Kansas City, Mo. Businesses leaders in the Kansas City metropolitan area want the governors of Kansas and Missouri to declare a truce in their economic "border war" that involves using incentives to lure businesses from one state to the other.
The 17 business leaders, who include Sprint CEO Dan Hesse and Donald Hall Jr. of Hallmark Cards, said in a letter to Missouri Gov. Jay Nixon and Kansas Gov. Sam Brownback last week that using incentives to induce businesses to move across the border does not create new jobs and erodes the area's tax base, The Kansas City Star reported Tuesday.
"The Kansas City community is experiencing an economic border war," the business leaders wrote.
They asked the governors to declare a moratorium on the practice while their state economic development officials review the incentive programs. They wrote that they do support using incentives to lure businesses from states outside the region.
"We believe the directors of the Department of Commerce should examine the definition of 'new jobs' for the granting of incentives," they wrote. "'New jobs' should be redefined to exclude jobs attracted to the states from counties bordering the state line in the Greater Kansas City (metropolitan area) and counties contiguous to those counties."
The competition for companies in the Kansas City area has increased since 2009, when Kansas passed a law that allows relocating companies to retain 95 percent of their employee withholding tax for up to 10 years. That has lured several firms to the Kansas suburbs.
JPMorgan Retirement Plan Services moved 800 jobs to the Sprint campus in Overland Park; Hoefer Wysocki architects moved 65 jobs to Leawood; and KeyBank Real Estate Capital moved 300 jobs to the Sprint campus.
Last fall, Kansas City, Mo., gave a $1.5 million inventive package to keep the 460 employees of the National Association of Insurance Commissioners from leaving for Kansas. And last week, Nixon joined Kansas City, Mo., Mayor-elect Sly James and several business executives to try and persuade AMC Entertainment to not to move to Kansas, which has offered it a $47 million incentive package.
Nixon mentioned the letter Monday in a teleconference about his new Missouri Strategic Initiative for Economic Growth. One recommendation calls for non-compete pacts that would prohibit using incentives to shift companies within bistate metropolitan areas.
"I was very heartened by the letter, by the fact the business community on both sides of the line is focused on trying to use our assets collectively and not use them to compete against each other just to move companies back and forth," Nixon said. "It was a dramatic thing for the Kansas City business community to come together with that strong of statement."
But Brownback's spokeswoman said in a statement that the competition would continue.
"Gov. Brownback and his administration will continue to support local Kansas communities with the best tools available for economic development," said Sherriene Jones-Sontag. "Kansas needs to compete and win against 49 other states plus Europe, India, China and the rest of the world."
Bill Hall, the president of the Hall Family Foundation, said the letter was written by the business leaders and was not promoted by the Greater Kansas City Chamber of Commerce or the Civic Council of Greater Kansas City.