In Missouri-Kansas Border Wars Over Companies, Kansas Suggests a Truce

In Billion-Dollar Missouri-Kansas Economic Border War, Kansas Suggests A Truce

After years of skirmishes with his counterpart in Missouri, Kansas Gov. Sam Brownback is proposing a truce in the increasingly expensive – and evidently pointless – border war over companies and jobs.

Brownback has directed Commerce Secretary Antonio Suave to slash the use of incentives to recruit employers from across the border in Missouri, provided Missouri amends its Missouri Works incentive program. The neighboring states have collectively spent as much as $1 billion to attract border jumpers, as companies relocating a few miles to claim tax breaks are called.

While incentives would still be available through the state’s Promoting Employment Across Kansas program, Gov. Brownback’s proposal raises the requirements in terms of capital investment and job creation. He says both states would have to agree to stop actively recruiting employers in the others’ jurisdiction. The proposal would go into effect if and when the Missouri General Assembly amends Missouri Works program to reflect his terms.

The agreement would go into effect for one year, the governor said.

“Our focus should be on creating new jobs that help our states and the region grow, not on providing opportunities for businesses that routinely cross the border to access economic incentives,” Gov. Brownback said. “Kansas is, and will remain, an attractive state for business growth with our stable regulatory environment and tax policy.”

In 2014 Missouri passed its own anti-poaching leislation, but Kansas did not agree to it. Missouri Gov. Jay Nixon said he would review what he called “the latest proposal” but made no commitment.

Business leaders in both states have critcized the use of incentives to lure border jumpers, claiming the subsidies merely relocate jobs at taxpayer expense. Bill Hall, assistant to the chairman of Hallmark Cards, told the Kansas City Star that “108 companies have moved cross-border” since 2009. He called the competition a “zero-sum game” that’s cost taxpayers $262 million in lost revenues. Each job involved cost the community about $60,000, he said.

Other estimates put the cost to taxpayers much higher. Missouri and Kansas committed more than $750 million of tax incentives and bonds between 2008 and 2012 to lure businesses to their respective sides of the Kansas City metro area, according to state records obtained by the Associated Press. Other cities and suburbs have allocated millions more, AP said.

Citing research done by a Kansas City civic organization he heads, Hall said that since 2009 nearly 10,000 jobs have been shuffled across the border the states share. About 5,700 of those jobs moved from Missouri to Kansas, approximately 4,000 from Kansas to Missouri.

“We want to lower incentives so that (employer) decisions aren’t based on ‘What can I get from the state?’ by making the move,” Hall told the Kansas City Star.

“Moving jobs across state lines isn’t economic development,” Kansas City Mayor Sly James said. “It’s score keeping and we can do better than that.”

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Warren Strugatch
Warren Strugatch is a writer, speaker and consultant based in Stony Brook, NY. He covers economic development, global business, management and marketing.

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