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Missouri offering truce with Kansas in tax-break battle for Kansas City area businesses

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KANSAS CITY, Missouri — Missouri Gov. Jay Nixon signed legislation Tuesday that he said could offer a truce to Kansas in a costly battle between the two states using lucrative tax breaks to lure businesses in the Kansas City region across the state line.

In recent years, the two states have waived hundreds of millions of dollars of tax revenues by offering specialized incentives for businesses to move across the border, often with little gain in jobs. The bill Nixon signed would prohibit Missouri from offering incentives to businesses that relocate from four Kansas counties to any of four Missouri counties in the Kansas City area.

But the proposed truce can take effect only if Kansas enacts a similar policy. Kansas Commerce Secretary Pat George said Tuesday that the state wasn't considering changing its economic development policies but was "looking for solutions and common ground" with Missouri.

Nixon said economic incentives have worked as intended to attract businesses to other regions of Missouri.

"But let's be honest, in Kansas City, one of the nation's largest metropolitan areas separated merely by a state line, these economic incentives don't always work as they should and can actually diminish the region's ability to compete as a region globally for jobs and investments," Nixon said.

Nixon said he believes political and business leaders in both states are interested in using state resources to help the Kansas City region compete in the global economy for jobs and businesses, instead of competing with each other.

"Every dollar we spend moving a job from one part of the region to another is a dollar we can't invest in creating new jobs, educating our workforce, marketing the greater Kansas City area to the world," Nixon said.

Donald Hall Jr., president and CEO of Hallmark Cards, said the states' tax-break battle has undermined business leaders' ability to work together for economic development. Hall was one of 17 business leaders who wrote a letter to Nixon and Kansas Gov. Sam Brownback urging them to find a way to stop the economic competition in the metropolitan region.

"This has cost taxpayers hundreds of millions of dollars and has generated little or no economic activity for either state," Hall said. "Neither state is a winner in this game."

PHOTO: Missouri Gov. Jay Nixon signs Senate Bill 635 into law, surrounded by business and civic leaders, on Tuesday, July 1, 2014, at the Greater Kansas City Chamber of Commerce in Union Station. The legislation is designed to end a long-running border battle between Missouri and Kansas, prohibiting each from using financial incentives to attract Kansas City-area companies over the state line. However, the law won't go into effect until Kansas officials exercise a similar policy. (AP Photo/The Kansas City Star, Allison Long)
Missouri Gov. Jay Nixon signs Senate Bill 635 into law, surrounded by business and civic leaders, on Tuesday, July 1, 2014, at the Greater Kansas City Chamber of Commerce in Union Station. The legislation is designed to end a long-running border battle between Missouri and Kansas, prohibiting each from using financial incentives to attract Kansas City-area companies over the state line. However, the law won't go into effect until Kansas officials exercise a similar policy. (AP Photo/The Kansas City Star, Allison Long)

Missouri's economic development programs entitle businesses to incentives for meeting certain job-creation criteria.

George said Kansas incentives give him the discretion to award financial incentives to a company, and he has in some cases denied requests for help on projects that weren't the right fit.

"You don't want to spend money wastefully, but you don't want to miss out on opportunities to grow the economy. We certainly don't want to back off at all," George said.

George also said Kansas has offered to work with Missouri to curtail the movement of businesses across state lines, but the state doesn't want to interfere with border communities that have their own economic development priorities.

The Missouri legislation would affect only state incentives, not those offered by cities and counties, and would target only tax breaks tailored for specific businesses. It does not affect broad-based tax policies, such as recent reductions in Kansas income tax rates or similar proposals pending in Missouri.

It would bar incentives for businesses moving between Jackson, Clay, Platte and Cass counties in Missouri to the Kansas counties of Wyandotte, Johnson, Douglas and Miami.


Tax break bill is SB635.

Online:

Legislature: http://www.moga.mo.gov

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