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MEPI 2000 - Louisville Economic Monitor - University of Louisville

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					Macro Performance Indicators for the
     Louisville Area Economy
                2000


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                                      by
                           Paul A. Coomes, Ph.D.
                        Professor of Economics, and
                        National City Research Fellow

                                                 and

                                 Barry Kornstein
                             Senior Research Analyst
                             University of Louisville

                  funded by a grant from National City
                              March 2001
                                                           Contents
EXECUTIVE SUMMARY ............................................................................................ 1
  Background, Acknowledgements, Geography ........................................................................ 3

I. DEMOGRAPHIC ...................................................................................................... 5
1. Immigration................................................................................................................................... 6

II. ECONOMIC STRUCTURE AND PERFORMANCE .......................................... 7
1. Job Growth ................................................................................................................................... 7
      Professional Jobs ...................................................................................................................... 8
      Transportation and Warehousing Jobs ............................................................................... 10
      Health Care Payrolls ............................................................................................................. 10
2. Earnings per Job ......................................................................................................................... 11
3. Business Formation, Headquarters ......................................................................................... 12
4. Industrial and Office Real Estate............................................................................................ 16
5. Exports of Merchandise to Other Countries ........................................................................ 17
6. Hospitality Industry ................................................................................................................... 19
7. Air Freight and Air Passengers ................................................................................................ 21
8. Income of Residents .................................................................................................................. 22
9. Housing Industry ........................................................................................................................ 24

III. COST OF LIVING ................................................................................................ 26
1. Summary Indexes ....................................................................................................................... 26
2. Housing Prices ............................................................................................................................ 27
3. Utility Costs ................................................................................................................................ 28
3. State and Local Taxes ................................................................................................................ 30

IV. COST OF BUSINESS ............................................................................................ 36
1. Labor Costs ................................................................................................................................. 36
2. Real Estate Costs ....................................................................................................................... 37
2. Utility Costs ................................................................................................................................ 39
3. State and Local Taxes ................................................................................................................ 39
4. Business Traveler Costs ............................................................................................................ 42

V.   HUMAN CAPITAL ................................................................................................ 43
1.   Educational Attainment of Adults ......................................................................................... 43
2.   K-12 Education.......................................................................................................................... 44
3.   College Enrollment, Reputation .............................................................................................. 45
3.   University Research and Development .................................................................................. 47
4.   Patent Activity............................................................................................................................ 50

VI. QUALITY OF LIFE .............................................................................................. 51
1. Crime ............................................................................................................................................ 51
2. Air Quality ................................................................................................................................... 53
3. Mobility, Traffic Congestion, Interstate Highway Infrastrcture ......................................... 54
4. Sports, Amusement and Recreation ........................................................................................ 58
5. Arts and Cultural Attractions ................................................................................................... 62
6. Charitable Giving ....................................................................................................................... 63
REFERENCES ............................................................................................................ 64
                                               Executive Summary



In this report we provide an update to the 1995 Macro
Performance Indicators study issued in March 1996. That         3. There is evidence of a resurgence in business for-
report, sponsored by six lead economic development                 mation in Louisville. The area’s high rate of busi-
organizations, was a comprehensive look at Louisville’s            ness starts and expansions has been noticed in sev-
performance relative to eighteen competitor markets.               eral national measures, including Cognetics Hot Spots
                                                                   ranking, and in the Inc 500 listing of fast growing
The previous study highlighted many positive character-            companies. Initial public offerings were relatively
istics of Louisville’s economy, including our high pay in          strong between 1995 and 1999. Louisville had three
manufacturing industries, our solid job growth, our at-            corporate headquarters in the Fortune 500 rankings
tractive energy and real estate prices, low crime rate, bus-       for 2000 - Humana, Tricon, and LG&E. On net
tling trade show business, and strong cultural assets. The         over the past five years, Louisville gained one top
study also highlighted Louisville’s slow population growth,        headquarters (Tricon), but lost another (Providian).
low educational attainment, low pay in office and distri-          Vencor appeared in the list for several years, but has
bution industries, high tax burdens, and low university            since fallen to Fortune’s ranking of the 501-1,000
research activity.                                                 largest companies.

The findings from the last study led to a series of strate-     4. Louisville continues to be a laggard in earnings per
gic meetings of business and civic leaders during 1996.            job outside of the manufacturing industries, and this
With the assistance of consultant Ross Boyle, the key              is linked to the area’s persistently low number of
investors in Louisville’s economic development drew up             professional workers.
a plan to accelerate Louisville’s economy. The ‘Boyle Re-
port’ (aka the ‘Visioning Report’) and the subsequent pro-      5. Louisville’s housing market over the last decade looks
grams and institutions became the blueprint that we con-           very strong in comparison to that of the previous
tinue to refer to today.                                           decade, and also relative to its modest population
                                                                   growth. However, all of the competitor markets
The present report attempts to characterize what progress          posted comparable housing start figures, with Ra-
has been made during the last five years, with emphasis            leigh, Charlotte and Nashville topping the list on a
on those areas that have been targeted for attention. The          per capita basis.
main findings are:
                                                                6. Louisville continues to stand out in its high tax bur-
1. Louisville’s population continued to grow during the            den on residents. Kentucky’s high state tax rates stand
   last half the nineties, with the seven county metro             out even more today, as many of the competitor
   passing the one million mark in 1999. However, the              markets have seen significant tax reductions in the
   growth rate of Louisville’s population remains near             last few years.
   the bottom of a ranking of competitor markets.
                                                                7. Louisville’s energyy costs remain low relative to com-
2. Job growth overall has been very strong in the                  petitors, and continue to be an important economic
   Louisville market over the past five years, continuing          development advantage for our area.
   the trend of the first part of the nineties. Louisville is
   now near the top in rankings of transportation-re-           8. Louisville’s real estate market appears to be expand-
   lated jobs. However, it ranks near the bottom in                ing at the same rate as the rest of the economy.
   measures of jobs in professional service industries.            Vacancies remain low for industrial space, but are
   Despite slow population growth, the Louisville                  above the national average for office space.
   metro has been able to support strong job growth                Louisville’s downtown office market has not yet re-
   by drawing workers from at least sixteen nonmetro               covered from the loss of Providian/Ageon and
   counties and by steady increases in the employment              Columbia HCA, nor the deflated building plans of
   rate of local residents, particularly women.                    Vencor.
Macro Performance Indicators, 2000                                                                                    1
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9. While precise estimates of the education levels of                        mobility in the Louisville metro area. Nevertheless,
   area residents will not be known for over a year,                         the region continues to be congested in certain corri-
   when the detailed 2000 Census results are released,                       dors, and does not score well in national congestion
   we estimate that Louisville remains well below its                        measures. Moreover, Louisville has yet to break
   competitors in high school and college attainment                         ground on either of the two bridge projects endorsed
   rates. Local K-12 schools remain in the middle range                      by business leaders for decades. Louisville is one of
   on measures of graduation rates, national test scores,                    but four of the competitor metros without a com-
   and spending.                                                             pleted loop around its central business district.

10. There are positive signs for research and develop-              12. The arts scene in Louisville remains viable, and for
    ment in Louisville, thanks to the Kentucky “bucks                   most dimensions, arts activity is ahead of what one
    for brains” program and accelerated efforts by the                  would expect for a city of our size. Our theatre,
    University of Louisville, particularly in the life                  ballet, and sports museums are most prominent in
    sciences. U of L more than doubled its research and                 that regard.
    development expenditures over the last seven years,
    posting the fastest growth rate of any university in            13. Louisville stands out in its college-level sporting
    the region. As yet, however, Louisville rates rela-                 activity, even against some of our college-town com-
    tively low in important ancillary measures, like metro              petitors. No city smaller than Louisville hosts a
    area patent production and university licensing of                  major professional sports team. The two PGA
    discoveries.                                                        Championships (1996 and 2000) and the upcoming
                                                                        Ryder Cup have put Louisville on the international
11. The widening and renewal of the Watterson                           golf map, giving the city another sporting amenity
    Expressway during the last decade greatly improved                  of the quality of the Kentucky Derby.

2                                                                                                 Macro Performance Indicators, 2000
Background, Acknowledgements                                  largely upon information about activity through 1998 or
Amazingly, it has been five years since our last compre-      1999. Remember that most of the economic develop-
hensive look at Louisville’s relative economic perfor-        ment initiatives were not launched until 1997.
mance. In that study, we examined a broad range of
factors for Louisville and its eighteen prime competitor      Second, we have revised somewhat the list of competi-
markets. We compiled hundred of indicators, and used          tor markets. While all the usual suspects (Cincinnati,
them to shed light on our area’s strengths and weaknesses.    Indianapolis, Nashville, Memphis) remain, we have
The findings led to the creation of a new economic de-        dropped some very large markets (Atlanta, Dallas, St.
velopment strategy for Louisville, and then to new insti-     Louis, and Phoenix), and added a market closer to
tutions. After we presented some of the more sobering         Louisville’s size (Birmingham). The result is fifteen mar-
statistics to business and civic leaders, Ross Boyle was      kets, including Louisville. These are the markets we track
hired to come to Louisville and take the investors in         each quarter in our Economic Performance Index for
economic development through a strategic planning             Cities (EPIC), and which have stood the test of time in
exercise.                                                     terms of interest by economic development leaders.

The results are all around us. Greater Louisville Inc was     As the reader digests all the statistical information in this
created out of three former institutions – the Greater        report, he or she should keep in mind that we are com-
Louisville Economic Development Partnership, the              paring Louisville to some very dynamic markets and hence
Louisville Area Chamber of Commerce, and the City/            does not fare well in all measures. Also, Louisville is
County Office for Economic Development. The two               eleventh largest of the fifteen metros in terms of popu-
key industrial clusters targeted – biomedical and logistics   lation, meaning that a majority of the competitors have a
– are now viable. Entrepreneurship and workforce de-          built-in advantage in terms of critical urban assets, like
velopment initiatives have become as prominent as in-         air connnections, corporate headquarters, and profes-
dustry attraction and incentive programs. The University      sional jobs. We have presented much of the summary
of Louisville has doubled its research and development        data on a per capita and/or percentage change basis, so
funding, set up dozens of endowed chairs in key areas,        that size in and of itself does not drive all the rankings.
and is emerging as an economic engine of its own. The
city and county governments are merging. Federal fund-        The fifteen metros, their component counties, and their
ing is being sought for both an east end bridge and a         1999 population estimates are provided in the table on
light rail spine north-south along down the center of the     the next page.
city. Indeed, if one wants to see what a community can
do when it (1) takes an objective look at itself (2) thinks   Acknowledgements
clearly about what it wants and (3) commits the dollars       We especially want to thank National City for its ongo-
and energy to some focused programs, Louisville in the        ing support of our research. This report, like the one in
last half decade provides a pretty good example.              1996, is provided pro bono to the community and its
                                                              economic development organizations. National City
Of course, the rest of world has not been standing still      provided all the resources for this project, and many
during the last five years. With such a red hot economy,      others.
most of our competitors have also been growing rapidly
and making strategic investments for the future.              We also continue to rely heavily upon publications and
                                                              the staff at scores of federal, state and local statistical
Some technical issues                                         agencies, as well as trade groups and private companies.
The reader should keep in mind several caveats. First,        While the internet has tremendously increased access to
many of the most important indicators are measured only       information, we should never take for granted the people
once a decade when the census is taken. Detailed data         and resources behind the raw data acquisition, organiza-
from the most recent census will not be available until       tion, and dissemination.
2002. Hence, we do not have precise current measures
of key factors like educational attainment, income distri-    Finally, we greatly appreciate the research and data
bution, labor force distribution, and commuting patterns.     support of Michael Price, Martye Scobee, Tom Sawyer,
Also, much of the other data we examine here arrives          Adam Kirby, Raj Narang, Kimberly Daniels and Ben
with a one to two year lag. Thus the analyses is based        Coomes.


Macro Performance Indicators, 2000                                                                                     3
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                                                             Demographic

In our 1995 study we learned that, relative to the com-                        though not in the central counties. The population
petitor markets, Louisvillians were older and more ra-                         of the 23-county Louisville economic area, as de-
cially homogenous, that the population base was grow-                          fined by the U.S. Bureau of Economic Analysis,
ing slowly, and that on net the area was losing its younger                    grew by one percent in 1999, marking the first time
and more educated residents. We will have to await the                         in twenty-four years that the area surpassed the na-
results of the 2000 Census to identify any detailed changes                    tional rate.
in the demographic composition, but there are several
themes evident in the latest annual data stream.                          3. However, both the Louisville 7-county metro area
                                                                             and the larger 23-county economic area continue to
1. The population of the Louisville area grew moder-                         rank near the bottom of population growth rates
   ately in the nineties, after posting no net growth in                     among the competitor markets. This is true for both
   the decade of the eighties. Specifically, the seven                       the first and second halves of the latest decade. Partly,
   county metro area added 55,000 residents between                          this reflects the fact that we have chosen to compare
   1990 and 1999, surpassing one million residents for                       ourselves against some of the hottest markets in the
   the first time. This represents an average annual                         United States. Raleigh, Charlotte, and Nashville are
   growth rate of .6 percent, compared to a rate of one                      perennial national leaders in growth rankings of all
   percent nationally.                                                       sorts. Indeed, Louisville’s population growth is simi-
                                                                             lar to that in Cincinnati, Memphis, and Birmingham
2. There is evidence of some acceleration in Louisville                      – cities with more comparable economic circum-
   population growth during the most recent years,                           stances.




                                                  Population Growth
                                       Louisville Economic Area (23 counties)
  1.40%
              1.32%        1.31%
          1.29%

                                   1.17%
  1.20%

                                                                                                        1.05%
                                                                                                                                       0.98%
  1.00%
                                                                                                             0.91%
                               0.88%
                                                                                                                     0.83%
                                                                                                                 0.83%        0.82%
  0.80%

                                                0.64%                                                                              0.66%
                      0.61%                                                                                               0.63%
                                            0.57%                                                   0.58%
  0.60%

                                        0.41%                                                   0.40%
  0.40%


                  0.20%                              0.21%
  0.20%
                                                              0.11%                         0.10%
                                                                                    0.06%
                                                                                        0.06%
                                                                  0.02%
  0.00%
       70

       71

       72

       73

       74

       75

       76

       77

       78

       79

       80

       81

       82

       83

       84

       85

       86

       87

       88

       89

       90

       91

       92

       93

       94

       95

       96

       97

       98

       99




                                                                      -0.07%
     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19

     19




                                                                               -0.10%
 -0.20%                                                                    -0.17%
                                                         -0.22%

 -0.40%

          Source: US Census Bureau and US Bureau of Economic Analysis, Regional Economic Information System, 1969-97 , May 1999.

Macro Performance Indicators, 2000                                                                                                         5
4. Louisville has seen a significant influx of foreign
   immigrants in the last decade, at least relative to its                                            3RSXODWLRQ *URZWK
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   historically small foreign-born population base. Ac-
   cording to the 1990 Census, only 1.3 percent of Lou-               Shyrvtu                      $ È                                   #&È
   isville MSA residents were foreign-born, second low-
                                                                                            È                           !&È
   est among the fifteen comparison markets. Yet, Lou-              8uh…y‚‡‡r



   isville ranked eleventh in the number of immigrants              Ih†u‰vyyr              ("È                    (&È
   attracted during the 1990s.                                   Ehpx†‚‰vyyr              (#È                    '(È
                                                                                                                                                     ('((#


5. In a recent study of the Louisville area workforce,           B…rr†i‚…‚           %!È               %$È                                        ((#((



   we explored some of the reasons for Louisville’s rela-          Svpu€‚q            & È              $ È
   tively low population growth. Our area continues to                                %%È            $#È
                                                                Dqvhhƒ‚yv†
   have a lower birth rate and higher death rate than
   the nation. Hence, an enhanced migration flow is                8‚yˆ€iˆ†           %%È            #(È
   the only way Louisville can gain an increasing share          Fh†h†Ã8v‡’         $%È           $(È
   of the national population.
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6                                                                                                   Macro Performance Indicators, 2000
                                                          Economic Performance

                       Job Growth
The Louisville metro economy today supports around
600,000 wage and salary jobs plus about 80,000 business                                                          -RE *URZWK LQ /DVW 'HFDGH
proprietors. The last decade has been one of exceptional
job growth in Louisville, posting an annual compound                                       Shyrvtu                 &!È                                 !#$È
growth rate of 2.2 percent per year. Except for 1991 -                                   Ih†u‰vyyr               #'È                          %$È
the year of the last national recession - Louisville has
added on net over 10,000 jobs each year during the last                                  8uh…y‚‡‡r              #È                         ''È
decade. Louisville ranks seventh in percentage job growth                              Ehpx†‚‰vyyr            'È                    &È
among the fifteen comparison metros.                                                       P€huh               !!È                     $ È

The fastest growing markets in terms of raw job growth                                  8‚yˆ€iˆ†           !È                  "$È
were all to the south - Raleigh, Nashville, Charlotte, and                                                     È                   !#È
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Jacksonville - and fueled by population growth. Dayton                                                    '"È                  #%È
                                                                                       Fh†h†Ã8v‡’
was the only comparison market to show very low net
job growth over the past decade.                                                      Dqvhhƒ‚yv†         È                 ! È
                                                                                         Hr€ƒuv†         &$È                  ##È
Louisville is one of only six of the comparison metros
                                                                                                           (%È                 ! È
to have more manufacturing jobs in 1999 than in 1989.
                                                                                      7v…€vtuh€



