YAEL T. ABOUHALKAH

Big businesses win, taxpayers lose in KC’s border war

Updated: 2013-07-17T22:56:01Z

By YAEL T. ABOUHALKAH

The Kansas City Star

All the usual suspects in the economic development giveaway sweepstakes were smiling broadly on Tuesday.

They were attending a ceremonial ribbon-cutting for the new Freightquote headquarters in Kansas City, close to the state line and just south of Interstate 435. It’s one of the most fiscally foolish moves recently in our region’s destructive border war.

Mayor Sly James was there, representing local taxpayers who are scheduled to contribute $31 million in tax breaks to the deal. That includes the Center School District, which will have to forgo hundreds of thousands of dollars a year in new property tax revenue it could have expected if the online-shipping broker (2011 revenues exceeded $500 million) would pay its fair share of taxes. You know, like most other businesses and homeowners in the city.

Missouri Gov. Jay Nixon was there to reap publicity, too. He was representing state taxpayers who stand to lose out on $33 million in taxes that Freightquote will keep to bolster its bottom line rather than send in to supply better services for residents.

Oh, yes, I know the drill from the politicians, the Kansas City Area Development Council and Kansas City’s Economic Development Corp.: If the state and city hadn’t capitulated to Freightquote’s demand for incentives, it would have stayed in Kansas, blah, blah, blah.

Fortunately, this kind of antiquated — and costly — reasoning seems to be getting a much-needed reality check.

More people are realizing that this region’s penchant for letting a few big companies benefit by shipping jobs from one state to another in pursuit of public incentives isn’t creating enough truly new jobs.

The best solution is one that’s being worked on behind the scenes: Publicly subsidize area companies based on how far they move and how many new jobs they will create in their new home, on top of their current workforce. If they just want to hop the state line, they’d get little or nothing.

The latest annual figures in the Quarterly Census of Employment and Wages from the U.S. Bureau of Labor Statistics contain some sobering news for local politicians.

• The six-county region gained barely 10,000 jobs in the last decade, up only 1 percent to 890,000 at the end of 2012.

• Jackson County lost 7 percent of its jobs — down more than 27,000 to 348,000 total jobs — because the reductions in Kansas City were greater than the growth in other parts of the county.

• Johnson County gained 7 percent by adding 20,000 jobs to reach a total of 310,000.

• But the biggest percentage winners were Cass County (up more than 17 percent to 23,000 jobs), Platte County (up almost 17 percent to 39,000) and Wyandotte County (up 9 percent to 84,000). Clay County was up 2 percent to 86,000.

• Overall, the two Kansas-side counties gained 27,000 jobs in the decade while Missouri lost 17,000.

Looking at a broader sample of its peers, Kansas City didn’t fare well.

The counties that house Fort Worth (up 12 percent), Oklahoma City (up 5 percent), Des Moines (up 4 percent) and Indianapolis (up 1 percent) were all in the plus side of the ledger. The county homes of Omaha, Denver, Dallas and Cleveland were flat or barely down for the decade.

Still, some peer cities suffered even broader job losses. They were the county homes for Cincinnati (down 11 percent) and Milwaukee (down 8 percent) plus the city of St. Louis (down 8 percent).

Taxpayers will benefit if Nixon and Kansas Gov. Sam Brownback can help work out a fix to the ruinous border war.

Yes, that would mean a few companies won’t get special favors in the future and will have to pay their fair share of taxes. Who has a problem with that?

To reach Yael T. Abouhalkah, call 816-234-4887 or send email to abouhalkah@kcstar.com. Follow him at Twitter.com/YaelTAbouhalkah. He appears on “Ruckus” at 7 p.m. Thursday on KCPT, Channel 19.

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