Back to Local Government Finances in KentuckyBy Michael T. Childress
From Financing State and Local Government
p. 103-123, published 2001
A number of economic, demographic, and political trends suggest that Kentucky’s state and local system of revenue gathering might not be adequate over the long-term. Individuals are receiving a greater portion of their income from nontaxable sources. Consumers are purchasing an increasing amount of untaxed services and avoiding the use tax through Internet or catalog purchases. The aging of the population also will reduce some state and local tax receipts while increasing some expenditures. Kentucky’s state and local tax system will begin to feel the effect of these long-term structural economic and demographic changes before many other states.
The focus of more than one recent task force and unsuccessful initiative, the difficult issue of tax reform is likely to remain a priority for Kentucky policymakers and citizens. Recent revenue shortfalls and changing consumer behavior have raised questions about the adequacy of our current tax structure, just as a number of private nonprofit organizations have repeatedly questioned its fairness to low-income taxpayers.
Generally, tax policy experts agree that the ideal state tax system should: (1) provide appropriate (i.e., adequate) and timely revenues; (2) distribute burdens equitably; (3) promote economic efficiency and economic growth (i.e., be competitive with those in nearby states); (4) be easily administered; and (5) ensure accountability.(100) Yet, because of economic changes, demographic shifts, and changing social priorities, a state and local tax structure can slowly evolve into a less-than-optimum system.
In this chapter we present data on the state and local tax system in Kentucky and discuss changes in the state’s economy and demographic structure that are affecting this system. More than half of the combined state and local tax revenue in Kentucky comes from two sources: the individual income tax (or the occupational tax at the local level) and the general sales and use tax. However, the adequacy and efficiency of the state’s tax system will be affected as economic and demographic changes unfold. These structural changes include:
Overall, the structure of state and local tax systems in Kentucky differs markedly from the average state. In this section we discuss the sources of state and local government tax revenue.
State General Fund Receipts. An estimated 77 percent of the total tax collections in Kentucky are made at the state level compared to an average of about 61 percent nationally. The two major sources of Kentucky’s general fund receipts are the individual income tax and the sales and use tax. Between them, they account for about 75 percent of state general fund receipts. However, their relative importance has changed dramatically over the past 25 years.
Kentucky’s general fund receives a smaller percentage from the sales and use tax and a higher percentage from the personal income tax than it did 25 years ago. In the mid-1970s the individual income tax comprised about 25 percent of general fund receipts while the sales and use tax accounted for around 40 percent. However, by fiscal year 1999-2000 the individual income tax comprised almost 42 percent of general fund receipts while the sales and use tax had declined to just over 33 percent (see Figure 33).(104) And if the general sales tax rate had not been increased from 5 to 6 percent in 1990, the trend in sales tax revenue (as a percentage of total receipts) would no doubt have been a far sharper decline.
Figure 33: General Fund Receipts by Major Sources, 1974-2000
Local Tax Revenue. An estimated 23 percent of total tax collections in Kentucky are made at the local level compared to a U.S. average of about 39 percent. More than one half of the tax revenue for local governments in Kentucky comes from property taxes, around 8 percent is in the form of selective sales taxes,(105) and more than a quarter issues from occupational or payroll taxes (see Figure 34).(106)
Figure 34: Sources of Local Tax Revenue in Kentucky, 1997
The extent to which these sources of state and local tax revenue remain robust into the future will be dependent upon changes in Kentucky’s economic and demographic structure, the effects of these changes on Kentucky’s tax system, and the response of policymakers.
The composition of personal income can exercise a large effect on state and local revenue growth since the personal income tax combined with the occupational tax constitutes the largest portion of Kentucky’s state and local revenue receipts.(107) Over the last several years Kentucky has experienced a shift in the composition of personal income that has affected revenue adequacy, according to the 1995 Kentucky Commission on Tax Policy.(108) And this shift is expected to continue into the future.
