Kansas is digging a mysterious billion dollar hole. What could go wrong?
By Max McCoy
award-winning author and journalist. A native of Kansan, he began his career at McCoy and has also written over 20 books, the most recent of which is “Elevations: A Personal Exploration of the Arkansas River,” named Kansas Notable Book by the State Library.
It’s the largest financial incentive program in state history.
Yet we don’t know the name of the company lawmakers decided to woo with this unprecedented and risky deal, which would provide the mystery company with at least $1 billion in tax breaks, wage subsidies, funded employee training. by the state and other incentives. The sheer size of the offer and the secrecy surrounding it are red flags for pundits, but it has bipartisan support from Democratic Governor Laura Kelly and the state’s GOP-controlled legislature.
Watching the case unfold left a queasy feeling in my gut.
It also reminds me of a big hole in the ground in western Kansas that promised to be an economic miracle for a struggling community, but turned out to be just a nasty big hole in the ground .
Have you been to the Great Well?
In 1878, the brave people of Greensburg decided that what they needed for economic growth was water. The railroad was coming and the locomotives would need water to quench their thirst for iron. But western Kansas is notoriously dry, and the Arkansas River was 20 miles away. Thus, the Greensburg Water Supply and Hydraulic Power Company was organized. With a franchise from the city, the company spent $75,000 to sink a shaft 109 feet deep and 32 feet in diameter. Using a complicated series of steam hydraulics, water was pumped to the surface and beyond, where it was stored in a 90-foot tower.
In the past few days, both houses of the Kansas Legislature passed the APEX Act, which stands for Attracting Powerful Economic Expansion. As you read this, the governor has already signed the damn thing, gifting the Sunflower State mystery date a $1 billion valentine.
If there was any doubt that the Kansas state government is absolutely committed to secrecy, this agreement should put an end to it. We’ve come to expect secrecy under Sam Brownback’s administration, but that hasn’t improved much under Kelly. People privy to the identity of the mysterious company, from those in the Commerce Department to the Statehouse, are bound by nondisclosure agreements. The idea of such a massive state effort to lure a private sector company to Kansas, shrouded in layers of secrecy, leaves a stench that won’t soon be forgotten.
What we know came out in dribs and drabs, little teasers to make us feel better about what we don’t know. The private sector enterprise would employ 4,000 people, be a feather in our economic cap, and “inject $4 billion” into the Kansas economy. Of course, the identity and even the nature of the company must be kept secret, because that is how it is these days in the high-stakes world of corporate incentives; such disclosure might scare off the potential investor, like a wayward, wealthy deer in the terrifying spotlight of public disclosure.
Legislation authorizing the package was rushed through, we were told, because a similar deal was in the works at the Oklahoma state house. Now that Kansas has finalized its offer, there’s nothing stopping Private Sector Mystery Firm from using it to leverage more franchises from Oklahoma or any other state willing to play along. why does the company want to move? What problem drives him to look for a new home? Is this a way to break a union?
Or, what if PSMF accepted the offer and set up their toxin-producing chemical plant in your favorite corner of Kansas? There’s no suggestion the maker being courted is making anything more toxic than shea butter soap, but chances are any maker experiencing a boom is likely to be making something – chips, textiles , batteries, car parts – which poses environmental problems. My money for a private-sector manufacturer that may eventually need its suppliers to locate nearby, as trade officials describe it, is auto parts. And, I recognize a hypocritical and irrational bias here: if the company makes Jeep parts, then I agree.
But what if the venture is one that many Kansans would have a moral objection to, like a new spaceport for billionaires Elon Musk or Jeff Bezos? Or something just as tumescent but deadlier? And if the PSMF was the subcontractor of the DOD Primus Scientific Missile Facility? Hmm, all that talk about powerful injection and expansion would make sense.
OK, hold back the hateful emails, they probably won’t be missiles.
But no matter what the company does, the deal should give Kansans pause.
The sheer magnitude of it – at least $1 billion in tax cuts, wage subsidies and other incentives – is hard to comprehend. How much money is it exactly? Let’s get started. The median household income in Kansas is close to $60,000, according to the US Census Bureau. Thus, this mountain of incentive treasures is equivalent to the median income of 16,666 families. Consider this a median salary for the entire population of Salina.
The APEX Act proves that Kansas has no real interest in taking care of the state’s working families. It aims to take care of business, and this can ultimately come at the expense of more worthy projects, such as investing in higher education or bolstering the retirement fund for state employees. If only the Legislature felt the same urgency to expand Medicaid as it does to provide a dowry for private sector investors, we would all be in a better place.
Even if the APEX Act does result in bringing an economic miracle to Kansas, with this mysterious company or another, we should be alarmed at how the legislation was passed. It is not only citizens who have been left in the dark, but also many legislators. Lawmakers shouldn’t have to sign an NDA to find out the identity of a courted company before voting to make the deal happen. State law has more than enough safeguards to protect the legitimate privacy interests of individuals and businesses. When lawmakers are required to sign NDAs to obtain essential information for informed voting, it mocks the transparency that should guide government. It is a bad precedent.
It sets a dirty political tone more suited to pornstars and presidential hopefuls. While the use of NDAs has become common in incentive packages for Amazon and other mega-corporations, it stifles public participation in deals with far-reaching and potentially disastrous outcomes.
Back to the history of the Great Well.
“The construction of this water supply system will not only blow up our town, but will provide employment for a great force of men,” trumpeted the Greensburg Republican August 3, 1887. The most close was still 30 miles away, the newspaper noted, but the easy availability of water would surely be an attraction. Construction began and the well was painstakingly dug – by hand. There were problems from the start, including the misfortune of cracked steam boilers. But in the end, the project was finished, although it went over budget by 50%.
The railroad came, but the aqueduct project had been so expensive that the company had trouble paying its debts. Lawsuits have been filed. Then came the national economic panic of 1893 and the railroad left Greensburg. The Greensburg Water Supply and Hydraulic Power Company eventually went into receivership. Most of the debt was owed to banks outside the state. The city ended up buying enough of the business to secure the well, for municipal water use, but much of the infrastructure was sold.
The 90 foot water tower has been sold.
He went to Ada, Oklahoma.
Le Grand Puits remains the monument of an ambitious failed economic development project. Out of overconfidence and bad timing, the well failed to keep the railroad in town. Greensburg never delivered on what its founders thought was an early promise of greatness, but for decades it’s been an original Kansas icon built on a bit of roadside hyperbole.
Things change, of course. Technology advances. But our desire for savings
But our desire for economic miracles can plunge us ever deeper into great pits of our own making.