Kansas senators question bond program effort to lure American Royal

WICHITA, Kan. (AP) - Kansas senators want to keep Gov. Sam Brownback's administration from approving new economic development projects that they say cost the state sales tax revenue.

Senators approved a budget bill Thursday that carried an amendment preventing the state Department of Commerce from approving any new STAR bonds projects in this fiscal year and the next. The STAR bonds program, which allows municipalities to use sales tax revenue to pay off the bonds, has been used to finance the construction of Kansas tourist attractions and entertainment districts.

Some lawmakers contend the program should be temporarily halted because of the state's financial problems, The Wichita Eagle reported (http://bit.ly/1Xqd9Pd).

Sen. Jim Denning, an Overland Park Republican and vice chairman of the Senate Ways and Means Committee, offered the amendment, which he said is intended to keep Brownback from using STAR bonds to entice the American Royal to move into Kansas. The American Royal, a 117-year-old event in Kansas City, Missouri, includes horse and livestock shows, rodeos and the World Series of Barbecue.

He said he crafted the legislation after noticing that about $42 million in sales tax revenue that should have been returning to the state general fund after a STAR bonds project ended wasn't being counted in revenue estimates for the next fiscal year. He said he asked the Department of Commerce about it.

"The initial response was the $42 million is not going to come to the state, it's going to be directed to the American Royal STAR bonds project," he said.

Brownback's spokeswoman Eileen Hawley, confirmed that he wants to bring the American Royal to Kansas. "The governor is always working on a variety of economic development projects to create jobs and grow the Kansas economy," she said. "The American Royal is one of them."

Denning said he does not approve of that use of STAR bonds given Kansas' budget challenges. The state has struggled to balance its budget since Brownback successfully pushed Republican legislators to slash personal income taxes in 2012 and 2013 in an effort to stimulate the economy.

"The governor's put us on a sales tax-consumption tax policy," Denning said. "He's let 300,000 business owners not pay tax on their personal income, and he's made 3 million Kansans pay higher sales tax to accomplish that. And then we're supposed to balance the budget on sales tax revenue."

Denning said he wants to pause the STAR bonds program and restore legislative oversight.

The Department of Commerce, which currently has the sole authority to approve or deny proposed projects, said the program is used to develop regional attractions that will spur a significant economic impact. It refused to release a list of current projects Friday.

"There are currently ongoing STAR Bonds projects across the state. All of these projects are in various stages of progress and are subject to privacy laws," the agency's spokeswoman Nicole Randall said in a statement. "Commerce therefore cannot release the names or specifics of these projects."

Hawley said the governor's office was willing to work with lawmakers to improve the program, but that "it is important to carefully consider the impact of STAR bond projects as Kansas transitions from funding the government through taxes on productivity to taxes on consumption."


Information from: The Wichita (Kan.) Eagle, http://www.kansas.com