While the growth was modest - only 1,800 more manu-                                    B…rr†i‚…‚        &%È                 !%È
facturing jobs - the expansion is important since the in-                               8vpvh‡v      %#È              #È
dustry still has the highest average pay in the Louisville
                                                                                                        #(È            $È
market and is a driver for so many other supporting in-
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                                                                                                        $È È
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dustries.                                                                                  9h’‡‚                                       ‚ht…vpˆy‡ˆ…hyÐhtrÃhqÆhyh…’Ãw‚i†y’




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Macro Performance Indicators, 2000                                                                                                                                                    7
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                                                          U…h†ƒ‚…‡h‡v‚à                          AvhprÃ

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Professional jobs
As manufacturing becomes less and less important as a                               activities rarely locate. Finally, Louisville ranks last in pay
source of job growth, communities seek to create and                                per job in the professional services industry – at $32,000
attract the most lucrative service sector jobs. Indeed, some                        per year, and two thousand dollars below the next low-
of the fastest growing sectors in the United States – in                            est metro (Greensboro).
terms of jobs – are those that historically pay very well.
These include health care, information technology, engi-                            Unfortunately, this rich economic census information is
neering, architecture, advertising, public relations, account-                      available only every five years – for years ending in two
ing, management consulting, research and design, and                                and seven, and published with nearly a three year lag. So
education. This is a challenging area for Louisville, with                          we do not know yet how much progress has been made
its historically low educational attainment. We discuss pay                         during the last few years. However, the pattern among
and education in later sections. Here we take a look at                             the fifteen comparison metros from the 1997 census is
Louisville’s standing in some of these professional job                             similar to that from the 1992 census. This suggests that
categories.                                                                         Louisville did not post gains in the professional services
                                                                                    sector during the middle part of the decade, a time of
In terms of employment by firms specializing in profes-                             great job and income growth in the area.
sional, scientific and technical services, Louisville remains
near the bottom of the list of competitor metros. The                               There are, of course, many highly skilled professional
NAICS industrial classification system has created a new                            employees working in companies that are classified
category, 541, for just this sector. Employees typically                            under industries not usually associated with the service
have a high degree of expertise and training. The sector                            sector. However, there is no clean way to break these
includes the offices of lawyers, accountants, architects,                           workers out of the federal data stream. For example,
engineers, designers, computer programmers, consultants,                            General Electric employs several thousand professional
researchers, advertisers, photographers, and translators.                           (not assembly) workers at its appliance division head-
We find that, for the latest census year - 1997, Louisville                         quarters in Louisville. GE’s Louisville operation is classi-
had 17,500 employees in this sector. Louisville ranks thir-                         fied as manufacturing. Ditto for the Brown-Forman and
teenth among the fifteen metros, both on an absolute                                Brown and Williamson headquarters, counted under
and a per capita basis. Only Memphis and Greensboro                                 manufacturing. Similarly, United Parcel Service employs
rank lower on a per capita basis. Moreover, Louisville is                           perhaps two thousand salaried professionals at its inter-
well behind the national average – an average that in-                              national Air Freight division headquarters in Louisville;
cludes rural areas and small towns where professional                               yet these are comingled with the package handlers and

8                                                                                                               Macro Performance Indicators, 2000
                                                                                                                          forklift operators under the “Air Transportation” in-
                                        3URIHVVLRQDO 6FLHQWLILF DQG 7HFKQLFDO -REV                                      dustry in the federal databases we all rely upon for
                                                 SHU  5HVLGHQWV 
                                                                                                                          regional studies such as this.
                                   VT                                                  !



              Shyrvtu                                                                                         "%        Though little industrial disaggregation is possible, we
 Fh†h†Ã8v‡’                                                                                           !%#
                                                                                                                          can shed some light on the degree of professional
                                                                                                                          employment in manufacturing industries by examin-
                                                                                                                          ing the split between production and all other work-
   8uh…y‚‡‡r                                                                                    !"(



  8‚yˆ€iˆ†                                                                                      !"'
                                                                                                                          ers. (Such a breakout is not available for other indus-
                         8vp’                                                                 !"!                       tries). The Census of Manufacturing, performed ev-
              P€huh                                                                      ! $
                                                                                                                          ery five years, provides this summary breakout for
                                                                                                                          metropolitan areas.
 Dqvhhƒ‚yv†                                                                           !&



  Svpu€‚q                                                                             !$
                                                                                                                          While Louisville ranks eigth highest in the number
              9h’‡‚                                                                   !                                of production jobs in manufacturing, it ranks tenth
 7v…€vtuh€                                                                            !
                                                                                                                          highest in supervisory and other non-production jobs.
   Ih†u‰vyyr                                                                       (
                                                                                                                          As is evident in the scatter plot below of data for
                                                                                                                          1997, Raleigh and Cincinnati have the highest ratios
 Ehpx†‚‰vyyr                                                                      '(
                                                                                                                          of supervisory to production workers. Greensboro
   G‚ˆv†‰vyyr                                                                    &%
                                                                                                                          and Louisville have the lowest ratios. Fortunately, Lou-
   Hr€ƒuv†                                                                 $                                            isville production workers are among the highest paid,
 B…rr†i‚…‚                                                             "'
                                                                                                                          ranking fourth at $32,000 per year. Louisville’s non-
                                                                                                                          production workers in manufacturing earned $47,000,
                                   T‚ˆ…pr)ÃVTÃ8r†ˆ†Ã7ˆ…rhˆà ((&Ã@p‚‚€vpÃ8r†ˆ†Ã9h‡hÃs‚…ÃI6D8TÃvqˆ†‡…’Ã$# 
                                                                                                                          seventh highest among the fifteen competitor mar-
                                                                                                                          kets.




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Macro Performance Indicators, 2000                                                                                                                                                  9
Transportation and                                7UDQVSRUWDWLRQ DQG :DUHKRXVLQJ ,QGXVWULHV 
Warehousing Jobs
                                                                                     $YHUDJH
The steady expansion                                                                 $QQXDO                   -REV SHU
by United Parcel Ser-                        5HYHQXHV        $QQXDO                  3D\ SHU 3RSXODWLRQ        
vice of its interna- 0HWUR                            3D\UROO    -REV        -RE               5HVLGHQWV
tional air freight hub %LUPLQJKDP                                                
over the last fifteen &KDUORWWH                                                
years has clearly been &LQFLQQDWL                                              
a       boon       for    &ROXPEXV                                             
Louisville’s distribu-    'D\WRQ                                                   
tion industries. By       *UHHQVERUR                                           
nearly every measure, ,QGLDQDSROLV                                             
Louisville is now a       -DFNVRQYLOOH                                         
major player in the .DQVDV &LW\                                                
                          /RXLVYLOOH                                             
business of moving
                          0HPSKLV                                              
goods, by truck, rail,
                          1DVKYLOOH                                            
water, and air. And 2PDKD                                                        
increasingly, Louisville 5DOHLJK                                                  
is capturing more of 5LFKPRQG                                                    
the lucrative value- 8QLWHG 6WDWHV                                   
added logistics busi-      T‚ˆ…pr)ÃVTÃ8r†ˆ†Ã7ˆ…rhˆà ((&Ã@p‚‚€vpÃ8r†ˆ†

ness. Indeed, if the       9h‡hÃs‚…ÃI6D8TÃvqˆ†‡…’Ærp‡‚…†Ã#'ÃhqÃ#(


eighties could be
characterized as the health care decade, the nineties should of all payroll in each market. A major study of the health-
be called the decade of distribution and logistics. The related economy in Louisville has been commissioned
airport expansion, the UPS surge, the new industrial parks by the GLI, and results should be available in May 2000.
full of national and regional distribution centers, as well It will contain detailed information on jobs, sales, medi-
as the computer repair, inventory management, and linked cal discoveries, patents, and other economic indicators.
light manufacturing operations have collectively been the
major growth engine for the region since the late 1980s.

According to the 1997 Eco-                                         +HDOWK &DUH ,QGXVWU\ 3D\UROOV 
nomic Census, Louisville now                                      /DERU DQG
ranks first among the fifteen                                    3URSULHWRUV
                     $V 3HUFHQW RI DOO
competitor metros in terms of                                    (DUQLQJV E\     3HU 5HVLGHQW    3D\UROOV LQ 06$ *URZWK  WR
revenues earned by companies                                    ,QGXVWU\                                   
in the transportation and ware-         %LUPLQJKDP                                                  
housing industries. Louisville is       &KDUORWWH                                                    
                                        &LQFLQQDWL                                                    
third in annual payroll, fourth
                                        &ROXPEXV                                                      
in jobs, third in pay per job, and
                                        'D\WRQ                                                        
first in the number of transpor-        *UHHQVERUR                                                   
tation and warehousing jobs             ,QGLDQDSROLV                                                 
per thousand residents.                 -DFNVRQYLOOH                                                 
                                        .DQVDV &LW\                                                   
Health Care Payroll                     /RXLVYLOOH                                                  
Louisville continues to stand out       0HPSKLV                                                      
in economic measures of health          1DVKYLOOH                                                   
                                        2PDKD                                                         
care, with the third highest health
                                        5DOHLJK                                                      
care payroll per capita and also        5LFKPRQG                                                      
the third highest industrial con-       8QLWHG 6WDWHV                                               
centration in health care (as           6RXUFH 86 %XUHDX RI (FRQRPLF $QDO\VLV 5HJLRQDO (FRQRPLF ,QIRUPDWLRQ 6\VWHP   -XQH 
measured by health care’s share
10                                                                                           Macro Performance Indicators, 2000
Earnings per Job
One key measure of Louisville’s economic performance                                                                       0DQXIDFWXULQJ ,QGXVWULHV
                                                                                                                     $YHUDJH $QQXDO (DUQLQJV SHU -RE 
is the rate of pay for area workers. Prior to the last quar-
ter century, Louisville thrived on high paying factory jobs.
                                                                                                                                                                                             Ç$&#'#
As production jobs in manufacturing dwindled, the low
                                                                                                  Dqvhhƒ‚yv†




educational attainment of our area’s population was re-                                                 Shyrvtu                                                                           Ç$$!($


flected in the declining earnings per job for area workers.                                          8vpvh‡v                                                                         Ç$"#"&

Manufacturing now accounts for less than fourteen per-                                              Svpu€‚q                                                                       Ç$! '

cent of the jobs and twenty percent of the payrolls in the                                              9h’‡‚                                                                     Ç#((%!

Louisville market. While Louisville still has one of the                                            8‚yˆ€iˆ†                                                                    Ç#& "
highest manufacturing concentrations among its com-
                                                                                                     G‚ˆv†‰vyyr                                                              Ç#$$&&
petitors, this sector has not been a direct source of sig-
                                                                                                                                                                            Ç##"(
nificant job growth since the early 1970s.                                                         Fh†h†Ã8v‡’



                                                                                                      Hr€ƒuv†                                                               Ç##!'


In terms of employment, both locally and nationally, the                                                P€huh                                                         Ç# $"

fastest growing sectors have been in the broad services                                               Ih†u‰vyyr                                                       Ç#( &

sector. This includes health care, business services, legal                                        Ehpx†‚‰vyyr                                                       Ç#&(
services, recreation, engineering, management, and social                                             8uh…y‚‡‡r                                                       Ç##!"
services. Most of these fast growing professions require
                                                                                                                                                                   Ç"'$%&
extensive formal education, and the most lucrative jobs
                                                                                                  7v…€vtuh€




are being created in markets that retain and attract edu-                                          B…rr†i‚…‚                                                      Ç"'""


cated young people. With the exception of health care,                                            Vv‡rqÃT‡h‡r†                                                              Ç#$$#!

Louisville has not fared well in this competition over the                                                          T‚ˆ…pr)ÃVTÃ7ˆ…rhˆÃ‚sÃ@p‚‚€vpÃ6hy’†v†ÃSrtv‚hyÃ@p‚‚€vpÃDs‚…€h‡v‚ÃT’†‡r€Ã



past thirty years. Indeed, in terms of earnings per job in
                                                                                                                     (%((' ÃEˆrÃ!Ã




nonmanufacturing industries, Louisville surpasses only
Greensboro among the fifteen competitor markets.


                           'LVWULEXWLRQ ,QGXVWULHV                                                                             2IILFH ,QGXVWULHV
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     8uh…y‚‡‡r                                                                           Ç#($(    Ehpx†‚‰vyyr                                                                                   Ç"#&%#

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    8vpvh‡v                                                                         Ç#&#%&        8uh…y‚‡‡r                                                                                   Ç"#"#

  Fh†h†Ã8v‡’                                                                          Ç#&##"        Ih†u‰vyyr                                                                                 Ç""&%'

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     Hr€ƒuv†                                                                        Ç#$!$       7v…€vtuh€                                                                                  Ç"""

    8‚yˆ€iˆ†                                                                       Ç##&"              Shyrvtu                                                                              Ç"!%"!

   Svpu€‚q                                                                        Ç##%%         Fh†h†Ã8v‡’                                                                               Ç"!"'

       Shyrvtu                                                                     Ç##""(        Dqvhhƒ‚yv†                                                                              Ç"!(!

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    G‚ˆv†‰vyyr                                                                 Ç#!$$                  9h’‡‚                                                                            Ç" %('

     Ih†u‰vyyr                                                               Ç# $$                    P€huh                                                                             Ç" !#"

  Ehpx†‚‰vyyr                                                             Ç#" #                   8vpvh‡v                                                                           Ç" ! &

  B…rr†i‚…‚                                                               Ç#"                    G‚ˆv†‰vyyr                                                                       Ç!(#""

       9h’‡‚                                                            Ç"'$'%                   B…rr†i‚…‚                                                                     Ç!'#

 Vv‡rqÃT‡h‡r†                                                                      Ç#$&!$       Vv‡rqÃT‡h‡r†                                                                                 Ç""%'

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   ('ÃEˆrÃ!Ã9v†‡…viˆ‡v‚Ãv†ÃqrsvrqÃur…rǂÃvpyˆqrÇurÃU…h†ƒ‚…‡h‡v‚ÃXh…ru‚ˆ†vtà         ('ÃEˆrÃ!ÃPssvprÃv†ÃqrsvrqÃur…rǂÃvpyˆqrÇurÃAvhhprÃD†ˆ…hprÃSrhyÃ@†‡h‡rÃ

   V‡vyv‡vr†ÃhqÃXu‚yr†hyrÃU…hqrÃvqˆ†‡…vr†                                                       Tr…‰vprÃhqÃB‚‰r…€r‡Ãvqˆ†‡…vr†




Macro Performance Indicators, 2000                                                                                                                                                                11
We have good annual data on the number of jobs and            Business Formation, Headquarters
the total earnings of workers in each major industry. The     Louisville has recently posted some strong numbers on
data arrive with about a two year lag. Jobs and earnings      business growth. Louisville rose in Cognetics’ ranking of
refer to wage and salary workers plus proprietors.            Entrepreneurial Hot Spots from 74th in 1994 to 16th in
                                                              1999. For the period 1996-1999, Louisville placed ten
1. Manufacturing jobs in Louisville paid on average           companies on the Inc. 500 list, outpacing Cincinnati (9),
   $46,000 per year in 1998, up $10,000 over 1990.            Indianapolis (9), and Nashville (5). For data and a discus-
   Louisville ranked seventh in manufacturing earnings        sion of Louisville’s turnaround, with emphasis on
   per job out of the fifteen competitor markets in           enterpreneurial vitality, see Growing Success 2000 - a recent
   1998, a drop of one rank since 1990. Raleigh moved         report by the Enterprise Corporation of GLI.
   up dramatically over the decade. Otherwise, there
   remains a clear north-south pattern to the earnings        The Louisville metro added on net 4,600 new business
   estimates, with Indianapolis and the Ohio markets          establishments over the decade ending in 1998 – the last
   topping the list. The estimates include those who          year for which we have complete data. This is a growth
   work in production jobs, but also supervisory posi-        rate of 20.6 percent, sixth highest among the fifteen com-
   tions and any other workers in the business estab-         petitor metros. In the comparisons, Louisville ranked near
   lishment primarily engaged in manufacturing. In Lou-       the middle of most employment size categories.
   isville, for example, Brown-Forman is classified as a      Louisville’s highest ranking, third, was among firms em-
   manufacturer and all of the salaries of managers in        ploying 100 to 249 employees. But Louisville ranked elev-
   its headquarters are counted in the average.               enth in business formation among the largest employers,
                                                              those with a thousand or more employees.
2. Distribution jobs, broadly defined, in Louisville paid
   on average $43,000 per year in 1998, up $12,000            Consistent with our above average job growth,
   over 1990. Louisville ranked eleventh in earnings per      Louisville’s rate of business growth surpassed that of
   job out of the fifteen competitor markets in 1998,         the nation as a whole by five percentage points over the
   an improvement of its next to last position in 1990.       last decade. Moreover, Louisville added more business
   Due to the constraints of data availability, we have
   defined the distribution industry broadly to include
   transportation, communications, utilities, and                              %XVLQHVV )RUPDWLRQ  WR 
   wholesale trade. So, the category here includes such               /RXLVYLOOH
V 5DQNLQJ $PRQJ  &RPSHWLWRU 0HWURV
   activities as electricity and water utilities, and radio
                                                                                            2t…rh‡r†‡Ãt…‚‡uà $2yrh†‡Ãt…‚‡u




   and television. However, in Louisville, this sector is              …À‚…r



   dominated by trucking, warehousing, and air trans-
                                                                       r€ƒy‚’rr†




   portation.                                                            $ǂÃ(((                       #




3. Office jobs in Louisville paid on average $29,000                     !$ǂÃ#((                       #



   per year in 1998, up $7,000 over 1990. Louisville
   ranked fourteenth in office earnings per job out of                    ǂÃ!#(                   "



   the fifteen competitor markets, no improvement over
   its position in 1990. We have defined the office in-                    $ǂÃ((                                                               #




   dustry here to include finance, insurance, real estate,
                                                                           !ǂÃ#(                                               (

   services, and government.
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12                                                                                            Macro Performance Indicators, 2000
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      †uh…rÂsÃr€ƒy‚’€r‡Ãr†‡                                                                        $"È           & È            ((È           %!È         "(È           !! È              %È            %"È             &$È

                   †uh…rÂsÃh’…‚yy                                                                    $"È           & È            ((È           %!È         "(È           !! È              %È            %"È             &$È




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r†‡v€h‡rÂsÃr€ƒy‚’€r‡Ã€vq                                                                      &$!"'"#       ''"%%&        &"% "       &"  (    #''''      !"%("'$         "#$'$!       '#%%"$!        '"&""




         †uh…rÂsÃr†‡hiyv†u€r‡†                                                                      $#!È           (%È            !$È           '#È         !(È             &È             #È            !È              È

            †uh…rÂsÃr€ƒy‚’€r‡                                                                        %(È           ' È            'È           $(È         "&È            '&È             #È            &'È             &&È




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r†‡v€h‡rÂsÃr€ƒy‚’€r‡Ã€vq                                                                         !!!$'         "#$"          #"(!         %" %       $("&&           & '(#           "$($!         !%!""           " !




