Missouri Senate passes business truce with Kansas

02/27/2014 12:54 PM

02/27/2014 6:35 PM

Missouri senators passed legislation Thursday proposing a truce with Kansas in the intense tax-break battle for businesses in the Kansas City area.

The two states have together waived hundreds of millions of dollars of tax revenues in recent years by offering specialized incentives for businesses to relocate — sometimes for merely moving a few miles from one side of the state line to the other.

The Missouri legislation would prohibit incentives for border-jumping businesses in an eight-county Kansas City region that spans both states.

The measure passed the Missouri Senate by a 30-2 vote and now heads to the House. If passed, it would take effect only if Kansas enacted a similar measure in the next two years.

This would "solve the problem ... of the job poaching that takes place on both sides of the state line," said Sen. Ryan Silvey, a Kansas City Republican.

The governors of Missouri and Kansas both have expressed support for a truce in the tax-incentive battle, as have regional business groups in Kansas City. But some Kansas lawmakers have been less receptive to the idea.

A recent analysis by the Hall Family Foundation found that since 2009, one Kansas program waived $141 million of tax revenues to relocate 3,343 jobs from Jackson County, Mo., to Johnson or Wyandotte counties in Kansas. Meanwhile, one of Missouri's main incentive programs waived $76 million in tax revenues to move 2,929 jobs from those two Kansas counties to Jackson County.

The proposed truce would affect only state incentives, not those offered by cities and counties, and would target only tax breaks tailored for specific businesses. It does not affect broad-based tax policies, such as recent reductions in Kansas income tax rates or similar proposals pending in Missouri.

Even while seeking peace, some Missouri senators took rhetorical shots at Kansas. Democratic Rep. Paul LeVota, of Independence, predicted that Kansas' revenues would be decimated by its recent income tax cuts, leaving the state unable to aggressively offer incentives to Missouri businesses.

"They should be at your door thanking you for this, because they're not going to be able to compete anymore," LeVota said to Silvey during the Missouri Senate debate.

Silvey also suggested that it was in Kansas' best interests to accept the truce.

"If they don't join us, we may find ourselves in a place a couple of years down the road where we are standing on this floor debating a Kansas recruitment act," Silvey said.

The Missouri legislation would bar incentives for businesses moving between the Missouri counties of Jackson, Clay, Platte and Cass and the Kansas counties of Wyandotte, Johnson, Douglas and Miami.

State Sen. Doug Libla, a Republican from Poplar Bluff in southeast Missouri, was one of the few to oppose the measure. He said tax incentives are one of many factors that businesses weigh when deciding where to operate.

"I just don't like throwing artificial barriers up on whether or not a business is going to locate somewhere or not," Libla said.

Business incentives bill is SB635.

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