Brownback plan would encourage urban growth

Kansas Gov. Sam Brownback’s prescription for reviving rural Kansas came in the form of tax breaks and paying off student loans.

Now he’s proposing a similar solution for urban areas such as impoverished pockets of Wichita or Kansas City, Kan.

Demographers question whether financial incentives can overcome long-standing trends and a variety of factors that drive decisions on where people live. They say people are more inclined to move for a job, family, community amenities or even the weather than for financial incentives.

Meanwhile, census numbers show Kansas continuing to lose population at a faster rate than its neighbors.

Still, Brownback touts the promise of the program already in place for rural areas. Administration officials say reversing generations-old population trends will take time and that doing so starts with creating incentives for people to stay in or come to troubled corners of Kansas.

The fledgling program waives state income taxes for five years for people who move from out of state into any of 77 counties designated as rural opportunity zones. It also promises to pay off up to $15,000 in student loans for people – whether they’re new to Kansas or not – who move to one of the struggling counties.

“People are coming to Kansas for opportunity and growth,” Brownback said during his annual address to the Legislature this month.

Details of Brownback’s urban incentives haven’t been completed, but the plan is expected to include some of the same tax breaks and student loan reimbursements for specific ZIP codes in urban areas.

An economic development executive said that offering incentives for fixing up a community would be just as powerful for drawing people as offering tax breaks to potential residents.

“We want to move it beyond the rural opportunity zone and make it a little more aggressive on the business side,” said Greg Kindle, president of the Wyandotte County Economic Development Council.

For instance, Kindle wants some financial incentives expanded to include small projects, such as one tax break that allows employers to keep most of their withholding taxes if they create at least 10 jobs.

Still losing population

Brownback points to the rural program – started in 2012 – as evidence that incentives for repopulating the urban core will work.

About 240 filers are receiving tax credits costing the state $560,000. About 1,000 people are receiving student loan reimbursements costing state and local governments $1.2 million this fiscal year.

However, census data released at the end of last year reveal that Kansas is still losing people to other states. Since 2010, the year before Brownback was sworn in, about 15,300 more people moved out of Kansas than moved into the state. It had the sixth-highest net migration loss in the country.

Population still grew by 1.8 percent in Kansas during Brownback’s first term, largely because the number of births outpaced the number of people leaving the state. In 2010, Kansas ranked 33rd in population. By 2014, it ranked 34th.

Rural opportunity zones weren’t “based on the scientific understanding of how migration works,” said Laszlo Kulcsar, a sociologist at Kansas State University.

The incentives, he said, don’t take into account why people move. Further, the governor’s plan for cutting income taxes devalues the very tax incentive used to entice people to Kansas, Kulcsar said.

Long-standing trend

Brownback administration officials say that the rural program wasn’t intended to suddenly reverse years of population decline.

“While we are pleased with the initial results, the process isn’t going to reverse course in one year,” Revenue Secretary Nick Jordan said in a statement.

Although it may appear the number of people participating in the rural program is small, Commerce Secretary Pat George said even a few dozen new people in a rural county can be a reason to celebrate. “You’ve got to start somewhere,” he said.

Some demographers are skeptical about the basis for using financial incentives to attract people to the state.

People have been migrating out of Kansas for 40 or 50 years, a trend partially hidden by birth rates that contribute to overall population growth. Trying to stop people from leaving the state is incredibly difficult, although demographers said the incentives might have a better chance of working in urban areas where there are more jobs.

“I would have some healthy reservations about how much any such program could dramatically redirect broad population redistribution trends,” said Michael White, a sociologist and demographer at Brown University.

The rural program benefited Kansas counties differently depending on how much money they kicked in for the student loan subsidies. Eight of the counties opted not to put any money into the program.

However, Phillips County in north-central Kansas put in $300,000, an expense shared by county government and private foundations. Fifty-five people moved to the county and took advantage of the loan subsidy.

Officials there believe the program has helped slow the population decline in a county where population dropped 6 percent from 2000 to 2010. The county’s population is down about 1.8 percent since 2010.

“It’s really about retaining who we have here as well bringing new people in,” said Nick Poels, executive director of Phillips County Economic Development.

Cost-effective incentives?

Other county officials were not as optimistic.

Elk County southeast of Wichita has just six people participating in the loan subsidy program. Elk County’s population plunged about 12 percent during the past decade. In the past four years, the county’s population dropped about 8 percent.

County Commissioner K.R. Liebau doesn’t believe the financial incentives will halt the county’s population slide.

“The only thing that could reverse the loss of our population,” he said, “would be some kind of industry.”

Kansas, experts said, needs to look at the cost of these incentives and whether they are worthwhile.

“How many people are actually coming in because of these programs, and do we know that those people would not have come otherwise?” asked Jon Rork, an economist at Reed College in Portland, Ore., who has studied migration patterns. “Is that the best way to spend that money?”

This story was originally published January 27, 2015 at 8:06 PM with the headline "Brownback plan would encourage urban growth."