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Candidate questionnaire: Kansas City’s economic ‘border war’
Today the statehouse candidates share their thoughts on the second item in the questionnaire developed with input from our readers:
Over the past five years, Kansas has provided roughly half a billion in tax breaks and other incentives to lure business here or keep them from moving across the state line. Do you support the use of taxpayer revenues to engage in this “economic border war”?
(If you need to lookup which district you’ll be voting for, check the Johnson County Election Office website).
Senate District 7
Kay Wolf (R)
Incentives are tools to attract new businesses to Kansas. A new business in Kansas can come from another state or from across the state line. The effort to attract and retain businesses and the jobs they create is very competitive locally, nationally and internationally. If the State were to not offer incentives, they would in effect be eliminating Kansas from consideration for new jobs. It is much like an automobile manufacturer offering rebates on vehicles. One does and one doesn’t. Where would you buy one?
Missouri has a program titled Quality Jobs much like our PEAKS program. The move of AMC is an example of a company moving across the state line. AMC evaluated Johnson County, New York City and Los Angeles as potential locations for their headquarters. Kansas would not have been an option nor been under consideration without tax incentives. Businesses bring employment, property, sales and income tax revenues, capital investment and fees. Their employees eat in our restaurants, purchase homes, buy groceries, and shop at our department stores. Businesses expand and create additional jobs. So while incentives may temporarily forgo some portion of new revenues, all the remaining revenues help fund our quality of life for K-12 education, public safety, social services and transportation.
Kansas regularly competes with Iowa, Texas, Oklahoma and Indiana for new businesses. Johnson County is economic engine and primary growth hub for the state. The PEAK program alone has brought more than 4,000 new jobs into our area. It is anticipated that within five years those 4,000 new jobs will grow to 9,000 jobs. Whether it is a company moving across the state line or across the nation, Kansas has to be competitive. I believe it is important that Kansas retain the ability to compete for projects as a means of growing our economy.
David Harvey (R)
I hate to even think about what would happen if we stopped competing for these companies. Kansas already ranks last in the country in job creation. We rank 48th in tax climate for new businesses and we rank 47th for existing businesses. The error with the question being asked is that economic incentives rarely reduce revenue because there is no economic activity to be taxed prior to these incentives. Unfortunately, offering incentives is the game that states and local municipalities are playing to attract and retain businesses to their states. Standing on the sidelines and not playing this game would damage our economy and have negative results that we would not want to endure.
A major solution to this problem would be to permanently reduce the tax burden and the regulatory environment that keeps businesses from moving to or expanding in Kansas. We need new leadership in Topeka that is willing to attack the status quo, develop bold initiatives that will achieve real results and elevate the Kansas economy.
House District 19
Stephanie Sawyer Clayton (R)
I support bringing businesses to Kansas. I think that we have good programs in place in order to accomplish this. I do not support an elimination of the exemption from sales tax for professional services- eliminating this incentive would cause the collapse of the Johnson County economy.
Bruce Belanger (R)
Johnson County residents all have a vested interest in the success of our metro area. The existence of a state line introduces another level of competition to our area that many metros do not have to consider. The ‘border war’ causes a great deal of frustration for all of us, but it is one example of how companies, countries, cities, states, and counties compete. There are instances where it is Overland Park vs. Wichita, Kansas vs. Texas, or US vs. Japan.
None of us like seeing tax revenue ‘given’ away to attract or retain companies. That being said, each situation is unique and requires its own business case. Some incentives have lead to a positive return on investment, others have not. Take a recent example with the defections of Teva Neuroscience and AMC from KCMO to Kansas. The estimated loss to KCMO in earning tax alone is $800,000, so there is a real economic impact of losing those businesses. In this case, there is a certain level of incentives that could be justified.
There does not appear to be a simple solution to this situation. There has been talk of a ‘border war truce’, but in the end, it is likely that each entity will look out for its own self interests. If Kansas made a unilateral decision to eliminate incentives, other states would likely step in to do so. Detailed, objective study of each situation is required to make good business decisions.
While we should not eliminate incentives as an option for economic development, a better approach is to create an environment in Kansas that is attractive for businesses. This environment is a combination of regulation, tax policy, workforce talent, infrastructure, etc. If we can make Kansas a place where business want to be, incentives will be less important.
House District 25
I do not. I agree with business leaders from across the region and both sides of the state line that have repeatedly called for a stop to the “economic border war”.
First, Johnson County has an incredibly attractive business environment to sell. We have schools that are among the most highly regarded in the nation. We have a workforce that is well educated and extremely productive, and we have the infrastructure and commercial real estate inventory to meet virtually every need. In an even battle, I am confident that the State of Kansas, and more specifically Johnson County, will win.
Second, the “economic border war” is inherently unfair to the most important segment of the economy, small business. Nearly two thirds of the US workforce is employed by firms with 50 or fewer employees. It is extremely rare for the tax breaks and incentives offered to lure business across the state line to extend to these firms. Yet, as a small business owner, I can tell you I am in constant competition with large employers. Again, I am willing to fight for my piece of the market, but I want a fair fight.
Finally, whatever you’re feelings about the recent tax cut passed by the Kansas legislature, it will likely do more for the competitiveness of Kansas from a business perspective that all of the tax incentives of the past decade combined.
We have everything we need to compete on a regional, national, and international basis. I believe we should be actively pursuing an end to the “economic border war” and be confident that the Kansas economy will not only survive, but prosper.
Stephen Foster (R)
Did not respond.
We need to be working to bring new business to the area, encouraging new people to move their families here, and creating more demand and new jobs through the strength of our schools, our communities and an improving economic climate. To that end, economic incentives can be helpful in attracting new businesses to the area and we all win.
Megan England (D)
As a state representative, I would support all responsible efforts to create the best possible environment for economic prosperity in Kansas. Although I don’t entirely oppose tax incentives for the private sector, I prefer to lure businesses to Kansas by supporting investments that benefit both the public and the private sector, like strong schools, good roads, and a skilled workforce.
Scott Gregory (D)
No. How many times have the promised, projected jobs not materialized? How many times have the beneficiaries of such largesse walked away? (Think “Boeing.”) We must also believe in this market that KCMO is working just as hard and raising the stakes at every turn. Good schools and infrastructure help attract and keep business.
Tomorrow, we publish the answers to our final question:
What is the biggest issue facing the state today, and what specific steps would you take to address it in Topeka if elected?
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