With her signing of an executive order in August, Kansas Gov. Laura Kelly pronounced the end of a longstanding “economic border war” between her state and Missouri. Her action, combined with legislation passed in Missouri this year (SB 182), stops the two states from offering tax incentives to companies in the Kansas City region. For the war to truly end, The Wichita Eagle reports, local governments on both sides of the border need to follow the states’ lead. Because they are not bound by the Kansas executive order or new Missouri law, cities and counties could still offer property tax abatements to lure businesses.
In Kansas City’s metropolitan area, there is a long history of businesses crossing the Kansas-Missouri border — lured by one of the two states’ tax breaks and financial incentives. “It’s a zero-sum game when incentives are given to move a company just a few miles from where it was,” says Rep. Kristey Williams, a member of the Kansas House Commerce, Labor and Economic Development Committee. “Essentially, taxpayers lose.”
Could this traditional type of interstate competition be replaced by an interstate collaboration, or cease-fire?
Smaller- and large-scale ideas were being proposed in the nation’s state legislatures in early 2019, including a bill known as the “border war bill” in Missouri. Passed by the state Senate in late February, SB 182 would prohibit state incentives from being offered to companies located in four Kansas border counties. Kansas would have to adopt a comparable ban for SB 182 to take effect.
According to Missouri Sen. Mike Cierpot, the bill’s sponsor, the two states have “spent over $335 million shuffling businesses back and forth over state lines … by moving a matter of miles, or in some cases blocks.”