Archive for Sunday, March 20, 2016

Editorial: STAR changes

State legislators are right to place new restrictions on the use of STAR bonds in Kansas.

Lawrence Journal-World opinion section

Lawrence Journal-World opinion section

March 20, 2016

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The STAR bond program has been a boon for some economic development projects in Kansas, but it apparently was due for a little tune-up.

STAR (Sales Tax Revenue) bonds were first used in Kansas to finance the development of the enormously successful Village West retail and entertainment district in Wyandotte County. The financing tool allowed the development to use new sales taxes generated in the STAR district to pay off bonds that were used to finance roads, water and sewer lines and other infrastructure for the project. Those bonds now have been repaid and the sales tax that made that possible is scheduled to start flowing back into state coffers in January 2017.

At least that was the intention of state legislators. However, Gov. Sam Brownback is pursuing another plan for that money. Legislators learned earlier this year that Brownback’s administration wants to divert about $46 million a year in sales tax revenue from Village West stores to entirely new projects in Wyandotte County but outside the existing STAR bond district. His hope was to use that money in not-yet-approved districts to help lure the American Royal livestock show from Kansas City, Mo.

Legislators were right to cry foul. Although Brownback’s plan may not have been illegal, it certainly isn’t the spirit of the law. The use of STAR bonds was approved for Village West, and the state shouldn’t be allowed to divert money raised in that district for another purpose without additional approval.

The governor and the Legislature are still sorting out this problem. A bill that would block Brownback’s plan was passed and vetoed. That veto was overridden by the Senate, which then passed another bill that makes changes in the STAR bond rules and would force the administration to start over on the American Royal plan. The House has not voted on overriding the governor’s veto, which may become moot if the House approves the new STAR bond bill.

The governor likely isn’t pleased by these developments, but allowing revenues in STAR districts to be diverted to new projects without additional approval provides too great an opportunity for abuse at a time when many taxpayers already are questioning the use of large tax rebates as an economic development tool.

STAR bond can be an effective tool to encourage diverse business development in the state. The American Royal project may be a worthy use of STAR bonds, but it should have to gain separate approval based on its own merits. If the project doesn’t measure up, the state certainly can find another good use for that $46 million in tax revenue.

Comments

Larry Tucker 1 year, 9 months ago

Yes, Star bonds have turned some of the economy around for the Wyandotte-Kansas City area or at least in the retail business. Wyandotte County still has one of the highest unemployment rates in the state. Those who have lost their jobs in manufacturing have not benefited from the sales tax diversion used there. Now the Kansas legislature, ignoring their plight, needs the new sales tax revenue so that the wealthy business people in Kansas City can still reap the tax breaks they were given in 2012 when over 300,00 of them no longer have to pay any state income tax. All of this new sales tax recovery in Topeka will compete with other economic development projects in Kansas especially in rural areas where attracting new business is almost impossible. Oh well, at least the politicians will be able to use this new money to get re-elected and people in Wyandotte County can still make minimum wage at restaurants and Wal-Mart!! It's time for new leadership in Topeka!!

David Holroyd 1 year, 9 months ago

OR new leadership in Wyandotte County? The sales tax generated comes from out of county, state, shoppers but from the folks in the DOT as well.

A bigger question is why has not the tax revenue been used to enhance other areas in the county?

A premier economic force is the KU Med Center! Rosedale has a park with a prominent view but not is derelict to say the least. A familiar Frisbie site but neglected by the county and the city.

Rosedale should have never allowed itself to be incorporated into the greater KCK.

All facets of a city must be enhanced from the revenues generated by that city.

Is Lawrence spreading the revenue or slighting various neighborhoods?

Is it likely that STAR bonds may be used to further redevelopment in Downtown Lawrence and tied to development in North Lawrence?

Does the Journal World know if STAR bonds are being considered?

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