End the ineffective corporate welfare of Kansas STAR Bonds | Commentary

Imagine the most ineffective government program possible. It would fail to meet its goals, accumulate decades of debt, and favor massive businesses instead of families and workers.

No reasonable person would keep such a program around. Yet, here in Kansas, such a failing program isn’t hypothetical but a reality.

The Kansas Department of Commerce’s Sales Tax and Revenue (STAR) Bonds is a corporate welfare program that is all risk and debt with no reward.

STAR Bonds is a program that allows private development projects to be financed by your sales taxes. Sales taxes related to the development repay the bonds instead of paying for roads or public safety. In other words, your hard-working tax dollars are stuffing the coffers of politically connected businesses instead of guaranteeing quality government services. Kansas is one of only three states that runs a STAR Bonds program and appears to be the only state actively using it.

Ostensibly, the justification for the program is to increase tourism to Kansas. Still, a 2021 review by the Kansas Legislative Division of Post Audit estimated that “only 3 of the 16 STAR Bond attractions we reviewed met Commerce’s tourism-related program goals.” And a 2020 Kansas Policy Institute report found that using STAR Bonds to support two projects in Wichita didn’t improve job creation.

By all accounts, this is a troubled government program that raises more questions than answers, so we decided to ask for more information. Over a year ago, our organization, Americans for Prosperity Foundation-Kansas, filed a Kansas Open Records Act request to Commerce seeking information about the STAR Bonds program. While we have received some records, Commerce has stonewalled us on e-mails about STAR Bonds from Lt. Gov. and Commerce Secretary David Toland.

We repeatedly asked Commerce for substantive updates on why it takes them so long to produce documents. However, all we’ve received in response is an e-mail telling us to check back next month. So we filed a complaint with the Attorney General’s Office requesting an investigation into this potential violation of the Kansas Open Records Act.

These records are essential because the e-mails we’ve received thus far show multiple instances where Commerce fails to provide substantive oversight over STAR Bond projects. On more than one occasion, Commerce accepted draft approval documents from the law firms requesting STAR Bonds approvals for their clients.

In one instance, Commerce’s Chief Counsel may have inadvertently revealed he had not even read STAR Bond applications before approving them. He stated he was “working on an approval letter” but asked where he could find what the project was building. Commerce provided an agency-commissioned STAR Bond study to show the program’s economic impact. The study isn’t made publicly available despite being paid for by taxpayers. The Director of the Docking Institute, Dr. Brett Zollinger, told Commerce in an e-mail that the “project has been somewhat more challenging than we envisioned!”

Suppose a professional paid consultant finds it difficult to demonstrate the program’s economic impact. In that case, that’s when you know the policy is beyond saving. It’s time to throw it out.