Governor says Kansas bonds program ‘loose’ but knocks plan

Kansas Gov. Sam Brownback answers a question regarding welfare reform during a press conference on Thursday Feb. 25, 2016, at the Kansas Statehouse in Topeka, Kan. (Chris Neal/The Topeka Capital-Journal via AP)

? Gov. Sam Brownback criticized an effort by Kansas legislators to block his administration’s efforts to lure a weeks-long annual horse and livestock exhibition out of Kansas City, Missouri, even as he promised to work with lawmakers to overhaul a program that could help finance the project.

The Republican governor is reviewing a budget bill approved by the GOP-dominated Legislature last week that includes a provision against a development in Wyandotte County for the American Royal. The provision says the state cannot authorize bonds backed by sales tax revenues for a project in the county through June 2017 unless the bonding program is reformed.

Brownback has until March 4 to act on the budget measure, which eliminates a projected budget deficit of nearly $200 million for the fiscal year that begins July 1. The American Royal provision blocks STAR bonds only for projects in Wyandotte County.

The governor has the power to veto individual items in budget bills and said during a wide-ranging Statehouse news conference that he hasn’t decided whether to use it on the anti-American Royal provision.

“We are willing to work with the Legislature on any bill that they propose to address their concerns about STAR bonds and how they should be used in the future, but it does not seem reasonable to me for the Legislature to identify one county as being ineligible to use an economic incentive,” Brownback told reporters.

The state created the STAR bonds program in the 1990s as a way to help finance big projects for major tourist destinations, though the program has been expanded to help finance smaller projects across the state.

Brownback said state Commerce Secretary Antonio Soave already is working on proposed changes in the program, without being more specific.

“I think the STAR bonds system has gotten loose,” he said. “It’s being used legally, but I think it’s gotten away from its initial intent.”

Sen. Jim Denning, an Overland Park Republican who pushed for an anti-American Royal provision in the budget legislation, said lawmakers were “being as direct as we can” with Brownback about reforming the STAR bonds program.

“Vetoing the provision sends exactly the wrong message, as if he doesn’t want legislative oversight,” Denning said.

With the state’s approval, Wyandotte County in 2001 began issuing $450 million in bonds to create a now-thriving shopping and entertainment district that includes NASCAR’s Kansas Speedway, a Major League Soccer stadium and a minor-league baseball park. The bonds are being paid off five years early — by the end of this year — by sales tax revenues from a district encompassing the development.

Legislators worried that Brownback’s administration wanted to expand the existing Wyandotte County district to include a new American Royal site and tap all or some of the $42 million in annual state sales tax revenue to back new bonds — when the state is struggling to balance its budget.

A recent Department of Commerce report said the American Royal project could include a new hotel, children’s museum and 5,000-seat arena for the exhibition’s events that also would host a minor-league hockey team.

After The Associated Press obtained a copy of the plan and disclosed details last week, administration official said there was no solid plan and disavowed intentions to tap existing sales tax revenues to help finance a project.