"To experience what passes for economic coordination among the 35 municipalities and 18 unincorporated areas of the Bluegrass region, arrive at an orchestral performance early enough to listen to the musicians warm up their instruments as they await the conductor's instruction to tune. That cacophony is the sound of Central Kentucky, as implied by research underway for Bluegrass Tomorrow: a riot of out-of-tune violins, each in its own world. Rural pitted against urban, cities against counties, with everyone playing scales in different keys, the pitch of some instruments grating against those of others and no mutually shared experience of a melody. And behind the scenes, no effort to pool resources to ensure the musicians are performing at their best by equipping them with the finest instruments.
The consequences versus the benefits of fine-tuning municipal and economic cooperation and collaboration in today's exceptionally competitive world of harmonized regional economies loom large over Central Kentucky. The region is treasured for its green spaces even as it anticipates the accommodation of 200,000 new residents over the next 20 years (translating as an additional 800,000 car trips per day on already crowded roads). And while job growth during this period is projected to be strong, it is also expected to be unevenly distributed throughout the area, resulting in potential revenue imbalances, a dissonance that pits communities that grow those jobs against those that simply add new residents.
Other regions of the United States are, in the meantime, uniting in the face of fierce global competition. And as they achieve new levels of cooperation and collaboration across borders, their successes only serve to highlight the twin crises of vision and direction in the Bluegrass.
In his acceptance speech on Nov. 7, Lexington Mayor-elect Jim Newberry set a tone for the way his administration will approach the issue. "Our competitors are not in Fayette County. For that matter, they aren't in Jessamine, Madison or any of our neighboring counties," he said. "So let's find ways to move past our local and regional differences and to start competing together against the world."
"We are getting our clocks cleaned," said Bluegrass Tomorrow president and CEO Steve Austin. "Why? No strength in improving our assets and amenities — we are simply relying on the old Kentucky habit of offering only cheap land and labor, and we're hoping that that will be enough to create jobs here."
In Austin's opinion, the region is lacking in economic development marketing, incentives and workforce training. And, he added, these shortfalls are especially serious when weighed against the region's needs. "We need to buy a computer for every child. We need to be preserving hundreds of acres of open space. We need to be planning for road and infrastructure improvements. All these are vital — and yet we have nothing to accomplish them with."
Overcoming this regional dissonance is the focus of "Bluegrass Metropatterns," an ongoing study for Bluegrass Tomorrow by Minneapolis-based regionalism expert Myron Orfield (study available online at www.bizlex.com). In a recent presentation to leaders from Lexington and surrounding communities, Orfield offered as an analogy the origins of the Commerce Clause of the U.S. Constitution, which "empowers the United States Congress to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." Orfield compared Central Kentucky with a colonial America in which Pennsylvania and Massachusetts, with their differing and often opposing laws and regulations, were played against each other to the benefit of Britain and France.
Orfield contends Central Kentucky is mired in similar regional discord while more successful regions elsewhere in the U.S. have pulled together to focus on the real competitor for today's jobs and investments: not each other, but the rest of world. "That's the challenge," he said, "how you figure out how you can create a system where people can work together; all the counties and the municipalities working together toward greater economic development rather then fighting amongst themselves for the things that are already here."
The internecine nature of economic tugs-of-war among the cities and counties of the Bluegrass frustrate former Bluegrass Tomorrow Chairman Joe Graviss, who applauded Orfield's analogy. "Except today," he noted, "instead of it being Pennsylvania against Massachusetts, it's Fayette County against Scott County."
Asked to cite specific business concerns that have engaged in pitting one county against another, Graviss was cautiously candid. "I'm not going to point fingers and tell you that XY&Z company or ABC industry did this or that. But as chairman of the Woodford County Economic Development Authority and working with the Bluegrass Alliance, which is a network of economic development folks in the region, we're all painfully aware of the fact that when a business wants to relocate or put their headquarters or build a building, or whatever they need for their business, they're going to go where they can get the deal that's going to make the most for their stockholders, their principals and their customers," he said. "A lot of times, 'location, location, location' is extremely important. However, a lot of times it's the bottom-line. They are going to talk to several different areas that all meet their location criteria and say, 'What are you going to do for me? How much can I get from you? How low will you go?' That's just the way it's done. We're cutting off our noses to spite our faces by playing in that arena."
In Orfield's view, the Bluegrass region is "growing in ways that threaten many of the region's most valued resources." It has been consuming previously undeveloped land much more quickly than its population has been growing, he said, threatening the area's open spaces and the unique soils of its agricultural lands as well as economic development, tourism, commute time, the competitive nature of the region and the ability to sustain growth patterns while providing vital services.
Orfield urged regional leaders to consider how other regions of the nation have successfully orchestrated cooperative systems among local governments. His recommendations include reducing dependence on local property and income taxes; reducing inequalities in tax rates and services; reducing competition for tax base; encouraging joint economic development efforts; and finding ways to complement regional land-use planning.
Central to the discussion is current Kentucky tax law, which limits local and county government revenue sources to property, insurance premiums and income taxes. Talk of amending the Kentucky constitution to enable the "local option" to raise needed revenues by enacting a local sales tax or some other measure is in the early stages and is not expected to see meaningful action in the state legislature until the election-free year of 2009, at the earliest.
As the discussions proceed, Orfield suggests considering the regional taxation of sales or income with the proceeds shared among municipalities and counties. Under this model, a portion of annual growth in the tax base goes into a regional pool for distribution back to participating jurisdictions based on tax base, population and other local characteristics. In a simulation of tax base sharing in the Bluegrass region, Lexington breaks even while 65 percent of the households in the rest of the region are in areas that would be net receivers.
This system, he argues, reduces incentives for inefficient competition for tax base as well as inequalities in tax rates and services and encourages joint economic development efforts, enhancing long-term regional growth while complementing regional land-use planning.
Bob Quick, president and CEO of Commerce Lexington, said Kentucky's system of governance forces counties to compete with each other. "Personally," he noted, "I believe the only way around this is to figure out ways to dissolve the invisible lines that separate counties (and tax dollars) and create regions that would be required to work together for the betterment of all and not just a county."
Quick concedes that it's going to take nothing less than a paradigm shift to bring about cooperation. "Trust will only be gained once the leaders come together, get to know each other, and have a serious talk about what it is we all want at the end of the day in terms of quality of life, economics and so forth," he said.
Orfield's search for economic harmony in the Bluegrass continues with plans to gather reactions to his latest observations and, like a conductor tapping the stand for a final tune-up, preparing for presentation in early spring of 2007 the score of a melody of regional cooperation.