Kansas City’s founding myth involves the quest to build the first railroad bridge over the Missouri River. In the oft-told tale, local business interests out-dueled Leavenworth to build what became known as the Hannibal Bridge — thereby ensuring the city’s role as a major trade hub.
The myth leaves out some important details, as is typically the case. The Hannibal Bridge wasn’t the result of private enterprise alone: Local governments and the state provided major financial incentives for companies building the railroad.
That’s right. Almost from its beginning, Kansas City has subsidized private business. Call it our original sin.
Roughly a century and a half later, the city’s burghers want to revisit the wisdom of handing out public incentives to private companies. The discussion is over a specific tool called tax increment financing, but it could be about tax abatements (which The Star has used), tax credits, exemptions, community improvement districts, bond guarantees or any of the other incentives Kansas City uses to make corporations content.
Those subsidies are deeply embedded in dozens of area projects, including shopping centers, apartments, offices, hotels, sports stadiums, factories and grocery stores. Incentives have paid for expansions, new construction and rehabbing old buildings. Name any recent project in Kansas City (save the Marriott-Residence Inn hotel now under construction downtown) and chances are pretty good the public has written at least part of the check.
This drives most taxpayers crazy. It provokes periodic spasms of frustration from outsiders, who demand that public incentives be re-examined and restrained.
Yet it’s enormously hard for politicians to back away from public incentives for private business. Several years ago, Missouri handed Ford $100 million in incentives for its Claycomo plant, even though Ford made more than $6 billion last year. Ford said it needed the subsidies or it would consider building trucks somewhere else, potentially costing the area thousands of high-paying jobs.
Well, OK, you might say. Helping Ford, and saving those jobs, makes sense.
But since you’ve helped Ford, you have to help General Motors, too — it’s only fair. Eventually, that means you must help their suppliers, because they employ people. Then come construction workers. Engineers. Lawyers. Retailers. Office workers. Athletes. Lose those businesses and you lose jobs, too.
Soon enough you’re giving subsidies to the Plaza. And if the Plaza qualifies for public assistance, what project doesn’t? Businesses would be fools not to ask for help, and politicians have a hard time denying them that aid.
Keep this in mind as city leaders ponder new restrictions to public subsidies for private business. It may have started with a railroad bridge, but the local subsidy train rolls down the track, apparently unstoppable.