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Government

What You Need To Know About Kansas City's Proposed Cuts To Arts, Economic Development, Health

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File photo by Julie Denesha
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KCUR 89.3FM
Hotel-room supply in Kansas City is greater than demand, in part due to the popularity of short-term rentals such as Airbnb. The problem will get worse when the 800-room Loews convention hotel opens in April.

Taxpayers in Kansas City, Missouri, have a chance between now and March 3 to influence how the city spends their money.

Mayor Quinton Lucas released his proposed budget last week. The budget prioritizes fighting violent crime, increasing the city’s stock of affordable housing and fixing potholes, but it falls roughly $3 million short of another of the mayor's priorities: eliminating bus fares.

Not only is the city council charged with paying for these new priorities, it also has to keep paying for past council’s deals. Case in point: $20.4 million to keep paying for the KC Live! Block at the Power and Light District.

And while the total budget remains pretty flat, several departments — namely police and firefighters — are asking for major increases.

Residents can weigh in at public meetings on Feb. 22, Feb. 29 and March 3; they can also use the city's online Balancing Act.

Here’s a closer look at some of the proposed cuts:

ECONOMIC DEVELOPMENT

The Economic Development Corporation of Kansas City serves as a liaison between the city and the business community and helps developers secure tax breaks for projects. The proposed budget:

  • Cuts $1 million in city funding for the EDC.
  • Sets aside $500,000 that the council can allocate to the EDC.

The EDC’s annual revenues are about $5 million, according to a 2017 tax form. A $500,000 reduction would be about 10% of the EDC’s budget.
In his prepared State of the City address, Mayor Quinton Lucas said the cut to the EDC reflects a “significant change” in how the city does economic development.

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Credit Waddell and Reed
The Kansas City Council has scaled back tax incentives for the financial services firm Waddell & Reed's new $140 million headquarters in downtown Kansas City.

“This right-sizing reflects administrative change over the past year, the ability of City Hall to handle much of development finance review, and our need to reorient what inclusive economic prosperity looks like for all Kansas Citians,” Lucas said.

The EDC has been through three CEOs in the last year. In a statement, Interim President and CEO T'Risa McCord said they are “absolutely happy” to work together with the mayor and city council on a “new financing model for a new path forward.”

TOURISM

The city's proposed budget cuts funding for Visit KC, which promotes convention and tourism business, by $660,000. 

City officials are bracing for a $1.1 million decline in revenues from the convention and tourism tax, a 7.5% tax paid by visitors who stay in hotels. That's because hotel room supply is greater than demand, according to an April 2019 study commissioned by Visit KC. This is partly due to the popularity of short-term rentals such as Airbnb. The April opening of downtown's 800-room Loews Convention Center Hotel will likely make the problem worse. 

City funding for Visit KC has steadily increased from $7.04 million in 2012 to $11.56 million this year. The $10.96 million proposed for fiscal year 2021 would mark a reduction.

The state of Missouri doesn't allow cities to tax short-term rentals, but the state does get a cut of those revenues. According to Airbnb, approximately 713,000 people stayed in Missouri as guests in 2019, with the hosts earning $75 million (up from $48 million in 2018). Jackson County ranked second in the state for host income, with $18.2 million (up from $12.5 million in 2018). 

Kansas City spokesman Chris Hernandez said it was one of the city's legislative priorities to seek a change in state law that would allow the city to collect a tax on home-sharing rentals. 

ARTS

The proposed budget:

Eliminates the Office of Creative and Cultural Services.

  • Established in 2015 as an outgrowth of former Mayor Sly James's Task Force for the Arts, the Office of Creative and Cultural Services administers the Neighborhood and Tourism Development program, which awards grants to nonprofits, and oversees micro-loans for artists. It helped coordinate Open Spaces, the two-month arts festival from August to October 2018.
  • Funding for this program has grown from $198,512 in 2015 to $538,532 this year. The proposed budget would cut two full-time positions and move one staffer to Neighborhoods and Housing, for an estimated savings to the city of $539,000.

Cuts the Kansas City Film Office budget by $175,000.

  • The Office of Creative and Cultural Services also works with the Kansas City Film Office, which was established in 2014.
  • Currently the film office receives $175,000 in city funding.
  • The cut would defund the city's film development program, created in 2016, which provides incentives to film and television projects credited with luring productions such as "American Ninja Warrior" and "Queer Eye." 

Reduces funding for attractions at 18th and Vine.

