Why the Kansas-Missouri economic border war is a waste of time and money
The border war is back, and not in a good way.
We’re not talking about the MU-KU men’s basketball rivalry. We like to see the teams play, even for charity.
But the economic border war erupted again last week when Missouri Gov. Eric Greitens and the state’s Economic Development Department said Swiss Re, a reinsurance provider, will move 400 jobs from its Overland Park offices to downtown Kansas City late next year.
“My job is to fight for jobs,” Greitens said in a statement.
We’re not convinced. While we welcome the company downtown — it’s always good to have new neighbors — Swiss Re received economic development incentives to make the very short move, always a dicey proposition.
The company is eligible for roughly $20 million in incentives during the next five years, or about $4 million annually. That’s money the state could receive, but will potentially forgo, once Swiss Re is downtown.
Economic development officials insist the incentives are worth it. Any tax revenue generated by the move is more than the company is paying now, they say.
But there’s apparently no guarantee the Swiss Re jobs will go to Missourians. If its workers decide to live in Kansas — or stay there — the benefit to Missouri drops.
And once one company gets a handout, others demand it. The result is an ongoing culture in which employers get help, while employees are left in the cold.
Offering incentives isn’t just about finances. It’s about fairness. Swiss Re gets a benefit unavailable to ordinary taxpayers. That’s the definition of corporate welfare.
Overland Park is mildly damaged by the arrangement. Since the city collects no earnings tax, the loss of jobs largely means vacant office space (and fewer hamburgers and beers after work).
That won’t stop city officials from using Swiss Re as Exhibit A in their argument for local incentives such as tax abatements and credits. Without those tools, they’ll say, similar firms will skip across the state line for a better offer.
The state of Kansas may take a bigger hit, depending on Swiss Re’s corporate structure and tax profile in the state.
Incentives can make sense for new companies. Amazon, for example, would bring new workers into the area, creating an increased demand for housing and other services, growing the area’s economy.
Giving incentives for businesses to move across state line, on the other hand, grows nothing. It just creates bragging rights.
Residents in both states would be better served by an end to the incentive culture for existing businesses near the border. No one benefits from simply moving jobs back and forth, and there’s a real chance for a loss in states offering incentives.
Instead, Kansas and Missouri should spend their time creating an environment for job growth by focusing on education and training, solid infrastructure and a vibrant and inclusive work culture.
That requires time and money, and everyone, including Swiss Re, paying their fair share of the public bill.
This story was originally published October 29, 2017 at 3:30 PM with the headline "Why the Kansas-Missouri economic border war is a waste of time and money."