Presented To The
Kentucky Appalachian Commission
April 20, 1998
Hazard, KY

Gov. Paul E. Patton,
Chairman Of The Commission

We Appalachians are proud people. We take pride in who we are and what we stand for. We take pride in our families. We’re proud of our environment. We’re proud of our heritage; our Appalachian culture is distinct in the Commonwealth and in the nation. Because of our pride, we have a strong allegiance to this place we call "home." We find importance not just in where we live, but in how we live. We value deeply those connections that draw us close to our kin and friends, to the mountains and our land. Our pride as a people is forever linked to the intense appreciation we have for the values and benefits we find in making our home in Kentucky’s Appalachian region.

We Appalachians are also a frustrated people. We’re frustrated because our region has not kept pace with the economic growth patterns of the state and of the nation. We have not developed a diversified, sustainable economy. We’re frustrated because we fear we may not be able to preserve for the generations to come the pride we feel in being Appalachians and in living the Appalachian life. We’re frustrated because we have worked hard and made advances in our region, but the achievements have not carried us as far as we need to go.

Ever since I was a boy growing up in Louisa—over in Lawrence County—I’ve heard politicians talk about doing something about the economy of Appalachian Kentucky. I’ve heard them talk about doing something to build our region. Some of these leaders have made substantial contributions to improving our quality of life. Governor Bert Combs laid the foundation for modern progress by opening the region through the construction of the Mountain Parkway and creating a consciousness about Appalachia. Congressman Carl D. Perkins literally worked himself to death trying to improve living conditions in the core Eastern Kentucky counties.

Now, the shovel is in another set of hands—in mine as your Governor, and in yours as the current generation sharing the responsibility to help make Appalachian Kentucky better for the next one. The challenges we have are the persistent challenges we know too well: Creating jobs which provide a spectrum of employment opportunities, having an adequate stock of decent, affordable housing; assuring that our environment is protected. And above all, fueling a spirit in Appalachian Kentucky that drives individuals to success and gives them a reason to set and pursue personal goals.

These issues cannot be addressed by government exclusively. That’s why I say we all share responsibility for Appalachia’s advancement. We’ve learned the government can’t import progress; we’ve learned progress can’t be imposed. You know and I know government can contribute to progress; you and I also know personal commitment to achievement is an important part of the regional advancement formula.

Today, I want to discuss with you my ideas for an Appalachian Advancement Action Plan that can help us build a diversified, sustainable economy in the region. I want us to consider the roles each of us have—as government officials, as community leaders, as controllers of resources and as citizens of Appalachian Kentucky—in taking our home region where we want it to be.

My broad objective is to set Appalachian Kentucky on a course that will allow the region’s economic and demographic profiles to match those of the state as a whole within 20 years. The key to putting us on that track is investment—personal investment, public sector investment and private sector investment.

If we are to have a diversified, sustainable economy early in the Twenty-First Century, people must invest in themselves through education. People, their ideas, their productive capacity and their commitment to personal progress are the strongest drivers for regional development. I sincerely believe we cannot meet our goal unless Appalachian Kentuckians embrace the value of life-long education and prepare themselves to pursue or create opportunities for their own achievement.

We must continue to make public investments in the region’s infrastructure and in public facilities. We must have adequate highways, water and sewer systems to not only make the region more attractive for private investment, but to enhance the quality-of-life. I think we should make these public investments with the intent of pursuing the potential and the promise of the region and its communities rather than just seeing them as actions to correct problems. We should not allow remediation to be an end unto itself.

Our public investments should extend as well to education facilities, instruction and programs that expand training and academic services.

Appalachian Kentucky cannot advance without investments from the private sector. Government can provide incentives and government can help create an environment that makes private investment more attractive. Government, however, cannot build a sustainable economy; government cannot attract people to a region; government cannot create wealth. Only private sector investments can do these things. Be they from multi-national corporations or the individual down the street who has a dream about having his or her company, private sector investments lead to the type of diversification and quality economic growth we’re targeting in Appalachian Kentucky.

