The establishment of new manufacturing plants in five towns in Kentucky had a negative net fiscal impact on most local governmental units during 1958-63, Inmost of the counties studied, the direct effect of locating the new manufacturing plants in the small towns was to increase the costs of government for the School district and often the town without increasing the revenue. The increases were typically small, however. Also, a comparison of the study counties with a group of comparable counties that had no new industry added during the study period showed no significant differences between the two groups of counties in changes in local governmental revenue or expenditures due to any secondary effects of new industry in the study counties.