From Cerner to Power & Light subsidies, KC politicians keep letting taxpayers down | Opinion
A recent story has me wondering: Are Kansas City politicians thoroughly corrupt or just incredibly inept negotiators?
Thomas Friestad, writing in The Kansas City Business Journal, covered a City Council investigation into whether Oracle Health, which bought medical technology company Cerner, met its obligations in return for the buckets of money given them by taxpayers. The report, available here, “did not identify any existing material instances of default.”
What about the jobs promised to Kansas Citians in return for all those subsidies? “The commission’s report,” Friestad points out, “did not discuss the campus’ job creation or retention, as its redevelopment terms do not have binding job thresholds.”
But that isn’t the deal politicians pitched to taxpayers. Again and again, we were told we would see thousands of new jobs. An October 2014 story in The Kansas City Star reported an anticipated 14,000 to 16,000 new positions at the Cerner campus.
Then-Mayor Sly James, not to be outdone, in 2014 told an economic summit in south Kansas City, “In the next 10 years, we’re looking at 20,000 more jobs. … So we’re looking at new people to the area who will be buying houses and wanting to go eat dinner and get their cars fixed and even buy a pack of gum. Those are the types of things that are going to come with these investments.”
None of that was required. And so, none of it came true
Recall that Cerner dealt in electronic medical records. Its founder was championed in Forbes Magazine as one of the “Obamacare billionaires” because such medical records were encouraged by the Affordable Care Act.
Cerner grew fast and its future looked bright. And like every other wealthy corporation with a bright future in Kansas City, it turned to taxpayers to finance their new world headquarters.
Cerner’s ask was different only in its sheer size: $1.7 billion in public money. Greg LeRoy of Good Jobs First, an organization tracking corporate subsidies, told The Pitch in 2015 that the Cerner deal was the largest in the country: “Head and shoulders, it’s the biggest.” That story also retold the 16,000-some job creation number.
Who negotiated the deal for taxpayers? Mayor James, who consolidated all the negotiating power over the deal to himself. The school district most affected by the forgone tax revenue was completely cut out of the negotiations. City Council members for the project’s district were sidelined.
Back to the report — and what it doesn’t mention. Community benefits agreements weren’t covered. Neither was the Hickman Mills School District, one of the poorest in the region. District leaders anticipated millions of dollars from Cerner in return for the even larger amount of property tax revenue the deal would deny them. They haven’t gotten all they were promised, either.
It was all just meaningless blather.
The Cerner deal may be the worst in Kansas City history — though it’s difficult to beat Mayor Kay Barnes’ 2004 Cordish embarrassment that still has taxpayers funding millions of dollars in bond payments each year for the Power & Light District development.
Other worst-deal competitors are shrouded in secrecy. James’ proposed subsidy package for Amazon HQ2 in 2017 was apparently so bad that it hasn’t been released to the public. And Mayor Quinton Lucas still won’t share whatever offer he made to the Royals earlier this year for a city-center stadium. We can only imagine.
It’s impossible to know whether deals like these are the product of corrupt negotiations or just world-class incompetence. In a 2018 analysis, I found corporate contributions to council and mayoral candidates rise in the election before the corporation seeks a taxpayer subsidy, only to fall again once the subsidy is granted.
That’s not a smoking gun, but it is smoke.
Kansas City voters should remember all of this the next time we’re presented with some sort of taxpayer-funded deal. Our political leaders are incompetent negotiators, either unable or unwilling to protect taxpayers. Tell them no.
Patrick Tuohey is co-founder of Better Cities Project, a 501(c)(3) nonprofit focused on municipal policy solutions, and a senior fellow at the Show-Me Institute, a 501(c)(3) nonprofit dedicated to Missouri state policy work.