Kentucky Economic Development Guide

Helping Kentucky’s businesses thrive is a chief goal of Gov. Steve Beshear and state legislators, and never was that aim more visible than in 2009, when the governor signed the Incentives for a New Kentucky bill into law, increasing the state’s competitive advantages.

The legislation updates economic development incentives utilized by the Kentucky Cabinet for Economic Development to attract, expand and retain business. A key component of the legislation streamlines and consolidates four longstanding programs into the new Kentucky Business Investment Program, or KBI, a more flexible program offering income tax credits and wage assessments to new and expanding businesses.

Along with numerous other tax benefits, the bill also enhances state assistance through the Kentucky Reinvestment Act, putting a focus on existing manufacturers making a significant capital investment in a Kentucky facility in order to remain competitive.

Multiple changes within the restructuring mean Kentucky can compete with any state, region or even country when it comes to business recruitment and development, says state Rep. Tommy Thompson of Owensboro, who sponsored the bill in the Kentucky House of Representatives.

“We discerned that our economic development incentives were a bit outdated, and they just weren’t market-tested in terms of being what industries are looking for today in terms of location and investment incentives,” Thompson says. “The governor challenged the cabinet to go out and survey a lot of different stakeholders about incentives, and also talk to local communities about what they need to attract businesses. That information and research led
to this package, which will grow jobs and help us be competitive in the marketplace.”

Just as important, Thompson says, the incentives are performance-based, so businesses have to hit specific benchmarks with jobs and revenue before any tax abatement or other financial packages are created.

Everything from breaks for retooling machinery and retaining employees have been factored into the new rules and regulations, so existing businesses fare just as well as new companies being lured into an area. That helps the state expand existing industry sectors and maintain a stable workforce, says Larry Hayes, secretary of the Kentucky Cabinet for Economic Development.

“Once you came here, you were part of our happy family and we worked with you, but if you had to make a major investment and update your facility without job creation, we really couldn’t assist you in any great way,” Hayes says.

“These new incentives give us the ability to work with our existing companies, help create new opportunities for them and identify new pieces of business for them to get into,” he says. “We can help them with the financing for mergers and acquisitions, so they can bring a product in from somewhere else.”
Focusing on bringing in new investment and helping established businesses means the Cabinet for Economic Development will be a major player at every level of Kentucky business, Hayes says.

“We’ve always been very enthusiastic about being a good partner in terms of doing business here, but now we have the ability to be a true business partner, and talk to them in a way we haven’t been able to do in the past,” he says.