         †uh…rÂsÃr†‡hiyv†u€r‡†                                                                      #((È          ! È            "#È           (%È         "%È             'È             #È            !È              È

            †uh…rÂsÃr€ƒy‚’€r‡                                                                        $'È           'È            %È           %%È         $%È            '(È             (#È            %(È             '!È




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r†‡v€h‡rÂsÃr€ƒy‚’€r‡Ã€vq                                                                      %%$"#       &'##'%"       ((#%(!!      #'"#&&    !#&$        $&( &!&        '$&& &#       %&"$!'        %$!"#




         †uh…rÂsÃr†‡hiyv†u€r‡†                                                                      $#(È          ! È            !!È           &(È         !'È             $È             #È             È              È

            †uh…rÂsÃr€ƒy‚’€r‡                                                                        &$È           '(È             !È           $(È         # È            &'È             (&È            &%È             &#È




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                                                                                                                     table. As recently as 1999 Louisville housed the head-
     establishments in most of the employment-size classes,
                                                                                                                     quarters of four Fortune 500 companies (Vencor dropped
     lagging the nation only in the largest employment classes.
                                                                                                                     out in 2000). Before Providian was bought by Aegon it
     This strong growth for smaller-sized businesses suggests
                                                                                                                     was also a Fortune 500 company headquartered in Lou-
     that the local area has launched a relatively high number
                                                                                                                     isville. LG&E was recently purchased by a British firm,
     of firms during the strong economic climate of the 1990s.
                                                                                                                     and will thus drop out of the rankings next year.
     The table on the nest page summarizes the growth in
                                                                                                                     Among the peer cities, Louisville was tied with Nashville
     business establishments by employment size over the last
                                                                                                                     for tenth place in terms of the number of 2000 Fortune
     decade - by number of employees and by county, with
                                                                                                                     500 companies, and is eleventh in terms of the total rev-
     a comparison to the United States total.
                                                                                                                     enues of its Fortune 500 companies. In the period 1995-
     Louisville was the headquarters city for three Fortune 500
                                                                                                                     2000 Richmond has had the most Fortune 500 compa-
     companies in 2000 - Humana, Tricon Global Restau-
                                                                                                                     nies each year, and currently has eight. Cincinnati, Omaha,
     rants, and LG&E Energy. In addition, it is the headquar-
                                                                                                                     Kansas City, and Columbus all have consistently had be-
     ters city for two more companies in the Fortune 1000 -
                                                                                                                     tween five and seven Fortune 500 companies over the
     Vencor and Brown Forman. We list the rankings of
                                                                                                                     last six years. Charlotte and Cincinnati have the highest
     Louisville’s Fortune 500 companies in the accompanying
       Macro Performance Indicators, 2000                                                                                                                                                                                  13
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ranking individual companies among the peer cities.
Eleventh ranked Bank of America is headquartered in
Charlotte, while fourteenth ranked Kroger is headquar-
tered in Cincinnati. Twenty-third ranked Proctor &
Gamble, also headquartered in Cincinnati, gives the peer
cities three companies within the Fortune 500’s top fifty                             7RWDO 5HYHQXH RI )RUWXQH  &RPSDQLHV 
                                                                                                         PLOOLRQ
companies.
                                                                        8vpvh‡v                                                                                Ç ! ""
Not surprisingly, Cincinnati and Charlotte lead the peer
cities in terms of total revenues by Fortune 500 compa-                  8uh…y‚‡‡r                                                                     Ç !$&'

nies. While Richmond has the most companies on the list
                                                                                                                             Ç%!% #
it’s highest ranking one is 159th and only two rank in the
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top 300, causing it to be just sixth among the peer cities              8‚yˆ€iˆ†                                         Ç$((!'

in Fortune 500 company revenues.
                                                                      Fh†h†Ã8v‡’                                      Ç$$(#&


The most striking change over this six-year period has                  Svpu€‚q                                   Ç#& &(
been Birmingham’s improvement from one to six For-
tune 500 companies from 1995 to 2000. Since most of                   Dqvhhƒ‚yv†                       Ç"" !!

Birmingham’s companies are new to the list and only                   B…rr†i‚…‚                      Ç!&
rank in the last third of the 500, it is still just ninth in
terms of total revenue, however. Three of Birmingham’s                7v…€vtuh€                     Ç!$#!%

five new Fortune 500 companies are commercial banking                    Ih†u‰vyyr                 Ç!!&&$
companies and the other two are in the healthcare indus-
try.                                                                     G‚ˆv†‰vyyr                Ç! "!%


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14                                                                                              Macro Performance Indicators, 2000
                                                                             $OO %ODFN2ZQHG )LUPV
Black-Owned Businesses. The Louisville                                                                         *URZWK  WR 
market support 2,900 black-owned
businesses , according to the just re-                                                                                           6DOHV DQG
leased data on minority-owned busi-                                                      6DOHV DQG                               5HFHLSWV
nesses from the 1997 Economic               PHWUR DUHD                  QXPEHU         5HFHLSWV               QXPEHU          
Census. The 400 firms with employ-          %LUPLQJKDP                                                              
ees employ 5,500 persons with an            &KDUORWWH                                                               
annual payroll of $78 million.              &LQFLQQDWL                           QD                 QD                      QD              QD
                                            &ROXPEXV                                                                
The tables organizes the data dis-
                                            'D\WRQ                                                                  
closed for Louisville and its peer cit-
                                            *UHHQVERUR                                                              
ies. Naturally, cities like Memphis
with very large black populations,          ,QGLDQDSROLV                                                             
have more black-owned firms. How-           -DFNVRQYLOOH                                                             
ever, Louisville ranks highly in            .DQVDV &LW\                                                             
growth since the last census in 1992.       /RXLVYLOOH                                                              
Louisville posted the fourth fastest        0HPSKLV                                                                
growth in firms and employment,             1DVKYLOOH                                                               
and ranked fifth highest in payroll         2PDKD                                                                            QD
growth over the five year period.
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  %LUPLQJKDP                                                                                     
  &KDUORWWH                                                                                   
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  &ROXPEXV                                                                                        
  'D\WRQ                                                                                         
  *UHHQVERUR                                                                                     
  ,QGLDQDSROLV                                                                                    
  -DFNVRQYLOOH                                                                                     
  .DQVDV &LW\                                                                                
  /RXLVYLOOH                                                                                     
  0HPSKLV                                                                                     
  1DVKYLOOH                                                                                     
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  5DOHLJK                                                                                      
  5LFKPRQG                                                                                    
  8QLWHG 6WDWHV                                                                      
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Macro Performance Indicators, 2000                                                                                                          15
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  8vpvh‡v                                                                           8uh…y‚‡‡r                                                                           




Dqvhhƒ‚yv†                                                                          8vpvh‡v                                                                       




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Fh†h†Ã8v‡’                                                                           Fh†h†Ã8v‡’                                                          




Ehpx†‚‰vyyr                                                                           8‚yˆ€iˆ†                                                            




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  8‚yˆ€iˆ†                                                                             Svpu€‚q                            




   Ih†u‰vyyr                                                                              P€huh                        




  8uh…y‚‡‡r                                                                           Dqvhhƒ‚yv†                    




7v…€vtuh€                                                                            B…rr†i‚…‚                  




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 Industrial and Office Real Estate                                                           Cincinnati and Kansas City ranked in the top five in both
 Louisville businesses absorbed 3.7 million square feet of in-                               industrial and office real estate expansion. As in our previ-
 dustrial space, and .9 million square feet of office space dur-                             ous study, Louisville’s vacancy rate for industrial real estate
 ing the past three years. This was the eleventh and twelth                                  remains well below the national average. By contrast,
 greatest amount, respectively, among the fifteen comparison                                 Louisville’s office market has consistently had more excesss
 markets - consistent with Louisville’s population size.                                     inventory than the national average.
 16                                                                                                                        Macro Performance Indicators, 2000
                                                @‘ƒ‚…‡ÃThyr†Ãs…‚€ÃG‚ˆv†‰vyyrÃHT6ǂÃTryrp‡rqÃ9r†‡vh‡v‚†à (("('

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   Exports of Merchandise to Other Countries                                                 and Canada, with over $500 million each, followed by
   Louisville businesses sold $2.3 billion of merchandise to                                 Germany and the United Kingdom. Almost all of the
   customers outside the United States during 1998. This is                                  growth over the past five years has been to Canada, Ja-
   a growth of 37 percent over the last five years. The most                                 pan and European countries. The largest declines in ex-
   important destinations for Louisville exports were Japan                                  ports were to Hong Kong, Belgium and Mexico.
    Macro Performance Indicators, 2000                                                                                                                                               17
18




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Macro Performance Indicators, 2000




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Louisville ranked ninth in export volume among the fif-            Farm Machinery Show, International Lawn & Garden
teen competitor metros in 1998. Cincinnati, Greensboro             Equipment Expo, and Mid-America Truck Show. There
and Indianapolis topped the list. Birmingham, Jackson-             has been one major addition, however. The FFA chose
ville and Omaha had the lowest export volume. Louis-               Louisville for its annual national meetings from 1999
ville had the twelfth highest percentage growth in export          through 2005. The FFA brings with it over 45,000 del-
volume over the 1993-98 period, with only Dayton, Bir-             egates for five days of activity in the area. The FFA is the
mingham and Richmond posting less growth .                         largest piece of convention business in the history of
                                                                   Louisville, using all area hotel capacity, both the Fair-
Also shown in the table are export sales data for some             grounds and the downtown Convention Center, and fill-
of the other metros in our region. Note that the other             ing our streets with entourages looking for food, recre-
industrial cities along the rivers – Huntington, Evansville,       ation, and education. As we only have consistent eco-
St. Louis - have shown little growth in exports, but that          nomic data through 1998, the impact of the FFA on
Lexington is posting very strong growth. In fact,                  Louisville’s standing in hospitality statistics is not known
Lexington’s percentage growth ranks sixteenth out of               yet.
the 250 metros for which data are reported. Presumably
this billion plus increase in export volume is attributable        The newly remodeled and expanded convention center
primarily to printer shipments from Lexmark.                       downtown should over time move us up a notch in the
                                                                   competition for the lucrative meetings and convention
Hospitality Industry                                               business. Historically, Louisville has hosted primarily meet-
Louisville continues to be major destination for trade             ings of statewide and local associations, like the Ken-
shows, thanks to the large high quality space at the Fair-         tucky Medical Association, the Kentucky League of Cit-
grounds, our central midwestern location at the intersec-          ies. These organizations like Louisville’s many inexpen-
tion of three interstate highways. The top trade shows in          sive downtown hotel rooms, the easy interstate access to
2000 are almost identical to the list from 1995 – North            the rest of the state, and the city’s many restaurant and
American International Livestock Exposition, National              cultural attractions.


Macro Performance Indicators, 2000                                                                                          19
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                     ,QGLDQDSROLV                                                    
                     -DFNVRQYLOOH                                                    
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                                                                 greatly over the past decade, the growth in passenger
In most measures of the hospitality industry, Louisville         volume has been triggered by Southwest Airline’s low
ranking falls in line with its population size. Among the        fares and the flights are largely to a few destinations –
fifteen competitor metros, Louisville ranks variously tenth      Washington, New York, Orlando, and Chicago. As all
or eleventh in hotel revenues, payrolls, and employment.         Louisville business travelers know too well, one typically
Combining 1998 earnings of workers and proprietors               has to go through Atlanta, Pittsburgh, Chicago, or St.
in the hotel, restaurant, and amusement industries, Louis-       Louis to reach important business desitnations like Los
ville ranks tenth in absolute dollars and sixth on a per         Angeles, San Francisco, San Diego, Seattle, Boston,
capita basis.                                                    Vancouver, Detroit, or Denver.

There are several factors that are most cited to explain         The constraints of air service and hotel quality on con-
why Louisville has not developed into a major conven-            vention business are shared by many of Louisville com-
tion city, regularly hosting high end national conferences.      petitors. Only Nashville and Memphis stand out in hotel
The two most important are interlinked – the paucity of          business, and both support more hotel payrolls than San
first class hotel rooms and the lack of direct flights to        Antonio or Salt Lake City – two popular convention
many large cities. Luxury hotel rooms are built to ac-           sites among large but not mega markets. Memphis’s ho-
commodate either top corporate managers or affluent              tel numbers are swelled by the activity at the Tunica, Mis-
vacationers. Louisville is not a major tourist destination,      sissippi casino a few miles south of the city’s airport.
nor are we home to an exceptional number of travel-              However, neither Nashville or Memphis are in a league
prone professionals. One reason Louisville has not at-           with marquee convention sites like New Orleans and Las
tracted (or grown) more corporate headquarters opera-            Vegas.
tions is the lack of suitable air service. Frequent business
flyers demand access to many direct flights per day to all       The new North American Industrial Classification Sys-
major markets. While Louisville’s airport has expanded           tem will improve our ability to track Louisville’s over-
                                                                 night hospitality industry. NAICS set up a new industry


20                                                                                        Macro Performance Indicators, 2000
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            &KDUORWWH &/7                                                                                      
            &LQFLQQDWL &9*                                                                                      
            &ROXPEXV &0+                                                                                         
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            ,QGLDQDSROLV ,1'                                                                                     
            -DFNVRQYLOOH -$;                                                                                     
            .DQVDV &LW\ 0&,                                                                                      
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            0HPSKLV 0(0                                                                                          
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division, entitled “Accomodations”, that includes hotels,
hotel-casinos, and other overnight sites. The first release
of basic economic census data occurred in 2000, and we                                      7RWDO $LU &DUJR PHWULF WRQV 
have summarized the results for the fifteen metros in the
table above. Louisville ranked thirteenth in establishments,                   Hr€ƒuv†                                                                                


eleventh in sales, tenth in payroll, and eleventh in employ-
ees - about where Louisville ranks in population size.                         G‚ˆv†‰vyyr                                            




These data also suggest that, at least through 1997, Lou-                 Dqvhhƒ‚yv†                                  


isville has an average hospitality industry.
                                                                                 9h’‡‚                            




Air Freight and Air Passengers                                              8vpvh‡v                 



Louisville’s international air freight hub for United Parcel
                                                                               8uh…y‚‡‡r           

Service has made our area a major player in distribution
and logistics activity around the world. In 1999, 1.4 mil-                Fh†h†Ã8v‡’              



lion metric tons of freight left the Louisville airport. This                    P€huh            


is the twelfth highest air freight volume among the 600
reporting airports in the world. Among the competitor                 Shyrvtu9ˆ…uh€              




markets, only Memphis (the home of Federal Express)                       B…rr†i‚…‚          


ships more freight. Memphis is number one worldwide                                                              T‚ˆ…pr)Ã6v…ƒ‚…‡†Ã8‚ˆpvyÃD‡r…h‡v‚hyÃ68DÃU…hssvpÃ

                                                                                                                 9h‡h Аhv…ƒ‚…‡†‚…t


in air freight shipments. As is evident from the chart, our
                                                                          Ehpx†‚‰vyyr        

                                                                                                                 G‚ˆv†‰vyyrÃv†Ã‡urà !‡uÃiˆ†vr†‡Ãhv…ƒ‚…‡Ã‚sÃ%ÃvÃ‡urÃ


central midwestern location is favored for air freight han-                Svpu€‚q           
                                                                                                                 ‚…yq0ÃHr€ƒuv†Ãv†Ã †‡




dling. Other than Memphis and Louisville, only India-
                                                                               Ih†u‰vyyr      

napolis, Dayton and Cincinnati have exceptional freight
volume.                                                                   7v…€vtuh€          




                                                                            8‚yˆ€iˆ†         




Macro Performance Indicators, 2000                                                                                                                                         21
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           2WKHU ODERU LQFRPH                                                               
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           (DUQLQJV E\ SODFH RI ZRUN                                                   

           OHVV 3HUVRQDO FRQWULEXWLRQV WR VRFLDO LQVXUDQFH                                
           SOXV $GMXVWPHQW IRU SODFH RU UHVLGHQFH                                          
           HTXDOV (DUQLQJV E\ SODFH RI UHVLGHQFH                                     

           SOXV 'LYLGHQGV LQWHUHVW DQG UHQW                                         
           SOXV 7UDQVIHU SD\PHQWV                                                       
           HTXDOV 3HUVRQDO ,QFRPH RI 5HVLGHQWV                                     

           3RSXODWLRQ QXPEHU RI UHVLGHQWV                                            
           3HU FDSLWD SHUVRQDO LQFRPH GROODUV                                               
           Source: US Bureau of Economic Analysis, Regional Economic Information System, 1969-98 , June 2000.


