When Missouri and Kansas agreed to a border war truce in 2019, the agreement was widely celebrated as the end of an expensive and counterproductive competition.
After spending hundreds of millions of taxpayer dollars moving jobs back and forth across State Line Road, both states agreed to stop subsidizing the relocation of existing employers within the Kansas City region.
The agreement, which consisted of legislation on the Missouri side (which sunset last year) and an executive order from the Kansas side, was a good idea. But I argued at the time that Kansas Governor Laura Kelly’s executive order contained a glaring weakness. Specifically, I questioned how Kansas would define “net new jobs” and whether companies could continue receiving incentives by combining a relocation with a modest expansion.
Seven years later, Governor Kelly has provided the answer.
Defending Kansas’s $125 million incentive package for Lockton’s new headquarters in Leawood, Kelly argued the deal does not violate the border war truce because “We will not incentivize the move of current jobs. If a company is going to move and expand, we’ll talk.”
That is almost precisely the scenario I described in 2019: “Could a growing Missouri firm already planning to make a few new hires take that plan to Kansas and seek incentives—using those ‘net new jobs’ as leverage?”
The company is expected to move roughly 1,500 existing jobs from Missouri to Kansas while adding approximately 500 new positions. Under Governor Kelly’s interpretation, those additional jobs are enough to distinguish the project from the type of incentive-fueled relocation the truce was intended to prevent.
But the transaction looks familiar. Thousands of jobs move across the state line. Taxpayers provide substantial subsidies. Public officials attend a groundbreaking and celebrate job creation.
The fundamental question is whether those additional jobs would have been created anyway. It is a difficult question to answer from the outside, yet the system incentivizes businesses to claim the growth is due to the incentive.
A real economic border war truce is worth crafting. But unfortunately, the 2019 truce isn’t that.