The point we need to consider is how to link these three types of investment. I think we can accomplish the connection by dealing with six broad categories. These categories are (1) promoting and supporting education, (2) support for economic growth, (3) expansion of the coal severance tax grant program, (4) health care, (5) infrastructure development, (6) environmental protection and (7) leadership development.

Promoting & Supporting Education

I can’t make my position about education any more clear: Education is the primary foundation on which Appalachian Kentucky progress must be built. The commitment the people of the region must make is to take advantage of the opportunities they have for educational services. The commitment we must offer from government is to assure quality, accessible, affordable education opportunities are available.

Over the past 10 years, substantial progress has been made in the region in upgrading the elementary and secondary education system. The Kentucky Education Reform Act may well prove to be the most important act to emerge from the General Assembly in the 20th Century. Appalachian Kentucky has clearly benefited from this legislation.

The investment in elementary and secondary education services in our region has grown dramatically. For example, according to the Kentucky Department of Education, during the 1977-78 school year, just a little more than $110 was spent on average for capital expenditures per each student in the 49 Kentucky Appalachian counties. In 1987-88, that average per student capital investment had grown to just over $193. Last year, the investment stood on average at almost $292.

Total spending per student has also grown. In 1977-78, the average per pupil total expenditure in the 49 Appalachian counties was about $1,172. In 1987-88, it was $2,939. Last year, this investment was $5,957 per student on average in these 49 counties.

Now, money in itself doesn’t solve our problems. It does, however, allow us to have the facilities and the programs we need to assure our children have access to education services that will help prepare them to be productive, independent adults.

Our attention turned to postsecondary education last Spring during a special legislative session and again this winter during the regular session. We have strengthened Kentucky’s commitment to education programs and opportunities in the Appalachian region. Just one look at the budget confirms the Commonwealth has put money behind the idea of making this state the "Education State." There’s more than $81,500,000 in the budget we just approved for capital projects and programs in Appalachian Kentucky. Have you ever seen a more substantial, one-time public investment in Appalachian education than we’re making? I think not.

Some of the new programs that extend the state’s commitment to education are the new "Commonwealth Assessment Test" that will replace the KIRIS test and the "Commonwealth Scholars" program that will help students finance the expense of their education. One of the most exciting developments in Appalachian education opportunities is the opening of the Pikeville School of Osteopathic Medicine. Not only will this institution train physicians for the region, it will expand substantially the medical segment of the region’s economy. The Commonwealth recognizes the value of this institution and the General Assembly has provided support for Kentucky students who attend the medical college.

Of course, these public investments won’t produce dividends if the people of the region don’t take advantage of the opportunities for education we’re creating. The question I pose to this Commission and the leaders of our region is: How can we most effectively encourage Appalachian Kentuckians to invest in themselves through education?

Support For Economic Growth

We’re doing a great deal through the public sector to make Appalachian Kentucky more attractive for private investment to encourage economic growth. As I review some of these activities over the next few minutes, I want to ask you to consider how we may improve our support for economic growth and what actions we may take to make our efforts more effective.

In the core counties of Appalachian Kentucky, the coal industry has long been, and should remain for some time to come, a major element in the regional economy. The coal industry will not provide in the future the volume of jobs it has in the past, but it will be part of the economic foundation in a variety of ways. Coal will attract investment into the region; coal will continue to provide a commercial and industrial base. And coal will provide the severance tax that funds major development programs for the coal counties.

When we consider support for economic growth, we must include the coal industry among the economic segments we target.

I continue to adhere to my position that if the Appalachian economy is to grow, we must have a strong manufacturing segment. Now, a manufacturing sector is not the only element in my vision for the region’s economy; it is, however, an important piece in a diversified foundation. Through the benefits of the coal severance tax I just mentioned, we have been able to make a major investment in preparing three areas to develop as economic opportunity centers based on manufacturing activities.

In the past few months, we’ve announced a$5.5 million investment for a 519-acre industrial park in Rowan County that will also benefit Menifee, Morgan and Carter counties. We’ve announced a $2.5 million investment for an 800-acre regional industrial park in Boyd, Greenup and Carter counties. And here in Perry County, we’re spending $5.5 million for a regional park that will also benefit Harlan, Breathitt and Leslie counties.