The construction of the UPS Hub 2000, nearly finished,             proprietorships, earn income from their net revenues.
should raise Louisville’s air freight numbers further over         Other labor income includes payments by employers to
the next decade. The new hub will double the sorting               privately administered benefit plans for their employees.
capacity per hour of the Louisville facility, from 160,000         These categories account for over seventy percent of
to 320,000 packages per hour. Assuming continued                   personal income of Louisville residents, approximately
growth in UPS freight volume worldwide and no loom-                the same share as for the nation as a whole.
ing constraints on labor or takeoffs and landings,
Louisville’s air freight volume should rank in the top five        The other primary sources of income for area residents
in the world within the next year or two.                          are earnings streams from wealth and payments to per-
                                                                   sons under various entitlement programs. Dividends, in-
Louisville is a less important site for air passenger traffic.     terest and rental income accounted for nearly 20 percent
Our airport handled 3.8 million passengers in 1999, the            of the personal income of Louisville residents in 1998,
171st busiest airport in the world. This is the tenth highest      slightly higher than the national average. Louisville ranks
volume among the fifteen competitor markets. Louisville’s          behind only Cincinnati in per capita income from these
airport is slowly gaining in passenger traffic against the         sources of wealth. This largely reflects our older popula-
competition, however. It posted the seventh highest per-           tion and their accumulation of assets relative to the popu-
centage growth over 1998, and eighth highest over the              lation of most of the competitor metros.
past five years. Cincinnati, with more than five times the
passenger traffic as Louisville, is the busiest airport of         Finally, transfer payments accounted for 13 percent of
the group and has also posted the fastest growth over              personal income in Louisville. This includes social secu-
the past five years. Behind Cincinnati in the rankings are         rity income, disability payments, medicare and medicaid
Charlotte, Kansas City, and Memphis. Dayton, Richmond,             payments, income maintenance payments and benefits,
Greensboro and Birmingham are the least busy airports              unemployment insurance benefits, and veterans’ benefits.
among the competitors.
                                                                   While Louisvillians receive on average about the same
                                                                   amount of transfer payments as the residents nationwide,
Income of Residents                                                we stand out relative to our metro competitors. Louis-
Louisville area workers receive income from wages and              ville has the highest per capita amount of transfer pay-
salaries. Residents that own businesses, organized as              ment income per year among the fifteen metros. We rank
                                                                   first in retirement income and second in medical benefits
                                                                   per head, reflecting our relatively older population. See
22                                                                                       Macro Performance Indicators, 2000
                                                                   chart.
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  Macro Performance Indicators, 2000                                                                                                                                                                                                    23
                                         TvtyrAh€vy’Ã7ˆvyqvtÃQr…€v‡†                                 U‚‡hyÃÃGh†‡ÃAv‰rÃ`rh…†


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24                                                                                     Macro Performance Indicators, 2000
                                            Hˆy‡vAh€vy’Ã7ˆvyqvtÃQr…€v‡†                                    U‚‡hyÃÃGh†‡ÃAv‰rÃ`rh…†

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Macro Performance Indicators, 2000                                                                                                        25
                                                       Cost of Living

A
         s veterans of regional economic research know                fact appear to have gotten higher relative to the com-
          so well, there is no suitable single measure of the         parison markets over the past five years.
          cost of living available for local areas. Neverthe-
less, the issue is so important to economic development               Before we examine these three factors in more detail, we
efforts that we try to track the key factors by looking at            present some recent summary comparision information.
many different data sources, qualifying our conclusions               The 2000 edition of Places Rated Almanac provided esti-
as needed.                                                            mates of the cost of living in each metro, for a hypo-
                                                                      thetical family of four, with two incomes totaling
For many items that consumers purchase there is little                $75,000.The table below summarizes some fo the mea-
variation in price around the United States, and hence                sures published in the recent Almanac.
have little effect on the relocation or salary decisions of
households. Clothing, food, automobiles, gasoline, and                Louisville ranks tenth highest in the Combined Cost In-
other prominent consumer items probably vary in price                 dex, with a value of 107. This implies that Louisville’s
by no more than a percentage point or two among our                   cost of living is seven percent above the average for all
competitor markets. However, several big ticket items                 metros in North America. However, most metros in the
do vary considerably from market to market, and we                    Almanac are small and therefore not directly comparable
examine them here in some detail. In particular, we have              to Louisville. Relative to the fourteen similarly-sized
organized recent and historical data on the cost of hous-             metros, Louisville still comes across as a moderately priced
ing, utilities, and taxes in the fifteen metro areas.                 place to live. The only category in which Louisville ap-
                                                                      pears costly is in the state income tax burden.
While no measure is perfect, the bulk of the evidence
suggests that Louisville is losing its advantage as a low             The two most expensive places to live are also the two
housing cost market, though utility costs remain low. State           fastest growing - Raleigh and Nashville - and reflect their
and local tax burdens for Louisville remain high, and in              high housing prices. Memphis and Jacksonville claim the
                                                                      lowest cost of living overall, thanks to the lack of a state
                                                                      income tax as well as modest housing prices.

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       %LUPLQJKDP                                                                         
       &KDUORWWH                                                                          
       &LQFLQQDWL                                                                       
       &ROXPEXV                                                                         
       'D\WRQ                                                                           
       *UHHQVERUR                                                                         
       ,QGLDQDSROLV                                                                       
       -DFNVRQYLOOH                                                                         
       .DQVDV &LW\                                                                      
       /RXLVYLOOH                                                                         
       0HPSKLV                                                                              
       1DVKYLOOH                                                                            
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       5LFKPRQG                                                                           
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26                                                                                        Macro Performance Indicators, 2000
Another summary cost of living index is that from the                                $&&5$ &RVW RI /LYLQJ ,QGH[  ,,,
                                                                                        FRPSRVLWH  86 DYHUDJH
American Chamber of Commerce Research Associa-
tion (ACCRA). Each quarter, surveyors in over 300 ur-                           Shyrvtu9ˆ…uh€                                                    $$

ban areas around the United States price a basket of
goods purchased by professional households in the top                                 Svpu€‚q                                                    $"



income quintile. ACCRA surveyors price 59 items and                  Dqvhhƒ‚yv†ÃCh€vy‡‚Ã8‚                                      (

aggregate them into summary indexes for groceries, hous-
ing, utilities, transporation, health care, and other. ACCRA                   Fh†h†Ã8v‡’ÃHT6                                 (("



is not able to measure differential state and local tax rates.                         8uh…y‚‡‡r                           ('$

The index base is set to 100 each quarter and represents
the national average. Thus, a value of 98.5 means that the                            8vpvh‡v                          ('"



place’s cost of living was 1.5 percent below the national                    9h’‡‚Tƒ…vtsvryq                          ('


average.
                                                                                    B…rr†i‚…‚                           (&(




The ACCRA index is fairly consistent with the informa-                              Ehpx†‚‰vyyr                        (&$


tion published in Places Rated. Louisville ranks tenth out
of the fourteen places for which the index is compiled.
                                                                                      G‚ˆv†‰vyyr                        (&"




In both rankings, Raleigh is the highest and Memphis is                       7v…€vtuh€ÃHT6                     ($


the lowest. Nashville shows up much lower, and India-
                                                                        Ih†u‰vyyrÃ9h‰vq†‚Ã8‚               ("(
napolis much higher, on the ACCRA ranking than on the
Places Rated ranking. For Nashville, housing cost estimates                             P€huh                 ("'


are the source of the contradiction. ACCRA shows Nash-                                 Hr€ƒuv†                ("$

ville to be one of the least expensive housing markets,
while Places shows it as one of the most expensive.

Housing Prices                                                      home selling in Louisville rose 80 percent between 1990
Home prices rose briskly in the Louisville market during            and 1999, the highest growth rate of any of the com-
the last decade, as well as in many of the competitor               parison markets, and twice the rate of growth for homes
markets. The median price of an existing single-family              in the US as a whole. According to the National Associa-


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          'D\WRQ6SULQJILHOG                                                                
          *UHHQVERUR                                                                         
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          -DFNVRQYLOOH                                                                        
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Macro Performance Indicators, 2000                                                                                                           27
tion of Realtors, the median price in Louisville was
$109,700 in 1999, up from $60,800 in 1990. Thus the                                      0HGLDQ 3ULFH
price of existing homes sold in Louisville has moved                            6DOHV RI ([LVWLQJ +RPHV 
                                                                                 T‚ˆ…pr)ÃIh‡v‚hyÃ6††‚pvh‡v‚Ã‚sÃSrhy‡‚…†

from but 64 percent of the national average to 82 per-         Vv‡rqÃT‡h‡r†                                                      Ç """

cent in nine years.
                                                            Shyrvtu9ˆ…uh€                                                                   Ç %$




Louisville’s longstanding reputation for inexpensive               8uh…y‚‡‡r                                                       Ç "'!



homes is getting harder to defend. Home prices have              Svpu€‚q                                                        Ç !'$


been bid up generally by the addition of about 50,000          7v…€vtuh€                                                       Ç !& 

new homes built in the Louisville market in the nineties,
thus erasing one of the area’s most important cost of             8‚yˆ€iˆ†                                                      Ç !$



living advantages – at least compared to the nation as a        B…rr†i‚…‚                                                      Ç !#'


whole. While there has been a statistical convergence of        Fh†h†Ã8v‡’                                                  Ç !&

home prices among the fifteen metro areas, Louisville
nonetheless can boast the twelfth lowest median home
                                                                  8vpvh‡v                                                Ç    ((




price in the last year for which data are available.               Ih†u‰vyyr                                             Ç      %#



                                                                   Hr€ƒuv†                                           Ç          "


The average value of a new home has also risen rapidly
                                                                Dqvhhƒ‚yv†                                         Ç       (
in Louisville during the past decade. By 1999, the aver-
age value was over $120,000, exclusive of the land price.          G‚ˆv†‰vyyr                                        Ç (&



This is only a few thousand dollars below the national              P€huh                                            Ç (#


average. And for a few years in the nineties, homes built           9h’‡‚                                         Ç # 

in Louisville actually cost on average more than that for
the nation as a whole.                                           Ehpx†‚‰vyyr                                  Ç($!




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28                                                                                 Macro Performance Indicators, 2000
Utility Costs
There is no standard comprehensive source of data on                                            5HVLGHQWLDO (OHFWULFLW\ &RVWV 
                                                                                                  NLORZDWW KRXUV SHU PRQWK
utiltity costs by metro area. This is partly because utilities
have service territories that are rarely coterminus with                       9h’‡‚                                                                                                        Ç " "'


metro boundaries. For example, Louisville Gas and Elec-
tric serves primarily customers in Jefferson and Oldham                     Svpu€‚q                                                                                                         Ç "!&




County only, accounting for almost three-fourths of the                     8‚yˆ€iˆ†                                                                                                        Ç !&''


Louisville metro population. Nevertheless, one can get a
fairly accurate impression of relative utitlity costs by ex-                   Shyrvtu                                                                                                      Ç !&&"



amining published information on the major utilities in                      8vpvh‡v                                                                                               Ç !#


our comparison markets. The Memphis Light Gas and
Water Division publishes an annual rate comparison for                     Fh†h†Ã8v‡’                                                                                            Ç    &



selected cities, including Louisville. And the Edison Elec-                B…rr†i‚…‚                                                                                         Ç       #&

tric Institute publishes data on “typical bills” in other
selected markets regularly.                                                  8uh…y‚‡‡r                                                                                        Ç       #&




                                                                           7v…€vtuh€                                                                                       Ç ($'

As in our previous study, we found Louisville to have
low energy costs, moderate water and wastewater costs,                     Ehpx†‚‰vyyr                                                                                  Ç !"



and relatively high phone rates. Louisville’s residential elec-              Hr€ƒuv†                                                                             Ç(# #

tricity costs in 2000 were the lowest of the thirteen mar-
kets for which comparable data were available. And                         Dqvhhƒ‚yv†                                                                      Ç'(#



Louisville’s natural gas costs were sixth lowest of the                      G‚ˆv†‰vyyr                                                      Ç%&%#

seven markets for which data were available.
                                                                                          Source: Memphis Light Gas and Water Division, and Edison Electric Institute.



The water bill for most households includes both a wa-
ter service and a wastewater portion, and these compo-

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                         WKHUPV SHU PRQWK                                                                 JDOORQV SHU PRQWK
                                                                                 Ehpx†‚‰vyyr           Ç & $                                        Ç#%(
                                                                                                         Xh‡r…ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃXh†‡rh‡r…
 Ehpx†‚‰vyyr                                                    Ç (# #
                                                                                  Svpu€‚q                  Ç!!!                                    Ç"$'%


                                                                                   8vpvh‡v              Ç!($                               Ç!('$
   8uh…y‚‡‡r                                           Ç #$

                                                                                 Fh†h†Ã8v‡’                     Ç"#                              Ç ($


  8‚yˆ€iˆ†                                           Ç "%"(                       8‚yˆ€iˆ†                Ç! "#                              Ç!&%%


                                                                                   G‚ˆv†‰vyyr               Ç! '%                           Ç!#"%

   8vpvh‡v                                 Ç ! !
                                                                                     9h’‡‚                Ç!#(                          Ç!# '


                                                                                    8uh…y‚‡‡r           Ç %&                          Ç!&%$
 Dqvhhƒ‚yv†                              Ç '$'

                                                                                 Dqvhhƒ‚yv†                  Ç!%(                        Ç #&$


   G‚ˆv†‰vyyr                            Ç '"                                 B…rr†i‚…‚               Ç ($                      Ç '(

                                                                                                                                                        T‚ˆ…pr)ÃShs‡ryv†ÃAvhpvhyÃ
                                                                                      Shyrvtu             Ç ''%                   Ç %%"
                                                                                                                                                        8‚†ˆy‡vtÃQ6ÃÅXh‡r…ÃhqÃ

   Hr€ƒuv†                               Ç((&"                                                                                                         Xh†‡rh‡r…ÃSh‡rÃTˆ…‰r’ÅÃ!


                                                                                    Hr€ƒuv†           Ç "$         Ç%$'

                Source: Memphis Light Gas and Water Division.




