An Olive Branch In The Economic Border War, This Time From Kansas

Apr 15, 2016

Kansas Gov. Sam Brownback is offering to stop spending state tax incentives to lure Missouri businesses across the state line but only if the Missouri General Assembly amends an offer to stop using tax breaks to poach Kansas jobs. Missouri extended the compromise two years ago, contingent on Kansas reciprocating.

Blake Schreck, Lenexa Chamber of Commerce CED President & Economic Development Director, stands near Freightquote, a company was lured from Lenexa, Kansas, to Kansas City, Missouri.
Credit Frank Morris / KCUR 89.3

Bill Hall, president of the Hall Family Foundation, says what's been called an economic border war has been extremely wasteful.

“We’re using our incentives to move existing jobs, rather than trying to compete for new jobs,” says Hall.

Hall has been keeping track of the incentive given to companies moving within the Kansas City metro, and he figures that more than $260 million has been spent that way. Critics says these moves are problematic because they don't create jobs or build the regional economy because people working for border-hopping companies don’t have to change where they live or shop.

The tax incentive programs used to lure companies across the state line work differently in the two states. In Kansas, the governor calls the shots. He decides whether to approve incentives for companies that qualify for Promoting Employment Across Kansas, or PEAK program. It lets companies pocket 95 percent of withholding taxes for new jobs.

In Missouri, there’s no gubernatorial discretion. If a company qualifies for the state’s main main border war weapon, the Missouri Works program (which works a lot like PEAK), it gets it. Thus, Missouri would have to change state law.

Two years ago, Missouri Gov. Jay Nixon signed legislation offering to disarm as long as Kansas would too. Kansas didn't make a move then.

Brownback's plan includes a truce on luring jobs from Jackson, Ray, Platte and Cass counties in Missouri  to Johnson, Wyandotte, Leavenworth, and Douglas counties in Kansas. That's much the same as the Missouri offer.

However, there are some differences between the two. Gov. Brownback wants to be able to use PEAK for the value of the net new jobs that a company promises to create. He also wants to be able to use the incentive if the company spends at least $10 million on construction when they get across the state line. Of course, Missouri would be free to do the same.

Despite the treaty offer, there’s not much time to make the changes in the Missouri. The General Assembly only has a couple of weeks left in its regular session.

There's also the problem of local incentives. Blake Schreck, President and Economic Director of the Lenexa Chamber of Commerce, says that silencing the state’s big guns is only the beginning of any serious border war disarmament. Schreck says the local, county and municipal incentives aren’t equal, or fair, either.

The Hall Foundation has agreed to a study to enumerate all the various county and municipal incentives at work pulling jobs around the metro.

Meantime, Hall’s hopeful lawmakers in Jefferson City will take up the matter.

“We’ve met with leadership, and certain legislators who have been involved in this before, and we have a feeling that the legislature will act positively," says Hall.

Hall says he thinks the Gov. Nixon will be supportive too, but he anticipates lots of nettlesome details in the way of a full  armistice in the economic border war.

Frank Morris is a reporter at KCUR.