Used properly, STAR bonds can prove beneficial to the state, and legislators should work to extend the bonds’ use beyond the current sunset date of June 30.
The STAR bonds program is an economic development incentive tool used to fund major development projects that serve as statewide attractions. The bonds create a special taxing district allowing projects to keep significant portions of state and local sales taxes generated at the development.
STAR bonds have been used to finance the Kansas Speedway in Wyandotte County, the Flint Hills Discovery Center in Manhattan, Heartland Park in Topeka, and the Prairie Fire shopping district and museum in Overland Park, among others. There are no STAR Bond projects in Douglas County, but the bonds have been touted as a way to help fund a $70 million outdoor recreational development at Clinton Lake State Park.
STAR bonds would allow the city of Lawrence to collect 49 percent of the city, county and state sales tax generated at the Clinton Lake outdoor center to retire bonds issued for the development. While STAR bonds are similar to tax increment finance districts, they are more powerful because they allow not only for local sales taxes to be collected but also state sales tax dollars.
Gov. Sam Brownback is supportive of the Clinton Lake project and has suggested STAR bonds for the Clinton Lake project, which, it’s important to note, is merely in the discussion stages.
But if STAR bonds are critical to the Clinton Lake development, the project may never get beyond the discussion phase. That’s because there are real questions about whether STAR bonds will be continued beyond June 30.
The Senate Commerce Committee is expected to conduct hearings this session on whether STAR bond authority should be used for new projects. Committee Chair Julia Lynn, a Republican state senator from Olathe, didn’t sound overly optimistic.
“We need to decide if the state should be in the STAR bonds business at all,” Lynn said earlier this week. “It’s too early to predict what will happen. I think the whole program needs a lot of work and attention.”
Lynn said the STAR bonds legislation needs to be thoroughly vetted. Specifically, the state needs a more transparent reporting process so that legislators can track the amount of sales tax the state will receive and what is being diverted for STAR bonds debt retirement, Lynn said.
Thorough vetting of the program and greater transparency should be welcome changes for the STAR bonds program. But assuming those can be accomplished to the Legislature’s satisfaction, the STAR bonds should continue. It’s an important development incentive that can be used to encourage projects that bring more visitors to Kansas.