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.”
In North Dakota, two features of the state’s economy have persisted for years now: some of the lowest jobless rates in the nation, and workforce shortages challenging individual employers and entire economic sectors.
“By most estimates, we have over 20,000 unfilled jobs,” notes North Dakota Sen. Brad Bekkedahl.
Would scholarships or a loan-forgiveness program — with some strings attached — help fix this mismatch between worker supply and demand? And which of these two options would work best? Those questions were explored during the legislative interim and will likely emerge again when lawmakers convene in early 2019.
In a July session that largely examined the future of a cornerstone of the Midwest’s economy, three expert speakers also illustrated to legislators just how far it has come over the past few years. “Manufacturing is coming back to North America,” Mark Denzler, vice president and chief operating officer of the Illinois Manufacturers’ Association, told lawmakers who attended a meeting of the Midwestern Legislative Conference’s Economic Development Committee.
On the U.S. side of the border, more than 900,000 manufacturing jobs have been created since 2009, an increase of nearly 8 percent. In Canada, manufacturers have added more than 130,000 jobs since June 2013.
Nowhere do these trends matter more than in the MLC’s 11 states (home to one-third of U.S. manufacturing employment) and four affiliate Canadian provinces (which account for more than half of that nation’s jobs in the manufacturing sector).
For the first time in 20 years, South Dakota legislators are in line to receive a pay raise — big news in a state that has had one of the lowest legislative compensation levels in the nation. Starting next year, the salaries for South Dakota’s 105 part-time legislators will be adjusted annually to equal 20 percent of the state’s median household income. That means a jump in annual pay from $6,000 in 2018 to an estimated $10,200 in 2019.
In some rural parts of Ohio, access to broadband seems a long way off, with entire areas lacking access to high-speed internet service. For other businesses and residents, the infrastructure is frustratingly close, but out of reach.
“We have a marbling effect throughout the rest of the state — even in suburban and urban areas — where we have a street over here or a cluster of homes over there that cannot get broadband infrastructure built out to them,” Ohio Rep. Rick Carfagna explains.
Two separate bills are being considered this year to address those two distinct problems associated with Ohio’s digital divide.
Under HB 378, the state would use some money from its existing Third Frontier Initiative ($50 million for each of the next two years from the proceeds of bond issues) to help fund broadband infrastructure projects in underserved areas of the state.
With the popularity of craft beer on the rise, state legislators across the nation have been re-examining their laws to allow for greater growth in the industry, from statutory changes that help increase production to the removal of restrictions on self-distribution. That trend has continued in 2018, with South Dakota and Kansas among the states exploring proposals to assist craft brewers.
In August, Apple Inc. announced that the company would locate its new data center in Waukee, Iowa. The technology giant will receive more than $200 million in state and local tax incentives to build the $1.3 billion facility on a 2,000-acre site in the Des Moines suburb.
In September, Amazon announced its search for a second North American corporate headquarters, known as HQ2. The scale and scope of the project — the e-commerce giant is expected to invest more than $5 billion in the facility and employ up to 50,000 high-paid workers — captured not only headlines, but the attention of state and local officials.
A very public competition has ensued, and at least one Midwestern state, Illinois, is right in the middle of it.
“I’m excited about our chances for [landing] HQ2,” Illinois Rep. Mike Zalewski says. Earlier this year, he was part of an effort to reform and reinstate a long-standing Illinois incentives program known as EDGE, which is among the programs that the state could use in its pursuit.
“For every Amazon, there’s a lot more 40- or 50-person manufacturers looking to move to Illinois or to grow their business [here], and we want them to succeed,” Zalewski says. “EDGE is designed ... to help both the big fries and the small fries.”
The role of state incentives (tax credits, tax exemptions, grants, low-interest loans, etc.) has gotten increased attention in the Midwest during the latter part of 2017. In September, around the same time Illinois began making its Amazon pitch, Wisconsin was closing the deal on what lawmakers say is the biggest economic development project in that state’s history.