Beyond this group of investments, the 1998-2000 budget provides another $10 million for specific economic development activities in the Appalachian Kentucky region. All of this amounts to an authorization to invest $22,500,000 in direct economic development activities in Appalachian Kentucky in less than a year. (And this does not include additional investments made through ARC grants, CDBG grants, RDA grants and loans and funds through any number of other programs we deal with.)

From time to time, I’ve been accused of being a "smokestack chaser," of being someone with a limited outlook about strategies for economic development. I want to make it clear today that I do not think there is a single "silver bullet" approach to successful regional development. What I do think is the following:

Appalachian Kentucky’s capacity for economic development is diverse. Initiatives for economic advancement should be synchronized with the development potential a locale possesses.

Economic development is not the product of a single activity, but rather the result of sustained efforts keyed to specific outcomes.

I ask you to keep those two points in mind as we turn our attention to some other investments we’re making to support growth of the region’s economy.

Tourism has been advocated by many local leaders and citizens as a vehicle for economic development. State officials, such as Tourism Development Secretary Ann Latta, have long understood the economic value of tourism. I’m pleased to advise the members of this Commission the new budget provides almost $41,500,000 in investments for tourism-related developments in Appalachian Kentucky. This represents the most substantial commitment to tourism in the region since Governor Combs committed almost four decades ago to make the state park system "The Nation’s Finest!"

Some of the projects addressed in the budget have received attention from this Commission. For example, substantial appropriations were authorized for the Red Fox golf project in Letcher, Perry and Knott counties and the Coal Mine Museum and Underground Mine Tour in Benham and Lynch. These projects were among a group this Commission identified as "magnet tourist attractions." I mention this to let you commissioners know the input you provide around this table is considered in the decision-making process.

When we talk about supporting economic growth in Appalachian Kentucky, we cannot overlook encouraging entrepreneurship. We’ve got to elevate the role entrepreneurship plays in developing our region. Later today, we’ll receive a report from the issue team I organized to explore how we may respond to this challenge.

One action already taken may improve the availability of risk capital for new companies. The General Assembly approved legislation we supported that encourages venture capital investment through venture funds dedicated to the development of small business in Kentucky.

Health care is important as a quality-of-life issue. It is also important as an economic development issue in Appalachian Kentucky. We have taken actions to further strengthen this sector. As you know, a new veterans’ nursing home will be located here in Hazard. The construction investment for this facility approaches $5,000,000. Also in Hazard, a new facility to house the UK Center for Rural Health will be built. This will be a $6,100,000 construction investment that will provide dividends for the region for years to come. And as I mentioned earlier, our budget provides support for Kentucky students who will be attending the Pikeville College School of Osteopathic Medicine.

These are some of the "headline" efforts. There are others that all combine to demonstrate we’re committed to growth in economic sectors that not only improve our region’s economy, but the quality of life of our region’s people!

As we continue to look at growing our economy, let’s turn now to telecommunications and technology—the utilities of the next wave of industrial development. (You’ll recall we had a rather spirited discussion about this topic when we met at Ashland last summer.)

The single point that impresses me most about this segment of development is Appalachian Kentucky—for perhaps the first time—is ahead of the curve of a new direction of economic progress because of the electronic infrastructure we host in this region. Our challenge here is to maintain this posture and to make every effort we can to encourage private sector investors to take advantage of this utility.

I know it is difficult to accomplish major achievements within a short time frame. We can’t do much today for the sake of today. However, the promise of the future rests on actions we take now. Because of this, I want to organize "The Governor’s Appalachian Tech Network Conference" to bring together annually the region’s most computer literate and technologically gifted high school and postsecondary students. The conference will give these students a networking platform. I also want it to be structured to stimulate ideas and concepts about applying technology in ways that create wealth, jobs and expand the economy of the region. One of the goals of this effort will be to keep Appalachian Kentucky’s young brain power in the region and encourage the students to apply their talents and knowledge "at home" after their postsecondary training.