The percentage of total personal income by various types is shown in Table 17. In 1960, wages, salaries and proprietors’ income comprised 76 percent of total personal income in Kentucky. Dividends, interest, and rent, which are generally subject to taxation, made up another 12 percent. The final two categories, other labor income and transfer payments, which are essentially nontaxable, made up the remaining 12 percent.
Table 17: Sources of Kentucky Personal Income, 1960-1999
By 1999, however, wages, salaries, and proprietors’ income had declined to just under 60 percent of total personal income. Dividends, interest, and rent increased to about 18 percent of personal income, which was not enough to offset declines in wages, salaries, and proprietors’ income. The remaining categories of other labor income and transfer payments nearly doubled as a percentage of total personal income from 12 to 23 percent. Other labor income consists of employer contributions to health insurance, welfare, and retirement funds, and transfer payments consist of government programs like Social Security, Medicare, Temporary Assistance for Needy Families (TANF), and Supplemental Security Income (SSI) payments (to name a few).
The changing nature of personal income is important because of the structure of Kentucky’s tax system. As illustrated in Figures 33 and 34, the individual income tax is the most important source of state general fund receipts, and the occupational tax is the second most important source of local tax revenue. If the composition of personal income continues to shift toward nontaxable sources and the tax structure remains the same, then future revenue problems will likely develop.
Despite recent reports of a “New Economy” in Kentucky, economic activity has been changing here for the last several decades. Figure 35 shows how Kentucky’s economy has been shifting away from the production of goods and toward the provision of services. The data in this figure measure the major sectors in Kentucky’s economy as components of the total gross state product (GSP).(109) In the late 1970s, services accounted for about 40 percent of Kentucky’s economic output, but in the early 1980s the provision of services contributed more to the state’s economy than the production of tangible goods. And by the late 1990s services accounted for over 50 percent of Kentucky’s economy.
This economic shift from goods to services has also been manifested in the changing mix of personal consumption expenditures over the last several decades. Table 18 illustrates the changing consumption patterns for the typical American consumer. In 1960, durable and nondurable goods accounted for 34 percent of personal consumption while services accounted for 25 percent. However, by 1999 services constituted 43 percent of personal consumption while durable and nondurable goods made up 24 percent.(110)
Table 18: The Changing Mix of Personal Consumption Expenditures, 1960, 1990, and 1999
Clearly, this economic shift has affected the amount of sales and use tax revenues. As described by the Kentucky Commission on Tax Policy, “Kentucky imposes a sales tax on the purchase of ‘tangible personal property,’ which applies to items like clothing, appliances, and furniture. But when the purchase is for a service, like a haircut, dental examination, car repair, or attorney services, the sale is not subjected to a tax.”(111) Obviously, if the state’s economy and consumption patterns continue to tilt away from goods and toward services, the sales and use tax base will slowly diminish unless the sales and use tax rate is increased or the sales tax base is widened to include some services. And economists observe that, in general, a lower rate on a wider base is better than a higher rate on a narrower base.(112)
Complicating the mix of changes in consumer buying is the dramatic rise in remote shopping. Americans are buying more and more items from catalogs, the Internet, and home shopping networks on television. The National Mail Order Association along with Marketing Logistics Inc. estimate that in 1998 U.S. consumer mail order sales reached $185 billion. Of this total they estimate that consumer Internet purchases accounted for $5.6 billion.(113) Mail order sales have been increasing faster during the decade of the 1990s than total retail sales and the subset of retail sales that closely approximates nondurable goods.(114) Nondurable goods such as apparel are the items most likely to be purchased remotely. During the 1990s total U.S. retail sales increased at an average annual rate of about 5.1 percent while mail order sales increased by around 8.3 percent.(115) As a result of this faster growth rate, mail order purchases comprise a higher proportion of total retail purchases today than in 1990. Table 19 illustrates how mail order purchases increased from about one fifth of nondurable goods to about one quarter during the 1990s.
