Gov. Beshear Announces Kentucky’s Top 10 Accomplishments for 2014

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THE LANE REPORT | DECEMBER 30, 2014

This year saw $3.7 billion invested in new businesses

FRANKFORT, Ky. (Dec. 30, 2014) — Gov. Steve Beshear announced the state’s top 10 accomplishments for 2014. This year, Kentucky smashed records for business investment, created nearly 15,000 new jobs, enrolled more than half a million Kentuckians into affordable health care, slashed costs on critical transportation projects and invested more money into K-12 education than ever before, Beshear said.

“We’ve fought our way through the Great Recession during the past seven years to get to this point – employment rates back at pre-recession levels, real investment in our schools and health care for hundreds of thousands of Kentuckians,” Beshear said. “I’m grateful for the outstanding accomplishments in 2014, but we are nowhere close to finished. There is much more to do to support Kentucky families, and we will not rest until that work is complete. Fortunately, we have great momentum going into 2015.”

Top 10 Kentucky accomplishments:

1. Record-setting $3.7 billion in new business investment

Kentucky’s manufacturing, service and technology sectors announced more than 350 new location and expansion projects, which are projected to create nearly 15,000 jobs and more than $3.7 billion in new investment. That is the most business investment in Kentucky since the cabinet started recording investment data in 1987.

Kentucky’s economic activity reached an all-time high this year, according to the Federal Reserve Bank of Philadelphia Coincident Index, which measures wages, unemployment rates and payrolls. Based on this index, Kentucky has recovered and exceeded the state’s economic losses suffered during the Great Recession.

For the fourth consecutive year, Kentucky will break its all-time export record. Exports through October were $22.8 billion, a nearly 9 percent increase over the same period last year. Through the same time period in 2013, exports were at $20.9 billion.

National analysts expect great gains for Kentucky in the coming year. According to the Federal Reserve Bank of Philadelphia Leading Index, which predicts economic conditions for the next six months, Kentucky is anticipated to have one of the highest growth rates in the country, with a rate roughly three times higher than the national average.

Kentucky’s entrepreneurial spirit is capturing national attention. The State Entrepreneurship Index (SEI) ranked Kentucky fourth in the country for its ability to create businesses. The commonwealth climbed 45 places from its ranking of 49th last year.

The Kauffman Foundation and Thumbtack.com gave the commonwealth an “A” rating for small business friendliness. Kentucky was also the most improved state in the rankings.

Major jobs announcements in 2014 include:

  • Ford Motor Company (Louisville): 650 jobs, $209 million investment
  • Champion Petfoods (Auburn): 147 jobs, $85 million investment
  • eBay Enterprise (Richwood): 354 jobs, $52 million investment
  • Nestle Prepared Foods (Mount Sterling): 91 jobs, $13.4 million investment
  • Quiver Ventures (Bowling Green): 80 jobs, $155 million investment
  • Kindred Healthcare (Louisville): 500 jobs, $40 million investment
  • Faurecia Seating (Simpsonville): 410 jobs, $18.7 million investment
  • DHL Express (Erlanger): 100 jobs, $45.6 million investment
  • RCC Big Shoal LLC (Pikeville): 30 jobs, $193 million investment
  • Aleris Rolled Products (Lewisport): secured 783 jobs, $350 million investment
  • Computershare Inc. (Louisville): 250 jobs, $12 million investment
  • CSX Transportation (Hopkinsville): 70 jobs, $83.4 million investment
  • Xerox (Lexington): 400 jobs
  • TeeSpring Inc. (Hebron): 299 jobs, $21.9 million investment

2. Jobless rates plunge to 6 percent, lowest level since 2008

In November 2014, Kentucky’s unemployment rate dropped to its lowest rate in more than six years at 6 percent. That’s the lowest rate for the state since April 2008.

Compared with November 2013, the rate dropped 2.1 percentage points. The last time such a steep drop occurred was 30 years ago, midway through the Reagan administration.

According to the Federal Reserve Bank of Philadelphia Coincident Index, Kentucky has now fully recovered and exceeded the state’s economic losses suffered during the Great Recession.

Kentucky set more unprecedented records in jobless rates in 2014. August marked the first time on record that unemployment rates fell from the previous year in every single one of Kentucky’s 120 counties. Then it happened again in September, and again in October, making three consecutive months of unemployment rates falling from the year before in every single Kentucky county.

Health care, construction, information and trade, transportation and utilities were among the biggest job growth sectors in 2014.

3. Nation’s second biggest drop in uninsured, thanks to kynect

Kentucky emerged as a national leader in getting health insurance to its citizens thanks to kynect, the state’s health benefit exchange. More than 521,000 Kentuckians enrolled in qualified health care through kynect in its first few months of operation.  Now in its second open enrollment period, more than 100,000 Kentuckians have obtained health care through the exchange. Open enrollment will continue through Feb. 15, 2015.

