Official: Kansas, Missouri close to ending economic war

? Missouri and Kansas officials are close to an agreement that would end a long-running “border war” that saw both states using economic incentives to persuade businesses to move, a Kansas Cabinet secretary said.

Kansas Secretary of Commerce Pat George said the main hurdle is how to remove incentives that do not create more jobs or investments without hindering efforts to attract companies or to persuade businesses not to move to another region.

“We’ve proceeded cautiously because we didn’t want to fix a problem and create a new problem,” he said. “We’re publicly funded entities and we want to spend the taxpayers’ money wisely. There certainly could be some that are not being spent as wisely as they could be.”

Kansas has a program called Promoting Employment Across Kansas, or PEAK, which allows a company creating jobs to keep 95 percent of the employees’ state income taxes for up to seven years. A state audit found most of the incentives went to counties surrounding Kansas City and that the majority of the jobs came from Missouri. It can be difficult to determine if the company created new jobs for Kansans, or if its Missouri employees are simply commuting across the border, The Topeka Capital-Journal reported Tuesday.

George said he isn’t sure if an agreement will be announced before he resigns in July to become head of the nonprofit Valley Hope Association. In Kansas, the Department of Commerce can change the incentives without legislative approval.

Missouri requires legislative approval, but it has passed a bill agreeing to end some incentives if Kansas does the same. Both states believe Kansas Gov. Sam Brownback and Missouri Gov. Jay Nixon can sign an agreement to make the changes, George said.

Missouri Department of Economic Development spokeswoman Amy Susan said in an email Tuesday the department won’t comment on ongoing discussions. But she said Nixon “has made it clear his administration will continue to promote policies that enhance Kansas City’s competitiveness as a region, and work to end tax incentives that only move jobs from one part of the region to another.”

Missouri has a program similar to PEAK but incentives aren’t always equal in the two states, George said. For example, Missouri cities and counties offer more local incentives, while incentives generally come from the state in Kansas. George said the complex issues have slowed negotiations.

“You really want to look at apples to apples,” he said. “You could never come up with an exactly equal — disarmament, you would say — but we’re trying.”