Macro Performance Indicators, 2000                                                                                                                                                      29
nents differ greatly among the comparison markets. We                         States. A household could pay hundreds of dollars more
have combined the two in the accompanying chart. Note                         annually in taxes than an identical household in the same
that Jacksonville has one of the lowest water rates, but                      metropolitan area by virtue of living in a high tax local
has by far the highest wastewater rate, and thus tops the                     jurisdiction – an expensive school district, or across a
chart in overall bill. The typical Memhis bill is a fraction                  state border. No government agencies or other organi-
of that in other markets. And Louisville ranks in the                         zations have the raw information or the incentive to de-
middle of the twelve markets for which data were avail-                       velop metropolitan tax burden estimates.
able.
                                                                              For example, even in Jefferson County, a household could
The monthly cost of a residential phone line in Louis-                        pay hundreds of dollars more or less per year in prop-
ville, at $24.63, is the highest of any of the comparison                     erty taxes depending upon their location. A family living
markets, according to the Federal Communications Com-                         in a home valued at $180,000, owning automobiles val-
mission..                                                                     ued at $18,000 would been liable for $2,473 in property
                                                                              taxes if they lived in the City of Louisville. Their tax bill
State and Local Taxes                                                         would be $800 less in an unincorporated portion of the
Louisville continues to be a high tax area for residents.                     County (where they would have to contract separately
The high tax burden appears to be due to a broad range                        for garbage pickup and some other services).
of relatively aggressive state and local taxes, rather than
to one very high tax rate. Kentucky’s state individual in-                    Similarly, workers in the Louisville economy pay widely
come and sales taxes are the single biggest contributors                      varying income and occupational taxes, depending upon
to the high tax burden.                                                       the jurisdiction of their places of residence and work.
                                                                              Indiana residents face but a 3.4 percent state income tax,
Largely because of the wide variety of property and                           and many parts of the Louisville market do not levy an
sales tax rates within metropolitan areas, there is no stan-                  occupational tax. On the other hand, those that both live
dard measure of local tax burdens around the United                           and work in Jefferson County face fairly stiff income-



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30                                                                                                          Macro Performance Indicators, 2000
based taxes. Kentucky’s state income tax rate is 6 percent                  tax rates reveal why. Kentucky’s state tax rates are near
on income above $8,000. And local governments and                           the top in the major revenue generating categories – in-
the public school system tack on up to 3.2 percent more                     dividual income taxes, sales taxes, corporate income taxes.
in occupational taxes, depending upon the place of work
within the County. A household earning $60,000 per year                     The fifteen states vary widely in their taxation of grocer-
in wages and salaries would pay between $1,320 and                          ies and drugs, making direct comparisons of sales tax
$1,920 in local occupational taxes, in addition to the Ken-                 rates difficult. Ten of the states have lower sales tax rates
tucky state income tax. Residents of surrounding coun-                      than Kentucky’s 6 percent, but five of those do not ex-
ties who commute into Jefferson County to work are                          empt groceries. All of the comparison states exempt pre-
exempt from the school system portion (.75%) of the                         scription drugs, and two exempt non-prescription drugs.
occupational tax.                                                           Overall, Kentucky appears to fall in the upper middle of
                                                                            the states. It does not have the highest sales tax rate, and
Despite the tax complexities due to the many jurisdic-                      it exempts groceries.
tions within a metro area, a fairly
accurate picture of differential tax
                                                   /RFDO 2FFXSDWLRQDO 7D[HV RQ  RI :DJHV DQG 6DODULHV
burdens can be composed by ex-
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amining state and local tax rates
                                          &LW\ RI /RXLVYLOOH-HIIHUVRQ &RXQW\ )LVFDO &RXUW                            
around the United States, as well
                                          7UDQVLW $XWKRULW\ RI 5LYHU &LW\                                             
as published rankings and studies -HIIHUVRQ &RXQW\ 3XEOLF 6FKRROV
                                                    
of related tax issues. The fifteen                7RWDO LI SODFH RI ZRUN LV &LW\ RU XQLQFRUSRUDWHG &RXQW\          
comparison metros, with central                                        RU LI SODFH RI ZRUN LV -HIIHUVRQWRZQ        
business districts in but nine states,                                  RU LI SODFH RI ZRUN LV 6W 0DWWKHZV        
encompass areas in fifteen states.                                             RU LI SODFH RI ZRUN LV 6KLYHO\      
For example, while Cincinnati is 
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considered an Ohio city, the Cin-
cinnati economy reaches into parts
of Kentucky and Indiana. Similarly, Kansas City’s We have also compiled some comparison information
economy is in both Missouri and Kansas. In fact, six of on local tax rates. While not permitted in Kentucky, many
the fifteen metros include counties in more than one state. local governments around the United States levy a sales
And two of the metros include counties in three states. tax – typically an increment to the state sales tax rate. For
                                                                      example, Tennessee has a six percent sales tax rate on
By nearly every measure, Kentucky emerges as a high tax retail purchases, including food. Nashville and Memphis
state for households. Kentucky has the highest state tax each add 2.25 percent to the state base of 6 percent.
collections of any of the fifteen comparison states, on
both a per capita and percent of income basis. Indeed, Some local governments also levy an income, or com-
Kentucky has one of the highest state tax burdens of any muter, tax. Technically, an income tax is one levied on
state, ranking fifth of fifty in tax collections per dollar of residents in a jurisdiction and based upon their income
income, and fifteen highest per capita. A look at the state wherever earned. Commuter taxes, like the Louisville-

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Macro Performance Indicators, 2000                                                                                                      31
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  Jefferson County occupational tax, are levied on work-                            While Louisville is the second highest taxing metro among
  ers in the jurisdiction regardless of where the worker                            the peer cities in terms of local corporate and personal
  resides. Typically, commuter taxes are withheld from                              income taxes, Louisville is the only peer city that does
  workers paychecks and no annually filing (or refunds)                             not impose local sales, use and gross receipts taxes in
  are required.                                                                     addition to any such state taxes. Local sales, use, and gross

  The three Ohio metros, Kansas City, and
                                                                                         6WDWH 6DOHV 7D[ 5DWHV 
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                                                                                                                       ([HPSWLRQV
  a corporate income or net profits tax.
  The tax rate in Kansas City is just one                                                                                                 1RQ
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  rates between two and two and a quar-                                                  5DWHV            )RRG           'UXJV            'UXJV
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  rate of 2.2 percent is second highest                          $UNDQVDV                                             

  behind Dayton’s 2.25 percent.                                  )ORULGD                                   
              
                 

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  are the only peer cities to levy a local                       .DQVDV                                                 

                                                                 .HQWXFN\                                  
              

  personal income tax. The personal in-
                                                                 0LVVLVVLSSL                                              

  come tax rates for the Ohio metros,
                                                                 0LVVRXUL                                             

  Kansas City, and Louisville are the same
                                                                 1HEUDVND                                
              

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  of 0.7 percent on income earned in                             6RXWK &DUROLQD                                           

  Marion County by county residents and                          7HQQHVVHH                                                

  0.175 percent on income earned in                              9LUJLQLD                                            
                 

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  32                                                                                                            Macro Performance Indicators, 2000
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receipts taxes are highest in the city of Birmingham at                          rates range from three percent in Greensboro and Nash-
four percent. However, in the Birmingham metro area                              ville to six percent in Raleigh/Durham and Jacksonville
outside of the city of Birmingham the rate varies be-                            (four percent of which is designated as a tourist devel-
tween one and two percent. Other metro areas with lo-                            opment tax).
cal sales, use, and gross receipts taxes above two percent
are the three metros in North Carolina, the two in Ten-                          Given the comlexities of the tax rate structures among
nessee, and Kansas City. Other than Louisville, the low-                         metros, the only way to compare tax burdens among
est rates are in Jacksonville and Columbus.                                      metros is to concoct a hypothetical household, make as-
                                                                                 sumptions about the the household’s income and juris-
In addition, a number of the metros, but not Louisville,                         diction, and to estimate the state and local tax liability of
add an additional sales tax of temporary lodgings. The                           that household in each market.

Macro Performance Indicators, 2000                                                                                                       33
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One revealing measure of differing local tax burdens is             built and/or lower priced than homes in the south, south-
provided each year by the Mayor’s office of the City of             west, far west, and northeast. Whether Louisville’s supe-
Washington DC. Analysts obtain information on the tax               riority has survived during the building boom of the
rates levied in the largest city of each state, plus DC. Tax        nineties is an empirical question that we cannot answer
categories include individual income taxes, real property           here. Certainly, the last decade has seen a convergence of
taxes, sales taxes, and automobile taxes. The tax burden            prices in Louisville toward the national average, as well
on a hypothetical family of four is estimated for each of           as the arrival of several large scale builders that use a
four income levels - $25,000, $50,000, $75,000 and                  similar model for home building around the United
$100,000. Estimates from the latest study are provided              States.
in the accompanying table, which for the first time pro-
vide estimates for families with income of $150,000.                Second, an above average tax burden is not in and of
Note that only nine of our comparison metros contain                itself a bad thing. If accompanied by above average
cities deemed to be the largest in their host states, and           schools, transportation systems, libraries, safety, and ameni-
hence included in the DC study. Note also that the refer-           ties, higher tax burdens could actually be lure to residents
ence point is the city jurisdiction, not the metropolitan           and businesses. The competition for mobile people and
area.                                                               firms among the fifteen metros in large part depends
                                                                    upon the ‘tax value’, that is how much do you get for
According to the DC study, Louisville families have the             your tax burden? Markets with low tax burdens and high
highest tax burden of any of the comparison cities, and             public services are the most attractive, all other factors
at all income levels. For families with incomes less than           considered. To the extent those we wish to attract to
$50,000, Louisville ranks among the highest ten cities              Louisville are aware of the high taxes here, we need to
nationally. Moreover, at all income levels, Louisville has          make them aware of the high volume and quality of
ranked in the top fifteen cities nationally since the DC            public services here as well.
studies began in 1993.
                                                                    Third, Louisville’s high tax burden is not entirely of its
This finding is consistent with a recent report by                  own doing. Louisville is unfortunately the only large
Runzheimer International, a corporate relocation con-               economic engine in a relatively undeveloped state. High
sulting firm. In putting together geographic adjustments            state-level income and sales taxes are collected dispro-
for salaries of relocating managers it assembled a wealth           portionately in the Louisville area, and perhaps as little as
of data on local tax differences around the United States.          fifty cents per dollar comes back to the area through
They released estimates publicly in 2000, showing the tax           state spending. (See Coomes and Kornstein, 2000). In
burdens on a family of four earning $60,000, living in a            examining the massive redistribution of public funds
home valued at $180,000, and owning two cars. They                  through state government, we found that the sparsely
found Louisville to have the fifth highest tax burden               populated areas of Kentucky were heavily subsidized by
among the 51 markets studied (one large city in each                the more densely populated areas. Thus, the few urban
state, plus the District of Columbia).                              areas are providing urban services to those who choose
                                                                    to live in more remote areas of the state. The cash bur-
There are some mitigating issues to consider. First, at             den on Louisville taxpayers was $750 million in the last
least historically, one could expect to acquire ‘more home’         year studied. Worryingly, the relative net outflow had not
for $180,000 in Louisville than in Chicago or other larger          been reduced since the last time we studied this issue,
markets. Homes in Louisville have traditionally been better         five years prior.

34                                                                                          Macro Performance Indicators, 2000
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        &KDUORWWH                                                                                    
        &ROXPEXV                                                                                     
        ,QGLDQDSROLV                                                                                 
        -DFNVRQYLOOH                                                                                   
        .DQVDV &LW\                                                                                  
        /RXLVYLOOH                                                                                  
        0HPSKLV                                                                                        
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        &KDUORWWH                                                                                
        &ROXPEXV                                                                                 
        ,QGLDQDSROLV                                                                               
        -DFNVRQYLOOH                                                                                 
        .DQVDV &LW\                                                                                
        /RXLVYLOOH                                                                               
        0HPSKLV                                                                                    
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        %LUPLQJKDP                                                                               
        &KDUORWWH                                                                              
        &ROXPEXV                                                                               
        ,QGLDQDSROLV                                                                           
        -DFNVRQYLOOH                                                                               
        .DQVDV &LW\                                                                            
        /RXLVYLOOH                                                                               
        0HPSKLV                                                                                    
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        %LUPLQJKDP                                                                             
        &KDUORWWH                                                                              
        &ROXPEXV                                                                             
        ,QGLDQDSROLV                                                                           
        -DFNVRQYLOOH                                                                               
        .DQVDV &LW\                                                                            
        /RXLVYLOOH                                                                           
        0HPSKLV                                                                                   
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        &KDUORWWH                                                                            
        &ROXPEXV                                                                             
        ,QGLDQDSROLV                                                                          
        -DFNVRQYLOOH                                                                               
        .DQVDV &LW\                                                                         
        /RXLVYLOOH                                                                        
        0HPSKLV                                                                                  
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Macro Performance Indicators, 2000                                                                                             35
                                                                     Cost of Business



  L
          abor markets, primarily at the entry level, have                            At $16.70 per hour Louisville had the second highest
          been tight in most metropolitan areas throughout                            wage rate for production jobs in manufacturing in 2000,
          the past five years, due to the strong national                             according to the U.S. Bureau of Labor Statistics esti-
  economy and the relative paucity of people in the co-                               mates for fourteen comparison markets. (No estimates
  hort aged 18 to 30. Yet, for several reasons, most mar-                             are available for Jacksonville). Only Dayton had a higher
  kets have been able to expand each year, raising output,                            average wage rate. Louisville also posted the fifth great-
  employment and payrolls. Businesses have responded to                               est growth in manufacturing wage rates over the past
  the shortage of entry level workers by automating tradi-                            five years. Note that Nashville, Raleigh, Omaha, and
  tional retail service functions - ATMs at banks, card swiping                       Charlotte - the markets with the greatest growth in wage
  and self-service at gasoline stations, electronic ordering                          rates, remain in the lower half of wage rates in 2000.
  of merchandise where the customer performs all the                                  Except for Charlotte, which has been shedding lower
  data entry.                                                                         paying manufacturing jobs, these markets have gained
                                                                                      some higher value-added manufacturing operations. In-
  Federal and state welfare reform measures have induced                              dianapolis had the least growth in wage rates, and has
  many persons previously considered unemployable into                                had no net growth in manufacturing employment.
  the labor market. And there has been a worriesome in-
  crease in teenage employment (and high school drop-                                 A summary measure of labor costs outside of manu-
  outs) as employers strain to find labor in fast food res-                           facturing is obtained by dividing total annual payrolls in
  taurants, grocery stores, ticket windows, package han-                              an industry by the average annual number of jobs in that
  dling, and construction. Louisville appears to be han-                              industry. We examined some aggregate data in a previ-
  dling this labor shortage in much the same way as the                               ous section, finding that Louisville ranked eleventh in an-
  rest of the country. Labor costs have not risen apprecia-                           nual earning per job in distribution industries, and
  bly during the nineties, while productivity is up.                                  fourteenth in office-type industries.



                         :DJH 5DWHV LQ 0DQXIDFWXULQJ                                                  ,QFUHDVH LQ :DJH 5DWHV 0DQXIDFWXULQJ
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    9h’‡‚                                                                   Ç &#(      Ih†u‰vyyr                                                                          !"%$È




  G‚ˆv†‰vyyr                                                            Ç %&             Shyrvtu                                                                        !!#$È



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  36                                                                                                             Macro Performance Indicators, 2000
                    0HGLDQ +RXUO\ (DUQLQJV 6HOHFWHG 2FFXSDWLRQV 0HWURSROLWDQ $UHDV 
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                           $FFRXQWDQWV   &RPSXWHU          &LYLO       7HFKQRORJLVW    +HDY\    )UHLJKW DQG                                     3DFNDJH
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           %LUPLQJKDP                                                                                                       
              &KDUORWWH                                                                                                     
             &LQFLQQDWL                                                                                                     
             &ROXPEXV                                                                                                       
                'D\WRQ                                                                                QD                        
           *UHHQVERUR                                                                                                       
           ,QGLDQDSROLV                                                                                                     
           -DFNVRQYLOOH                                                                                                     
           .DQVDV &LW\                                                                                                      
             /RXLVYLOOH                                                                                                     
              0HPSKLV                                                                                                      
              1DVKYLOOH                                                                                                     
                2PDKD                                                                                                       
                5DOHLJK                                                                                                     
             5LFKPRQG                                                                                                       
          8QLWHG 6WDWHV                                                                                                     
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Of course, employers hire by occupation, not by indus-              Real Estate Costs
try. We have organized recent estimates for a few occu-             The dynamics of the real estate market are complex,
pations in the accompanying table. Good comparable                  with speculative building often well ahead of market
data are available from the U.S. Bureau of Labor Statis-            need, price adjustments lagging, and with mismatches
tics on many occupations, and we selected seven that
should be indicative of labor costs in activities central to
economic development efforts - accountants, computer                                            3ULFH RI ,QGXVWULDO 6SDFH
programmers, civil engineers, meidcal and clinical lab tech-                            6XEXUEDQ /RFDWLRQ SHU VTXDUH IRRW 
nologists, drivers of heavy trucks, stock handlers, and
package handlers. One’s first impression of the data is                    G‚ˆv†‰vyyr                                                                                Ç#




that there is little variation in labor costs among the fif-             Fh†h†Ã8v‡’                                                                                 Ç#



teen markets, particularly given that most of the wage                    Svpu€‚q                                                                                 Ç"'&


estimates are subject to sampling and other errors of
three or more percentage points. Nevertheless, a few
                                                                             Shyrvtu                                                                             Ç"&$




things stand out. Louisville had the lowest median hourly                B…rr†i‚…‚                                                                              Ç"&$



wages in two categories - computer programmers and                         8uh…y‚‡‡r                                                                             Ç"&$


manual freight movers. Louisville ranked relatively high                     P€huh                                                                         Ç"$"

in pay for civil engineers and package handlers.
                                                                        Dqvhhƒ‚yv†                                                                       Ç"$!




