Kansas and Missouri
The new border war
Missouri calls for an economic truce with Kansas
I hear the tax breaks are good in Kansas
MISSOURI and Kansas are old rivals. In the 1850s thousands of Missourians rode into Kansas,seized polling stations at gunpoint and fraudulently elected pro-slavery candidates. The effortsof these “border ruffians” were a prelude to the civil war.
Today the rivalry is less bloody. Both states offer tax incentives to lure in companies fromelsewhere. Because they share a large metropolitan region, Kansas City, many firms qualifyfor such breaks simply by shifting a mile or two over the border.
Looking at the biggest type of sweetener, the Hall Family Foundation, a charity, estimates thatover the past five years the two state governments have forgone $217m in taxes. Some 3,289jobs have been tempted across the metropolitan border to Kansas; Missouri has won 2,824jobs back. Kansas can therefore claim to be “winning”. But local reports suggest that CBIZ, aKansan consulting firm, is considering moving to Missouri; that would erase this lead.
None of this border-ruffianry creates new jobs. Locals gripe that when, for example, AMCTheatre recently moved its headquarters out of downtown Kansas City, Missouri, its staff simplyhad a longer commute to work. Sly James, the mayor of Kansas City, Missouri, describes thenew border war as “short-sighted”. Kevin Collison, a reporter for the Kansas City Star, calls it“cannibalistic”.
A few years ago local business leaders from 17 companies, including Sprint and Hallmark Cards,wrote to Jay Nixon, the governor of Missouri, and Sam Brownback, his counterpart in Kansas,to warn them that the rift was harming the area. In the past month, a truce has started tolook likelier. Majorities in the Missouri House and Senate have approved versions of a bill thatwould bar incentives for businesses near the border to hop over it. The catch, though, is thatthis law will go into effect only if Kansas reciprocates. There is a two-year window for a deal tobe done.
Missouri Senator Ryan Silvey, a Republican who is sponsoring the Senate version of the bill,says he is confident the House will soon pick up and pass his version. Over in Kansas, MrBrownback is guardedly optimistic. He says he has thought for some time that “ceasefirenegotiations” were needed, and that this bill is a “necessary condition for us to negotiate”. MrBrownback says that ceasefire discussions ought to consider all the tools used to encourageeconomic development on both sides of the border. These would include income and propertytaxes.
It is difficult to understand why either state would want to continue throwing money at ascheme that benefits only the companies that move. Mr Silvey explains: “When people feel likethey are locked in competition they just want to win, even when the competition is stupid.”Since Missouri's annual budget is $26 billion to Kansas's $14 billion, some Missourians ask whytheir state does not simply outspend its neighbour to win the war. Mr Silvey says that if anagreement is not reached in the next few years, his colleagues will want to “go with bothbarrels” and steal more business from Kansas. Move quickly Kansas, or the border ruffiansmay yet ride again.
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