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A A Plan For Kentucky Jobs

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Building Kentucky’s Economic

Future For Our Families My top priority as Kentuckyʼs next governor is to grow our economy, support our businesses, and create more good-paying jobs. Weʼre starting to turn a corner after economic turmoil, but too many are still struggling and we canʼt let the middle class get left behind. To get this done, Iʼll practice the same values I have as Attorney General: bringing people together, making government do more with less, and getting results for Kentuckians. This plan incorporates the need to keep our finances strong and hold the line on taxes in order to keep Kentucky competitive with commonsense proposals to build on our economic strengths, attract new companies, and make sure our workforce has the education to get hired. And it reflects ideas from small business owners, employees, and residents from every corner of our Commonwealth that I heard during my Bluegrass Business Listening Tour. My plan has three central proposals: 1. Building on Kentuckyʼs Strengths. Our Commonwealth has been blessed with incredible natural resources and advantages, and through the hard work of our residents weʼve also developed landmark products. Our homegrown industries – like agriculture, advanced manufacturing, logistics, mining, tourism, horses, health care, aerospace, and bourbon-- are powerful engines of economic growth and job creation, and our plan calls for a renewed wave of support for these companies. In short, if you can make it or see it in Kentucky, Sannie and I want to make sure your business is growing. 2. Opening Doors To Businesses. From high-speed Internet cables to strong state finances, we need to make sure we are creating the right environment for Kentucky to attract new businesses and support our existing companies. This means both cutting red tape and trimming waste in state government to increase our efficiency, as well as investing in priorities that are vital to our economic growth and will help spur job creation. 3. Building The Best Workforce. Whether itʼs an apprenticeship or a four-year degree, making sure Kentuckians have the education they need to get hired is the true key to our long-term growth. In addition to supporting early childhood education and working to increase our graduation rates, we need to align job-training programs with the needs of employers, form partnerships between schools and businesses, and make sure that Kentuckians have the training they need to land a good-paying job. With your help, weʼll create an environment where Kentucky remains a great place to live, work, and raise a family – a place weʼll always be proud to call home. I hope youʼll join me in this effort.


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Building On Kentucky’s Strengths

Kentuckyʼs top industries – agriculture, advanced manufacturing, logistics, mining, tourism, horses, health care, aerospace, and bourbon – hold potential for continued growth and success. Over the last seven years, we have seen tens of thousands of good-paying jobs created across the Commonwealth. Foreign sales from components for aircraft parts have increased by nearly 38 percent in 2013 and 2014, alone, and put us on the global map as a leading state in this industry.1 Our tourism industry is also growing, and the state is reaping the benefits in higher revenues and job gains. Weʼre only beginning to explore these opportunities. A Conway-Overly administration will find ways to boost them even more and provide real results for middle-class families. More Homegrown Businesses. Kentucky should look to grow businesses inside our borders. For example, our bourbon industry is doing amazing things – increasing production and sales, adding jobs, and bringing new revenue to the state. Thanks to the passage of the Bourbon Barrel Reinvestment Tax Credit, itʼs poised for even better years ahead. While state government should continue to identify and eliminate barriers to growth for this industry, it should also be looking for the Commonwealthʼs next “Bourbon Industry” and doing more to grow businesses from within. Additionally, state government should do more to support our small businesses by cutting red tape. Thatʼs why Iʼve proposed a cabinet-level Office of Small Business Advocacy, so small businesses have an advocate to contact who will help them navigate compliance issues, apply for tax incentives, and obtain other supportive services. Under my leadership, Frankfort will be a better resource for small businesses. A Responsive Economic Competitiveness Strategy. A state economic plan developed with a top-down approach can sometimes overlook emerging economic initiatives occurring in our communities. We need a new strategy for improving our economic competitiveness that starts at the bottom in our communities and extends up to state government. As Governor, Iʼll work with our Council of Area Development Districts to create a more localized economic competitiveness strategy for Kentucky that better represents each of our regionʼs diverse assets and needs. This common-sense approach will provide state government with better and timelier information and allow us to deploy resources and support in a more fiscally responsible way. Growth Accelerator. Industry clusters or groups of businesses in related industries within the same geographic area have been forming for decades in order to benefit from common markets, talent, and technologies. They exist in industries throughout the Commonwealth, and state government should do more to leverage their growth potential. As Governor, Iʼll find ways to strengthen our industry clusters by eliminating needless regulatory barriers to growth; addressing workforce and infrastructure challenges; and combining existing incentives and/or creating new ones that could further reduce business costs. 1 “Kentuckyʼs exports are flying high with aerospace,” The Lane Report, May 11, 2015