Table 19: Americans Are Spending More of Their Retail Dollar as Mail Order Purchases
The rise in remote sales has important tax implications. We have estimated that Internet purchases by Kentuckians will likely result in annual use tax losses that range from $7.6 million to $57 million by 2004.(116) And the state is likely losing many times this amount as a result of non-Internet mail order sales like catalog purchases. For example, we estimate the cumulative amount of use tax owed on non-Internet mail order sales in Kentucky from 1998 to 2003 at nearly $600 million.(117) As more Kentuckians shop online and order from catalogs, policymakers will be challenged to develop new and better ways to increase the use tax compliance rate. While survey results show that over half of Kentuckians say they are very or somewhat likely to pay their use tax,(118) other research suggests that no more than 16 or 17 percent of the use tax owed nationally is actually paid.(119)
While the projected revenue losses from business-to-consumer (B2C) sales are high, they are minor when compared to projected losses resulting from business-to-business (B2B) sales. For example, one estimate places the state’s use tax losses due to Internet purchases at $84 million dollars per year in 2001,(120) and businesses are believed to account for 90 percent of this total.(121)
Demographers and budget analysts have been warning policymakers for years that the coming wave of retiring Baby Boomers will wash away projected budget surpluses and erode existing spending priorities. While expenditures for various entitlement programs are expected to increase dramatically, it is already estimated that over half of federal domestic spending outside of interest goes to people 65 and older.(122) Likewise, the revenue side of the ledger will be affected as an increasing percentage of the nation’s population reaches retirement age and becomes eligible for various tax breaks. While much has been written about this issue from a federal perspective, the impact at the state and local levels has not been studied as thoroughly.
It is clear, however, that state and local governments will be affected. For example, individuals over 65 years of age tend to spend less money in general and tend to concentrate more of their expenditures in nontaxed areas such as health care services. As a result, sales and use tax collections, which comprise around 33 percent of the state’s total general fund receipts, will be affected as the population ages.
Moreover, while many elderly will continue to work, they will get the bulk of their income from nontaxable (or virtually nontaxable) sources, like pensions and Social Security. This will affect future income and occupational tax collections, which comprise about 42 percent of the state’s general fund receipts and more than a quarter of local tax revenue, respectively.
Finally, the Homestead Exemption on real estate for the 2001 and 2002 tax years now exempts from taxation the first $26,800 of a property’s assessed value for property owners who are at least 65 years of age.(123) The property tax is the main source of local tax revenue in Kentucky, accounting for nearly 54 percent of local tax revenue in 1999. As the Homestead Exemption shields some property owners from taxation, it exposes others to potentially higher levels of taxation and under some circumstances could lower total property tax receipts.
In the sections that follow, we briefly examine the demographic data on Kentucky’s aging population and then discuss in detail how the income, occupational, sales, and property tax could be affected. We conclude with a discussion of how future expenditures might be impacted.
There are at least two important factors regarding the manner in which Kentucky’s population is aging. First, Kentucky’s population is aging faster than most. Second, some regions of the state will have a much higher concentration of elderly than others. In short, the much-feared aging of Baby Boomers, which will be felt nationally, will be felt more acutely in Kentucky. The Census Bureau ranked Kentucky 28th in 1995 among the 50 states and the District of Columbia in terms of its population 65 and older. By 2025, however, the state is expected to rank 14th.(124) Kentucky’s 65 and older population is predicted to increase by almost 9 percentage points, from around 12.6 percent to 21.3 percent (see Table 20). From 1975 to 2000, Kentucky’s population 65 and older looked similar to that of the nation as a whole. However, beginning in 2005 and continuing at least until 2025, Kentucky will begin to pull away from the U.S. average.
Table 20: 65 and Older Population Shares, U.S. and KY, 1970-2025
The anticipated shift in Kentucky’s population toward more elderly can also be seen in the changing distribution of who heads Kentucky’s households. By 2020, individuals 65 and older will be the predominant household in Kentucky (see Figure 36). As we will discuss, this rapid increase in the number of households headed by individuals 65 and older is important because they tend to pay less tax.
Figure 36: Household Projections by Age of Head, Kentucky
While the whole state is aging, it is not aging uniformly across Kentucky. Some counties have (and will have in 2020) a higher percentage of elderly. For example, as shown in Figure 37, counties in the western and south central part of the state have a much higher percentage of their population in the 65 and older category. Consequently, these counties might begin to feel the effects on their tax bases sooner than others.
