During an address to the Greater Kansas City Chamber of Commerce, Missouri Governor Jay Nixon announced a proposal for ending what he calls the “border war” of incentives between Missouri and Kansas, and for jointly promoting growth in the Kansas City region.
The main point of contention is about line-jumpers – companies located in the Kansas City metropolitan area that get incentives by simply relocating across the state line while staying put in the Kansas City metro area and not creating any new jobs.
Currently, both states provide such incentives and treat the relocated jobs as newly created jobs. Gov. Nixon said it was bad for taxpayers, bad for the state budgets, and bad for the economy, and it hampers the region’s ability to compete on a global level.
He said the problem unique to the region is the result of a flaw in the incentive programs of both states, and they have a shared responsibility to fix it.
Gov. Nixon then outlined the proposal he has made to Kansas to fix the issue:-
1. An immediate moratorium on discretionary incentives for projects where jobs are merely being relocated across the state line.
2. Governors and legislatures in both states to work on a permanent moratorium mandated by law.
3. Local officials should be encouraged to avoid similar counterproductive use of local tax dollars.
4. Leverage both states’ combined resources to promote the Kansas City region as a whole.
Gov. Nixon cited several examples of the interdependent two-state economy in the Kansas City region. One was the Animal Health Corridor stretching from Columbia, MO to Manhattan, KS. It is packed with the world’s largest concentration of animal health companies for whom the state line was irrelevant.
Gov. Nixon also cited the example of automotive supplier Yanfeng USA, which is building a factory in Riverside, MO. Yangfeng’s biggest customer is the GM Assembly and Stamping Plant in Fairfax, KS.
The $600 million Fairfax plant expansion announced by GM in Jan 2013 pushed Yangfeng to increase manufacturing capacity in Riverside by building a new $45 million production facility and creating 263 new local jobs.
Gov. Nixon said such expansions were a win for the region and for both states.
He said while Missouri and Kansas were engaged in petty skirmishes along the state line, they were losing the global competition for the jobs and industries of the future.
He added that every dollar spent moving a job from one part of the region to another was a dollar they could have spent on creating new jobs, strengthening research and infrastructure, or marketing Kansas City’s advantages to the world.
Most importantly, said Gov. Nixon, this was a dollar not spent on investing in students and schools – the best economic development tools for competing and winning in the global economy.