This is my first project using this data set and it was problematic at times. The default provider of data in the United States is the U.S. Census. The Census have data from 1992 to 2015 for data prior to the date you must contact “the Data User Outreach and Education Branch.” With time series, you should always be careful with the starting and ending points of the data. The emphasis was on change in state revenue over time so the intervening years were eliminated. We are just looking at 1992 and 2015, the first and last years easily available.
The census data is compiled into a “public use format” which is the raw data–the source of preference for a data project. The census also provides a summary table in an excel format by state. My suspicion was that people typically use the summaries instead of the raw data and excel is widely used and accessible. Any conclusions that were derived from the raw data would be compared to the summary data and, where differences existed–and there were bound to be some, criticism would follow. Therefore, this project was limited to just the summary data.
There’s been some excellent work done on Kentucky’s fiscal situation and they include:
Center for Business and Econ. Research, Report to Governor’s Blue Ribbon Commission on Tax Reform by Economic Consultants (2012).
Kentucky Chamber of Commerce, Creating a Sustainable State Government
Kentucky Center for Economic Policy, What Good Tax Reform Looks Like (2017).
Kentucky Center for Economic Policy, Our Commonwealth: A Primer on the Kentucky State Budget (2018).
Kentucky’s Financial Standing
Moody’s downgraded Kentucky to “Aa3” citing “revenue underperformance that will challenge the commonwealth’s ability to increase its very low pension funding levels. The commonwealth has one of the heaviest unfunded pension burden of all states. The commonwealth high fixed costs will also restrict fiscal flexibility.” Standard & Poors changed its outlook from stable to negative in January, 2018, according to the Herald-Leader.
The continuing pension costs will consume a greater portion of Kentucky’s future budgets. As a proportion of a person’s income, state taxes have declined from 7.77% in 1992 to 6.82% in 2015. Local taxes have, however, increased form 2.31% in 1992 to 3.02% in 2015. Kentucky’s local taxes were among the lowest in the nation while state taxes were relatively high.
When state and local taxes are considered together, Kentucky’s tax burden is in the middle of the other states. It is reasonable to speculate that services that were eliminated at the state level were assumed by local authorities. While overall tax burden has remained the same over 23 years, local authorities are assuming an ever greater level of responsibility in the allocation of public resources.