Kentucky to get nearly $3B in new business investments since passing economic reforms

Kentucky to get nearly $3B in new business investments since passing economic reforms

Companies have announced billions in new business investment in Kentucky a few months after the state passed key economic reforms. Illinois lawmakers should take note.

State government in Illinois’ southern neighbor has aggressively moved ahead with economic reforms in 2017. And Kentucky is seeing results.

In April alone, Kentucky Gov. Matt Bevin has announced nearly $3 billion in new business investments into the state. Toyota, which already has its largest plant located in Georgetown, Ky., announced an additional $1.33 billion in investments in that plant, where it produces the Camry. Braidy Industries, Inc. announced it was building a $1.3 billion aluminum rolling mill in Eastern Kentucky, creating 550 jobs.

The investments speak to Kentucky’s efforts to improve its business climate through reforms such as statewide Right to Work and ending prevailing wage.

“If Kentucky wasn’t a right-to-work state, it wouldn’t have been on the list,” Craig Bouchard, the chairman and CEO of Braidy Industries, told WKYT-TV in Lexington about the move.

That sentiment from a business owner isn’t a surprise. Two-thirds of global chief financial officers in a CNBC survey said a Right-to-Work law is either “important” or “very important” when deciding to grow their business. Over the last 25 years, Right-to-Work states have had double the annual jobs growth rate of forced-unionization states like Illinois, with Right-to-Work states averaging 1.5 percent annual jobs growth versus 0.75 percent for forced-unionization states.

Kentucky became the 27th Right-to-Work state in the country when it passed the law in January 2017. (Missouri brought the total up to 28 when it enacted Right to Work in February.) Kentucky also repealed its prevailing wage laws this year, which will reduce costs on public construction projects, further making the state more competitive in the region by benefitting taxpayers and leveling the playing field between union and non-union work.

But as Illinois’ southern neighbor strengthens its economy, the Land of Lincoln – which is surrounded by Right-to-Work states and several states without prevailing wage laws – refuses to reform. Kentucky benefits from that, too.

Even before Kentucky enacted pro-growth reforms in 2017, Illinois was losing thousands of residents in migration to Kentucky each year, including more than 2,000 in 2015 alone and more than 13,000 from 2006-2015.

These migration trends will likely only intensify now that Kentucky is enacting economic reforms to compete for more jobs and taxpayers as Illinois falls further behind.

The new business investments coming to Kentucky should signal to Illinois lawmakers the reforms Illinois needs to catch up to its neighbors. Illinois should adopt a Right-to-Work law so it isn’t the only state in the area to prohibit worker freedom. A property tax freeze and property tax reform would further help Illinois compete for residents with neighboring states – all of which have lower overall tax burdens, and significantly lighter property tax burdens.

Illinois lawmakers should consider the state’s lack of competitiveness when negotiating and working toward passing a budget. Illinois needs a balanced budget – which lawmakers haven’t passed in 16 years – with economic reforms that change the state’s trajectory. Otherwise, both businesses and residents will continue to overlook Illinois and pick Illinois’ neighbors instead.

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