Government & Politics

Steps toward border war ceasefire continue with KC plan to cap some local incentives

Editor’s note: This story has been updated to correct the average pay figure for Waddell & Reed employees moving to Kansas City. Employees will be paid an average of $157,000 in total annual compensation.

Kansas City Mayor Quinton Lucas took a step Thursday to comply with Kansas’ requests in efforts to shut down the so-called economic development border war.

Lucas, who took office last month, introduced an ordinance at the afternoon City Council session that would limit Kansas City’s use of property tax incentives to attract businesses and jobs from communities in Kansas. The ordinance complies with Kansas Gov. Laura Kelly’s executive order, which made it a condition of her state’s ceasefire agreement.

For years, Kansas and Missouri spent taxpayer funds to lure jobs across the state line. But this year, Missouri Gov. Mike Parson, a Republican, and Kelly, a Democrat, agreed to halt the practice.

Parson signed a bill in June that barred Missouri from offering state tax incentives to companies that relocate from Wyandotte, Miami and Johnson Counties. Kelly soon followed with an executive order.

But Kelly’s order stipulated that local governments in Missouri also had to ratchet down their use of property tax abatements — often used as incentives for businesses setting up shop on both sides of the state line — to 10 years to correspond with the limit in Kansas. Missouri communities can abate those taxes for up to 25 years, potentially giving them an advantage.

Lucas’ proposal would follow that request, limiting property tax incentives to 10 years for companies hopping the border.

“I’m pleased to see Mayor Lucas introduce an ordinance that aligns with our Kansas-Missouri border war agreement,” the Kansas governor said in a statement Thursday. “This action at the local level will help end the economic tug-of-war.”

The proposal comes even as companies wring the last remnants of border war incentives out of the states.

Waddell & Reed, an Overland Park-based firm, will get $62 million in incentives from the Missouri Department of Economic Development to jump the state line.

While the state is still working through details, officials say the project is grandfathered in because it was underway before the two states celebrated their truce on Aug. 13.

Holly Koofer-Thompson, spokeswoman for the economic development department, told The Star the incentives were not related to the border war and that the move “supports both Missouri and Kansas, so it’s a positive thing for both states.”

But critics of the practice of luring companies back and forth across the state line decried the award as a prime example of poor public policy.

Waddell & Reed recently informed Kansas regulators of their plans to cut 158 jobs. The firm earlier this year announced plans to relocate to Missouri.

In exchange for $62 million from the Missouri Works program, Waddell & Reed pledged to invest about $90 million in its new headquarters in Missouri and bring 1,039 workers with an average total annual compensation of more than $157,000, the state said.

Lucas said in an interview he hopes the Waddell & Reed move is among the last such projects.

The Star’s Kevin Hardy contributed to this report.
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Allison Kite reports on City Hall and local politics for The Star. She joined the paper in February 2018 and covered Midterm election races on both sides of the state line. She holds a bachelor’s degree in journalism with minors in economics and public policy from the University of Kansas.
Kevin Hardy covers business for The Kansas City Star. He previously covered business and politics at The Des Moines Register. He also has worked at newspapers in Kansas and Tennessee. He is a graduate of the University of Kansas