There’s an economic development arms race in full bloom with the main protagonists as Kansas City vs. Kansas City. That’s Kansas City, Kansas and Kansas City, Missouri, where businesses in the region have been showered with $750 million in tax incentives to move a few miles across the state line either way.
Kansas Speedway (Photo - balpeck @ flickr)
According to documents obtained by the AP, the two states have spent an astounding $750 million in tax incentives and bonds in the last five years to lure 200 businesses into opening new facilities or expanding in the Kansas City area.
Around three-fourth of the giveaways have come from Kansas, which is trying to lure businesses in Missouri. For its part, Missouri is offering what it can to keep businesses from relocating across the border. Both states also compete against each other when a new firm wants to locate to Kansas City.
The fight goes back a decade to the Kansas Speedway, which Kansas won by providing $150 million in tax breaks, bonds and other aid. Missouri was only able to offer a $42 million incentive package.
Near the Nascar track is another stadium for the Major League Soccer team that was lured away by Kansas from Kansas City, MO. Also nearby is another company named Cerner Corp., which had 5,500 people on the Missouri side and wanted to expand its operations. The new facility with 4,000 more employees is on the Kansas side, near the soccer stadium. Kansas won Cerner by offering them $85 million in incentives.
The most recent case cited in the AP report is that of Teva Neuroscience Inc. The company was based in Kansas City, MO. Kansas tried to lure their headquarters with its 400 jobs across the state border. Missouri tried to hold them back with new incentives worth $11 million, but it was no match for the $31 million that Kansas reportedly offered to Teva. The company is now headquartered in Overland Park, Kansas which is a part of the Kansas City metro area.
Restaurant chain Applebee has been bounced back and forth across the border in this ED arms race. It moved from Kansas City, Missouri to a suburb in Kansas in 1993 and then moved back to Missouri in 2011 after they were offered $10 million in incentives.
Normally, it makes for good headlines for state governors to announce new jobs and new companies moving into their area. But in all the above listed ED projects and others like them, the benefits for the metro area are largely cosmetic because no new jobs are created and they end up losing tax revenues overall.
Businesses in the area have sent a joint letter to Governors Sam Brownback and Jay Nixon of Kansas and Missouri respectively, pleading with them to declare a truce and focus their ED dollars on attracting new businesses from outside the Kansas City metro area.
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