One Economy

This page is the financial logic, not a budget and not a promise. It reasons from verified figures toward a strategic question: if the corridor unified its tax base and concentrated its development capacity, how would the trajectory change? Read it as a model with stated assumptions. The actual rates and choices belong to a public merger negotiation.

The corridor runs several economies where it could run one

Four city governments inside roughly 25 miles each set their own tax rates independently, and the result is not a strategy but a spread:

A spread that wide is not the product of competing philosophies. It is the product of four small governments each solving its own budget in isolation. The same household, moving a few miles up the valley, crosses into a different tax regime for the same public services. That is the fragmentation a single economy would replace, not by splitting the difference, but by adopting the model that already works here.

One model in the corridor is already built for growth

Pikeville's audited finances show something most people get backwards. The city is funded mainly by a tax on work performed inside its limits, not by taxing homes:

• 57% Share of Pikeville's General Fund from its 2% occupational (payroll and net-profits) tax: about $12.2M in FY2024
• ~5% Share from property tax: about $1.1M. The job base out-earns the property base roughly eleven to one.
• 3,000+ Employees at Pikeville Medical Center alone, among the largest employers in the region and a core driver of that occupational base

This is the strategic distinction. A property tax reaches only the people who live inside the line. An occupational tax reaches everyone who works inside it, including the thousands who commute in each day to the hospital, the university, and the businesses that serve them. In a regional hub that imports its workforce, the working population is far larger than the resident population, so a city funded on payroll captures the whole regional economy while a city funded on property captures only its own rooftops.

What the numbers imply

The occupational figure is not just a budget line. Divide the revenue by the rate and it reveals the size of the economy the tax sits on. Pikeville collected about $12.2M at 2%, which means the wages and business profits earned inside the city limits each year total roughly:

• ~$610M Taxable workplace earnings inside Pikeville per year, implied by dividing $12.2M in occupational revenue by the 2% rate
• ~$79K That base, per Pikeville resident, in a region where per-capita income is a fraction of that. The earnings belong mostly to people who commute in.
• ~$6.1M Annual yield of each single percentage point of occupational tax on that base

Read those figures together and the structural point is hard to miss. A base of $610M is far more than Pikeville's roughly 7,750 residents could earn among themselves. It is that large because it is filled by a regional workforce that drives in each day to the anchors and the businesses around them. The occupational tax is already a regional tax. It simply is not yet shared regionally.

That reframes what consolidation does to the math. It does not require raising anyone's rate. It changes how much of the corridor's existing workplace earnings sit inside one taxing boundary and fund one shared set of services. The leverage is straightforward: at a 2% rate, every additional $100M of corridor workplace payroll brought under one government is worth about $2M a year. The prize is the size of the base, not the height of the rate. The precise corridor-wide base awaits the workplace-payroll figures for Prestonsburg, Allen, and the rest of the valley, so this section models only what Pikeville's audited numbers already prove.

What unifying the base changes

Follow the structure rather than any single town's rate. Today a nurse who lives in one corridor community and works at an anchor in another pays the occupational tax wherever she clocks in, and that revenue stays on one side of a municipal line. It funds services she may never use and none for the community she goes home to. Across thousands of daily commuters, that is a one-directional flow: value produced corridor-wide, captured at one address.

If the corridor is one city, then that flow stops being directional. The same payroll tax, paid on the same job, funds services across the whole unified city, including the worker's own neighborhood. Nothing about the work changes. What changes is that revenue generated by the regional economy is spent on the regional economy. Extraction becomes circulation. That is the core of the financial case, and it holds without promising any specific household a specific rate.

Concentration beats fragmentation, and Kentucky's tools are built that way

The second half of one economy is where the money gets spent. The status quo splits development capacity among separate governments that compete for the same employers and bid their own tax bases down against each other. Concentration replaces that with one strategy aimed at the nodes that already have gravity. Kentucky's own toolkit rewards exactly this:

• Tax Increment Financing (KRS 65.7041–65.7083) lets a city capture the future growth in both occupational and property taxes inside a development district, up to 100% for as long as 30 years, to finance the infrastructure that creates that growth. For a hub funded on payroll, the reach into occupational increments is unusually powerful: if you build a district around an anchor, the new jobs' payroll taxes help pay for the roads, water, and sites that brought them.
• The Kentucky Product Development Initiative ($35M a year) caps awards at $2M per county per project, but explicitly lets jurisdictions pool their allocations to exceed that cap. Pooling beats fragmentation by statute. A joint authority elsewhere in the state drew about $3.3M that way, and Floyd County is already using the program for due-diligence work at the Allen Rail Site in the corridor.
• A local industrial development authority (KRS 154.50-320) can assemble, develop, and convey build-ready land, the scarce ingredient in a narrow valley where flat, developable acreage is the binding constraint on new employers.

Scale is what wins the money that matters

The largest external dollars flow to capacity and coordination, not to the smallest applicant:

• The corridor already sits inside one regional vehicle, the Prestonsburg-based Big Sandy Area Development District, covering Floyd, Johnson, Magoffin, Martin, and Pike counties. It administers regional grants today, so a consolidated city would map onto existing machinery rather than fragment it.
• ARC POWER has invested $484.9M through 564 awards nationally (job and leverage totals reported by ARC are projections, not audited outcomes). In this region the money already moves through regional coalitions: the Big Sandy ADD won a $400,000 award for a five-county entrepreneurship program and a $1.2M award for a Martin County facility.
• EDA's Build Back Better Regional Challenge awarded about $1B to 21 regional coalitions, $25M to $65M each, chosen from 529 applicants. Eligibility required a cross-sector coalition. A single small town could not apply; a region could.

The pattern is consistent across every program: the unit that competes successfully is regional, professionally staffed, and able to absorb and manage large awards. That is a description of a 14,000-person city, not of four governments dividing the same limited capacity.

The flywheel

Put the two halves together and the logic closes into a loop. Jobs located anywhere in the corridor generate occupational-tax revenue. That revenue, no longer trapped at one municipal line, funds infrastructure and build-ready sites through pooled grants and TIF. Better sites and infrastructure attract more employers, which add more jobs, which feed the base again. A property-dependent town cannot run this loop, because property tax barely moves when employment grows. A city whose revenue is geared to jobs has its entire fiscal structure pointed at the one variable the region most needs to move.