While we give this attention to retaining the region’s "brain power," I also want to initiate an effort to attract back to Appalachian Kentucky at least the influence of those natives who left the area and became successful in their respective fields. One of my approaches to this is to create the "Appalachian Alliance." I see this as a vehicle to organize business leaders and executives who are natives of the region and hold influential positions with enterprises outside the area. We want to target those native sons and daughters who have the capacity to influence the activities of their companies in ways that can be beneficial to our goal of economic growth. We want to encourage these executives to consider Appalachian Kentucky as a site for investment, for expansion and for new ventures.

In a similar vein, I want to begin an effort to organize the country music stars from the region—especially that concentration of talent that comes from the US 23 Country Music Highway—and provide for them a vehicle to lend their talent, business abilities, energy and resources to help build Appalachian Kentucky’s tourism and entertainment economy.

I also plan to convene "The Governor’s Appalachian Kentucky Resource Summit." This will be a gathering of CEOs of companies and organizations controlling large blocks of the region’s land and natural resources. My goal is to seek ways to promote partnerships with these executives that can contribute to regional advancement.

Expanding The Coal Severance Tax Grant Program

The coal severance tax grant program is substantial development tool for our coal-producing counties. One of my goals is to extend the value of this program by increasing the percentage of severance tax collections this is available for development activities. I want this program to provide for the benefit of the coal counties the full 50% of the collections that’s authorized by statute.

We have made progress toward that goal. For the current fiscal year, 31% of the coal tax collections is earmarked for coal county activities. My budget provides an increase to 35% in the next fiscal year and 38% in the 1999-2000 fiscal year.

Another goal is to consider revisions to the program that expand the allowable uses of coal severance tax grants. As the coal counties host a sufficient inventory of industrial parks and industrial sites, we need to look at other economic development pursuits that can be funded through these grants.

We took some steps toward that with the 1998-2000 biennial budget. My budget provided authorization for coal county fiscal courts to spend their single-county grant funds on selected projects that are related to economic development, but which are outside the usual scope of the severance tax grant program. By and large, these projects were identified by local leaders as being important for the economic advancement of their communities.

4. Improving Health Care

Let’s turn now to another of those broad categories I feel we must address if we are to create a sustainable economy in the region. I’ve already spoken about health care as an economic sector. Now I want to consider health care as a quality-of-life issue.

Quite broadly, I think we can all agree we have improved access to and the availability of health care services in our region over the past three decades. Substantial investments in this sector have been made by the state and federal governments, private companies, not-for-profit groups and individuals.

As we move into the next century, we should take note that our task is not yet completed. We must continue to make public sector investments as we can in health care services. We must also continue to seek investments from the private sector for these services in the region.


5. Infrastructure Development

Investment in infrastructure is a vitally important element in linking public investments with private and personal investment in regional development. I feel we have accomplished a great deal in the region in this regard, but we all know we have a lot of opportunities for additional investment.

I’m pleased to report to you the 1998-2000 biennial budget provides funds totaling almost $29,500,000 for a variety of infrastructure projects across the region. Now keep in mind this is a budgetary authorization. It does not include the additional dollars for water and sewer facilities provided through ARC, CDBG and the Rural Development Administration.

We’ve also provided $1,250,000 to develop a statewide water plan before the next General Assembly convenes. The goal of this plan is to find a way to provide safe drinking water to everyone throughout Kentucky. Certainly, Appalachian Kentucky will benefit from this effort.

Community facilities and development projects are also an important part of the infrastructure. Again turning to the new biennial budget, almost $35,000,000 has been provided to communities across the Appalachian Kentucky region for these projects. Additionally, there’s about $8,000,000 for community services such as fire departments, emergency service agencies, outreach services and health services.

