There’s something to be said for Kansas City, Mo. Mayor Mark Funkhouser’s ire.
The embattled mayor, who faces re-election soon, blasted the Greater Kansas City Chamber of Commerce during a press conference last week for its support of the PEAK program. Funkhouser said the program – Promoting Employment Across Kansas – poaches employment from Kansas City, Mo. and sends it across the state line.
“It’s just nuts,” Funkhouser said.
The program, passed by the Kansas Legislature in 2009, allows for-profit businesses relocating to Kansas to retain 95 percent of their payroll withholding tax over a period of five or more years. The state Secretary of Commerce determines eligibility for companies.
Funkhouser is right: the plan is clown-shoes nuts, especially in the Kansas City area.
“Our fortunes are tied together, and that’s an empirical fact,” Funkhouser said.
The state of Kansas – as a revenue collector, not as a people – is the main beneficiary of such a program. When the Kansas City Wizards moved from Kansas City, Mo. to Kansas City, Kan., new, long-term jobs weren’t created in the metro. Wizards employees simply will point their vehicles in a different direction when heading to the office.
Funkhouser proposed that the state of Missouri should consider similar economic development incentives to stop the shuffling of companies within the area.
That’s just throwing one bad idea after another.
There doesn’t appear to be support in the Missouri Legislature to offer such incentives, and that’s a wise move. Legislators or a state officer like the appointed-Secretary of Commerce in Kansas shouldn’t be picking winners in business and industry. The market should determine that.
And the incentives will lead to problems down the road. If the businesses Kansas is “poaching” from Missouri actually prefer doing business in the city’s center, they’re likely to return to Missouri when the incentives expire.
Or, they’ll be back at the bargaining table pitting the two state legislatures against one another in a negotiation in which both states lose.
The business incentives Kansas offers now are forcing the populace at-large to subsidize businesses. While Kansas offers lucrative deals to businesses it deems worthy, citizens were slammed with a whopping 18 percent sales tax increase, or 1 cent sales tax increase.
In the meantime, cities and counties are getting involved in offering sweet deals.
Mayor Mark Funkhouser has no control over what the state legislature does, but he faces intense pressure to dismantle the earnings tax and find other ways to fund Kansas City’s needs.
At one time, the Kansas City Mayor offered lukewarm support for the idea of eliminating the earnings tax. However, now that it’s to appear on a ballot, he’s singing a different tune.
In the meantime, the Mayor supported a move to offer $1.5 million in earnings tax abatements to keep the National Association of Insurance Commissioners (NAIC) in Kansas City, Mo.
The Mayor is absolutely correct that the poaching needs to stop, but he can do his own small part by refusing to grant abatements to certain businesses at the expense of the people and other businesses in his own community.
When large corporations receive incentives, it’s big news. However, small businesses generate about 80 percent of all jobs.
If the earnings tax is too big for the NAIC, it’s too big for the rest of us. The problem with incentives isn’t solely a state problem. It’s a local problem, too, and Funkhouser should know better.