Figure 37: Percentage of Population 65 and Older, by County
The sales tax accounts for the largest portion of Kentucky’s combined state and local tax revenue, almost 37 percent.(125) Since older citizens tend to spend less money overall and less on taxable items, future sales tax collections will be affected. Table 21 illustrates these points. As can be seen in the row titled “Average Annual Expenditures,” households that are headed by individuals 65 and older tend to spend, on average, thousands of dollars less each year than younger households. The one exception is households that are headed by someone under age 25. Moreover, as previously noted, older households tend to spend more money in nontaxed areas, such as health care. The oldest households spend an estimated 12.2 percent of their total expenditures on health care compared to 2.6 to 7.2 percent for the other households. Also, older households tend to spend relatively less at restaurants and entertainment, which are taxed.
Table 21: Older Citizens Spend Less Money Overall and Less on Taxable Items
As a consequence of these spending patterns, the state receives less sales tax from the average household that is headed by someone age 65 or older. We estimate, in fact, that the typical 65-and-older household pays about $500 annually in sales tax—the lowest amount of all age groups (see Figure 38).(126) Thus, assuming that the elderly of the future adopt spending habits similar to those of today’s elderly, total state sales tax collections will be lower than they otherwise would be.
Figure 38: Estimated Annual Sales Tax Paid, by Age Group
The income and occupational taxes account for the second largest portion of Kentucky’s combined state and local tax revenue, about 33 percent.(127) Since older citizens get most of their income from Social Security and pensions, which are effectively untaxed, future income tax collections will be affected. Consumer Expenditure Survey data show, for instance, that households where the head is 65 or older receive the majority of their income from “Social Security, private and government retirement” as opposed to wages, salaries, or some other taxed source (see Table 22). In Kentucky, state tax is not paid on Social Security income or the first $35,000 of private pension income. The net result is that the majority of individuals drawing Social Security or pension income pay no state income tax. Moreover, since the labor force participation rate declines with age (see Figure 39),(128) the local occupational tax will be affected as the population ages.
Figure 39: Civilian Labor Force Participation Rates by Age, 1950-1998, and Projected, 2015-2025
The property tax is the third largest source of Kentucky’s combined state and local tax revenue, accounting for around 17 percent.(129) In reality, it constitutes a small portion of state tax revenue, around 5 percent, and a large part of local tax revenue, just over 50 percent. As we have already discussed, the Homestead Exemption on real estate for the 2001 and 2002 tax years now exempts from taxation the first $26,800 of a property’s assessed value for property owners who are at least 65 years old. As the population ages and more citizens become eligible for the exemption, the property tax burden will gradually shift to other property owners. Moreover, local governments will be likely to seek other revenue sources, such as the occupational tax and insurance premium taxes.
For a variety of reasons, the elderly pay less tax (see Table 23) and as their ranks increase, state and local government will see the impact on revenue receipts. At the same time, the aging population is expected to exert increased, reciprocal pressure on the expenditures side of the ledger.
Table 23: Older Citizens Pay Less State and Local Tax as a Percentage of Their Total Income
The projected growth in spending on Medicare, Medicaid, and Social Security dominates the long-term federal budget outlook. If current policies at the federal level remain the same, spending on these three programs is likely to grow significantly faster than the economy as a whole over the next few decades. By 2040, the Congressional Budget Office (CBO) projects, spending on these three programs could account for about 17 percent of gross domestic product (GDP), which is more than double the current 8 percent.(130) And if proposals to increase benefits in any of these programs are adopted, spending will grow even more rapidly, which will result in an even greater share of the gross domestic product going to these programs.
Anticipated increases in health and retirement spending are due to three factors. First, as the Baby Boom generation retires, expenditures for Social Security and Medicare will increase considerably simply by virtue of the increase in numbers of recipients. Second, Americans are living longer and spending more time in retirement, thus increasing the time during which they are dependent upon these programs. Third, the cost of health care is expected to continue rising steadily and thus increasing costs for Medicare and Medicaid.
