Gov. Sam Brownback says he thinks the influence that Wichita-based Koch Industries wields at the Statehouse has been exaggerated.
Koch, the second-largest private company in the country, employs about 3,300 people in Wichita and more than 100,000 worldwide. It has gained national notoriety because of the political spending of its owners and employees.
“I don’t think they have an extraordinary influence. They express themselves like any other company of their size in this state,” Brownback said in an interview last week. “I’m glad they hire a lot of people. I’m glad for the employment base and the opportunities for people. … I’m glad they’re here in the state of Kansas, but I wouldn’t say they have an outsized influence.”
He also praised the company’s donations to Wichita State University.
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In June, Rep. Scott Schwab, R-Olathe, sent an e-mail to supporters describing an altercation with a Koch lobbyist and accusing the company of using its influence in the Kansas Chamber of Commerce to deny him an election endorsement even though he voted for its agenda on all items except the repeal of the state’s renewable energy standards.
The chamber dismissed Schwab’s claims; Koch did not comment.
Koch also has been a target of critics of the governor’s income tax plan. Sen. Tom Holland, D-Baldwin City, said during a budget debate that the state was robbing schoolchildren “to pay Charles and David,” a reference to Charles and David Koch, the sons of the company’s founder, who serve as CEO and executive vice president, respectively.
David Koch chairs the foundation for Americans for Prosperity, one of the key groups, along with the chamber, advocating for the state’s income tax cuts.
The Legislature reduced individual tax rates and eliminated them for certain companies, such as limited liability corporations.
Koch Industries is not an LLC, but several of its subsidiaries are and therefore benefit from the tax exemption: Koch Biological Solutions, Koch Energy Services, Koch Ag & Energy Solutions, Koch Agronomic Services, Koch Nitrogen Co. and Koch Cos. Services.
With the exception of Koch Biological Solutions, which formed in August, all of those subsidiaries existed before the tax cuts were adopted.
Koch Industries spokeswoman Melissa Cohlmia said in an e-mail to The Eagle that the company was not involved in efforts to change the tax code.
“No. Koch did not lobby or advocate for a change in the Kansas LLC law,” she said. “We didn’t lobby on the tax plan in 2012; we don’t know whether we will lobby to maintain it.”
Jeff Glendening, Americans for Properity’s state director, called the exemption for LLCs “a great move to bring in small businesses.”
“I mean, small businesses are a major factor, major employer in this state, and that’s really hanging up a big sign in the state saying ‘hey, we’re open for small businesses,’ ” Glendening said.
He said Americans for Prosperity hopes the state marches on to a zero income tax for all businesses and individuals.
When asked, Glendening would not comment on whether this policy had helped Koch Industries.
Brownback dismissed the idea of Koch’s outsize influence as “a national narrative.”
Senate Majority Leader Harry Reid, D-Nev., repeatedly pushed the topic this year, even remarking on the Senate floor that Republicans “are addicted to Koch.”
U.S. Rep. Mike Pompeo, R-Wichita, called Reid’s repeated attacks on the Kochs “reprehensible.”
“The jobs created by this company are a far greater benefit to the middle class than any wasteful Washington program,” Pompeo said in February.
Pompeo’s campaign and political action committee received a total of $127,000 from Koch Industries this past election.
The company spent about $7.7 million in federal campaign contributions in the most recent election, according to the Center for Responsive Politics. But that number does little to convey the extent of the Koch network’s political spending.
Spokesmen for Americans for Prosperity and Freedom Partners Action Fund, two groups at the center of the Koch political network, told the National Journal they had spent a combined $100 million on competitive races in 2014.
The company was Brownback’s biggest donor over the course of his career in the U.S. Senate. Both brothers and the company donated to Brownback’s 2010 campaign for governor but did not make any official donations to his re-election campaign as of the October campaign finance filing.
Mark Nichols, vice president of Koch Cos. Public Sector, would not answer a question in October about whether the company was supporting Brownback’s re-election efforts through donations to independent expenditure groups, which do not have to report their donors.