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Patrick Tuohey

Three cheers for The Kansas City Business Journal for writing about the costs to taxpayers of economic development subsidies offered up by city leaders. My colleague Patrick Ishmael wrote about new accounting standards instituted by the Governmental Accounting Standards Board (GASB) in 2015, and now City Hall has begun reporting in accordance with the new standards—which require states and localities to provide more information about tax abatement agreements into which they offer, including gross dollar amount.

For us at the Show-Me Institute, the additional reporting requirements and transparency are a good thing. They largely confirm our assertion that Kansas City gives away far too much of its own money and the money of other taxing jurisdictions such as schools and libraries.

While the city diverts just under $90 million of money it would receive from sales, utility and income taxes to developers, this does not include the money from property taxes that would otherwise go to other taxing jurisdictions such as school districts. That amount, according to the Journal, is just under $42.5 million.

So taken all together, the city itself is reporting that the costs of economic development subsidies is $132,311,000. This does not include other costs, such as the $14 million the city allocates from the general fund to cover the debt incurred by the Power & Light District. (See FY 2018-19 budget, p 63.)

That brings the total up to at least $146 million every year.

Long-time followers of the Show-Me Institute will not be surprised by any of this. We have consistently pegged the cost to taxpayers of subsidies at, “north of $100 million a year.” This has garnered howls of denial from The Kansas City Star editorial board (read here and here) and dismissals from city leaders. GASB is requiring the city to account for its handouts in a more transparent manner, and for that we should all be grateful.

About the Author

Patrick Tuohey
Patrick Tuohey
Director of Municipal Policy

Patrick Tuohey is the Director of Municipal Policy at the Show-Me Institute.