It is interesting to observe which market had the highest                  Hr€ƒuv†                                                                        Ç"#&



pay in each occupation. Birmingham paid the most for                      8vpvh‡v                                                                     Ç""$


accountants, Raleigh for computer programmers, Omaha
for civil engineers, Columbus for medical techs, Mem-
                                                                           Ih†u‰vyyr                                                                  Ç"!$




phis for truck drivers and freight handlers, and India-                 7v…€vtuh€                                                                    Ç"!$



napolis for package handlers. Of course, high pay can be                 Ehpx†‚‰vyyr                                                            Ç"


the result of many factors, including very productive                     8‚yˆ€iˆ†                                                               Ç"

workers, strong local demand or weak local supply.
                                                                             9h’‡‚                                                          Ç!&$


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Macro Performance Indicators, 2000                                                                                                                            37
                        3ULFH RI &ODVV $ 2IILFH 6SDFH                                                                      3ULFH RI &ODVV % 2IILFH 6SDFH
                       &HQWUDO %XVLQHVV 'LVWULFWV                                                                    &HQWUDO %XVLQHVV 'LVWULFWV 
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   8uh…y‚‡‡r                                                                               Ç!$     8uh…y‚‡‡r                                                                                            Ç '$




  8‚yˆ€iˆ†                                                                        Ç!!$              8‚yˆ€iˆ†                                                                                           Ç '



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Ehpx†‚‰vyyr                                                                 Ç!!&                 Fh†h†Ã8v‡’                                                                               Ç $$



Fh†h†Ã8v‡’                                                              Ç!                     Dqvhhƒ‚yv†                                                                              Ç $$



7v…€vtuh€                                                               Ç!                     B…rr†i‚…‚                                                                           Ç $



   Ih†u‰vyyr                                                            Ç ($                      Ehpx†‚‰vyyr                                                                        Ç #&"



Dqvhhƒ‚yv†                                                            Ç ($                      7v…€vtuh€                                                                       Ç "&$



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                          3ULFH RI &ODVV $ 2IILFH 6SDFH                                                                          3ULFH RI &ODVV % 2IILFH 6SDFH
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                                 …r‡hyÅh‡r†ÃÇÃr…Æ„ˆh…rÃs‚‚‡                                                                        …r‡hyÅh‡r†ÃÇÃr…Æ„ˆh…rÃs‚‚‡



    P€huh                                                                                  Ç!        Fh†h†Ã8v‡’                                                                                             Ç '




    Shyrvtu                                                                               Ç!&$          8‚yˆ€iˆ†                                                                                         Ç &"




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Fh†h†Ã8v‡’                                                                               Ç!$        Dqvhhƒ‚yv†                                                                                   Ç %




7v…€vtuh€                                                                               Ç!!$            8uh…y‚‡‡r                                                                                   Ç %




  8‚yˆ€iˆ†                                                                              Ç ('               Shyrvtu                                                                                  Ç $&$




Dqvhhƒ‚yv†                                                                           Ç ($                P€huh                                                                                    Ç $&$




  8uh…y‚‡‡r                                                                           Ç (!$            B…rr†i‚…‚                                                                                    Ç $&$




B…rr†i‚…‚                                                                        Ç '&$                  G‚ˆv†‰vyyr                                                                            Ç $




  G‚ˆv†‰vyyr                                                                    Ç '                  Ehpx†‚‰vyyr                                                                          Ç #"




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Ehpx†‚‰vyyr                                                                   Ç &#(



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  levy a higher tax. However, given the accounting com-                                              precise statement about business taxes using this data.
  plexities of prorating corporate net income for compa-                                             The Kentucky state tax rate, while high on a nominal
  nies operating in many states, it is not possible to make a                                        basis, does not generate much tax revenue for state gov-

  38                                                                                                                                   Macro Performance Indicators, 2000
between the location and characteristics of building stock
and current demand. It is beyond the scope of this re-                            ,QGXVWULDO (OHFWULFLW\ &RVWV 
                                                                           NZ SHDN  NLORZDWW KRXUV SHU PRQWK
port to draw strong conclusions about Louisville’s real
estate market. Nevertheless, recent data on real estate costs       Shyrvtu                                                                                          Ç!#&(#


reinforce Louiville’s image as a distribution center. Lou-
isville ranked highest in the cost of industrial space in       Fh†h†Ã8v‡’                                                                                        Ç!##(




1999, but in the middle of the rankings for office space.         8vpvh‡v                                                                                      Ç!"'$'


For industrial space, we compared the gross lease rates
per square foot of suburban buildings in the 60,000 to            Hr€ƒuv†                                                                                        Ç!"!&'



100,000 square foot category. The data are reported by              9h’‡‚                                                                                      Ç!!'#"


the Society of Industrial and Office Realtors each year.
Lease rates are lowest for Dayton, Columbus and Jack-            8‚yˆ€iˆ†                                                                                      Ç! ('$



sonville. Except for the Dayton market, which had a             B…rr†i‚…‚                                                                                 Ç!  $#

decline in absorption of industrial real estate and a 12
percent vacancy rate in 1999, the SIOR data does not              8uh…y‚‡‡r                                                                                Ç!  $#



reveal a simple correlation between inventory, usage            Ehpx†‚‰vyyr                                                                              Ç!(&#

and price.
                                                                Dqvhhƒ‚yv†                                                                           Ç! #!



For office space, SIOR differentiates between class A            Svpu€‚q                                                                             Ç ('!

and B space, and between downtown and suburban lo-
cations. According to SIOR, in the past five years              7v…€vtuh€                                                                        Ç ''$#


Louisville’s central business district office space has gone
                                                                  G‚ˆv†‰vyyr                                                    Ç "'$$

from the least expensive of the fifteen markets to near
the middle of the rankings. This is true for both class A                       Source: Memphis Light Gas and Water Division, and Edison Electric Institute.



and B space. For suburban locations, Louisville’s posi-
tion in the middle of the rankings remains unchanged
since the five years ago.
                                                                                   &RPPHUFLDO (OHFWULFLW\ &RVWV 
Utility Costs                                                                  NZ SHDN  NLORZDWW KRXUV SHU PRQWK
Energy costs remain low in the Louisville market, par-              9h’‡‚                                                                                         Ç(%%$

ticularly for electricity. As in our previous study, we found
that Louisville had the lowest electrcity rates for both         8‚yˆ€iˆ†                                                                                        Ç(! $


commercial and industrial customers. Natural gas costs
                                                                  8vpvh‡v                                                                                     Ç( '

were also near the bottom of available data for the com-
parison cities. Water costs in Louisville appear to have        Fh†h†Ã8v‡’                                                                                     Ç( 


edged towards the top of the comparison markets, how-
                                                                                                                                                                Ç( $
ever. And the cost of a business phone line in Louisville
                                                                7v…€vtuh€




is near the average for the competitor cities.                   Svpu€‚q                                                                                      Ç'($




State and Local Taxes
                                                                    Shyrvtu                                                                             Ç' !




The reader should refer to the discussion of tax burdens        Dqvhhƒ‚yv†                                                                        Ç&&$$


on residents, several pages prior under the Cost of Liv-
ing section. Many of those findings, particularly
                                                                B…rr†i‚…‚                                                                        Ç&#&$




Kentucky’s individual income tax and the Jefferson                8uh…y‚‡‡r                                                                       Ç&#&$


County net profits tax, also apply to a discussion of the
cost of doing business in the Louisville market.                  Hr€ƒuv†                                                                   Ç%'!%%




                                                                Ehpx†‚‰vyyr                                                          Ç% %(!


Corporate income taxes are levied by all fifteen state gov-
ernments that contain counties of our comparison metros.          G‚ˆv†‰vyyr                                                    Ç$#'(




Kentucky stands out in its high corporate income tax                            Source: Memphis Light Gas and Water Division, and Edison Electric Institute.


rates, particularly for taxable income above $250,000.
Only three states in the list - Indiana, Iowa, and Ohio -

Macro Performance Indicators, 2000                                                                                                                                         39
                    ,QGXVWULDO 1DWXUDO *DV &RVWV                                                                    &RPPHUFLDO 1DWXUDO *DV &RVWV 
                         WKHUPV SHU PRQWK                                                                             WKHUPV SHU PRQWK


 Ehpx†‚‰vyyr                                                                     Ç!''"#                 8uh…y‚‡‡r                                                                Ç%'"




   8vpvh‡v                                                                Ç!&%&!                   Ehpx†‚‰vyyr                                                               Ç%%# 




   8‚yˆ€iˆ†                                                                 Ç!%'%                      8‚yˆ€iˆ†                                                               Ç%$##(




    8uh…y‚‡‡r                                                              Ç!%#&                       8vpvh‡v                                                      Ç$'"&#




    G‚ˆv†‰vyyr                                              Ç!'$                                        Hr€ƒuv†                                             Ç#("("




 Dqvhhƒ‚yv†                                       Ç ("$'                                               G‚ˆv†‰vyyr                                          Ç#(&!




    Hr€ƒuv†                                        Ç '( '                                             Dqvhhƒ‚yv†                                        Ç#$'$



                 Source: Memphis Light Gas and Water Division.                                                         Source: Memphis Light Gas and Water Division.




                      ,QGXVWULDO :DWHU &RVWV                                                                        &RPPHUFLDO :DWHU &RVWV 
                           PLOOLRQ JDOORQV                                                                                 JDOORQV

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 40                                                                                                                               Macro Performance Indicators, 2000
                                  0RQWKO\ 7HOHSKRQH 5DWHV IRU D %XVLQHVV ZLWK D 6LQJOH /LQH
                                                  DV RI 2FWREHU  

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            T‚ˆ…pr)ÃArqr…hyÃ8‚€€ˆvph‡v‚†Ã8‚€€v††v‚ÃÅSrsr…rprÃ7‚‚xÂsÃSh‡r†ÃQ…vprÃ

            Dqvpr†ÃhqÃ@‘ƒrqv‡ˆ…r†Ãs‚…ÃUryrƒu‚rÃTr…‰vprÅÃEˆrà (((                                                              
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            5DOHLJK         &ROXPEXV .DQVDV &LW\ &LQFLQQDWL                     1DVKYLOOH   0HPSKLV     /RXLVYLOOH ,QGLDQDSROLV 5LFKPRQG


ernment, indicating wide opportunities to                                  6WDWH &RUSRUDWH ,QFRPH 7D[ 5DWHV 7D[ <HDU 
minimize the tax burden.
                                                                                                           1R RI        /RZ     +LJK
                                                                                               5DWHV      %UDFNHWV      %UDFNHW %UDFNHW
Kentucky jurisdictions generally levy low
property taxes, a locational incentive for                       $ODEDPD                                                  QD      QD
firms with expensive plant and equipment.                        $UNDQVDV                                           
Most states rely heavily on local property                       )ORULGD                                                  QD      QD
taxes to finance K-12 education, whereas                         ,QGLDQD 
                                                QD      QD
Kentucky stands out in its use of statewide                      ,RZD                                             
income and sales taxes to finance local edu-                     .DQVDV                                                   QD      QD
cation. The City of Louisville, however, is                      .HQWXFN\                                         
an exception in the state of Kentucky, levy-                     0LVVLVVLSSL                                         
ing property taxes at a rate similar to that
                                                                 0LVVRXUL                                                QD      QD
for Indiana or Ohio cities. Hence, capital-
intensive businesses in the City face both                       1HEUDVND                                         
stiff property and income taxes. Outside                         1RUWK &DUROLQD                                           QD      QD
the City, property tax rates (and public ser-                    2KLR                                               
vices) are generally one-half what a busi-                       6RXWK &DUROLQD                                           QD      QD
ness would face in, say, Indianapolis or Cin-                    7HQQHVVHH                                                QD      QD
cinnati.                                                         9LUJLQLD                                                 QD      QD
                                                                 6RXUFH 7D[ )RXQGDWLRQ 6WDWH 7D[ 5DWHV DQG  &ROOHFWLRQV 6SHFLDO 5HSRUW
Louisville raised its hotel tax several years                    1XPEHU   -XQH 
ago to help finance the new convention                           
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center downtown. Nevertheless, Louisville                        VXSSOHPHQWDO LQFRPH WD[
still has one of the lowest combined tax                         QD QRW DSSOLFDEOH

Macro Performance Indicators, 2000                                                                                                          41
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                            &KDUORWWH                                  
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                               7RS  'HVWLQDWLRQV LQ   6XPPDU\
                            /RXLVYLOOH DQG 2PDKD IURP $PHULFDQ +RWHO 0RWHO $VVRFLDWLRQ 6WDWH DQG
                               /RFDO $FFRPPRGDWLRQ 7D[HV 


rates (lodging plus general sales tax) among the compari-
son metros.
                                                                                                    )HGHUDO *RYHUQPHQW 7RWDO 3HU 'LHP 5DWHV
                                                                                                         /RGJLQJ 0HDOV DQG ,QFLGHQWDOV
Business Traveler Costs
Louisville’s reputation for inexpensive hotel rooms and                                       Shyrvtu                                                               Ç !&

other hospitality related costs is supported by federal
government per diem rates. The 2001 rates for federal                                     Fh†h†Ã8v‡’                                                               Ç !&




employees visiting the fifteen markets are shown in the                                    Svpu€‚q                                                     Ç       $


accompanying charts. Louisville ranks ninth highest in                                     8vpvh‡v                                                   Ç       $

lodging costs, at $69 per night, and tenth highest in total
cost per day. Indeed the costs correlate well with the                                      Ih†u‰vyyr                                               Ç       #




population sizes of the comparison markets.                                                8‚yˆ€iˆ†                                             Ç       "




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42                                                                                                            Macro Performance Indicators, 2000
                                                                                Human Capital



P
        erhaps no element of economic development is                                      not last, was near the bottom of the rankings. We believe
        as important, or as hard to measure, as human                                     this low rate of formal education to be caused by sev-
        capital. Employers at a minimum need workers                                      eral long-term factors, including Louisville’s relatively older
who are literate and numerate. Parents seek communities                                   population, the outmigration of the most educated young
with strong school systems. Economies are boosted both                                    persons, and the fact that some of our competitors host
by a well-educated workforce, but also by research ini-                                   major research universities (Columbus, Raleigh, Nash-
tiatives - typically spawned by local universities.                                       ville).

We review a number of recent indicators of human capital                                  More current data on the educational attainment of Lou-
in this section. We believe that the Louisville area still lags                           isville residents will not be available for more than a year,
its competitors in formal education, particularly at the                                  when the detailed 2000 Census results are released. We
college level. Available measures for K-12 education lo-                                  know from the 1990 Census that Louisville has a long
cally suggest that our schools are about average in test                                  way to go, in terms of both high school and college
scores and spending. Data on federal research funding                                     attainment of adults, to catch its competitors or the na-
and on patent activity suggest that research and develop-                                 tional average. Using national and local trends, and mak-
ment in the Louisville area remains low, though recent                                    ing assumptions about recent progress by age-sex co-
growth rates are very encouraging.                                                        hort, we have recently made estimates of the educational
                                                                                          attainment of Louisville area residents through the year
Educational Attainment                                                                    1998. Our best estimate is that Louisville still remains far
One of the most surprising findings from our 1995 re-                                     behind the nation in formal education, and for nearly
port was that the Louisville area had the lowest percent-                                 every age group. See our study for the Louisville-Jefferson
age of adults with a college degree among the eighteen                                    County Workforce Investment Board, The Louisville La-
metros studied. Our high school attainment rate, while                                    bor Force: Issues and Trends.



                                                                           College Attainment
                                                               Louisville Economic Area vs. United States
                                                 30.0
                                                                Females                                         Males
                                                                   United States
                                                 25.0
        % of population 25+ completing college




                                                                Louisville
                                                                Economic Area
                                                 20.0



                                                 15.0



                                                 10.0



                                                  5.0



                                                  0.0
                                                        1990                       1998                1990                      1998




Macro Performance Indicators, 2000                                                                                                                 43
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%LUPLQJKDP &LW\                                                                                     
%LUPLQJKDP -HIIHUVRQ &R                                                                                      
&KDUORWWH0HFNOHQEXUJ                                                                                          
&LQFLQQDWL &LW\                                                                                                
&ROXPEXV &LW\                                                                                                  
'D\WRQ &LW\                                                                                                    
*UHHQVERUR *XLOIRUG &R                                                                                      
*UHHQVERUR )RUV\WK &R                                                                                       
,QGLDQDSROLV                                                                                                   
-DFNVRQYLOOH 'XYDO &R                                                                                      
.DQVDV &LW\                                                                                           
/RXLVYLOOH -HIIHUVRQ &R                                                                                    
0HPSKLV &LW\                                                                                                  
0HPSKLV 6KHOE\ &R                                                                                  
1DVKYLOOH'DYLGVRQ                                                                                             
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5DOHLJK :DNH &R                                                                                            
5DOHLJK 'XUKDP &R                                                                                           
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K-12 Education
To a researcher it is frustrating that there are no standard           draw any precise conclusions about the relative quality
data available on the quality of K-12 education around                 of primary and secondary schooling in the Louisville
the United States. Parents, employers, and policy makers               market. Data on the very large Jefferson County Public
all agree that quality education is supremely important to             School system suggest that spending on K-12 education
the economic success of individuals and communities.                   here is comparable to that in other markets, that class
Public spending on education is approaching one-half                   sizes are relatively large, and that high school graduation
trillion dollars annually, with a growth rate of over five             rates and test scores are similar to that for other large
percent. Two-thirds of public spending on education is                 central county school systems.
for K-12 education, where it absorbs over a quarter of
all state and local government funds – about $340 billion              We identified twenty-one large school districts in the fif-
in the year 2000. Yet, unlike the vast and transparent da-             teen comparison markets, and compiled the latest sum-
tabases on colleges and universities, there are no accept-             mary data on operations. See the accompanying table,
able measures of the activity and performance of K-12                  derived primarily from the federal Digest of Education
school systems. Some data are available on expenditures                Statistics 2000. The Jefferson County Public School sys-
and student-teacher ratios. No comparable data are pub-                tem had the third largest enrollment among the districts,
lished on graduation and dropout rates, performance                    with only the Jacksonville and Memphis city systems teach-
on basic skills tests in primary grades, or ACT and SAT                ing more students. JCPS also had the third largest total
scores for secondary school students.                                  expenditures, behind Jacksonville and Charlotte, though
                                                                       only the eighth highest instructional expenditure per pu-
Because K-12 education quality is so important, but so                 pil. JCPS also had the second highest pupil-teacher ratio.
poorly monitored, we report here the best of the im-
perfect measures we could assemble. It is impossible to

44                                                                                             Macro Performance Indicators, 2000
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    Expansion Management magazine produces an annual rat-                                      law, engineering, medicine, nursing, social work, public
    ing of public high school systems. It uses data on gradu-                                  administration, urban planning, music, teaching. The
    ation rates, ACT/SAT scores, teachers’ salaries, and class                                 University of Louisville also offers a number of
    sizes to compute an Education Quotient. The EQ ranges                                      doctoral programs. Two other magnets for higher edu-
    between 50 and 150, with 100 the midpoint of the 2,200                                     cation are the Louisville Presbyterian Theological Semi-
    school districts surveyed. Only four of the large school                                   nary and the Southern Baptist Theological Seminary.
    districts tracked here scored above the national midpoint
    in the magazine’s latest ranking. JCPS score was 84, well                                  The Louisville metro area also has a solid network of
    below the Raleigh-Wake County score, but ahead of                                          community and technical colleges, and specialty busi-
    some other very large school districts. Memphis and                                        ness schools (McKendree, Spencerian, Sullivan,
    Nashville, in particular, scored very low.                                                 Webster).

