Lawmakers hear plans to end Kansas tax break war
Thursday, February 6, 2014
Missouri lawmakers appear ready to embrace a proposed truce with Kansas in a long-running business battle that has waived hundreds of millions of dollars of tax revenues in order to shuffle jobs around the Kansas City region.
No one spoke in opposition Wednesday as Missouri House and Senate committees each heard testimony on legislation that would impose a moratorium on tax incentives for businesses in the Kansas City region relocating from one side of the state line to another.
The proposal appeared so popular that some Missouri lawmakers suggested it could be labeled a “consent bill,” placing it on a fast-track for approval that precludes any amendments during House and Senate debate.
The leading witness at the Missouri hearings was Bill Hall, assistant to the chairman of Kansas City-based Hallmark Cards Inc. and president of the Hall Family Foundation. His key evidence was a recent foundation report examining the money spent through two of the states’ primary incentive programs.
Since 2009, one Kansas program has waived $141 million of tax revenues to relocate 3,343 jobs from Jackson County, Mo., to Johnson or Wyandotte counties in Kansas, Hall said. Meanwhile, one Missouri program has waived $76 million in tax revenues to move 2,929 jobs from those two Kansas counties to Jackson County, he said.
The net result: a collective tax waiver of $217 million that produced a net gain of 414 jobs in Kansas.
It’s “a wasteful economic border war,” Hall said. “Neither state benefits. In fact, both are losing.”
But there is a perception among some Kansas and Missouri officials that Missouri is losing more often. That could help explain the eagerness to advance the moratorium legislation in Missouri.
Sen. Ryan Silvey, who is sponsoring the measure, said the proposed truce should make financial sense for both states.
The tax incentive battle has taken “millions of dollars out of the states’ economic development ability and trapped it in what’s basically a washing machine, just churning the same jobs back and forth across the state line,” said Silvey, R-Kansas City.
The moratorium legislation would apply to businesses moving between the Missouri counties of Jackson, Clay, Platte and Cass and the Kansas counties of Wyandotte, Johnson, Douglas and Miami. It would bar Missouri from offering tax incentives for businesses to move from those Kansas counties to those Missouri counties, but only if Kansas adopts a similar prohibition through legislation or a gubernatorial order.
The pact has the support of many Kansas City-area leaders. Among those testifying for it Wednesday were lobbyists for Kansas City, the Greater Kansas City Chamber of Commerce and the Civic Council of Greater Kansas City.
There’s “great frustration” among Kansas City-area business leaders when “we see people doing the border hop at the disadvantage of those of us who stay put,” said Shannon Cooper, a lobbyist for the regional chamber.
The Missouri legislation would not prohibit individual cities and counties from continuing to offer tax incentives for businesses to move across the state line.
That omission was cited by an aide to Missouri Gov. Jay Nixon as one of several thorny issues that could still create problems for the proposed truce.
Chris Pieper, a senior legal and policy adviser for Nixon, said another challenge is how the legislation affects a business with locations in both states that wants to consolidate. If the legislation won’t allow incentives in that situation, it could be harder for the Kansas City region to compete against other cities to retain that business, he said.
“This legislation has a very laudable goal, and it’s one that we all agree that we need to get to,” Pieper said. “I think there’s some differences, some nuances in how you get there strategically.”
Nixon held a news conference in Kansas City in November to call for a moratorium in the tax-break battle. Kansas Gov. Sam Brownback has suggested a similar pact. One of the sponsors of the Missouri measure is House Speaker Tim Jones, a Republican from the eastern Missouri city of Eureka.
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