Michael A. Smith: Racing to bottom
09/30/2012 12:00 AM
09/28/2012 7:07 PM
Just off Wornall Road in south Kansas City, Mo., a painting of Gov. Sam Brownback greets commuters. From his truck-mounted billboard, Brownback’s caricature shouts a cheery “thanks!” to Missouri’s people as he drives his own cartoon truck labeled “jobs” from a decaying Missouri into a glittering land of Oz: Kansas.
Get the message? It also refers to the anonymously authored website savemissourijobs.com, which warns Missourians of dire economic losses. There is only one hope: answering the recent Kansas tax cuts that Brownback championed.
Scholar Paul Peterson called this the race to the bottom. He wrote that state and local governments are under constant pressure to cut taxes and services, in order to compete. People and capital are mobile, so “job creators” are always just a move away from leaving the state, depleting its tax base and costing those precious jobs.
The Kansas City area exemplifies this. AMC Theatres is moving hundreds of employees from downtown Kansas City, Mo., to a new headquarters in nearby well-to-do Leawood. The incentive package for this deal cost Kansas taxpayers $40 million.
Not to be outdone, Kansas City used similar tactics to lure the Applebee’s headquarters from the suburbs to an under-occupied office building on the Missouri side.
None of this means any real growth for the Kansas City metropolitan area, or for either state: Jobs are moved, not created. Commuting employees are unlikely to move their families just because their jobs shifted a few miles. For example, the new Applebee’s headquarters on State Line Road is literally across the street from Kansas – and nowhere near the “blighted areas” that such tax breaks were originally intended to help.
This one-up politics leaves the rest of Kansas and Missouri behind. Coffers are depleted, leaving the states to choose between raising someone else’s taxes and underfunding the essential services and cultural amenities that are just as important, if not more so, when it comes to luring new businesses and their employees.
In response, Missouri state Rep. John Rizzo, D-Kansas City, offered a bill to end site-specific tax breaks to Kansas businesses that relocate. Had it passed, the bill would have been triggered by the passage of a similar bill in the Kansas Legislature. Brownback and this state’s legislative leaders have shown no interest in this truce.
Still, Rizzo might be onto something. Leaders in the Quad Cities of Iowa and Illinois made an agreement to promote jobs throughout the metropolitan area. If officials in one state hear of a business planning to move, they call their counterparts across the Mississippi River and develop a plan together. San Antonio and Austin, Texas, have a long-standing rivalry for medical and high-tech jobs, but both cities now have a requirement that any site-specific tax breaks have to fit into a larger economic plan, benefiting the whole community.
Finally, Kansas City, Kan., and Kansas City, Mo., recently cooperated to make the former the first city in the world getting superfast Google Fiber Internet service. The latter gets it next.
Leaders in the two Kansas Cities have a better handle on things than their counterparts in Topeka and Jefferson City. Areawide cooperation means jobs, revenue, technology and a huge “wow factor” for the community. Alas, this is the exception, while the race to the bottom is the rule.