Moreover, the demographic changes projected over the coming decades will significantly alter the ratio between retirees and workers and thereby affect both sides of the federal, state, and local government’s budgetary ledger. According to CBO, “In 1960, 5.1 workers supported each beneficiary in the Social Security Program; today, the ratio is about 3.4 to 1, and in 2040, it is projected to fall to just 2.1 workers per beneficiary.”(131) Consequently, the growth of federal outlays for Social Security and Medicare will increase rapidly while the growth of revenues from taxes that largely fund these programs will slow.
Kentucky’s older population, which is expected to be larger than that of many states, will almost certainly increase demand for public services at the state and local as well as the federal levels. A significant portion of the cost of Medicaid, three quarters of which is spent on nursing home or adult day care for older recipients, is paid for by the Commonwealth. Indeed, Medicaid has been the fastest rising public cost in the state of Kentucky for a number of years. Moreover, Kentucky’s older citizens have historically been disproportionately poor and thus more likely to rely heavily on a combination of federal and state programs for support. We also know that a significant percentage of Kentuckians will depend on Medicare and Social Security in their retirement.
In a collaborative project with the University of Kentucky Sanders-Brown Center on Aging, the Kentucky Long-Term Policy Research Center has surveyed Kentucky citizens 45 years old and older to determine the extent of their current and anticipated reliance on these programs.(132) We find that respondents rely or plan to rely heavily on Medicare for health care in retirement; 76 percent say it is or will be a major source of health care (see Table 24).(133) If Medicare provisions remain unchanged, this portends fiscal strain on state Medicaid budgets, as Medicare provides limited coverage of nursing home care, and employer-provided health care, which 43 percent of respondents say is or will be a major source of their health care in retirement, may not provide long-term care coverage.
Concerning Social Security, a significant percentage of Kentucky’s retirees list it as the most important source of their retirement income (44 percent), and about one third (31 percent) of those not yet retired believe Social Security will be the most important source of income in their retirement (see Figure 40).(134)
Figure 40: What source of retirement income will be most important?
What is true in Kentucky is true across the country: current and future retirees will depend heavily upon Medicaid, Medicare, and Social Security. The heavy reliance many Americans have and will have on these programs will cause their aggregate share of the budgetary pie to increase substantially as the Baby Boomers retire.
Many economists believe the increased burden the Baby Boomers will place on the federal government will in turn create a heavier burden for state and local governments.(135) According to C. Eugene Steuerle, an economist with the Urban Institute who recently chaired the Technical Panel advising the Social Security Administration on its methods and assumptions, “There will be extraordinary pressure upon states and localities to self-finance much of what they want to do in the near future.”
According to the National Association of State Budget Officers (NASBO), “The share of total state spending financed by federal funds declined from 26.3 percent in fiscal 1996 to 25.8 percent in fiscal 1997. Federal aid to states is expected to continue on a downward trend for the foreseeable future.”(136) Indeed, the percentage decreased to 25.2 percent in fiscal year 1999.(137) From the combined state and local government perspective in Kentucky, federal funds account for about 20 percent of total expenditures (see Figure 41), which is a significant amount. As Baby Boomers begin to retire in large, it is quite likely that intergovernmental transfers from the federal government to state and local governments will decline. This means, of course, that the state’s financial burden could become heavier in the future. In turn, it is likely that governments will look increasingly at its system of state and local taxation to ensure it will have sufficient revenue to provide expected services.
Figure 41: Federal Funds as a Percentage of Kentucky State and Local Expenditures, 1977-1999
States that disproportionately depend on the sales tax or the income tax for general fund receipts are likely to feel the effects of structural changes underway in the economy and population sooner than most. For example, Tennessee and Washington are highly dependent on the sales tax while Oregon and Maryland rely heavily on the personal income and occupational tax. Kentucky, on the other hand, is not “overly dependent” (relatively speaking) on any one tax source. Yet Kentucky’s percentage of state and local tax revenue from the general sales tax, selective sales tax, and individual income tax is 68.9 percent (see Table 25), the fifth highest percentage in a ranking of all states and well above the U.S. average of 57.7 percent. This suggests that Kentucky’s state and local tax system will begin to feel the effect of these long-term structural changes in the economy and population before many other states.