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Logistics Hub. We should take better advantage of one of our biggest strengths – our strategic location. If Kentucky is going to live up to its potential of becoming a top state for logistics and distribution, we should begin phasing out the inventory tax, with a goal of eliminating the state portion within the next four years. This will lower costs for businesses and make Kentucky more attractive for investment. Several states have already repealed this tax because they recognize itʼs an impediment to job growth and difficult to collect. Itʼs time Kentucky did, too. The relatively small revenue loss to the state should be more than made up in revenue gain from growth in these industries. Tourism Marketing Dollars Create Jobs. Over the last five years, Kentuckyʼs tourism industry has experienced unprecedented growth, growing by more than $2.2 billion to exceed $13 billion in total economic impact, and adding 13,000 jobs.2 Every dollar spent on marketing our tourism industry is yielding positive returns. This growing industry provides vital tax revenue to our state and local communities. As Governor, Iʼll protect the dedicated funding source for tourism promotion and ensure that funds are preserved for marketing Kentucky as a premier travel destination. Kentuckyʼs Bourbon Trail. Kentucky is experiencing an epic bourbon renewal that state government should capitalize on. My vision is to make Kentucky a premier tourist destination for bourbon – just as Napa Valley is for wine. This will require doing more to bring antiquated laws up-to-date with changes in technology, and ensuring laws on the books support growth in this industry, not hinder it. We also need tourism-friendly alcohol legislation that allows for responsible and regulated sampling, enhanced culinary experiences, and modernized promotional opportunities. As Governor, Iʼll work with our Kentucky distillers to modernize these laws to make our Commonwealth an even more attractive tourist destination. Fight for Kentucky Coal. Coal keeps energy prices low and puts food on the table for our families. As Attorney General, Iʼve stood up for our coal communities. I fought for the coal industry when I sued the Environmental Protection Agency (EPA) to stop the agency from implementing regulations that would raise our utility rates and jeopardize jobs. I defended coal mine permits after the EPA revoked the permit of an operating coal mine, forcing it to shut down. As Attorney General, I fought to keep the Big Sandy Plant in Eastern Kentucky up and running. I opposed Kentucky Power closing Big Sandy because the plan would have transferred the load to a West Virginia plant and passed the costs on to Kentucky consumers. As Governor, Iʼll continue to challenge the EPAʼs regulatory agenda when it is too extreme. Iʼll aggressively market Kentucky coal and explore new export potentials, nationally and abroad. Finally, Iʼll work with the coal industry to seek ways to make coal more economical to mine, ensuring it remains a cheap energy source.

2 Tourism, Arts and Heritage Cabinet, Economic Impact Study of Tourism for 2014


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Agriculture – A Cornerstone Of

