Will There Be a Cease-fire in Kansas City’s Economic “Border War”?
That’s the billion-dollar question that legislators on both sides of State Line Road are asking themselves. Show-Me Institute researchers have discussed the problem of trading businesses back and forth between Kansas and Missouri, fueled by tax incentives, for years now. Halting these wasteful subsidies, by whatever legal mechanism that can accomplish it, should be a top legislative issue in both Jefferson City and Topeka.
Simply cutting the vast majority of tax incentive spending would accomplish this; the less discretion the states have to spend your money on their cronies, the better. But a secondary option, relating directly to the incentive war itself, would be the establishment of a “truce” between Kansas and Missouri—for both states to largely or completely prohibit the issuance of incentives that would draw businesses from one state to another. What that might look like was outlined in a recent Kansas City Star article:
Missouri first approved a bill prohibiting the use of state incentives to poach businesses in Douglas, Johnson, Miami or Wyandotte counties in Kansas in 2014.
But to go into effect, the law required Kansas’ governor to enact a similar ban on incentives to lure businesses away from Cass, Clay, Jackson or Platte counties in Missouri.
Kansas, under then-Republican Gov. Sam Brownback, balked at the plan. He came back with a proposal of his own two years later, but it ultimately yielded no agreement.
The Missouri law expired in 2016. A bill filed this year by Sen. Mike Cierpiot, R-Lee’s Summit, would renew it through 2021 to open the door for further discussion.
Extending the period for the truce to be offered is an altogether reasonable proposition, one that I would hope the state of Kansas would consider. In an ideal world, Missouri wouldn’t be doling out vast amounts of money on special projects; bad policy is still bad policy, and tax credit reform that puts a hard cap on incentives should still be the ultimate goal. That said, an all of the above approach that includes a “truce” is nonetheless appropriate as the state’s overall tax credit problem is whittled down.