  • For the past few years, the city has boosted funding for the American Jazz Museum up to $1,025,000 as the organization struggled with finances.
  • The proposed budget includes $850,000 to support the museum's operations.
  • With new leadership and a new board in place, this proposed budget might mark a return to the city's previous funding levels, such as $500,000 in fiscal year 2018.

Cuts ArtsTech's program for at-risk youth by $90,000.

  • ArtsTech partners with Kansas City No Violence Alliance (KC NoVa) and other organizations to offer arts programming, conflict resolution and career readiness for urban teens including the Teens in Transition program, which serves about 60 to 70 teens each summer.

The Film Commission, Visit KC and Office of Culture and Creative Services all receive funding from the convention and tourism tax, Hernandez told KCUR in an email.
Leaders of arts organizations decried the cuts.

"As evident by many recent successes, film production is a vital and growing component of our economy," Stephane Scupham, who heads up the office, told KCUR in an email. "We have experienced a tremendous amount of community support."

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Credit Netflix
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Netflix
The Netflix program 'Queer Eye' filmed two seasons in Kansas City.

The state of Missouri currently does not offer tax credits to draw filmmakers to the state, but some lawmakers are pushing to revive the film tax credit program.

ArtsTech Executive Director Dave Sullivan said the proposed cuts to his program would be "very devastating to our youth," adding that he's hopeful the city will reconsider since this is just the beginning of the budget process. 

Not all city-funded arts organizations face cuts. The Negro Leagues Baseball Museum is slated to receive an additional $50,000 to mark the 100th anniversary of the Negro Leagues, with celebrations that kicked off in February and continue through November.

Also, the city budget shifts $400,000 to the public art program from the GO Bond program.

ENTREPRENEURSHIP

Former Mayor Sly James was a vocal advocate of tech startups and entrepreneurship. Lucas’ proposed budget signals a shift in priorities, cutting:

  • $300,000 for the Keystone Innovation District, a planned startup accelerator located between the historic 18th and Vine district and the Crossroads.
  • $75,000 from KCSourceLink, which connects entrepreneurs to resources, funding and education, as well as complete research to bring entrepreneurial activity to Kansas City. The majority of KC SourceLink's revenue comes from federal grants and contributions from private businesses, in addition to city resources. KCSourceLink says it currently receives $25,000 from Kansas City to help secure federal funds; it is not clear why it has been targeted for an additional $50,000 cut.
  • $50,000 from LaunchKC, which pairs tech startups with corporations. As with KCSourceLink, most of LaunchKC's revenue comes from federal grants and contributions from private businesses, in addition to city resources.

Supporting small businesses is important to the city’s economy, KC SourceLink Marketing Director Sarah Mote said in an emailed statement to KCUR.
“Entrepreneurship is vital to the Kansas City economy and should be supported at all levels — by the local government, by universities, by corporations, by entrepreneurs,” Mote said.

LaunchKC did not respond to KCUR’s inquiry.

HEALTH

The budget includes increased spending for some public health initiatives, such as home health inspections and programs to address communicable diseases.

Funding allocated for safety net providers such as Truman Medical Centers, Samuel U. Rodgers Health Center, Swope Ridge Geriatric and Northland Healthcare Access totals $31.7 million.

But the budget proposes a reduction of $500,000 in funding to Children’s Mercy Hospital, which provides safety net care for children. It reduces Children’s Mercy’s allocation from $649,874 in the current fiscal year to $150,000 next year.

City leaders, including Lucas, say the cut was needed to help fund mental health initiatives, which will receive the reallocated funding in the new budget.

In a statement shortly after the budget was released, a spokesperson wrote that Children's Mercy was "completely blindsided by this cut ... which accounts for more than 75% of our funding from the city."

The hospital said city funds are "used to care for the most vulnerable children in Kansas City" with programs that explore health care inequities, provide exams for abused and foster children and provide home-based care for pregnant women affected by alcohol and drug abuse, among others.

Financial reports show the proposed reduction for Children's Mercy would be less of a financial squeeze than other providers who receive the city funding.

For year-long period ending June 30, 2018, Children’s Mercy revenues exceeded expenses by nearly $78 million, operating on a margin of 5.3%.

Lucas says Children’s Mercy, which received more than $21 million in community support and grants in fiscal year 2018, had a demonstrated ability to generate revenue that other city-funded providers didn’t.

Lisa Rodriguez is a reporter and the afternoon newscaster for KCUR 89.3. Follow her on Twitter at @larodrig.

Laura Spencer is an arts reporter at KCUR 89.3. You can follow her on Twitter at @lauraspencer.

Alex Smith is a health reporter for KCUR. You can reach him by email at alexs@kcur.org.

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