Table 25: Percent of State and Local Tax Revenue by Tax Source, 1997
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100 Financing State Government in the 1990s (National Conference of State Legislatures and National Governor’s Association, 1993) 16. Also, refer to this volume, Chapter 1, “Tax Reform in Kentucky: An Overview of Principles and Practice.” Return to text.
101 Kentucky Revenue Cabinet, Annual Report 1999-2000, 15 Dec. 2000, 14 Feb. 2001 http://www.state.ky.us/agencies/revenue/pdf/annualreport99-00.pdf. Return to text.
102 Ky. Revenue Cabinet. Return to text.
103 Mail order sales include those placed by mail, phone, or electronically (over the Internet) without the person who places the order coming to the point of sale. Refer to Table No. 1288, Statistical Abstract of the United States: 1999 (Washington: U.S. Census Bureau, 1999). Return to text.
104 These data are from two sources. The 1974 to 1991 data are from the Kentucky Finance and Administration Cabinet, as presented by William Hoyt, “Trends in Kentucky Taxes and Their Implications for Future Tax Policy,” in Exploring the Frontier of the Future (Frankfort, KY: Kentucky Long-Term Policy Research Center, 1996) 243-53. The data from 1992 to 2000 are from various Kentucky Revenue Cabinet annual reports (see footnote 94). Return to text.
105 Selective sales taxes include those on alcoholic beverages, amusements, insurance premiums, motor fuels, pari-mutuels, public utilities, tobacco sales, and other selective sales taxes. Return to text.
106 Author’s calculation based on data from State and Local Government Finance Estimates, by State: 1996–1997, U.S. Census Bureau, 6 March 2001. The 1995-96 data are available online at http://www.census.gov/govs/estimate/96stlss1.xls. Local governments includes counties, cities, school districts and special districts. Return to text.
107 Refer to Table 25. The individual income tax, which includes the local occupational tax, comprises 31.2 percent of Kentucky’s state and local tax revenue. The next largest category, the general sales tax, comprises 21.2 percent. Return to text.
108 Kentucky Commission on Tax Policy: A Blueprint for Comprehensive Reform, 15 Nov. 1995: 22. Return to text.
109 Goods-producing industries include agriculture, mining, construction, and manufacturing. Service industries include: transportation and utilities; wholesale trade; retail trade; finance, insurance and real estate; and services. Data are from the Bureau of Economic Analysis, 8 Feb. 2001, http://www.bea.doc.gov/bea/regional/gsp. Return to text.
110 The 1999 data are estimated from U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey, 14 Feb. 2001 ftp://ftp.bls.gov/pub/special.requests/ce/standard/1999/region.txt. Return to text.
111 Ky. Commission on Tax Policy 23. Return to text.
112 Hoyt. Return to text.
113 National Mail Order Association, 1998 Mail Order Sales Results, 8 March 1999, 22 Feb. 2001 http://www.nmoa.com/Library/1998sale.htm. Return to text.
114 In this category we include SIC codes 53 (general merchandise group stores), 56 (apparel and accessory stores), 57 (furniture group stores), and 594 GAF (stores which specialize in department store types of merchandise—general merchandise, apparel, furniture, and miscellaneous shopping goods stores). Return to text.
115 Calculated by the author from Census Bureau estimates. U.S. Census Bureau, Table 2: Estimated Total Annual Retail Sales, 23 Feb. 2001 http://www.census.gov/svsd/retlann/view/artssal.txt. Return to text.
116 Michael T. Childress, “Revenue Implications Grow As More Kentuckians Shop Online,” Foresight 7-4 2000: 1. Return to text.
117 This is the amount owed, not the amount lost. Refer to Peter Schirmer, Kevin O’Neil, and Michael T. Childress, “The Internet as a Virtual Tax-Free Zone: Implications for the State Budget,” in Collecting Taxes in the Cyberage (Frankfort: Kentucky Long-Term Policy Research Center, 1999): 20. Return to text.
