survey did reflect the highest percentages of businesses reporting an increase in business performance to date. Those high numbers last year likely reflected the stabilization of the growth that began with the economic recovery that started in 2001. This year we see a very different picture as the number of manufacturers that report increases in business performance indicators dropped to a level last seen in mid-2003. This drop is likely due to problems affecting the overall growth of the state and national economy such as the tightening of the credit market, rising energy prices and a fall in consumer confidence. Since the number of manufacturers that expect a growth in performance has significantly declined, we do not expect conditions to improve next year. We do, however, expect conditions to stabilize as manufacturers adjust to the new business environment.