    College Enrollment, Reputation                                                             According to a recent US News and World Report
    Louisville offers a fairly broad range of higher educa-                                    booklet, undergraduate enrollment (at four-year colleges
    tion opportunities. Four-year undergraduate colleges                                       and universities) in the Louisville metro area was over
    include those of Bellarmine University, Indiana Univer-                                    25,000 during the 1999-00 academic year. Thus, Lou-
    sity-Southeast, Spalding University, and the University                                    isville ranks eighth of fifteen metros on a per capita
    of Louisville. Among these a student can find faculty                                      basis, and higher than that of Indianapolis or Cincinnati.
    and curricula to major in nearly any undergradute                                          Two of the comparison markets are home to flagship
    subject.                                                                                   public universities (Raleigh and Columbus).

    All four universities also offer graduate education, par-                                  Bellarmine University is the only local school that is
    ticularly in professional fields, for example in business,                                 rated highly in the latest USNWR release. Bellarmine

    Macro Performance Indicators, 2000                                                                                                                                      45
was rated as the 27th best regional school in the South.                     $YHUDJH 5HSXWDWLRQDO 6FRUH RI )RXU<HDU &ROOHJHV DQG
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It scored well on measures of academic reputation,
freshman retention, and typical class size.
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However, Louisville does not score so well in the                        Shyrvtu                                                                         "$%


rankings for universities with a national mission as a
comprehensive university or as a liberal arts college.                 8uh…y‚‡‡r                                                          "!(




We have organized USNWR information for the na-                          P€huh                                                        "!!


tional universites and liberal arts colleges in the com-
parison metros. Twelve of the metros have national                   Ehpx†‚‰vyyr                                                 " %



universities. The University of Louisville falls into the             Svpu€‚q                                           !((

fourth tier of the rankings, primarily because of the low
test scores of entering freshmen and low graduation                 B…rr†i‚…‚                                       !("



rates. Nine of the metros have universities rated higher            7v…€vtuh€                                     !(

than Louisville.
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Louisville does not have a liberal arts college that
USNWR categorizes as national in its student draw.
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and several are prestigious. See table on the next page.
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 Research and Development
 In terms of dollars expended, the University of Louis-                                             hensive data on research and development expenditures
 ville is still not a major research university, but it has made                                    is for fiscal year 1998. U of L reported expenditures of
 great strides over the past five years. The latest compre-                                         $39 million, more than double its expenditures of seven


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        years earlier. We examined data on the twenty-eight uni-                               and nearly twice as large as the University of Memphis.
        versities in the fifteen comparison markets that had re-                               Growth in R&D is highest among the Kentucky univer-
        ported some R&D expenditures. We aggregated the ex-                                    sities, with WKU, UL, and UK holding the top three
        penditures by market, as shown in the accompanying                                     spots. Clearly, Louisville is now on the right track regard-
        charts.                                                                                ing university research.

        The Louisville metro ranks ninth among the fifteen metros                              University Licensing
        in university R&D expenditures in 1998. (No university                                 One indication of the commercial value of university
        in Jacksonville reported R&D expenditures, and expen-                                  research is the stream of payments earned for licensing
        ditures in Indianapolis were counted through the two                                   of products and ideas. The University of Louisville has
        flagship universities that run the programs there - Indi-                              only recently begun to participate in this market, and hence
        ana University and Purdue University.) The comparison                                  scores low in the statistics. Given the university’s now
        markets include some very large research-oriented uni-                                 strong commitment to research and commercialization,
        versities, including Duke, University of North Carolina,                               it will be interesting to track this data over then next de-
        North Carolina State, Ohio State University, and                                       cade.
        Vanderbilt. Impressively, Louisville scored the highest
        percentage growth over the past seven years of any of                                  We have compiled the most recent data from the Asso-
        the comparison metros.                                                                 ciation of University Technology Managers, Inc. Data
                                                                                               are published for universities in thirteen of the compari-
        We also organized data on R&D expendiutres of uni-                                     son markets. Louisville ranked last among the thirteen
        versities around our region. Note that the University of                               markets in both number of licenses and income from
        Louisville’s expenditures were about one-fourth that of                                licenses in 1999. Income is net of license fees paid to
        the University of Kentucky, but larger than Notre Dame’s                               other institutions.


        Macro Performance Indicators, 2000                                                                                                                                           49
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No major research institutions from the Charlotte or               Louisville and Richmond were the only competitor
Jacksonville metro areas participate in the survey. Totals         metros to post fewer patents in 1998 than in 1990.
for the Indianapolis, Kansas City, Memphis, and Omaha              Lexington has doubled its patent generation over the past
metro areas include half of the reported total for that            decade, and surpassed Louisville in 1998.
state's university system despite the fact that the state flag-
ship university is not located in that metro area. In each         The largest corporate patent generator in the Louisville
case, however, the metro area is home to the state                 market continues to be General Electric. GE typically
university's medical school and medical research center.           registers ten to fifteen patents per year. Other notable
                                                                   patent generators over the past few years include Lantech,
Patent Activity                                                    Credo Tool, AAF International, Robinson-Nugent,
Louisville firms and individuals typically register between        Jordan Holding Company, Q2100, Sandvik Sorting
100 and 140 patents per year with the U.S. Patent and              Systems, Coffey Marketing, and Research Corporation
Trademark Office. During the period 1990-98, Louis-                Technologies.
ville has posted 1,056 patents. This ranked tenth highest
among the fifteen competitor metros, and ninth highest
on a per capita basis. The trend over the decade does not
look good for Louisville, however. Nationally patent
registration grew from 47,000 to 80,000 per year, and
most of the competitor cities posted similar growth rates.




50                                                                                     Macro Performance Indicators, 2000
                                                                          Quality of Life

  Q
            uality of life, that most subjective of economic                                   Crime
            development factors, has become perhaps the                                        We gathered data on seven major types of criminal of-
            most important competitive advantage in the                                        fenses available from the Federal Bureau of Investiga-
  modern economy. With a tight labor market, a booming                                         tion for Louisville and its competitor metros.
  service sector, and revolutionary new ways of commu-
  nicating, shopping and producing, communities look for                                       To ensure data quality, the FBI only publishes statistics
  every advantage in recruiting fresh human capital. Indeed,                                   for Metropolitan Statistical Areas having at least 75 per-
  regular improvement in a community’s quality of life may                                     cent of the law enforcement agencies within their bound-
  now be needed to keep the native population, especially                                      aries reporting data through the Uniform Crime Report-
  the more educated youth, from leaving for more attrac-                                       ing Program and for which the central city/cities sub-
  tive areas.                                                                                  mitted 12 months of data during the year. This means
                                                                                               that not every one of the competitor metros has pub-
  There are many facets to quality of life, and different                                      lished data in any given year. During the period 1995-
  people at different times may value these facets quite                                       1999, data was published for the Louisville MSA in only
  differently. Hence, attempts to roll up a number of fac-                                     1995 and 1998. Data was available for all five years for
  tors into an index or ranking of cities according to qual-                                   only five of the other 14 competitor metros (Birming-
  ity of life are inherently arbitrary. One person’s bland                                     ham, Columbus, Greensboro, Omaha, and Raleigh/
  scorched earth is another person’s desert paradise. One                                      Durham), and no data was available for Kansas City.
  family’s perfect place to raise children is another family’s                                 Nevertheless there is enough data to make meaningful
  most boring place on earth.                                                                  comparisons and analyze trends.
  With these caveats, we next examine some of the well-                                        Crime in Louisville was virtually the same during 1998 as
  recognized factors that most put under the quality of life                                   it was during 1995. Violent crime in Louisville dropped
  heading. We simply lay them out, and let the reader judge                                    by 1.4 percent, due mostly to a 13.6 percent drop in
  whether Louisville is competitive. We examine crime, en-                                     robberies countering a 5 percent increase in assaults. Prop-
  vironmental issues, sports availability, the presence of arts                                erty crimes increased by 1.1 percent, due largely to a 4.4
  and cultural attractions, and traffic congestion.                                            percent rise in larcenies/thefts. On the other hand, auto


                                                                         e
                                                                     Crim in the Louisville MSA
                                                                  Offenses per 100,000 Population


3,000                                                                                                                                      2,853.6
        S rce: F Crim intheU
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                                                                                                       e ou
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2,500                           1995      1998



2,000



1,500


                                                                                                                 989.4   985.4
1,000


                                                                                       466.5     489.7                                               522.0
                                                                                                                                                             454.6
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                                                             226.1     195.3
          6.7        6.8           29.1          26.6
   0
             Murder                       Rape                  Robbery                   Assault                  Burglary      Larceny-Thef t       Auto Thef t




  Macro Performance Indicators, 2000                                                                                                                          51
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  thefts dropped by 12.9 percent from 1995 to 1998. By                                                 Memphis also had the highest property crime rate among
  contrast both violent and property crimes fell markedly                                              the peer cities. Indianapolis had the lowest property crime
  between 1995 and 1998 for all metropolitan areas (18.6                                               rate, nearly 50 percent lower than that in Memphis.
  percent for violent crimes and 12.9 percent for property                                             Birmingham also led the peer cities in property crime
  crimes).                                                                                             rate reduction, dropping nearly 30 percent from 1995 to
                                                                                                       1998. Birmingham’s property and violent crime rates
  Comparing the latest available data for each of the peer                                             continued to drop in 1999 as well. Of the nine peer
  cities, Louisville ranks ninth best in violent crimes but                                            cities with data for both 1995 and 1998, Columbus was
  fourth best in property crimes. In both cases Louisville’s                                           the only other metro besides Louisville with an increase
  rate was above the 1999 national metropolitan area aver-                                             in violent crime.
  age. Seven of the fourteen peer cities for which there is
  data have violent crime rates above the metropolitan area
  average, and eleven of them had property crime rates
  above the national metro average. Violent crime rates
  among the peer cities varied widely, with Memphis hav-
  ing a violent crime rate over three times higher than that
  in Dayton. Birmingham experienced a remarkable 52.3
  percent drop in violent crime from 1995 to 1998. Of
  the nine peer cities with data for both 1995 and 1998,
  Omaha was the only one with an increase in violent crime.




  52                                                                                                                                 Macro Performance Indicators, 2000
  Air Quality
  The last decade has seen an encouraging reversal of air         teria pollutants, concentrations are converted into an in-
  quality trends nationally, with reductions in all major pol-    dex value between zero and 500. The pollutant with the
  lutants except ozone. With a few exceptions, Louisville’s       highest index value is reported as the AQI for that day.
  air has improved in concert with the national improve-          Of the peer cities, only Omaha had a day with an AQI
  ments. Louisville is “in attainment” of EPA air quality         above 100 during 1999 that was due to a pollutant other
  standards for all pollutants except ozone. However, due         than ground-level ozone. This follows the national pat-
  to its industrial makeup and its valley location, Louisville    tern, where 97 percent of days with an AQI above 100
  still has arguably the dirtiest air of the fifteen competitor   are due to ozone. This may be partly due to the typical
  markets.                                                        sampling schedule for particulate matter at monitoring
                                                                  sites of just once every six days.
  The U.S. Environmental Protection Agency compiles and
  publishes a summary measure, called the Air Quality In-         During 1999, Louisville experienced 44 days with an AQI
  dex. It weights and combines pollutants that are linked         value above 100. This ranks Louisville fourteenth out of
  to health and economic deterioration, and scores each           the fifteen peer cities, with only Nashville having more
  metropolitan area regularly. EPA collects data on air           such days. The average number of days with an AQI
  pollutants at monitoring sites around the country, and          above 100 for the peer cities was 25.9. There were three
  these are used to construct the AQI . The AQI provides          peer cities - Jacksonville, Omaha, and Kansas City - with
  information on pollutant concentrations for ground-level        five or fewer such days.
  ozone, particulate matter, carbon monoxide, sulfur di-
  oxide, and nitrogen dioxide. The AQI is “normalized’            Louisville does somewhat better in comparison to its
  across pollutants so that an AQI value of 100 represents        peers in terms of the average number of days with an
  the level of health protection associated with the national     AQI above 100 during the years 1995 to 1999. During
  health-based standard for each pollutant.                       that five year period, Louisville averaged 22.8 such days,
                                                                  which ranked twelfth among the fifteen cities. Memphis,
  Higher levels of the pollutants are at least in the “un-        Nashville, and Charlotte averaged more days with an
  healthy for sensitive groups” range. For each of the cri-       AQI value above 100. The average for the peer cities


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 Macro Performance Indicators, 2000                                                                                                      53
was 16.6 days, so in addition to its better rank among the                   Mobility, Traffic Congestion
peer cities over the five-year period compared to 1999,                      The Texas Transportation Institute (TTI) estimates that
Louisville was much closer to the average. Omaha and                         the average Louisville driver spent 40 minutes stuck in
Jacksonville were by far the best cities, each averaging                     traffic during 1997. The travel delay calculations take into
less than four such days over the 1995-1999 period.                          account recurring (or usual due to peak period conges-
                                                                             tion) delay and incident (due to crashes, vehicle break-
Louisville averaged 7.4 more days with an AQI value                          downs, etc.) delay. That is, the usual bottlenecks at spa-
above 100 during the 1995-1999 period than it did dur-                       ghetti junction and Hurstbourne Parkway are taken into
ing 1990-1994. On this measure, Louisville ranked tenth                      account as well as random obstructions caused by inop-
of the fifteen peer cities. The three metros with the high-                  erable vehicles. Ten of the fifteen peer cities (including
est average number of days having an AQI above 100                           Louisville) are included in the TTI study, and Louisville
during 1995-1999 were also the three metros with the                         ranks seventh of the ten in terms of annual driver delay
largest increase in such days. All of the peer cities had                    in 1997. Only Charlotte, Nashville, and Indianapolis driv-
more days with an AQI above 100 in the last five years                       ers experienced more delay. Drivers in Kansas City, Mem-
compared to the previous five-year period. This mirrors                      phis, Columbus, Omaha, and Cincinnati all experienced
a national trend. Between 1989 and 1998, the total num-                      roughly 25 percent less delay than Louisville drivers.
ber of days with AQI values greater than 100 decreased
57 percent in southern California but actually rose 10                       Traffic delays consistently increased throughout the 1990s
percent in the remaining major cities across the country.                    in all of the peer cities. From 1991 to 1997, hours of
In the peer cities, there were 58 percent more such days                     traffic delay doubled on average in the other nine peer
on average during the period 1995-1999 compared to                           cities, and increased slightly more than that in Louisville.
the period 1990-94.                                                          Since 1992, Louisville drivers have been experiencing


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54                                                                                                      Macro Performance Indicators, 2000
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   about five more hours of annual delay than the average
   driver in the other nine peer cities.

   The TTI’s Travel Rate Index (TRI) indicates the addi-
   tional travel time that is necessary for an individual to
   make a trip during the peak travel periods because of
   congestion. For example, a TRI of 1.30 indicates the
   average peak trip takes 30 percent longer than a trip in
   free-flow conditions. In 1997 Louisville had a TRI of
   1.24. This puts Louisville tied with Memphis for fifth
   place among the ten peer cities in the TTI study. Kansas
   City and Nashville have the lowest index values (1.18)
   while Charlotte has the highest (1.29). As with the data
   on hours of delay, the TRI values of the peer cities have
   been increasing steadily since 1990. Peak period travel
   took Louisvillians just 14 percent longer than otherwise
   in 1990, and the average for the other nine peer cities
   was just 16 percent in 1990.




   Macro Performance Indicators, 2000                                                                        55
Transportation Infrastructure
Given the decades-long local debate about bridges, it is                                 of an interstate loop around their central business
interesting to compare the major highway patterns and                                    districts, i..e. an interstate with a three digit number.
infrastructure in the fifteen markets. We have constructed                               Second, the least complete and/or rational looking
maps for each metro area that show only the major lim-                                   patterns are to be found in Charlotte, Jacksonville,
ited access highways and the locations of the airports. If                               Louisville, Raleigh and Richmond. Indeed, in the cases
one knew little else about these markets, one would likely                               of Louisville and Jacksonville, the highway outlines al-
draw a few conclusions from these maps. First, all are                                   most beg the viewer to pencil in the completion of a
served by interstate highways, and all have some version                                 loop.




