Video: Missouri Gov. Proposes Moratorium on Business Incentives in Border War with Kansas

In a speech given to the Greater Kansas City Chamber of Commerce last Tuesday, Missouri Governor and 2013 CSG President Jay Nixon called for an end to the wasteful practice of inducing businesses to move across the Kansas-Missouri border using tax and financial incentives. According to the Kansas City Star, the practice has shifted more than 6,000 jobs across the state border within the Kansas City metropolitan area, cost the states more than $210 million in income tax revenues and has had no net gain to the local economy. “That’s bad for taxpayers, it’s bad for our state budgets, and it’s bad for our economy, hampering our ability to compete as a region,” Nixon said.

Nixon explained that he wants to work with Kansas Gov. Sam Brownback to introduce legislation that would place a permanent moratorium on the border war incentives, but in the interim called for an immediate halt to the use of discretionary tax incentives that simply move jobs across the state border. “Although resolving this issue once and for all will require legislation in both states, in the meantime there is no reason another dime of taxpayers’ money should be spent to subsidize the movement of jobs within this region,” said Nixon.

In September, Nixon spoke at a gathering of state policymakers, academics and economic development professionals at a joint event held by The Council of State Governments and the Kauffman Foundation in Kansas City, Missouri where he took a similar stance on state incentives and the Kansas-Missouri border wars.

A report released by CSG earlier this year found that states spend billions of dollars on tax and financial incentives each year with the hope of spurring job growth and that those incentives have increased in both frequency of use and size over the past 40 years, with some deals worth over $1 billion each. In addition, some states are using incentives to engage in a bidding war with other states – like Kansas and Missouri – each offering increasingly lucrative deals for existing companies to relocate from one state to another. Despite the big price tag, state policymakers are often in the dark about what those incentives actually cost and how well they are working to achieve the state’s economic development goals.

Watch Gov. Nixon's speech here:

Tags: