Gov. Laura Kelly signed an executive order Friday designed to match a Missouri law linking state-level business development incentives to net job growth in seven counties of the Kansas City metropolitan area and inspire at least a truce in the economic border war.
The order issued by Kansas' Democratic governor adhered to a law signed by Missouri Gov. Michael Parson, a Republican. The concern of public officials in both states has been the propensity of government officials to shower tax breaks on businesses willing to shift operations across the state line into either Kansas or Missouri.
Focus of state-sponsored incentives should be on tangible economic growth measured by net job expansion and capital investment, Kelly said.
"We're finally able to announce the end of the so-called border war," Kelly said during a Topeka news conference, accompanied by Kansas legislators. "I signed an executive order which directs the Kansas Department of Commerce to no longer provide incentives to any company in the Kansas City region for simply moving employees from one side of the state line to the other."
She said Kansas and Missouri officials had allowed competition for businesses to be distorted in a back-and-forth battle that was "wasteful and bad for both states."
The executive order guiding the cease-fire applied to the Missouri counties of Jackson, Platte, Clay and Cass and the Kansas counties of Johnson, Wyandotte and Miami.
In June, Missouri's Parson signed Senate Bill 182 to restrict awarding of economic development incentives to companies making the move from Kansas to Missouri. The law, applicable only if Kansas signed a reciprocal agreement, was linked to the seven-county region.
"We appreciate Gov. Kelly’s partnership and work on ending the border war," said Kelli Jones, spokeswoman for the Missouri governor. "We are thoroughly reviewing Gov. Kelly’s executive order but are encouraged by the news of its signing, which will help both states better serve the citizens of Missouri and Kansas through fiscally responsible practices."
The Hall Family Foundation's study of businesses transitioning between Johnson and Wyandotte counties in Kansas and Jackson County in Missouri indicated more than 10,000 jobs moved between the states in the past decade in exchange for $330 million in tax incentives.
Kelly's directive didn't extend to Kansas' local government incentive programs, but the governor urged municipalities in both states to exhibit restraint when recruiting companies in the metro area. She urged Missouri cities to limit property tax abatement for relocating companies to the 10-year term allowed under the Kansas Constitution rather than extend deals to 25 years to 35 years as permitted under Missouri law.
On Aug. 28, according to Kelly's executive order, the state Department of Commerce no longer would use the state's major economic development programs to convince businesses in four Missouri counties to relocate existing jobs to three counties in Kansas.
The state-level tax incentives "shall be limited to the net new jobs created for any business," the executive order said.
For example, if a Kansas City, Mo., company moved 100 existing jobs to Kansas City, Kan., under the governor's order, that business wouldn't be eligible for Kansas tax incentives. If that company expanded employment to 150 in Kansas City, Kan., the 50 new jobs would be tied to state incentive programs.
"These negotiations have been dependent on the idea that the local governments need to show good faith in doing their part just as the governors have done their part," said David Toland, the commerce secretary in Kansas. "What we're trying to do with this agreement is grow the pie and create new jobs."