Do you remember when Nancy Pelosi said, "...we have to pass the bill so you can find out what is in it"? That is similar to the situation I was faced with last Thursday…and I voted “no”, along with 6 other Senators. But, the bill passed, 32-7.
Let me explain the bill, my reservations and concerns, and the reason I voted "no".
Senate Bill 347 is 59 page “economic development” bill designed to attract an unnamed large company. People who knew the details of the potential agreement had to sign non-disclosure agreements, so those of us who were not privy to the discussions had no way of knowing all the details of what we were voting on. Furthermore, the unnamed business put time deadlines on passing the bill, so it had to be rushed through. That’s never a good starting point for making a good decision.
I am all for economic development, as long as it done the right way. But this is another example of going down a road we have traveled before, with disastrous results.
SB347 is designed to attract a purported $4 billion dollar company and we were told it would bring thousands of new jobs, but there is no guarantee, and right now ALL businesses in Kansas are already having trouble finding employees. A massive new company in our area would put the state and this unknown corporation in direct competition with all the rest of the businesses in Kansas. Most businesses do not have access to these types of advantages handed out by the state. It would likely pull employees away from already struggling businesses and possibly put some out of business.
Where will this business be located in Kansas? I don’t know.
What kind of business is this? I don't know.
What is the the track record of this company? I don't know.
Are there potential environmental or regulatory concerns? I don’t know.
Will it cause us to spend more on infrastructure for this business? I don’t know.
There are way too many “I don’t knows” for my comfort level. It would have helped if I could have known all these details but, they were not available for me to consider.
I hope you understand that if I am going to make decisions on your behalf, I have to later defend them and understand the consequences. Absent that, I can’t in good conscience take someone else’s word that I should just vote "yes" and not worry about it.
In addition, the state is on the hook for paying for the reimbursement of up to 50% of training and education expenses for new employees for this business in each year for up to five successive years, up to an annual amount of $5,000,000, as determined by the secretary of Commerce.
It also provided a 50% cut on property tax for this unknown company…so the rest of us would still be footing the rest of the bill. Some say that 50% is better than nothing…that is true, but we are also making other concessions in this bill that would offset those gains significantly.
The bill was amended in attempt to make it more palatable by adding some tax cuts for Kansans, but those cuts would be predicated upon the deal being struck with this large undisclosed company. We should restructure our tax schedule in Kansas to make us more competitive, but that should be done in a clean tax bill with no strings attached and no sunset on the tax cuts. That was not the case here.
Whenever the government gets involved by offering huge tax abatements to attract a single employer, it creates an uneven playing field for everyone else who is trying to make ends meet. Often, once the incentives run out, the large companies either leave or need additional incentives to stay. Even when all the details are known, it’s a dangerous path to tread as there are numerous examples of these thing blowing up. Cerner is one recent example. And the 25 Kansas STAR Bonds projects have a horrible track record with only one success story. That’s a 4% success rate…in return for hundreds of millions of tax breaks and other incentives.
The other problem is that it puts virtually all the negotiation and oversight of this undisclosed deal in the hands of the Secretary of Commerce. These large companies have legions of attorneys who are sophisticated negotiators and are used to managing large deals of this nature. These people know how to gain an advantage, legally and financially. And they will be negotiating directly with our current Secretary of Commerce, or whomever that might be in the future, on behalf of all Kansas taxpayers. This should worry us all. It feels to me like this new undisclosed business is similar to an expensive, shiny new car that we just gotta have…no matter the price!
Finally, a company purportedly capable of investing over $4 billion is likely a publicly traded company. Remember, that in these companies, investment decisions are made based on how to keep stock prices high, and investors happy. Not that’s a bad thing…but it doesn’t place Kansans as their first priority when making future plans for their company. Oh…they can say that…but it’s naïve to believe otherwise.
As I said earlier, I am FOR economic development, but we have been approaching it in the wrong way for a long time. Kansas is one of the highest taxed states in the union. Our electrical rates are generally higher than surrounding states, and we are losing population due to these things. There are other problems as well, but all of these problems must be addressed first if we are truly going to fix the eco-devo problems here.
The bill is now in the House, where it will be debated this week.
