House passes new tax break for rural jobs despite skepticism from some lawmakers

? The Kansas House on Tuesday passed and sent to the Senate a bill that would offer tax incentives for investment companies that finance business projects that bring jobs to rural areas.

The Ad Astra Rural Jobs Act, as the bill is called, passed the House, 97-22, over the objection of some House members who said it had not been thoroughly studied, and worried that it could lead to giving taxpayer subsidies to factory hog farms or other kinds of confined animal feeding operations.

Rep. John Carmichael, D-Wichita, made that argument during debate on the bill Tuesday. He also noted that a nearly identical bill was introduced in the Missouri General Assembly in 2016, under the name “the Show-Me Rural Jobs Act,” and that the same venture capital firm executive who supported that bill was also the leading proponent of this year’s bill in Kansas.

The venture capital executive was Jeff Craver, a principal with the St. Louis-based Advantage Capital Partners.

The Missouri bill passed out of a House committee last year but was never considered by the full House. Another version of the bill has been reintroduced this year.

“I sincerely hope this bill accomplishes its laudable purpose and does not result in the victimization of small businesses in Kansas by out-of-state venture capital companies,” Carmichael said, explaining his vote against the bill.

But Rep. Troy Waymaster, R-Bunker Hill, one of the sponsors of the bill, said he believes those concerns are being exaggerated.

“I think it was a little overstated (Tuesday) and in committee when they were working the bill in regards to the approved investment companies coming into the state of Kansas and looking at businesses who want to either start a business in rural Kansas, expand, or if a company wants to move in from another state into the state of Kansas using this program,” he said.

Waymaster said the bill provides that the Department of Commerce would have to approve the investment companies and their business plans before they could be eligible for the tax credits, and they would only get the credits if they actually create jobs.

Lawrence Reps. Boog Highberger, a Democrat, and Tom Sloan, a Republican, also voted against the bill.

“It appears to me that the tax credits issued under this bill could be used to offset the tax liability of an affiliate investment company, regardless of whether the company itself successfully creates rural jobs,” Highbereger said in his written explanation. “I think it is telling that the primary proponent of the bill who is a venture capitalist while our Department of Commerce stayed silent.”

Sloan said he supports economic development for rural areas, but said he thinks providing access to high-speed internet service, job training programs and ensuring access to health care providers would be more effective strategies.

“Providing tax credits to new businesses will not be successful if four years of no income tax liability for many businesses has not resulted in businesses locating in rural Kansas,” Sloan said.