Kansas Legislature greenlights more than $1 billion in incentives for undisclosed company
Kansas officials are now ready to pitch the state’s case to a mystery company considering Kansas and Oklahoma for its next project after the Kansas Legislature approved an incentive package worth more than a billion dollars.
The Kansas House approved the program Tuesday and the Senate accepted the House amendments Wednesday. The bill is heading to Gov. Laura Kelly’s desk.
Kelly and the Department of Commerce asked the Legislature to rush through the rich incentive package as Kansas prepares to make its final offer Thursday to a company considering the location of a $4 billion factory, and 4,000 permanent jobs, in the state. The firm’s identity, the possible location of the plant and what it would produce are shrouded in non-disclosure agreements signed by lawmakers and state officials.
According to rough estimates from the non-partisan Kansas Legislative Research Department, the project could cost Kansas around $1.3 billion in refundable tax credits, payroll tax incentives and training grants.
The cost proved a major issue for some lawmakers.
“Is that cost effective for any business to pay that kind of money to bring jobs in?” Sen. Caryn Tyson, a Parker Republican, asked Wednesday.
In a statement, Commerce Secretary David Toland rejected the research department estimate but would not say how soon Kansas’s general fund would start seeing a return on investment.
“Failing to take into account $2.5 billion annually in new economic activity, along with presenting projections that are only based on worst-case scenarios paints a picture that shows none of the benefits to Kansas. This misleading depiction puts the state at risk of losing an unprecedented economic opportunity,” Toland said.
Toland, who confirmed Tuesday that Kansas is competing with Oklahoma for the deal, said he couldn’t provide better details without giving the neighboring state a competitive edge.
“I can’t get into the particulars of our offer because if I do the other state will know, they’ll see our hand and that puts Kansas at a competitive disadvantage,” Toland said.
The Oklahoma Legislature convened this week.
Citing non-disclosure agreements, the Kelly administration has kept the identity of the company, industry involved and location of the proposed project confidential.
Speculation from experts has pointed towards the Kansas City metro area and a possible chip, battery or electric vehicle plant.
Lawmakers, including some Johnson-county based legislators, who signed the non-disclosure agreements, were fierce advocates of the project, saying the potential benefits to the state would justify the cost.
“There’s always a certain level of confidentiality that has to be there … until the deal is consummated and announced,” Tarwater said. “We’re not doing this for one company, we may not even get the deal we’re trying to get but we are creating a good tool.”
“This can give us the opportunity to own a new market. It can give our students an opportunity to stay and work here for a company they’re proud of.”
But the lack of transparency proved difficult to accept for others in the Legislature - arguing that the state was acting recklessly and unethically. Approval of incentives for this project, Rep. Leo Delperdang, a Wichita Republican, pointed out, could result in the loss of efforts to cut the state’s food sales tax, pay down debts or set aside money for a rainy day.
“We’re betting the bank, we’re betting school finance, we’re betting social service. Somebody better get down here and ask ‘are we biting off more than we can chew,’” said Rep. Henry Helgerson, an Eastborough Democrat.
Rep. John Carmichael from Wichita said the state had opened itself up to green lighting billions for a business many may not want in the state.
“How can you represent your constituents if you have signed a non disclosure agreement that says you will not tell them what you did or why you supported this legislation,” Carmichael asked.
“That is wrong.”
In Senate Debate, Wednesday, Sen. Renee Erickson, a Wichita Republican, acknowledged that risk exists when greenlighting the incentive dollars but risks, she said, come with rewards.
“We can either focus on the cost or the benefit,” Erickson said.
This story was originally published February 9, 2022 at 4:26 PM with the headline "Kansas Legislature greenlights more than $1 billion in incentives for undisclosed company."
