Transcript Slide 1

AQUILA GROUP OF FUNDS®
Update on the
Kentucky Economy
Dr. James R. Ramsey
April 29, 2011
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Honored to serve as a Trustee of the
Churchill Tax-Free Fund of Kentucky since
its inception in 1987
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Last year when we met, we said 2009 was
another crummy economic year…
2010 was better…
not great, but better
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Economy Picks Up Steam Output
Returns to ‘07 Levels
GDP
1.8%
* Source – Chamber of Commerce
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A Flock of Black Swans
(National concerns…)
• A successful rebellion in Tunisia
• A successful rebellion in Egypt
• An apparently unsuccessful civil war in Libya
• Armed uprising in Bahrain and Yemen
• One of the largest earthquakes on record in Japan
• One of the most devastating tsunamis ever to strike Japan
• A high level nuclear accident in Japan
• Impact on energy prices/stability and of course
• Weak housing markets
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In Kentucky,
things were better in 2010 than 2009
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Kentucky Non-Agriculture
Employment
(employment in thousands)
1890.0
Dec '07
1872.4
1870.0
1850.0
Oct '00
1833.6
1830.0
1810.0
Mar '11
1795.1
1790.0
1770.0
Jan '99
1769.4
Jul '03
1777.6
1750.0
But still a ways to go…
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Loss of Manufacturing Jobs
in KY Continues to be a Major Concern
320.0
300.0
308.3
280.0
260.0
240.0
220.0
Mar '11
212.9
200.0
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Kentucky Education & Health Services
Employment
Mar '11
253.7
250.0
240.0
230.0
220.0
210.0
Jan '00
206.7
200.0
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% of Kentucky Employees by Industry
2000
Industry
2011
17.1%
Manufacturing
12.0%
11.8%
Education &
Health Services
14.2%
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Observation on Kentucky Economy
April 2011
• Recessionary impact not as bad in Kentucky as some other states
• Seems as if we hit bottom and are coming back (albeit slowly)
• How long will it take to regain the 120,000 lost jobs during
recession?
– Where will new jobs come from?
• Healthcare
• Logistics
• Business Services
• Energy
• Impact on state budget – state services
– Improving revenue growth
– But structural imbalance
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Adding to the problem we have
the “Leaky Bucket”
• Medicaid
• Corrections
• Public employee benefits
So we will face state budget problems for a while
(at least another three years)
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Spending Priorities
$20,000
$19,031
$18,000
$16,000
$14,000
$12,000
$10,000
$9,207
$8,000
$6,000
$6,945
$4,000
$2,000
$0
Higher
Education
K-12 Education
Inmates
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Forecasting / Guessing The Future
• Modest recovery continues to take place in
Kentucky
• We will continue to add jobs, but …
• Probably 2013 before we see as many jobs in
Kentucky as we had in 2007, still…
– We will
•Continue to face difficult public policy
choices that impact our long term future
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Reminder
Since forecasting is a tough business.
I am going to keep my day job
at least one more year.
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