Kentucky’s Economy A Champion for Rural Communities. As Governor, Iʼll support efforts to diversify the economies of our rural communities, including providing better broadband access; expanding infrastructure to make transit easier and more efficient; and working to create an entrepreneurial culture that leads to business formation and jobs for the middle class, like the Shaping Our Appalachian Region (SOAR) initiative is doing now in Eastern Kentucky. The SOAR initiative is helping rural areas through economic transition with investment and support from federal and state partners. Itʼs achieving real results that I look forward to continuing. Support for Our Farmers. My passion for Kentucky farmers and our Commonwealthʼs agricultural economy runs deep. My father grew up on a farm in Western Kentucky and our family operated Young & Conway Seed Company on U.S. 60 in Morganfield. My familyʼs agricultural heritage made me especially proud to announce the Tobacco Master Settlement victory for Kentuckyʼs agricultural industry last June. As Attorney General, I was able to negotiate this settlement after 10 years of disputed claims and litigation, which resulted in $110.4 million in payments to the Commonwealth and guaranteed Master Settlement Agreement (MSA) payments in the future. Funding from this agreement not only boosts farm income and ensures the sustainability of farm-based enterprises, but it also supports early childhood education and university-based cancer research and screenings. Itʼs an accomplishment that Iʼm honored to have on my resume. A Conway-Overly administration will continue to stand up for Kentucky farmers by:

• Leading the way to make Kentucky a global leader in agricultural biotechnology. As Governor, Iʼll forge stronger relationships between farmers, higher education institutions, and policymakers, so we can identify opportunities to enhance our educational facilities and recruit more research faculty who specialize in this area. Biotechnology provides important tools that aid in the production and modification of products, while also keeping costs down for producers.

• Securing Kentuckyʼs position as the nationʼs top industrial hemp producer through bolstering promotion of Kentuckyʼs strong agricultural assets and central location. This will help us attract more licensed processors to the Commonwealth, creating good-paying jobs and keeping family farms viable. Thereʼs a growing market for industrial hemp, and Kentucky should be ready to capitalize on this emerging opportunity.

• Enhancing marketing and purchasing opportunities for our locally grown products through increased governmental coordination and partnerships with our farming community, including promotion of the Kentucky Proud brand.


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• Designating an agricultural specialist within the Economic Development Cabinet, or as a liaison to that Cabinet, whose responsibilities will be to manage agricultural issues. This will allow us to better target prosperous agribusinesses and determine their economic impact, so we can make more informed decisions about where to focus incentives to maximize growth.

• Creating a Processing Plant Site Finder Tool that will make it easier for businesses to locate processing plants or establish cooperative processing plants for our agricultural commodities. We ought to be producing more food products right here in Kentucky.


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Opening Doors To Business Kentuckyʼs central location should automatically make us a top choice for businesses wanting to expand and relocate. Combined with our low power costs, competitive tax structure, and premier higher education institutions, itʼs no wonder why weʼre considered among the most business-friendly states. In fact, Site Selection magazine ranked Kentucky number one nationally for new and expanded industry activity per capita, earning us the Governorʼs Cup award for 2014.3 Last year, Kentucky announced more than 350 new projects that are projected to create more than 15,000 jobs.4 A Conway-Overly administration will ensure Kentucky is a leader in business attraction, job creation, and wage growth. We will modernize state government, trim the waste, and refocus on production and returns to be more responsive to our business community. As a strong fiscal conservative, Iʼll continue to hold the line on taxes. Iʼm not afraid of making changes if they lead to improved service delivery and greater efficiency because I believe state government can do better. A Conway-Overly administration will focus on results. Put Kentucky on the Broadband Superhighway. Kentucky ranks 47th for high-speed broadband among the states.5 Nearly a quarter of our rural areas lack adequate broadband access, and a significant percentage either canʼt afford it or donʼt think itʼs necessary, even though itʼs available.6 Lack of broadband access is an impediment to economic growth. This infrastructure has to be built. State government should take the lead in devising a plan that will make it economically feasible for private industry to expand access statewide. For example, if we were to enlarge our customer base and allow a single broadband provider to service all of state government and other public entities, it could make expansion worth their while. As Governor, Iʼll make upgrading our broadband infrastructure a priority. Under my leadership, Kentucky will neither get passed by nor left behind on the Broadband Superhighway any longer.

