Kansas secures deal to offer over $1 billion in breaks to mystery firm

TOPEKA, Kan. (AP) – Kansas lawmakers on Wednesday approved the state’s largest-ever taxpayer-funded incentive to attract thousands of new jobs, even though most didn’t know the name of the company or what it was. planned to do.

The measure also reduces corporate tax rates.

The Republican-controlled state Senate approved a bill, 31-9, that would create a new incentive program so the state Department of Commerce could offer a single company hundreds of millions of dollars pauses once this year and once in 2023. The GOP-controlled House approved the measure on Tuesday, so it goes to Democratic Gov. Laura Kelly.

Kelly sought permission to offer tax credits, wage subsidies and training funds in time to attract an anonymous company. Officials said the company was planning a $4 billion project and that Kansas was competing with another state that some lawmakers say is Oklahoma.

“We want to buy these magic beans. We won’t tell you where it’s going to be, what it’s going to be, just that it’s going to be awesome,” said State Senator Molly Baumgardner, a Kansas City-area Republican who voted no.

Officials who know the company’s identity said they were required to sign an agreement not to name it or release details of the project. They said the company expects to make a decision within weeks.

Proponents of the measure argued that Kansas lost other major projects because it could not offer generous enough incentives.

“It’s a tool that will help us compete with other states,” said Senate Commerce Committee Chair Renee Erickson, a Republican from Wichita.

Ohio recently offered Intel Corp. incentives worth about $2 billion to secure a new $20 billion chip manufacturing plant. Michigan lawmakers in December approved $1 billion in incentives, two-thirds of which for General Motors to build electric vehicle battery assembly plants.

Electric vehicle maker Canoo has announced plans to open a plant in northeast Oklahoma next year that is expected to create 2,000 jobs.

But Wisconsin has cut incentives for electronics giant Foxconn. It was supposed to invest $10 billion there and create 13,000 jobs, but the deal now covers about 1,450 jobs with an investment of $672 million by 2026.

Kelly’s administration has said the facility it is pursuing will be the largest economic development project in Kansas history. They said the company will employ 4,000 people and that other companies supplying or supporting it will create several thousand additional jobs. They said the business would pay an average of $50,000, while income per person in Kansas averages less than $32,000.

“I don’t think there’s a state in the country that wants to not be in our current position to create these types of jobs with this type of economic investment,” said Sen. Rob Olson, a Republican from the Kansas City area.

Still, lawmakers from both parties scoffed at being pressured into committing without knowing more. Democratic state Rep. John Carmichael of Wichita mockingly suggested Kansas was getting “a porn production studio” and jobs for adult film actors and film crews.

“The problem is, you don’t know what kind of business you’re betting taxpayers’ money and the future on,” Carmichael told his colleagues during the House debate.

The measure requires the state to cut its corporate tax rates by half a percentage point for every big deal struck so that all businesses benefit. That would save companies about $100 million a year and lower the state’s top rate from 7% to 6% if two deals were completed.

Critics worry that the planned incentives are so rich that lawmakers won’t have room to consider other proposed tax cuts.

House GOP leaders’ spreadsheets showed Kelly’s proposed incentives could create a budget shortfall by mid-2026. The measure approved by lawmakers is a little less generous, spreads the incentives over several years and requires legislative leaders to sign the agreements.

Some lawmakers were unimpressed with the grim projections.

“I’ve never seen a profile that hasn’t filled the budget in four or five years,” said Sen. Jeff Longbine, a Republican from eastern Kansas. “The legislature is required to pass a balanced budget each year, and adjustments are made up and down.”

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David Eggert in Lansing, Michigan; Sean Murphy in Oklahoma City and Andrew Welsh-Huggins in Columbus, Ohio.

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Follow John Hanna on Twitter: https://twitter.com/apjdhanna

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