As a result of kynect’s phenomenal reach, a Gallup poll this summer reported that Kentucky’s drop in uninsured was second-highest in the country, going from 20 percent in 2013 to just under 12 percent midway through 2014.

The projected health implications for providing affordable health care to so many Kentuckians are enormous. Just through early September, nearly 260,000 unique Medicaid expansion members had accessed almost $540 million in care.

A study by the Council of Federal Advisers projects that because more Kentuckians have health insurance, about 26,000 more people get cholesterol screening each year. Almost 7,000 more women will get a mammogram. Over 10,000 more women will get a pap smear, and 14,000 people will get treatment for depression. Finally, 25,000 fewer people will find themselves in financial trouble because of medical bills.

4. Biggest increase in K-12 education funding in state history

Despite more budget reductions in many state agencies, Beshear designed a two-year budget that provided long-overdue investments in education and early childhood.

Among the investments:

  • An increase in base per-pupil funding for K-12 classrooms from the current $3,827 per student to $3,911 in FY15 and $3,981 in FY16 – the largest SEEK investment in Kentucky history.
  • Guaranteed pay raises for teachers and classified school personnel.
  • Increases in technology funding by $9.9 million, textbook funding by $33.4 million, professional development by $10 million, safety by $9.4 million and extended school services by $20 million.
  • An increase of $18.7 million in FY16 to expand preschool services to reach 5,125 more 4-year-olds whose family income is within 160 percent of the federal poverty level.
  • $100 million in bonds for K-12 school building projects.

Kentucky saw big improvements in education measurements in 2014 as well.  The college and career readiness rate jumped to 62.3 percent – up from 54.1 percent last year. That’s a huge improvement over the 38 percent rate Kentucky posted in 2011.

The four-year graduation rate is up from 86.1 percent in 2012-13 to 87.4 percent in the 2013-14 school year.

5.  Bourbon’s banner year

It’s time to toast America’s native spirit – bourbon’s popularity and industry expansion hit new heights in 2014.  An economic impact study released this fall revealed the proof – within the past two years, the bourbon industry has nearly doubled its workforce, tripled its number of distilleries, and set new modern records for exports and barrel inventories.

Bourbon is big business in Kentucky, making huge gains in exports and tourism. The distilling industry contributes $3 billion in gross state product to Kentucky’s economy every year, up 67 percent from just two years ago.

There are more barrels of bourbon aging in Kentucky right now – about 5 million – than there are people living in the Bluegrass State, and every one of those barrels had long been taxed as property. This spring, Beshear signed a bill that gave distilleries much-needed relief from the ad valorem taxes levied every year on aging bourbon barrels. Distilleries are required to invest the tax credit in capital improvements, including construction, renovation, tourism related facilities and equipment.

Some of the state’s distilleries expanded or improved their facilities with support from the state’s Cabinet for Economic Development. Among the major announcements:

Beam Suntory announced a new 600,000-square-foot state-of-the-art distribution center will be built in Franklin County – the largest facility of its kind in the county. The company also announced plans to build the “Jim Beam Urban Stillhouse” in downtown Louisville, a $5 million project.

Diageo broke ground on the new Bulleit Distilling Co. in Shelby County. The $115 million project will take about three years to build, including the distillery and six barrel warehouses. The company also announced it will invest an initial $2 million to develop the Stitzel-Weller Visitor Center in Louisville.

Maker’s Mark Distillery will invest $70 million to expand operations in Loretto, creating replicas of its existing stills and adding new barrel warehouses and other infrastructure improvements. The project will create 30 jobs.

Woodford Reserve opened its remodeled and expanded visitor center in Versailles. Brown-Forman, owner of Woodford Reserve, invested nearly $2 million into the 7,500-square-foot center.

Wild Turkey opened its new visitor center in Lawrenceburg, capping off a $100 million investment to modernize and expand the distillery experience for tourists.

Buffalo Trace broke ground on an 83,000 square foot distillery expansion in Frankfort, an investment of more than $20 million which is expected to add 40 new full time jobs.

Glenmore Distillery announced a $45 million investment to add a 223,000-square-foot distribution center in Owensboro, which is expected to create 20 new full time jobs.

Barton 1792 Distillery in Bardstown announced a plan to invest $5 million to purchase equipment to increase production capacity, and is expected to add 50 new full time jobs.

The Bardstown Bourbon Co. LLC plans to build a distillery in Bardstown, creating 35 jobs and investing $25 million into the project.

Brown-Forman announced plans to build Old Forester Distillery along historic Whiskey Row in Louisville. The $30 million investment is expected to create up to 20 new jobs.

Four Roses opened a new visitor center at the Cox’s Creek Warehouse and Bottling Facility in Bullitt County. The $500,000 expansion will create 12 new jobs.