3 Site Selection Magazine, Governorʼs Cup Rankings for 2014 4 Ibid. 5 “Construction of high-speed Internet network in Eastern Kentucky expected to start in August,” Lexington-Herald Leader, April 7, 2015 and National Broadband Map 6 Commonwealth Office of Broadband Outreach and Development, 2014 Presentation


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Invest in Infrastructure. “Location, location, location:” itʼs one of the main reasons why businesses choose the Bluegrass State to do business. Yet without investment to modernize and repair our roads, bridges, and ports, we could lose our competitive edge and fall behind. We simply canʼt afford to wait. A modern infrastructure will allow us to protect public assets, ensure quality of life for our families, and keep our economy growing. Public-private partnerships (P3s) are one way to jump-start critical infrastructure projects. The Kentucky Chamber of Commerce has made P3s a priority, and advocate for their use in order to relieve pressure on public resources. Indeed, P3s will allow us to stretch public dollars to immediately put people to work on projects that we must complete. When done right, P3s are a fiscally responsible approach to expanding services at the least cost to taxpayers. We need to pass legislation to take this critical step that will help fund infrastructure projects and ensure protections are in place to safeguard the interests of taxpayers and labor organizations. P3s provide a flexible option to invest in infrastructure that could create thousands of good-paying jobs for middle-class families.


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A Toolbox Full of Economic Essentials. As Governor, Iʼll conduct a top-to-bottom review of every tax incentive we have in the Economic Development Cabinet. This will allow us to make certain that we have the right tools in the toolbox to bring good-paying jobs here. Under my leadership, state government will take a fiscally responsible approach to tax policy, which will lead to more tangible results – ensuring businesses do their part and create the good-paying jobs they promise. Iʼll guarantee taxpayers get a good deal just like we achieved in the Office of the Attorney General, where for every one dollar invested, we returned three dollars to Kentucky taxpayers.7 Kentucky Businesses FIRST. My priority will always be our local industries. As Governor, Iʼll review procurement policies for appropriate opportunities to provide Kentucky businesses preference when bidding on state contracts over out-of-state bidders, including opportunities for our minority, veteran, and women-owned businesses. State government should not be buying from out-of-state businesses when it could be buying in state. Office of Small Business Advocacy. Small businesses make up the majority of employers in Kentucky, with more than 90 percent of businesses having fewer than 50 employees.8 Theyʼre the engine of job creation for Kentucky and should be cultivated and valued. Thatʼs why Iʼm shocked about how often I hear from small business owners that the only time they deal with Frankfort is when thereʼs a licensing issue and an inspector tells them theyʼre out of compliance. This is unacceptable. Weʼve got to improve this relationship by providing small businesses with an advocate – someone whoʼs responsive to their needs and can work closely with them to get their questions answered and issues addressed. As Governor, Iʼll create a new cabinet-level Office of Small Business Advocacy that will be solely responsible for serving small businesses and be their resource for all of their state government needs. It will work with small business owners to identify financial, regulatory, and intellectual challenges that hinder business growth and propose action to address them. Funds to support this new office will come from eliminating existing state government inefficiencies without jeopardizing jobs. A National Leader in Entrepreneurial Investment. In recent years, Kentucky has received national praise and awards for its entrepreneurial support programs, like the new angel investor tax credit.9 As Governor, Iʼll ensure the continuation of Kentuckyʼs angel investor tax credit and hopefully grow the program. The credit provides a tax advantage to investors if they invest in qualified small businesses to lessen their investment risk. In turn, the funds help high-tech start-ups grow and create thousands of good-paying jobs. The Lending Shield: Greater Transparency of Unregulated Lenders. Predatory small business lenders promise small businesses quick cash in exchange for loans with exorbitantly high repayment terms. These unscrupulous lenders have been operating below the radar and taking advantage of businesses unable to get loans from traditional banks. As Governor, Iʼll put in place protections to make loan terms more transparent and launch a public awareness campaign about these risky loans.

