Lawmakers and Businesses React to Nixon's "Border War" Speech
JEFFERSON CITY - Some Missouri lawmakers and Kansas City area business leaders are wondering how they should interpret an economic speech Gov. Jay Nixon delivered Tuesday, in which he vowed he had a plan to end a business "border war" between Missouri and Kansas.
In recent years, Kansas City area companies have often made headlines for making the decision to jump or move parts of their operations across the state line. Often, businesses make the move because they were offered tax breaks.
In the speech, Nixon called for a temporary moratorium, or delay, to authorizations of discretionary state tax credits used to draw businesses to the Kansas City metropolitan region.
Nixon said breaks are often given out to re-locate jobs across state lines and rarely lead to new job creation in the Kansas City metropolitan region. Nixon said when the state diverts money to providing incentives to keep up with Kansas, other economic development tools like education lose out.
"Too often here in Kansas City, economic development tools that were designed to create jobs and generate real economic growth have the opposite effect - manipulating the market and hampering Kansas City's ability to compete as a region globally," Nixon said.
Kansas City has grappled with this issue for a few years. Area business leaders drafted a letter in Feb. 2012 to both governors, asking them to end the border war. In May 2012, The Associated Press analyzed five years of records and found Missouri and Kansas combined to commit $750 million to bonds or tax incentives intended to encourage business to move to or expand in the Kansas City area. The Associated Press found Kansas doled out nearly three-fourths of the incentives.
Nixon outlined a four-part proposal at the Westin Crown Center in the heart of downtown Kansas City.
First, he wants both states to immediately stop using discretionary tax credits that only serve to move jobs across state lines.
Second, Nixon wants the legislatures in both states to pass permanent legislation to make changes to tax credit programs that will better serve Kansas City.
Third, Nixon wants to discourage local governments in the area from using similarly inefficient practices.
Lastly, Nixon called for Missouri and Kansas to work together to leverage their combined resources to promote the Kansas City region as a whole.
Although lawmakers and business leaders agree the "border war" is a problem, some admit they were surprised by Nixon's speech and said the governor released few specifics.
Dan Mehan, President and CEO of the Missouri Chamber of Commerce, told KOMU 8 News Tuesday he was not made aware of specifics and was still trying to find what prompted the speech.
Pat George, Kansas secretary of commerce, told the Kansas City Star he was also caught off guard.
"We've been working with my counterparts in Missouri discussing potential solutions to the border war," George told the star. "It surprised me. We've communicated pretty well over the past year or so. We thought it might be a joint announcement."
Sen. Ryan Silvey, R-Clay County, has been working on proposals to curb the use of tax credits in the metro. He used his personal Twitter account Tuesday to sound off on the speech.
Gov Nixon says to end the border war he needs unilateral discretion over economic incentives in the area. Not an option.— Ryan Silvey (@RyanSilvey) November 12, 2013
We've worked hard to keep politics out of economic incentives by making them outcome based. We will not let anyone have unilateral authority— Ryan Silvey (@RyanSilvey) November 12, 2013
I have been working with local leaders on an end to the border war that can actually pass the legislature.— Ryan Silvey (@RyanSilvey) November 12, 2013
I'm happy to work with Gov Nixon on a realistic solution to the border war that has local support & can pass in Jeff City. This is not it.— Ryan Silvey (@RyanSilvey) November 12, 2013
Tax credits are issued differently in Missouri than they are in the Sunflower State. Kansas uses the Promoting Employment Across Kansas (PEAK) program to attract businesses and the secretary of commerce ultimately has discretion in whether the state will offer a company incentives after reviewing an application.
In Missouri, Lawmakers passed a bill this year to consolidate the Missouri Quality Jobs Act into the Missouri Works program. Businesses automatically qualify if they meet a set of requirements.
House Speaker Tim Jones, R-Eureka, released a statement Tuesday and questioned the Nixon administration's legal authority to make changes to tax credit programs.
"The answer is not to stop what we're working on and hand Governor Nixon the keys," Jones wrote. "The legislature has been working on fundamental reforms which will improve our economy while ensuring we are able to escape the cycle of job loss which has come about as a result of the border war, and we will continue with these efforts during the upcoming legislative session."
Kansas Republican Gov. Sam Brownback also issued a release following Nixon's speech.
"In Kansas, we are actively working with our mayors and civic leaders to build consensus around a process that is fair and equitable and allows both Kansas and Missouri to attract and retain business," Brownback wrote. "In the past year, all the net job growth in the KC metro area has occurred on the Kansas side."