KC Council committee weighs ‘unfathomable’ impact of tax incentives on schools
Economic development incentives cost students of Kansas City Public Schools three times as much as students in other local school systems, according to a city analysis shared Wednesday as part of an effort to reform the city’s incentive structure.
Council members Melissa Robinson and Ryana Parks-Shaw recently introduced legislation that would fundamentally alter the way the city handles economic development incentives and give taxing jurisdictions like local school districts more say.
Between May 2018 and April 2019, property tax abatements cost school systems in Kansas City a total of $46.7 million, according to a city analysis of disclosure documents.
Of that total, Kansas City Public Schools lost out on $28.8 million in potential revenue — more than $2,000 per student. That was well above the $650 average for all school districts within Kansas City limits. Over the same time period, tax abatements in Hickman Mills deprived each student of $651 in revenue. In North Kansas City, that figure was $379.
Parks-Shaw said the legislation sought to build a more equitable development process for school districts. Oftentimes, school district officials say they are left out of early discussions about major development projects and property tax incentives granted by the city that will affect their revenue for years to come.
“We do not want to stop economic development in Kansas City,” Parks-Shaw said at a Wednesday committee meeting. “However, we must address the critical issue of how tax abatements exist to the detriment of some of our students.”
Parks-Shaw, who represents the 5th District, said the council hopes to work with both developers and school districts as the bill is crafted. The legislation was held in committee and will be discussed again next month.
“This is the beginning part of a conversation as it relates to tax incentive reform,” said Robinson, who represents the city’s 3rd District.
She said the proposal was designed to ensure equity is considered when handing out tax incentives and will help address longstanding practices that hurt certain parts of the city.
Brandon Ellington, who represents the same district, said he agreed with the ideology behind the bill. But he said he did not want to hand over decision making authority to school districts.
A version of the legislation introduced Wednesday would require certain projects to receive approval from schools before moving forward with incentives. Currently, school districts can weigh in but do not have final authority over those decisions.
“It seems like we’re just bypassing the council,” Ellington said.
Tax abatements are a powerful but common inducement used by economic development agencies to help lure or retain companies to the area. But they cost schools, libraries and mental health providers millions in foregone tax revenues: In 2018, taxing jurisdictions lost out on a total of $175 million in potential revenue.
While incentives can help bring new jobs and projects to town, critics say the city tends to use them to promote development in well-established areas like downtown, while overlooking impoverished areas.
In June, Kansas City Public Schools Superintendent Mark Bedell wrote a scathing letter to council members, saying a proposed plan to extend tax abatements for a Kansas City company was an example of “systemic racism.”
“I am exhausted with the development community pitting the City against the public entities that are doing the work of trying to give our students and their families access to the world they deserve,” Bedell wrote.
The council ultimately rejected awarding more incentives to BlueScope Construction, which has received a 100% property tax abatement for nearly 20 years.
Shannon Jaax, the school district’s director of planning and real estate, said all taxing jurisdictions should have more influence in incentives. While the school system recognizes the important role incentives can play in economic development, she said it wants to see meaningful reforms that promote more equitable economic development across the city.
Jan Parks, a member of the Coalition for Kansas City Economic Development Reform, said the council needs to take the chance to improve the lives of vulnerable families.
“The time is now to fix the economic divide,” Parks said. “The time is now to build inclusive, sustainable economic development. Those who most need are not currently receiving their fair share of economic development.”
Last year, the coalition collected enough signatures to place on the ballot a proposition to significantly limit incentives available for developers. That effort ultimately failed.
Terry Ward, a board member with North Kansas City Schools, said the city must find a more balanced approach to its economic development incentives.
“Let me be clear: economic development incentives hurt public education if they are not balanced,” said Ward, who has researched the impact of incentives. “But not all economic development incentives are bad.”
Janice Bolin, director of finance for the Kansas City Public Library, said millions of dollars are diverted away from the library due to tax incentives. Most of the library’s funding comes from property taxes, she said.
“It comes out of the pockets of families, children and those needing services provided by the library and other organizations,” Bolin said.
Angie Lile, a parent and business owner, said the diversion of money from schools to luxury apartments or hotels is “unfathomable” when thinking about the cost that adds up to per child in Kansas City Public Schools.
No developers participated in the public comment Wednesday.
The resolution is expected to be discussed again by the committee on Sept. 16.
This story was originally published August 19, 2020 at 6:01 PM.
