When it comes to extolling small businesses, two leading state politicians have the talking points down pat.
“I am for big business, too,” Kansas Gov. Sam Brownback said while on the re-election trail in 2014. “But if you want to expand your economy, you’ve got to get small business growing.
And Missouri Gov. Jay Nixon said in 2012: “By helping our small businesses create new jobs and grow, we will keep Missouri’s economy moving forward.”
Unfortunately for small businesses in both states, a new national report released Tuesday reveals that major public incentive programs in Kansas and Missouri don’t help small businesses that much. Instead, large corporations grab most of the public assistance.
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The report — “Shortchanging small business” — was prepared by Good Jobs First with support from the Ewing Marion Kauffman Foundation. Good Jobs First for years has contended that many public subsidies are excessive and divert crucial funds that cities and states could use for basic public services.
The new report looks at 16 large economic development programs around the nation, including Promoting Employment Across Kansas (PEAK) and Missouri Works. Both allow qualifying businesses to keep all or almost all of the new state income tax revenues they create for a handful of years.
From 2010 to 2014, PEAK gave 95 percent of its subsidy dollars to large recipients, not small businesses, the report said. That was the third highest figure in the report.
From when it was formed in 2013 to 2014, Missouri Works provided 89 percent of its incentives to large recipients.
“States... are failing to walk the talk” in valuing small business job creators, Good Jobs First concluded.
In addition, the group said, small businesses often are less interested in traditional incentives because access to credit is one of their biggest requests for state governments. Small businesses also tend to favor public investments in better job training, education and transportation. However, as Kansans are finding out, a state that hands out lavish tax cuts can wind up with less in public funds for these initiatives.
The PEAK and Missouri Works programs are destructive in other ways in the Kansas City area. Employers hop the state line to grab state incentives while creating few if any new jobs in the region.
Officials in both states should dial back their big incentive plans, and then funnel more funds toward initiatives that benefit job-creating small businesses.