7 The calculation is based on general fund investments in the Attorney Generalʼs office from FY 2008-15 and settlement press releases from the AGʼs office 8 Kentucky Cabinet for Economic Development 9 Cabinet for Economic Development, Kentucky Innovation Network Wins National Award for Innovation, April 10, 2015 Press Release


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Building The Best Workforce Kentucky is experiencing a skilled-labor crisis.10 Our employers canʼt find enough skilled workers to fulfill their needs. Workers are limited in their employment opportunities. And weʼre losing prospective businesses to other states because our workforce lacks sufficient training. The quality of our workforce – more than anything else – will be the key factor in determining Kentuckyʼs future economic success. A Conway-Overly administration will make investing in worker training and education a priority. “Earn-While-You-Learn:” A Statewide Apprenticeship Program. Over the next several years, businesses will be creating more middle-skill jobs that require more than a high school education and less than a four-year college degree. Kentucky should immediately prepare its workforce for these emerging opportunities. As Governor, Iʼll put Kentucky on the fast track for this job growth by creating a coordinated statewide apprenticeship program. Apprenticeship programs help people earn hands-on, paid occupational experience, while also receiving classroom education. They satisfy employersʼ skill demands and boost worker productivity and wages. Iʼll aggressively expand existing successful apprenticeship programs, such as the Kentucky Federation for Advanced Manufacturing Education (FAME) and others developed by industry and labor partners, and look for ways to replicate them in other high-growth industries where businesses express an urgent need for talent. Through a mix of federal and state workforce subsidies, nonprofit and employer sponsorships, and continued collaboration with Kentucky Community and Technical College System (KCTCS), weʼll be able to expand these opportunities to more Kentucky businesses and workers, with the goal of being the first state in the nation to have a coordinated, multi-industry, statewide apprenticeship program. Additionally, Iʼll consider providing tax credits to defray the cost to businesses – and grants to encourage the formation of public-private partnerships to aid this endeavor. Reimagine Workforce Development to Empower Workers. We canʼt effectively train workers for the future if our workforce system is from the past. Employers and workers 10 “In Kentucky, manufacturers partner to bridge the skills gap,” Brookings, March, 2015


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deserve a system thatʼs more responsive to changing trends – one that ensures businesses have an ample supply of skilled labor and ensures workers are prepared for work on Day One of employment. This will require better employer engagement and more coordination among government, our education community, labor organizations, and nonprofits. As Governor, Iʼll do away with redundant programs that teach people skills for jobs that either donʼt exist or wonʼt exist in the near future and apply those savings to creating new workforce development programs that truly meet todayʼs employer demands. This includes creating more customized programming that recognizes and readily adapts to changing employer needs. Training Programs for Our Three Best Performers. I continue to hear from employers that their training needs go unmet despite having jobs available. As Governor, Iʼll request that colleges within KCTCS conduct an annual assessment to identify the top three leading industries for growth in communities near their campuses in order to ensure colleges are providing our most valued employers customized training programs that meet their needs. Attract Businesses to College Campuses and Retain More College Grads. As Governor, Iʼll find ways to revamp existing tax breaks that could be offered to businesses choosing to locate in close proximity to our colleges and universities if they also commit to working with the academic institution and promise to create good-paying jobs for our grads. This special tax break will only be available for businesses adhering to a strict academic-business partnership. The incentive will enhance alignment between our higher education institutions and business community; improve transfer of research to market; and allow us to keep more of our college graduates by providing them better job opportunities after graduation. Aim Higher! Everyone should have the chance to reach his or her full economic potential. As Governor, Iʼll make access to high-quality early childhood education a priority. Research shows greater access to ECE programs provides economic benefits to children, their parents, and society – returning as much as $8.60 for every one dollar invested.11 A Conway-Overly administration will aim to increase Kentuckyʼs college graduation rate to the national average12 because investing in education is the surest way to create more good-paying jobs and ensure legitimate income growth across the Commonwealth.

11 “The Economics of Early Childhood Investments,” Executive Office of the U.S., December 10, 2014 12 NCHEMS Information Center, Graduation Rates (2009 latest year available), KY 48%, national average 56%


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For more information about the Conway Jobs Plan, visit:

conwayoverly.com

@ConwayforKY

conwayforky

Paid for by Conway-Overly for Kentucky. R. Wayne Stratton, Treasurer.

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