Print edition: 
Chapman Rackaway stated that Kansas offered $16 million in tax incentives to Bombardier Learjet with “none of the safeguards that would prevent a Boeing-type departure from occurring” (“State needs to review incentives,” Jan. 15 Opinion). To the contrary, the state has protections in place if Learjet does not make good on its promise to expand its Wichita facility and create high-paying jobs.
Ten million dollars of Learjet’s incentives are under the Promoting Employment Across Kansas program. During the benefit period of up to 10 years, the company can retain 95 percent of the state payroll withholding tax of the newly created jobs as long as it pays at or above the median county wage where the jobs will be located.
In addition to meeting or exceeding median county wages, the new jobs also must meet or exceed the average wage for the industry in question. Finally, Learjet must provide adequate health insurance coverage for the new positions. If the company does not meet these requirements, especially regarding new job creation, Learjet will immediately lose the benefit of withholding any payroll taxes on the new employees.
The remaining $6 million in incentives are state-issued bonds. If the company relocates or drastically reduces employment during the term of the bonds, it also will lose the withholding revenue from those jobs. The liability for the bonds is solely the responsibility of the company.
It’s also important to note that Kansas does not use existing state funding to provide for either incentive. With the PEAK program, the state only agrees to withhold payroll taxes on newly created jobs, not existing jobs in Kansas.
In a free-market society, nothing can ultimately prevent a company from relocating, if it so chooses. Performance-based incentives such as PEAK, however, can be used effectively to help recruit businesses into the state and help them expand after they establish operations.
Kansans should be pleased that the company has decided to expand its operations in Wichita, creating 450 news jobs and adding substantially to the $600 million investment Learjet is making to develop the Learjet 85 business jet and expand the company’s Wichita facility. Learjet’s commitment to Wichita reaffirms the community’s status as the Air Capital of the World. The Brownback administration will continue to pursue every opportunity to expand the aviation industry in Wichita.
And please know that the Department of Commerce is here to fact-check information for Kansans wanting to know more about the performance-based incentive programs the Kansas Legislature has put in place to attract companies to our state and grow jobs.
