Most people taking advantage of Kansas’ Rural Opportunity Zones have ties to the area

01/14/2014 3:53 PM

08/08/2014 10:21 AM

The majority of people using a state program designed to repopulate rural Kansas already have connections to the area.

Rural Opportunity Zones, a program designed to boost population in rural areas by offering tax breaks and student-loan aid for people who move there, is increasingly popular, Commerce Secretary Pat George told Senate and House commerce committees on Tuesday.

The overwhelming majority of people taking advantage of Rural Opportunity Zones already had roots in rural Kansas: 81 percent had family connections, according to the Department of Commerce’s data.

“Hopefully, we get both. And we’ve been getting some of the people who have no connections to Kansas, but a lot of the people have prior connections,” said Chris Harris, who oversees the program. “And it was designed that way because the people who were leaving are the people who were growing up there, and that’s the trend we want to reverse.”

For non-native Kansans, the zones helped create an awareness of Kansas, George said.

“The main issue it is addressing is the out-migration. Many rural areas have lost population on a consistent basis for decades,” Harris said. “And with that comes a whole host of other issues, including a difficulty in finding doctors, nurses, professionals of all sorts, teachers and everything else.”

Harris said Rural Opportunity Zones function as an umbrella program with many features, including a student loan repayment program that is an incentive for recent college graduates, many of them natives of rural Kansas, to move to smaller towns as new residents.

The tax abatements offered by the program require that participants have lived outside the state for five years. The student loan repayment makes no such requirement and allows students attending universities in Kansas to use the program upon graduation, Harris said.

“The legitimate question is, are we incentivizing something that was going to happen anyway?” Harris said before entering the House meeting. He said the answer is no, citing a survey of applicants that showed 70 percent saw the program’s incentive as a major factor in their decision to move to rural Kansas.

Sen. Mary Pilcher-Cook, R-Shawnee, asked George for the breakdown of public versus private employees taking advantage of the program. George said he could not be certain, but estimated 75 percent belonged to the private sector.

The data provided to the senators in the morning counted 59 government employees using the program in 2013 as a separate category from the 324 people in the field of education. George explained that private and public school teachers were counted as one category. The 268 health care workers also included public health and private practice doctors, George said.

By the House meeting in the afternoon, Harris was still crunching the numbers and could not give a specific figure on the ratio of public to private sector employees.

During the commerce presentation, Sen. Jeff Melcher, R-Leawood, asked about “the border war” with Missouri, involving companies moving back and forth over the state line in the Kansas City metro area. George said he prefers to call it “a border challenge.”

Melcher said that jobs moving across the state line had a limited impact. Jeremy Hill, director of Wichita State University’s Center for Economic Development and Business Research, also said state line crossings do little to spur economic growth statewide.

George conceded that employees of a company moving to the Kansas side might not change their state of residence, but he contended that many new jobs have been created by companies since their move. He said these additional jobs have been overlooked.

“That’s something that I haven’t seen put out there, the number of jobs added after the move,” George said. “The new people that come on board probably are going to be living in that area, more likely, and they’ll be spending more money for automobiles and groceries and all those economic benefits.”

“So it’s a little disingenuous to say there’s no net new jobs in the moving across the borders, because our research says there is.”

Ken Kriz, an economist at Wichita State University, said in a phone call last week that the state should be more concerned with jobs moving across the Oklahoma state line rather than Missouri. He said the state’s income tax exemptions force local governments to raise property taxes to compensate for the loss of state funds, and that Oklahoma has more favorable property taxes.

George said both state lines present similar challenges.

“That goes to the point of creating the best environment. And tax policy’s part of that, incentives, things we can do to ease the regulatory burden, cost of living,” George said. “We work extra hard to keep businesses here, so we don’t want you going to Oklahoma, Missouri or any of those.”

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