Topeka A proposed expansion of a tax break for businesses bringing workers to Kansas advanced Friday in the Legislature, despite concerns that the cash-strapped state can’t afford it and would be attracting lower-wage jobs.
The House gave the tax bill first-round approval on an 84-27 vote. Members plan to vote again Monday to determine whether the measure goes to the Senate.
The bill rewrites the rules for an incentive program created last year to encourage companies to move jobs from other states to Kansas. More companies would be eligible, as would nonprofit groups and even some federal government agencies, and the wages they’d have to pay would be lower than they have to pay now.
Democrats in the Republican-controlled House suggested the measure would have taxpayers subsidizing some jobs that don’t pay a living wage.
Critics also worried about a potential loss of revenue to the state, when it must close a projected $416 million budget shortfall for the fiscal year beginning July 1. Legislators were awaiting the release of figures for state tax collections in February, worried that they’d be lower than anticipated.
But supporters of the bill said any revenues lost from the tax break would be made up by taxes on goods purchased by newly employed workers. And, they said, the state needs to create jobs to solve its financial problems.
“The argument that a job at $12 is better than a job at $10 is compelling,” said Rep. Mike Kiegerl, an Olathe Republican. “But what if there are no jobs at $12? A job at $10 is better than no job at all.”
The program now applies to companies that move at least five jobs from another state to Kansas, if those jobs pay at least the average wage in the county of the new work site. Those companies are allowed to keep 95 percent of the state income taxes that would be withheld from the paychecks of their Kansas workers.
The bill would make companies, nonprofit groups and some federal agencies eligible if they create new jobs in Kansas, rather than just moving them from another state. Out-of-state companies also would be eligible if, upon buying a Kansas firm, they kept its jobs in the state.
Also, the wages they paid to qualify would have to meet or exceed the wages paid in half of the jobs in the county. That figure often is lower than the mean average.
The Department of Revenue estimated the changes would lower the state’s tax collections by $6 million during the next fiscal year, with the figure growing to $33 million by fiscal 2015.
Rep. Ann Mah, a Topeka Democrat, called the measure “another giveaway.”
Other Democrats said the state should be investing in high-wage jobs with good benefits.
“We have to take care of some of these workers, too,” said Rep. Julie Menghini, a Pittsburg Democrat. “We have to make sure they’re getting a fair wage.”
Republicans countered that setting the wage threshold too high would hurt efforts to attract jobs to rural areas or create new jobs for entry-level workers.
“We need to get our citizens back to work,” said Rep. Marvin Kleeb, an Overland Park Republican.