Legislators call for tax discussion beyond economic ‘truce’ with Kansas

Missouri Gov. Jay Nixon speaks Tuesday, Nov. 12, 2013, in Kansas City, Mo., before the Greater Kansas City Chamber of Commerce.

Missouri Gov. Jay Nixon speaks Tuesday, Nov. 12, 2013, in Kansas City, Mo., before the Greater Kansas City Chamber of Commerce. Photo by The Associated Press.

COLUMBIA, Mo. — Boone County lawmakers said they agree with Gov. Jay Nixon that the back-and-forth shuffle of businesses across the Missouri-Kansas border is needless. But, they add, there are larger tax questions to address.

“It’s definitely a bigger, more complicated, more in-depth potential solution than saying, ‘Let’s call a truce,’” said Rep. Caleb Rowden, R-Columbia.

In a speech Tuesday, Nixon called for state legislation to end tax incentive programs meant to draw businesses across the Kansas border to Missouri. He told the Greater Kansas City Chamber of Commerce that the two states should work together to draw jobs to the metropolitan region.

Members of the Boone County delegation said they would support a proposal that ended the Kansas City area tug-of-war over businesses. But they said Nixon’s speech couldn’t replace a broad legislative discussion about tax incentives, tax structure and competition with all neighboring states — not just Kansas.

“Competition amongst neighboring states with the use of this kind of incentive has, for a long time, been a classic race to the bottom,” said Rep. John Wright, D-Rocheport.

This makes each state worse off

Wright said the use of tax incentives allows the government to “pick winners and losers” in private industry. He called for a clear, consistent set of rules that allowed private enterprise to develop on its own while reducing state spending.

State tax credits amount to $600 million, or about 8 percent of the state budget, Wright said.

“The use of tax incentives costs the state money,” he said. “It costs the state revenue that would otherwise be allocated to our schools or to reducing taxes for everybody.”

Rep. Chris Kelly, D-Columbia, also thinks tax credit programs need to be reviewed so that funds can be shifted to benefit education. But he said the problem is that while it’s easy to present tax credits negatively as a whole, someone has a stake in each individual tax credit.

For instance, Kelly said he doesn’t “want anybody messing with” a tax credit for digital data storage centers because it benefits Columbia’s economy. Rowden named urban development tax credits as a boon to his constituents.

The lawmakers also said the General Assembly needs to discuss tax structure in a broad sense. Rowden said there has to be a tax structure in Kansas that makes it sensible for businesses to move five miles across the border.

Kelly said Missouri has lower taxes, a larger state budget and a healthier economy than Kansas. He characterized state politicians’ focus on competing with Kansas — a point that came up often in recent debates over a $692 million tax-cut bill — as a distraction.

“I think Kansas is simply the smokescreen for a philosophical agenda… An interesting question is, does anybody care what the public policy is, or only as being perceived by the voters as being on the right side?” Kelly said.

Reps. Stephen Webber and Caleb Jones, as well as Sen. Kurt Schaefer, did not respond to requests for comment.

The 2014 legislative session begins Jan. 8. Sen. Ryan Silvey, a Kansas City area Republican, has said he is working on legislation that would address the Missouri-Kansas tax incentives.

Kelly, Rowden and Wright all said they would probably support a proposal to end the “border war” — as long as the conversation doesn’t stop there.

“Any important piece of legislation takes some time and requires a fair amount of discussion across those constituencies,” Wright said. “I’m glad the governor has started the discussion.”

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