Despite the coronavirus pandemic’s shock to Kentucky’s economy, the Bluegrass State has seen a rebound in employment, revenue and company investments. But as Kentucky’s economic momentum gains speed, there's a wildcard in the Delta variant that threatens to slow all the progress that has been made so far this year.
“Kentucky’s economy is surging,” Gov. Andy Beshear said after announcing the state had surpassed $2.2 billion of total planned private-sector investment for the year.
Even as the coronavirus’ heavy economic burdens are starting to be lightened for local governments around the state, a surge in new cases due to the virus’ mutation may cause additional pain.
The governor called the Delta variant the most aggressive mutation of the virus that has been seen to date. As of Wednesday, 1,686 new COVID-19 cases were reported in Kentucky. There have been about 487,871 cases of COVID in the state since the pandemic began, with 7,352 deaths reported, according to the state's website. In the U.S., there have been over 35 million cases resulting in 614,000 deaths.
Due to the Delta variant’s spread, Beshear and Dr. Steven Stack, commissioner of the state Department for Public Health, issued social distancing recommendations and encouraged all those 12 and older to get the vaccine.
“These vaccines are life-saving and for a few lucky Kentuckians, they’re going to be completely life-changing, too,” Beshear said in a statement.
At a White House briefing Monday, the Centers for Disease Control and Prevention said it estimated the seven-day moving average of new COVID-19 cases to be 72,000 a day as of June 30. This is a 44% increase from the prior seven-day average estimate.
The state is getting about $1.3 billion of American Rescue Plan Act funding from the federal government, which will help alleviate the pandemic’s effects. The governor has said the money will be used to boost the state’s economy by building schools, expanding broadband access and delivering clean drinking water.
More than $157 million in ARP funds will be distributed to more than 360 cities in Kentucky to offset expenses related to COVID-19.
The funds will be doled out based on the size of the city’s population. The money can be used to offset expenses caused by the pandemic. The cities will get half of their total allocation this year and half next year.
“Local governments have been important partners in our battle against COVID-19 and we know they have taken on great hardship and expenses to protect our people,” Beshear said. “I’m relieved our eligible city governments will receive these funds, because if we are to build a better Kentucky, we must ensure our communities are supported and positioned for growth.”
Despite the pandemic, Beshear said job growth continues and so far this year over 5,000 full-time jobs had been created in the state.
“As we move into the second half of 2021, we are positioning the Commonwealth for long-term growth,” he said.
The most recent data bear out the fact that Kentucky’s economy is on the mend in 2021.
Last month, the Office of the State Budget Director reported Kentucky’s general fund receipts came in $1 billion above
In terms of the market, as of July 30, Kentucky is ranked 34 out of 50 states in the U.S. in sales of municipal bonds. Issuers in the state have sold $1.76 billion of bonds so far this year, down almost 26% from the $2.37 billion in the same period in 2020 when it was ranked at 28. For all of 2020, issuers in the state sold over $3.73 billion of bonds, putting its ranking at 33, and up 2.3% from the $3.65 billion it sold in 2019.
Since 2011, issuers in the state have sold about $41 billion of bonds, with the most issuance occurring in 2016 when $5.8 billion of debt was offered. The state’s general obligation bonds are rated Aa3 by Moody’s Investors Service, A by S&P Global Ratings and AA-minus by Fitch Ratings and Kroll Bond Rating Agency.
In May, Fitch revised Kentucky’s
More Kentucky deals are coming. On Wednesday, BofA Securities priced Meade County’s $196.99 million of Series 2021A-1 and Series 2021B01 industrial building revenue green bonds subject to the alternative minimum tax for the Nucor Steel Brandenburg project.
The bond proceeds will be lent to Nucor Corp. for "eligible green expenditures," according to Moody's Investors Service, specifically for pollution prevention and control, which includes waste recycling and waste reduction.
"At least 90% of the net proceeds, after deducting costs of issuance, are expected to be spent on projects focused on the handling, sorting, processing, treatment and recycling of ferrous scrap metals through Nucor's new metals recycling electric arc furnace steel plate mill located in Brandenburg," Moody's said. "The bonds are ultimately an obligation of Nucor under an Agreement of Lease between County of Meade, Kentucky as lessor and Nucor as lessee."
The deal is rated Baa1 by Moody's and A-minus by S&P Global Ratings.
Also coming up, the Turnpike Authority of Kentucky is expected to sell $156.67 million of tax-exempt Series 2021A&B and Series 2022A fixed-rate revenue bonds in a negotiated deal. The deal is tentatively set to be priced on Aug. 25 after a one-day retail order period.
The Series 2021A new-money bonds in the deal won’t exceed $50 million in project funds while the Series 2021B bonds are a current refunding of outstanding Series 2011A bonds. The Series 2022A bonds are a tax-exempt forward refunding of Series 2012A bonds.
“The Turnpike is a long-term contributor to the state’s economy and one of the largest issuers of bonds. Important markets are linked in the system. Prospective manufacturers and employers consider the system most critical,” said John Hallacy, founder of John Hallacy Consulting LLC.
Business are continuing to move to and expand in the Commonwealth as its economic momentum gains traction.
On Monday, the governor helped break ground on Firestone Industrial Products’ $50 million plant expansion in Whitley County, which is expected to create an additional 250 jobs.
In July, Fidelity Investment announced plans to hire about 600 people in Covington, adding to the already 730 people working at the firm’s Kenton County campus.
These new hires will join the 4,700 workers already in the Covington area, whose jobs include client and relationship management professionals, operations specialists and technologists.
“Fidelity Investments was creating job opportunities for Kentuckians even during the depths of the pandemic, so it’s incredible to celebrate the company’s continued growth today, as our economy surges ahead,” Beshear said. “Fidelity’s commitment to providing Kentuckians with quality job and training opportunities will continue paying dividends as our state positions itself to lead in the post-COVID economy.”
GE Appliances, a Haier company, recently completed a $60 million expansion of its global headquarters in Louisville, which will create more than 245 full-time jobs.
Dollar General opened a $65 million distribution center in Walton, which when at full capacity will directly employ 250 people and generate 50 private-fleet jobs.