                                                                                                                                     
                                                                                                                                             
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      Sports, Amusement and Recreation                                       ·   Louisville does not have a major professional sports
      Due to federal information privacy laws, there is little                   franchise, but neither do the other comparison mar-
      public information about individual sporting operations                    kets that are smaller than Louisville.
      here. A lot can be learned, however, by examining na-
      tional datasets and publications. By organizing data on                Collegiate Sports.
      Louisville and twenty competitor markets, we can infer,                Because of the athletic success of the University of Lou-
      for example that::                                                     isville, Louisville ranks highly in attendance at college bas-
                                                                             ketball and football games, even in comparison to col-
      ·    Louisville is an average sports town, for most sports             lege towns. Louisville ranks fourth highest in basketball
           and most measures. Louisville ranks in the middle                 attendance at home games among the thirty NCAA Di-
           of the twenty-one markets in golf courses, and in                 vision 1 schools based in the comparison markets. And
           payrolls and jobs for amusement and recreation ser-               UofL ranks fifth highest in home game attendance among
           vices.                                                            the twelve Division 1-A teams in the comparison mar-
                                                                             kets.
      ·    Louisville ranks highly in college basketball and foot-
           ball attendance. It also ranks near the top in racing,            All the markets support a basketball team, and twelve
           thanks to the presence of Churchill Downs, and in                 schools in eight markets support both basketball and
           attendance at sports museums, thanks to the Ken-                  football. The Nashville and Raleigh-Durham-Chapel Hill
           tucky Derby Museum and the Louisville Slugger                     markets each support three basketball teams and two
           Museum.                                                           football teams. Cincinnati supports two basketball teams
                                                                             and one football team. We aggregated attendance for


      58                                                                                          Macro Performance Indicators, 2000
                                                                                             reputation for tough high quality golf courses, thanks
            Amusement and Recreation Service Industries                                      to the 1996 and 2000 PGA Championships and the
                    Payroll per Capita, 1997
                                                                                             forthcoming Ryder Cup competition, all at Vahalla Golf
                                                                                             Club.
    Nashville                                                                        $451

    St. Louis                                            $263

      Omaha                                              $263
                                                                                             Louisville is home to four of the ten toughest courses
 Indianapolis                                     $217
                                                                                             in Kentucky, according slope ratings published by Ken-
 Jacksonville                                   $206
                                                                                             tucky Gol: Persimmon Ridge (1), Vahalla (3), Lake For-
   Charlotte                                    $205
                                                                                             est (7), and Polo Fields (10).
   Cleveland                               $185

   Evansville                              $184
                                                                                             At least two magazines rank the top 100 courses in the
United States                            $171
                                                                                             United States. Louisville’s Vahalla course ranked 61st in
   Pittsburgh                            $167
                                                                                             Golf Digest’s May 1999 top 100 course ranking, but was
   Louisville                      $144
                                                                                             not listed in Golf Magazine’s September 1999 ranking.
    Portland                      $134
                                                                                             Combining the two rankings, one finds ranked courses
   Lexington                    $123
                                                                                             in Birmingham (2), Cincinnati (2), Cleveland (2), Co-
      Austin                $108
                                                                                             lumbus (8), Indianapolis (2), Portland (3), and St. Louis.
   Columbus                $107

     Raleigh               $104                                                               The Louisville market overall falls in the middle of com-
 Greensboro                $103
                                           Source: US Bureau of Economic Analysis,
                                                                                              parison statistics on the number of golf courses. Golf
    Memphis               $93              1969-97 Regional Economic Information              is apparently also very popular in all of our competitor
                                                                                              markets. The Louisville area supports 57 golf courses,
                                           System , May 1999.
 Birmingham          $81

     Dayton         $67                                                                       containing 891 holes, according to the latest Places Rated
                                                                                              Almanac. Twenty-two courses are counted as daily fee
                                                                                              operations, eleven are municipal, and twenty-four are
                                                                                              private. Louisville gained thirteen courses between 1992
each market and divided by each metro’s population.                                         and 1999. Louisville ranks eleventh in the number of
Louisville ranks fourth highest on a per capita attendance                                  courses out of the twenty-one markets compared, and
basis in basketball, fifth highest in football, and sixth high-                             ninth highest on a per capita basis. Louisville also ranked
est in a combined ranking.                                                                  in the middle for growth in the number of golf courses,
                                                                                            though it ranked seventh highest in percentage growth.
Professional Sports
As Louisville civic and business leaders debate how to                                      Amusement and Recreation Industries
attract a NBA franchise, our market now only supports                                       For statistical reporting purposes, most commercial sport-
one significant professional sports team - the minor league                                 ing activity falls under a category called Amusement and
Louisville Riverbats. However, this is in line with our                                     Recreation Services, Standard Industrial Code (SIC) 79.
population size.                                                                            This broad category also includes non-sports entertain-
                                                                                            ment, and excludes sporting activities that are counted
As one can quickly see from the table, only larger mar-                                     with the major activities of their hosts, e.g., college sports
kets support major league baseball, basketball, or foot-                                    are counted with the teaching and research activities un-
ball. Jacksonville and Nashville each supports a NFL fran-                                  der “Colleges and Universities”. However, the aggre-
chise with slightly more population than Louisville. Char-                                  gate data can be used to construct some useful summary
lotte is able to support both basketball - both NBA and                                     measures of commercial recreation activity by market.
WNBA - and football with about thirty percent more
population than Louisville. And of the twenty-one mar-                                      First, consider the earnings data published by the US Bu-
kets, only Cleveland supports major league baseball, bas-                                   reau of Economic Analysis. The Louisville MSA sup-
ketball, and football.                                                                      ported an amusement and recreation payroll of $144
                                                                                            million in 1997, or $144 per resident. These measures are
Golf                                                                                        displayed below for Louisville and twenty comparison
Louisville is known as an inexpensive place to play golf,                                   markets. Louisville falls near the middle of both rankings,
thanks largely to low green fees at the many fine munici-                                   on a per capita basis and as a share of total earnings by
pal courses around the area. Louisville is also building a                                  workers and business owners in the market. The fact

Macro Performance Indicators, 2000                                                                                                                  59
    that Louisville falls below the national average                                           Amusement and Recreation Services
    suggests that on net Louisvillians import recre-                                                 Payroll per Capita, 1997
    ation services from other markets, like Las Ve-                                           Central Counties of Comparison Metros
    gas, Orlando, and large professional sports mar-
                                                                                 Nashville                                                                    $431
    kets.
                                                                               Indianapolis                                                   $307

    Next, consider the economic data published in                                Charlotte                                               $280

    County Business Patterns. These data are generated                           St. Louis                                               $277

    from employers’ payroll tax filings. They are ex-                          Kansas City                                             $259
    cellent administrative data, but for privacy rea-                            Cleveland                                      $219
    sons cannot be disclosed except in aggregate                                Evansville                                     $216
    form. Fortunately, all the central counties in our
                                                                                Cincinnati                                    $201
    comparison markets have enough amusement
    and recreation activity that the federal govern-                              Portland                              $177

    ment discloses jobs and payroll information -                               Pittsburgh                             $165

    at least at the two-digit SIC level. The latest data                       Birmingham                            $152

    available is for 1997.                                                     Jacksonville                     $131

                                                                                 Louisville                   $120
    The Louisville market, as measured by Jefferson                             Lexington                     $119
    County, ranks about midway among the com-                                   Columbus                      $114
    parison markets on most measures. There were
                                                                               Greensboro                 $98
    304 establishments producing amusement and
    recreation services in Jefferson County in 1997.                               Raleigh              $92

    These include sports clubs, horse and auto rac-                             Richmond                $91          Source: US Department of Commerce,
                                                                                                                     County Business Patterns .
    ing tracks, bowling alleys, golf courses, amuse-                               Omaha                $86
    ment parks, arcades, and casinos. These organi-                              Memphis            $71
    zations employed around 4,500 persons and had                                  Dayton         $49
    an annual payroll of about $80 million. Racing
    firms accounted for nearly one-third of the jobs
    and payroll.
                                                                                      highest growth in payroll between 1993 and 1997. Evans-
    Jefferson County supports about $120 of amusement                                 ville, Jacksonville, and Charlotte were the leaders.
    and recreation payroll per resident, thirteenth highest of
    the twenty-one markets. The leaders were Nashville, In-                           Some disaggregated data is available for Jefferson County
    dianapolis, Charlotte, and St. Louis. All the leaders but                         and the other central counties. As the reader can see in
    Nashville had professional team sports franchises in 1997,                        the table below, detailed industry data is provided for
    and Nashville had Opryland. Evansville ranked highly                              about three-fourths of the total activity. Two four-digit
    because of the riverboat casino. Our market had the tenth                         industries dominate the all important payroll category -


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 7941    Sports clubs, managers, and promoters                        124          $1,224,000              7                            75         $894,000            3
 7948    Racing, including track operation                            948         $23,757,000             43                           497      $12,774,000           32
 7993    Coin-operated amusement devices                              221          $2,426,000             21                            89       $1,271,000           15
 7997    Membership sports and recreation clubs                     1,048         $19,518,000             47                         1,099      $16,739,000           48
 7999    Amusement and recreation, n.e.c.                             545          $6,757,000             62                           390           $5,247           63
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    60                                                                                                          Macro Performance Indicators, 2000
racing and membership sports clubs. Both have grown            Another directory is published by the International As-
between 1993 and 1997, with racing nearly doubling in          sociation of Sports Museums and Halls of Fame, of
payroll.                                                       LaFayette, Louisiana. Unfortunately, the association does
                                                               not consistently compile or release data on attendance
The next largest category is “Amusement and recreation         and other economic activity measures. The following ad-
services, not elsewhere classified”, SIC 7999. This catch      ditional sports-oriented museums are listed:
all industry includes such disparate activities as archery     Columbus: Golf House Ohio, Jack Nicklaus Museum
ranges, billiard parlors, bingo halls, circuses, day camps,
fishing piers, golf driving ranges, go-cart rentals, off-      Indianapolis: NCAA Hall of Champions
track betting parlors, riding stables, and nonmembership       Kansas City: National High School Sports Hall of Fame
swimming pools.
                                                               Memphis: The National Pastime: Museum for Minor
Consistent detailed data was available for membership             League Baseball
sports and recreation clubs (SIC 7997) in the comparision      Nashville: Tennessee Sports Hall of Fame
markets. This category includes country clubs, tennis clubs,
                                                               Raleigh: North Carolina Sports Hall of Fame
and other amatuer sports and recreation clubs. Louisville
ranks near the middle on a payroll per capita basis.           St. Louis: St. Louis Cardinals Hall of Fame Museum

Due to federal privacy and disclosure laws, data on rac-
ing payrolls were published for only twelve of the cen-
tral counties. Jefferson County ranked was second high-
est (behind Indianapolis’s Marion County) in racing pay-
rolls in 1997.

Sports-Oriented Museums
Louisville has two prominent sports-oriented museums,
and a third on the way. The Kentucky Derby Museum
and the Louisville Slugger Museum are major local at-
tractions, and account for a large portion of the out-of-
town attendance for all arts and cultural attractions in the
Louisville market. The long-planned Muhammad Ali
museum has just obtained core funding from the Ken-
tucky state legislature and the City of Louisville.

The Official Museum Directory lists thousands of museums
of all types in the United States. We found only six muse-
ums in a scan of the directory for sports-oriented muse-
ums in our twenty-one comparison markets. Lexington,
Louisville, and Indianapolis stand out in attendance and
employment, and Louisville is clearly the leader in the
number of paid employees.




Macro Performance Indicators, 2000                                                                                 61
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Arts and Cultural Attactions
The Arts and Cultural Attractions network of GLI re-            The study found that the 43 arts and cultural attractions
cently commissioned a study of the economic impor-             surveyed had an annual attendance of 1.9 million,
tance of these activities in Louisville. In the study we       employed about 2,000 persons, and had a combined
found that Louisville does indeed support a wider range        annual labor cost of $49 million. Annual earnings per
of arts and cultural attractions than would be expected        job of ACA employees average about $19,400, well be-
for a market our size. The accompanying table indicates        low the average for all jobs in the Louisville MSA. This
the array of offerings in Louisville and twenty compari-       partly reflects the heavy reliance on part-time workers by
son markets. Note that several markets larger than Lou-        ACA groups.
isville do not support an opera, ballet, or zoo. No com-
parison market smaller than Louisville supports this full       The largest source of export sales - those to visitors -
array of arts activities.                                      appears to be from the museums (especially the Louis-
                                                               ville Slugger Museum, the Kentucky Derby Museum, the
In addition, even compared to some very large markets,         Louisville Science Center, and the Speed Art Museum),
Louisville ranks very highly in sports museum, theatre,        performing arts (especially the PNC Broadway Series
and ballet activity. In most other categories, including art   productions, the Kentucky Center for the Arts, Derby
museums, science museums, orchestras, opera, zoos, and         Dinner Playhouse, Actors’ Theatre, and the Louisville
libraries, Louisville’s ranking falls about where one would    Ballet), and the Zoo.
expect based upon population size.


62                                                                                 Macro Performance Indicators, 2000
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                                                                       6…‡ÃHˆ†rˆ€Ã6‡‡rqhpr                                 %




          1 = highest                                                                  Q‚ƒˆyh‡v‚                  $

          21 = lowest




Museums and nature attractions posted the largest growth
in economic activity during the decade of the nineties.
Strong growth came from the Falls of the Ohio state                                3HU &DSLWD 8QLWHG :D\ &RQWULEXWLRQV
                                                                                        $QQXDO &DPSDLJQ
park, the Louisville Slugger Museum, and the Speed Art
Museum.                                                          8vpvh‡v                                                                                           Ç"% $




Charitable Giving                                               B…rr†i‚…‚                                                                                       Ç"#$!



The intensity of charitable giving and the safety net            8‚yˆ€iˆ†                                                                               Ç"!$#


organizations they support are another measure of an            7v…€vtuh€                                                                     Ç!(&#

area’s quality of life. Charity takes many forms, probably
most through unorganized channels. Church organiza-               G‚ˆv†‰vyyr                                                                  Ç!( "



tions are perhaps the largest vehicle for raising funds and         P€huh                                                            Ç!%$$


providing services to the poor and needy. Moreover,             Dqvhhƒ‚yv†                                                     Ç!#((

many persons choose to give directly to nonprofits of
choice on an ad hoc basis. No regional data is available          8uh…y‚‡‡r                                                      Ç!#('


on the array of charities and their activities. However, we      Svpu€‚q                                                  Ç!"'#

were able to compile data on United Way contributions               Shyrvtu                                              Ç!"'
in each market.
                                                                    9h’‡‚                                          Ç!!#&


Louisville ranks highly in United Way contributions per resi-   Fh†h†Ã8v‡’                                      Ç! %"

dent. lagging only Cincinnati, Greensboro, Columbus and
Birmingham. Louisville also had the fourth highest growth         Ih†u‰vyyr                                     Ç! %
                                                                                                                  T‚ˆ…pr)ÃÃVv‡rqÃXh’ÂsÃ6€r…vphÃ

rate in per capita contributions between FY 95 and FY 00.         Hr€ƒuv†                               Ç '%     ÅHrh†ˆ…r€r‡†)Ã8h€ƒhvtÃ9r€‚t…hƒuvpÃ

                                                                                                                  hqÃ@p‚‚€vpÃT‡h‡v†‡vp†Ãs‚…ÃVv‡rqÃXh’Ã

                                                                                                                  8h€ƒhvt†Ãà (((!Å
                                                                Ehpx†‚‰vyyr                   Ç %"%




Macro Performance Indicators, 2000                                                                                                                                 63
                                                    References

Paul Coomes and Raj Narang, The Economic Importance            Alexei Izyumov and Babu Nahata, Attracting Immigrants
of Arts and Cultural Attractions in the Louisville Area,       to an Urban Area: Literature Review and Findings, Univer-
Greater Louisville, Inc, August 2000, University of            sity of Louisville, March 2000, 50 pages. See http://
Louisville. See http://monitor.cbpa.louisville.edu.            monitor.cbpa.louisville.edu.

                                                               Alexei Izyumov, Babu Nahata and Paul Coomes,
Paul Coomes and Raj Narang, Louisville’s Health-Related        Immigration to the Louisville Metropolitan Area: Trends and
Economy: Size, Charactter, and Growth, Greater Louisville,     Characteristics, University of Louisville, April 2001, 51
Inc, May 2001, University of Louisville, 35 pages. See         pages. See http://monitor.cbpa.louisville.edu.
http://monitor.cbpa.louisville.edu.
                                                               Tax Foundation, State Tax Collections and Rates, annual
Paul Coomes and Michael Price, The Recent Perfformance of      special reports.
Regions in Kentucky, Kentucky Economic Development
Partnership, May 2001, University of Louisville, 68 pages.     U.S. Bureau of the Census, County Business Patterns, 1988
See http://monitor.cbpa.louisville.edu.                        and 1998. See www.census.gov/pub/epcd/cbp.
                                                               U.S. Bureau of Economic Analysis, Regional Economic
                                                               Information System, 1969-98, June 2000, CD product.
Paul Coomes and Michael Price, The Louisville Labor
Force: Issues and Trends, Louisville and Jefferson County
                                                               U.S. Bureau of the Census, 1997 Economic Census, 2000
Workforce Investment Board, March 2000, University
                                                               (www.census.gov).
of Louisville. See http://monitor.cbpa.louisville.edu.
                                                               U.S. Bureau of Economic Analysis, Regional Economic
Paul Coomes and Barry Kornstein, The Intrastate
                                                               Information System, 1969-98, June 2000.
Distribution of Kentucky State Government Revenues and
Expenditures, Fiscal Year 1996-97, August 1999, Univer-
sity of Louisville. See http://
monitor.cbpa.louisville.edu.

Paul Coomes and Barry Kornstein, 1995 Macro Perfor-
mance Indicators for the Louisville KY-IN Metropolitan Area,
March 1996, University of Louisville.

Paul Coomes and Barry Kornstein, The Economic Impact
of 1997 Events at the Kentucky Fair and Exposition Center
and Commonwealth Convention Center, for the Kentucky
State Fair Board, 1997, University of Louisville.

District of Columbia, Tax Rates and Tax Burdens in the
District of Columbia – A Nationwide Comparison, annual.

Greater Louisville Inc, Enterprise Corporation, Growing
Success 2000. See www.enterpriselouisville.com/
2000reportpg1.html.




64                                                                                  Macro Performance Indicators, 2000

				
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