Last week, Kansas taxpayers learned about a questionable economic development deal that rewards Cargill with $1.6 million in funding for essentially reducing its workforce and then bringing it back to existing levels over a 24-month period. The state’s interim Commerce Secretary Bob North defended the deal, saying, “The purpose for the PEAK retention package was to keep the headquarters in Wichita rather than lose the project to another state.”
Let us first state we are glad Cargill is retaining its operations in Wichita. It is a valued employer important to the Kansas economy and has invested considerable resources in local community initiatives across the state, most notably the Kansas Food Bank.
Our concerns rest with the structure of the deal and the reliance of companies on economic development initiatives funded by taxpayers at the local and state level.
As was reported, the agency’s consultant advised: “The state would need to delay payment for the creation of 100 jobs to allow Cargill to drop from 800 to 700 employees over the course of two years and sidestep restrictions for how funds can be doled out from the Promoting Employment Across Kansas program.”
It is playing a shell game.
Upon learning of the deal’s details, Senate commerce committee members Sen. Molly Baumgarder, R-Louis-burg, Sen. Gene Suellentrop, R-Wichita, and Sen. Tom Holland, D-Baldwin City, rightly criticized its components. Unfortunately, they weren’t given the opportunity to do so as part of the legislative process. It isn’t that they should have the authority to approve every deal. That’s certainly part of the responsibility vested in the Department of Commerce. But this deal was written in a way that deceives the intent of economic development and job growth and makes further scrutiny of the process an immediate need.
We want the state to have the financial resources and financing tools to assist in the recruitment, expansion and retention of companies, but this manipulation isn’t how it should be done.
Baumgardner was right to call for an audit. Taxpayers should demand a review of the Department of Commerce’s economic development programs. How are resources being awarded? How successful have these investments been? Did they result in the promised jobs and growth outcomes? Have other companies been granted similar deals?
Greater transparency and accountability is needed. It’s an issue Gov. Jeff Colyer shouldn’t wait to address. Now is the time.
We recognize there aren’t easy answers. Corporations have succeeded in incorporating economic development dollars into their business plans and communities are threatened with the loss of these companies if they don’t produce the desired financing districts, cash, tax exemptions, bonds, and rebates.
Holland called it “corporate crack.” Cargill certainly isn’t the only user and Kansas isn’t the only victim. Cities and states across the country are seemingly forced to grant millions of dollars in incentives requests out of fear businesses will go somewhere else that’s offering those resources, taking jobs with them.
As a result, millions of dollars are awarded to help with corporate expansions while small- and mid-sized businesses are left to grow their operations with nothing but their own innovation and, hopefully, a banker or investor who believes in their business plan.
No one wants to see Kansas do anything but grow and prosper. But it’s time to examine whether our current ideas around economic development are truly producing the desired outcomes. The first step is an audit of the Department of Commerce and the incentives it has awarded. From there we can assess what has worked and, more likely, what hasn’t.
– Topeka Capital-Journal
