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Kansas City, Missouri, Won't Tempt Kansas Companies Across The State Line With Big Tax Breaks

Waddell and Reed
Kansas City, Missouri, has agreed to limit its use of tax incentives to level the playing field with cities in Kansas. The vote comes after the city offered Waddell and Reed generous incentives to relocate from Overland Park.

Kansas City, Missouri, has finally agreed to hold up its end of the so-called economic border war truce with Kansas.

The move on Thursday came more than five months after Missouri and Kansas agreed to stop poaching companies from one side of the state line to the other.

Legislation passed by the Kansas City Council Thursday limits tax abatements for companies hopping the state line to Kansas City, Missouri, to 10 years, bringing the city’s incentive policy in line with municipalities on the Kansas side.

After the vote, Kansas City Mayor Quinton Lucas said the final legislation came after months of collaboration with other municipalities in the region. 

"I think it has the opportunity, particularly if we truly work together, to be a game changer," Lucas said. 

Notably, the city council vote on Thursday came after Kansas City approved a generous tax incentive package to financial services firm Waddell and Reed to move from its headquarters in Overland Park.

Back in August 2019, the governors of Kansas and Missouri agreed to end the decades-long practice of using tax breaks to lure companies from one side of the state line to the other without creating new jobs for the region.

But state law enabled cities on the Missouri side to offer longer-term tax breaks than cities in Kansas.

Kansas Gov. Laura Kelly conditioned her support of the truce on Missouri-side municipalities promising not to give out bigger incentives than cities on the Kansas side.

The “border war” counties embraced by the truce include Johnson, Miami and Wyandotte counties on the Kansas side and Jackson, Platte, Clay and Cass counties on the Missouri side.  

Kelly praised the council's passage of the ordinance, saying it was “an important step in achieving an equal playing field at the local level, and also will allow the region to become even more competitive.”

Kansas Commerce Secretary David Toland praised Kansas City’s move on Twitter.

The proposal passed Thursday was first introduced by Lucas in September.  

Between then and now, the city awarded Waddell & Reed generous incentives to build a new $140 million headquarters downtown. Those came in addition to $62 million in incentives from the state of Missouri.

Developers and city officials say that project was exempt from the truce because it was in the works before the truce went into effect.

Overland Park Mayor Cark Gerlach told KCUR he wasn’t dwelling on Waddell & Reed’s move from his city, noting that there were several reasons the company wanted to move. Still, he said Kansas City’s action will be good for the region as a whole.

“It’ll focus on growing companies and growing the region versus companies hopping back and forth across the state line without growth,” Gerlach said. 

Minutes after the vote, Lucas announced the creation of a Regional Committee on Economic Mobility along with Kansas City, Kansas, Mayor David Alvey and Olathe Mayor Michael Copeland.

The committee will identify high-need areas throughout the region and target them for economic development. 

Lucas said the city needs to move beyond the status quo, whereby city officials rubber stamp deals that come before the council with little or no negotiation.  

“We need to make policy that cares about poor people a hell of a lot more than we do now ... Hopefully, this gives us some kind of proactive, progressive — in the broadest sense of the word — economic development approach,”  Lucas said. 

Gov. Kelly likewise supported the establishment of the committee, saying she looked forward to hearing its recommendations “on how Kansas and Missouri can address disparities in economic mobility across the state line.” 

Lisa Rodriguez is the City Hall reporter and afternoon newscaster for KCUR 89.3. Follow her in Twitter @larodrig.

Slow news days are a thing of the past. As KCUR’s news director, I want to cut through the noise, provide context to the headlines, and give you news you can use in your daily life – information that will empower you to make informed decisions about your neighborhood, your city and the region. Email me at lisa@kcur.org or follow me on Twitter @larodrig.
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