Kentucky City Fuels Economic Expansion With ... Higher Taxes

Amazing what elected officials can accomplish when they concentrate on creating jobs and restoring the local economy.

The Herald on the growing economy in Owensboro:

... this city of 57,265 and surrounding Daviess County, where 96,656 people live, have invested in an array of business-development initiatives in health care, transportation, education, and tourism and travel that focused on making the city and county more competitive in attracting residents and businesses.

Job growth is coming from construction, an expanding medical sector, new businesses in high tech and biotechnology, and the three loan-service centers of US Bank Home Mortgage.

Most improbable in this politically conservative region is the $80 million tax increase that provided almost half of the $178.4 million in publicly and privately financed downtown development projects now under way.

The tax increase, which raised the city insurance premium tax rate to 8 percent from 4 percent, and the county rate to 8.9 percent from 4.9 percent, is paid by residents and business owners on premiums for auto, homeowners, boat and casualty insurance policies. The increase, which came after vigorous debate, was approved by a vote of 7 to 2 in February 2009 by city commissioners and the Daviess County Fiscal Court.

Notice the tax increase is regressive: everyone who owns anything insurable gets hit - which means the vast majority paying the higher tax are low- and middle-income workers - and everyone pays the same percentage, which means the wealthy hardly notice an increase that burdens most workers.

And before the positive results of the tax became manifest, the officials who courageously approved it paid the price:

The new tax revenue is producing jobs and new downtown projects, but the effect of the vote on local political careers also was unmistakable. Of the seven city and county officials who voted to approve the tax increase, just two remain in office; two were defeated and three did not seek re-election in 2010.

I hope the five out of office are walking around town with "I told you so" tattooed on their foreheads.

So what's the lesson for 99 percenters, suffering communities and discouraged voters?

"For so long, we were kind of isolated," said Payne, who is credited in Owensboro and Daviess County with leading the redevelopment. "We were kind of on a cul-de-sac. You had to be going here to get here. If anything was going to happen in this community, we were going to have to do it ourselves. We decided to reinvent this community, and that's what we're doing."