CNBC: Kentucky's Rankings

Let's dig a little deeper into the CNBC Rankings for Kentucky's business climate:

Cost of Doing Business -  2009 Rank: 8th   2008 Rank: 14th

Workforce - 2009 Rank: 19th   2008 Rank: 20th

Quality of Life - 2009 Rank: 46th   2008 Rank: 40th

Economy - 2009 Rank: 44th   2008 Rank: 45th

Transportation & Infrastructure - 2009 Rank: 4th  2008 Rank: 6th

Technology & Innovation - 2009 Rank: 32nd   2008 Rank: 38th

Education - 2009 Rank: 35th  2008 Rank: 38th

Business Friendliness: 2009 Rank: 31st  2008 Rank: 28th

Access to Capital - 2009 Rank: 33rd  2008 Rank: 22nd

Cost of Living - 2009 Rank: 9th  2008 Rank: 18th

There isn't an exhaustive explanation that we have been able to find yet to explain all the factors in these categories. We'll keep looking.

Looks like we have Cost of Living and Transportation covered. Business Friendliness and Access to Capital seem to be the most likely to be impacted in the short run by public policy.

All very interesting.

CNBC: Top States for Business Survey

The rankings are in for 2009. Kentucky finished a respectable 34th - respectable here being defined as not being in the bottom ten. Though compared to our surrounding states, again improvement is needed. Here are how we stack up against them - with their national ranking in parentheses.

Virginia (1)

Missouri (14)

Indiana (15)

Tennessee (20)

Illinois (25)

Ohio (29)

Kentucky (34)

West Virginia (46)

Interestingly - Alabama & Mississippi finish well below Kentucky - 39th and 45th respectively. And yet, over the last ten years or so, those states have beaten us when competing for big automotive investments. Policymakers should be asking this question: why?

KY's Tax Burden - Another Way to Look at It

Of our surrounding states, Kentucky places the second highest tax burden upon its citizens.

State and local taxes extract 3.4% of Kentuckian's disposable income. Only Ohio, at 3.7%, comes in higher. Virginia also comes in at 3.4%.

The others: West Virginia - 2.8%; Missouri - 2.8%; Indiana - 2.8%; Illinois 2.1%; and Tennessee - 0.3%.

Yes - you read that right. It caused us to wonder if the formula was correct but we re-ran the numbers. Tennessee's state and local government extracts less than 1% of personal disposable income from its citizens. This may be one big reason why Tennessee's growth in gross state product has blown KY away for the past decade.

Kentucky's Economic Growth: Needs Improvement

According to data from the Bureau of Economic Analysis, a federal agency, Kentucky has lagged in economic growth for the past decade, when compared to our surrounding states and the Southeast U.S. as a whole.

State              Growth in GSP*

Virginia             87.3%

Tennessee       64.3%

West Virginia   58.9%

Illinois              56.9%

Indiana            51.6%

Missouri           50.3%

Kentucky          47.9%

Ohio                 41.9%

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SOUTHEAST REGION   75.1%

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There are many variables that contribute to these types of trends. What is clear is that Kentucky needs to take a serious look at its business and entrepreneurial environment.

It should be expected that Virginia and Illinois are ahead of us - given the Chicago and D.C. metropolitan regions within those states.

But West Virginia growing by 10+ better points? Tennessee by 17+ points?

Are Kentucky's economic development leaders examining these issues? We certainly would encourage them to do just that.

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* GSP - Gross State Product 1997 - 2008.