I think one unintended effect of the tunnel was that anyone that had the means, but still intent on staying in the area, left Middlesboro and moved to Harrogate where the tax burden is much less.  TN has the higher sales tax, but all other forms of taxation are significantly cheaper.  As a result, many people live and work on the TN side of the tunnel, but go to the stores and restaurants on the KY side.  Since the mines have declined, the best jobs for non-college graduates are factories on the TN side as well.
I also think KY has been mismanaged for generations.  They seem to always find a way to funnel all resources (even those natural, human, and other resources generated in places like southeastern KY) into the golden triangle of Lexington, Louisville, and Frankfort.  There’s probably not a state where the people get taxed more but have less to show for it than KY.  On the flip side, TN has enjoyed about 16 straight years of good leadership regardless of party in both Bredeson and Haslam (Lee seems to be doing alright too).
I’m not a huge fan of KY’s current gov, but he seems to be doing alright.  His dad just about wrecked the place though when he was gov.