Watchdog group says Kansas incentive program benefits larger companies
Wichita ? A watchdog group says larger businesses have been the primary beneficiaries of a Kansas economic incentive program.
The Wichita Eagle reports Good Jobs First says most of the money spent on the state’s Promoting Employment Across Kansas program from 2010 to 2014 went to companies with more than 100 employees or at least 10 locations.
The Promoting Employment Across Kansas program was established by the Kansas Legislature as a way to provide incentives for companies to move to Kansas. The program allows companies to retain 95 percent of their state payroll withholding tax for up to seven years.
Between 2010 and 2014 the state struck PEAK deals with 203 companies at a total cost of nearly $44 million to the state, according to the report released Tuesday. Good Jobs First defined 164 of those companies as large companies and found that they accounted for $41.7 million of the program’s total cost.
“State economic development spending is profoundly biased against small, local and entrepreneurial businesses,” said study author Greg LeRoy said in an e-mail. “Our findings definitively confirm what many small businesspeople have long believed.”
But State Commerce Department spokesman Dan Lara questions the group’s methodology labeling firms with more than 100 employees as large. Lara said the federal government uses 500 employees as the threshold for what constitutes a small business, and an audit shows the PEAK program adds $57 to the economy for every $1 spent by the state.
“Larger firms tend to create more jobs at once. They’re more likely to have PEAK eligible projects and those projects are going to create more jobs by virtue of their larger scale, which will give them higher benefits due to the structure of the program,” he continued.
Sen. Jeff Melcher, R-Leawood, said the state has other policies designed to help small businesses.