118 Childress, “Revenue Implications Grow…” Return to text.
119 The U.S. Advisory Commission on Intergovernmental Relations reports a rate of 16.5 percent in Taxation of Interstate Mail Order Sales: 1994 Revenue Estimates. Return to text.
120 Donald Bruce and William F. Fox, State and Local Tax Revenue Losses from E-Commerce: Updated Estimates (Knoxville: Center for Business and Economic Research, University of Tennessee, 2001) 8-9. Return to text.
121 See Chapter 4, “Tax Equity in Kentucky,” page 49. Return to text.
122 Rudolph G. Penner, “Tax Benefits for the Elderly,” The Retirement Project, No. 5, The Urban Institute, Washington, April 2000. Return to text.
123 Ky. Revenue Cabinet, press release, “Homestead Exemption Increases to $26,800,” 14 December 2000, 19 October 2001 http://revenue.state.ky.us/pressreleases/pr121400.htm. Return to text.
124 “Kentucky’s Population Projections: 1995 to 2025,” U.S. Census Bureau Web site (2000), 17 Nov. 2000 http://www.census.gov/population/projections/state/9525rank/kyprsrel.txt. Return to text.
125 This includes the general sales tax and selective sales taxes. Selective sales taxes include alcoholic beverage taxes, amusement taxes, insurance premiums taxes, motor fuels taxes, pari-mutuels taxes, public utilities taxes, tobacco sales taxes, and other selective sales taxes. This is an estimate for 1999. The data were downloaded from the U.S. Census Bureau http://www.census.gov/govs/estimate/9918ky.html on 4 October 2001. Return to text.
126 We use the U.S. Department of Labor, Bureau of Labor Statistics, Consumer Expenditure Survey (CES), South Region data, to estimate the amount of sales tax paid by age of household head. Personnel at the Kentucky Revenue Cabinet examined each CES category and indicated whether sales and use tax is applied in part or in total. We then estimated how much sales tax would be garnered from each age group and expenditure category, accounting for 57 percent of total sales tax receipts. Return to text.
127 This is an estimate for 1999. The data were downloaded from the U.S. Census Bureau http://www.census.gov/govs/estimate/9918ky.html. Return to text.
128 Howard N. Fullerton, Jr., “Labor force participation: 75 years of change, 1950-98 and 1998-2025,” Monthly Labor Review, December 1999, 24 October 2001 http://www.bls.gov/opub/mlr/1999/12/art1full.pdf. Return to text.
129 This is an estimate for 1999 using data from the U.S. Census web site. Return to text.
130 Congressional Budget Office (CBO), The Long-Term Budget Outlook (Washington: Author, Oct. 2000), CBO Web site, 25 October 2000 http://www.cbo.gov. Return to text.
131 CBO, The Long-Term Budget Outlook. Return to text.
132 Refer to Michal Smith-Mello, et al., Challenges for the New Century (Frankfort: Kentucky Long-Term Policy Research Center), Appendix E for information about the Kentucky Retirement Survey. Return to text.
133 Michal Smith-Mello and Amy Watts, “Anticipating Future Needs for Long-Term Care,” Policy Notes, Kentucky Long-Term Policy Research Center, Frankfort, No. 4, June 2001. Return to text.
134 Michael T. Childress, “Are Kentuckians Financially Prepared for Retirement?” Policy Notes, Kentucky Long-Term Policy Research Center, Frankfort, No. 5, Aug. 2001. Return to text.
135 C. Eugene Steuerle, untitled speech, Kentucky Long-Term Policy Research Center Annual Conference, “Challenge for the Next Century,” Covington, Kentucky, 14 Nov. 2000. Return to text.
136 National Association of State Budget Officers (NASBO), NASBO web site, 7 Nov. 1998, 19 Nov. 2000 http://www.nasbo.org/pubs/exprpt/serexec.htm. Return to text.
137 NASBO. Return to text.