Certainly, the highway system is a crucial part of the region’s infrastructure. It is one of the most visible public investments we make and it is one of the most valuable in relation to attracting private sector investments. Appalachian Kentucky is not being neglected when it comes to highways. Now, I’m not saying we’re about finished with our regional road system. But I do think it is important the Commissioners and the people of Appalachia know there are construction projects with a value of more than $405,700,000 in the new Six-Year Highway Plan that were approved with the 1998-2000 budget! This is the projected cost of only the construction phase of projects in the region that are scheduled to begin this fiscal year, next fiscal year or during the 1999-2000 fiscal year. The investment does not include the cost of pre-construction work such as design, right-of-way acquisition and utility relocation.

With the new federal highway bill that’s making its way through the legislative process, we may have the opportunity to expand our highway investment activity over the next several years as increased funding may be available for the Appalachian Highway System.


6. Environmental Protection

Another broad category to which we direct attention is environmental protection. My goal is to protect the environment in a manner that maintains the region’s quality-of-life and enhances our potential to build a sustainable economy.

Many Appalachian Kentuckians are involved in a major rededication to cleaning up their counties and taking extra efforts to keep them clean. The PRIDE program is focusing energy on the proposition that environmental improvement can foster economic improvement. Fifth District Congressman Hal Rogers, who initiated the PRIDE program, understands how the physical environment can impact the economic environment. Congressman Rogers has been supported in this effort by Natural Resources Secretary James Bickford and his cabinet.

The 1998 General Assembly produced legislation that will have a positive impact on the environment not just in Appalachian Kentucky, but the state as a whole. For example, my Kentucky Forest Conservation Act implements "best management practices" on logging operations, requires a master logger be on logging sites and creates landowners and public information programs. The act will be a major force in sustaining Kentucky’s forests and the forest products industry.

As you know, the legislature changed some of the provisions of the Kentucky Forest Conservation Act. The bill we have is a start toward the objective we want to achieve. It’s likely this act will need attention in the future.

Another environmental bill that will be of particular benefit in Eastern Kentucky requires new homes to be hooked onto a sewage disposal system or a septic system. This bill is designed put an end to the practice of running "straight pipe" sewage discharges. We also now have legislation that prohibits boaters from discharging sewage into rivers and lakes.

Leadership Development & Civic Capacity

The final broad category I want to address focuses on leadership development and building civic capacity in our communities. These are vital factors in the equation for regional development, but they are often overlooked or minimized.

I think it’s important for us to consider how we may cultivate leadership and build Appalachian Kentucky’s civic capacity. We need to give attention to how we may encourage people in the region to embrace their personal role in the development of their region and in the conduct of their government.

From my perspective, people seem to have become disconnected from their government. It seems the concept that the people are the government somehow has been neutralized when it comes to involvement with the institutions of citizenship. Because of this, one of the most powerful drivers for community advancement has been negated. People have lost the sense that they can contribute to the destiny of their communities.

We need to get people reconnected with government. We need to move people to understand that if we are going to have a prosperous region, then "we, the people" have to build it. We cannot sit at home and wait for government to build a good community. We must engage people in the process of community achievement.

The East Kentucky Leadership Network and East Kentucky Women In Leadership have made significant contributions to leadership development for their constituencies. I hope soon we will have in place Leadership East Kentucky as another entity dedicated to building and expanding civic capacity. We are making progress in this category, but I don’t want that progress to skew the scope of work that remains to be done.




As you can see, my concept for the Appalachian Advancement Action Plan is broad-based. I think it brings together in one strategic statement some of the best ideas for development that have been discussed for the region. This is not a partisan strategy; it is not a plan based on ideology. It is simply a practical action plan for regional advancement.

I don’t envision the Appalachian Advancement Action Plan as a static strategy. It needs to change with the challenges; it needs to be flexible. Today is a start at crafting this plan. I solicit your advice about and input for this effort.

I think it’s time we start bringing our frustration to an end. It’s time to turn to our pride, to our love for our Appalachian homeland and to our hopes of preserving all of this for future generations to take this region where we want it to be!

I’m convinced personal investment, public investment and private investment are the keys to building the sustainable economy we must have. Take any one out of the formula and our efforts to advance Appalachia will be hampered if not stalled altogether.

Come join me with your commitment and your personal investment. Let’s take Appalachian Kentucky where we know it should be!