6. Hundreds of millions of dollars saved on Ohio River Bridges project

In 2014, Beshear led efforts to build critical infrastructure, especially bridges, at a lower cost and faster rate. In early 2014, the costs of Louisville-Southern Indiana Ohio River Bridges (LSIORB) project dropped by nearly $300 million in an updated financial plan developed by the Kentucky Transportation Cabinet and the Indiana Department of Transportation.

In April, the new Milton-Madison Bridge over the Ohio River opened to traffic. At 2,428 feet long, it is the longest bridge in North America — and perhaps the world — to be slid laterally into place when it was moved 55 feet from temporary piers onto refurbished permanent piers. Built as a joint project by Kentucky and Indiana, the bridge is named “Best Project” for 2014 (lateral slide category) at the National Accelerated Bridge Construction Conference.

In September, Beshear broke ground to ceremonially begin construction on a new and long-awaited $131.5 million bridge to carry U.S. 68/KY 80 over Kentucky Lake, replacing the aging, obsolete Eggners Ferry Bridge.

7.  State secures $68 million more in tobacco master settlement agreement payment

Beshear and Attorney General Jack Conway secured a settlement related to the 1998 tobacco Master Settlement Agreement (MSA) that will provide an additional $68 million to support Kentucky farms, health care and early childhood services.

The governor and attorney general settled a long-running case between Kentucky and tobacco manufacturers prompted by an adverse ruling in a 2003 MSA arbitration proceeding.The settlement relieves the state from the financial and administrative burden of litigating disputes over events that occurred a decade ago, and also ensures that Kentucky will continue receiving its MSA payments.

The funding allowed the governor to fully restore $42.5 million in 2014 budget cuts in areas like lung cancer research, county agriculture funds and early childhood oral and mental health assistance, while maintaining this level of funding in 2015.

Under the agreement, Kentucky receives $110.4 million in disputed and related payments and will avoid a long and expensive legal battle. Combined with the $48.3 million in payments already received this fiscal year, the total MSA payments for FY14 total is $158.7 million, which is $67.9 million more than budgeted for FY14.

8. State’s largest employer goes tobacco-free

The state’s largest employer – the executive branch of state government – ended the use of all tobacco products and e-cigarettes on executive branch state property on Nov. 20, the day of the Great American Smokeout.

Kentucky is the fifth state to institute such a policy. As the largest single employer in Kentucky, the state’s tobacco-free policy will affect approximately 33,000 state workers, as well as hundreds of thousands of visitors to state offices and properties. The policy impacts 2,888 state-owned buildings – making more than 26.4 million square feet newly tobacco-free. The commonwealth also leases space in 568 other structures.

Kentucky has the highest rate among all states of adult smokers and the sixth-highest rate of youth smoking. Kentucky also leads the nation in cancer deaths. One of the primary goals of the Beshear’s kyhealthnow initiative is to reduce Kentucky’s smoking rates by 10 percent by 2019.

9. Broadband partnership to build 3,000 miles of fiber for high-speed internet access

A new public-private partnership will develop a robust, reliable, fiber “backbone” infrastructure to bring high-speed Internet connectivity to every corner of the commonwealth.

Beshear and U.S. Rep. Hal Rogers announced the partnership with Macquarie Capital, which has assembled a team of market-leading local, national and global specialists to design, develop and operate the open access network. When completed, 3,000-plus miles of fiber will be in place across the state. The project is projected to take two to three years to complete.

Kentucky ranks 46th in broadband availability and 23 percent of rural areas in Kentucky do not have access to broadband. A modern, high-capacity fiber infrastructure will enable businesses to compete globally, educators to expand their use of rich teaching resources, students to access the knowledge of the world, health care entities to collaborate and first responders to communicate easily in emergency situations.

The push for reliable, accessible high-speed broadband is one recommendation that emerged from SOAR, the “Shaping Our Appalachian Region” initiative. The partnership will propel the commonwealth forward in education, economic development, health care, public safety and much more.

10. SOAR attracts national investment, names executive director

The Shaping Our Appalachian Region (SOAR) initiative completed its first full year in 2014, which included attracting significant resources from the federal government to continue its work.

In January, the White House announced an eight-county region of eastern Kentucky was among the areas named as a “Promise Zone.” It was the only rural region to earn the designation. The designation means the federal government will partner with these zones to accelerate public-private partnerships, promote job creation and education opportunities, and improve access to federal grant programs.

The U.S. Department of Agriculture expanded its StrikeForce Initiative into Kentucky this year, including much of eastern Kentucky. The USDA is partnering with local community organizations, businesses, foundations, universities and other groups to support local projects and pursue needed investments into these rural areas.

SOAR, the creation of Beshear and Rogers, held dozens of listening sessions across the region throughout 2014 through 10 working groups, which then reported their key findings to the executive board. Those goals and recommendations will be considered over the coming months. SOAR also named Jared Arnett as its founding executive director.  Arnett, who had served as the CEO of the Southeast Kentucky (SEKY) Chamber of Commerce, will lead the next regional SOAR summit, scheduled for February 2015.

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