Missouri lawmakers seek economic 'border war' truce

Saturday, March 31, 2012 | 5:17 p.m. CDT; updated 7:25 p.m. CDT, Saturday, March 31, 2012

JEFFERSON CITY — Sitting in a cramped first-floor office in the Missouri Capitol, House member John Rizzo gestured toward the hallway outside his door in frustration.

"It's literally from here to the end of the hallway, 50 (to) 100 feet," Rizzo said, referring to the distance a company would have to move to go from being based in Kansas City, Mo., to being newly anchored in Kansas City, Kan. The distance amounts to a short walk across State Line Road, which bisects the two-state metro area.

With the national economy still in a slump, both Missouri and Kansas are hungry for more jobs within their borders and they're willing to pay for it with tax credits and other deal sweeteners.

Rizzo said companies in the area know that and have been playing the Show-Me State and the Sunflower State against each other by moving back and forth across the state line, all the while picking up incentives for jobs "created" — even if no new positions are opened and no one moves into the metro area from outside of it.

Rizzo, a Democrat from one of the Missouri side's industrial neighborhoods, is co-sponsoring a measure that calls for a moratorium on tax credits that draw across jobs located within 30 miles of either side of the state line.

But Missouri would only be held to that requirement if the Kansas Legislature passes a similar bill. Otherwise, the Missouri measure calls for the Show-Me State to dramatically ramp up its economic development spending on its side of the border.

Sponsoring Rep. T.J. Berry said the latter provision is necessary because he thinks Kansas is "winning" the war, with recent catches like AMC Theatres, which moved 450 employees in September from downtown Kansas City to the Kansas suburb of Lenexa.

Berry said if both states could agree to end those tax credits, each could use its money to attract businesses from outside the region, improving the "net growth" of the metro area and creating actual new jobs.

But while the Missouri House has approved Berry's bill and sent it to the Senate, no such measure is moving in Kansas. There, House Speaker Mike O'Neal and Kansas Gov. Sam Brownback, both Republicans, said this week that they aren't interested in any idea that might throw off their state's post-recession comeback.

Even if the two legislatures did approve the moratorium, maintaining it could be difficult. Arthur Rolnick, a former executive vice president of the Minneapolis Federal Reserve Bank, said such agreements only work if every entity follows the rules.

Local politicians are under constant pressure to cheat for their city or state and Rolnick said in some cases they do.

"Who's the winner? It's not any of the states. It's the owners of the companies who are ripping off taxpayers," said Rolnick, now a senior fellow at the University of Minnesota.

Hours away from the Kansas-Missouri border war on the banks of the Mississippi River, Tara Barney, of the Quad Cities Chamber of Commerce, says cities in that region — anchored by Davenport, Iowa, and Moline, Ill. — have an agreement not to poach jobs from each other.

Instead, the cities notify each other when a local company talks about moving its headquarters, so that tax credits can be saved for the wooing of out-of-state companies.

"It sometimes is a challenge for any elected official, but I would say that all in all, they generally do understand that taking scarce tax dollars for jobs where the employees are not even moving is not well-received," said Barney, the chamber's CEO.

But Pam Whiting, with the Greater Kansas City Chamber of Commerce, said state laws are needed because the competition there involves too many cities and counties to easily form a similar local agreement.

Back in the Missouri Capitol, Rizzo said Kansas and Missouri should be interested in ending the border war rather than winning it, because the competition itself puts a drag on still-tight budgets in both states.

"We're seeing this border war in many different aspects and nobody wins," he said. "They're not new jobs. These jobs are bought and paid for."

Associated Press writer John Hanna in Topeka contributed to this report.



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