Kentucky is going to build an equestrian arena

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And a lot of other things, too—like a healthcare research facility at the University of Louisville, science labs at Western Kentucky University, and water and sewer lines in rural communities—because it was able to sell $400 million worth of municipal bonds on Tuesday.

This is great news, considering that the muni market had pretty much ground to a halt. Kentucky was one of the first states to get back out there in a big way. Yesterday I was talking with Jonathan Miller, Kentucky’s secretary for finance and administration, who explained what an emotional rollercoaster ride the muni market has been of late: “We were very nervous about this, and then the bailout passed, and we were relieved, and then the market tanked again. We were really worried—we had encountered a lot of pessimism and skepticism that we’d be able to sell these bonds.”

Now, of course, he’s glad that they did, not just because of the small role Kentucky played in restoring a modicum of confidence to the market (after Kentucky floated its bonds, Ohio immediately followed), but also because it’s not such a bad time to be plowing money into public works projects. Like states around the nation, Kentucky is seeing signs of a slowdown—tax revenue was off 5% in September, compared to the same month last year—and nothing says Keynesian response better than building a bunch of new buildings and sewer lines.

UPDATE: Here’s why I was talking to Jonathan Miller.