Voice For Liberty

Tag: Subsidy

  • Contrary to officials, Wichita has many incentive programs

    Contrary to officials, Wichita has many incentive programs

    Wichita government leaders complain that Wichita can’t compete in economic development with other cities and states because the budget for incentives is too small. But when making this argument, these officials don’t include all incentives that are available.

    The document Will Wichita Accelerate Competition for Primary Jobs? contains contradictory information about money available for economic development incentives in Wichita. The usual argument that officials make is represented by this quotation from the report: “Wichita and Sedgwick County compete conservatively with incentives. The City of Wichita and Sedgwick County have a total of $1.65 million in new uncommitted funds for cash incentives this year with any unused money going back to the general fund.”

    But the same report contains this: “The $4.5 million PEAK program incentive from the Kansas Department of Commerce was an important factor in keeping NetApp in Wichita. Locally we were able to provide $836,000 in incentives.”

    So with an incentives budget of $1.65 million, a Wichita company received $5.3 million in incentives. Some of that, like the PEAK incentive, is paid over a period of years. But that amount doesn’t begin to describe the benefits NetApp received.

    A sample of available incentive programs

    Kansas Department of Commerce logoA letter to NetApp from the Kansas Department of Commerce laid out the potential benefits from the state. As detailed in the letter, the programs with potential dollar amounts are: Promoting Employment Across Kansas (PEAK), up to $7,705,535; Kansas Industrial Training with PEAK, up to $160,800; sales tax savings of $6,880,000; personal property tax exemption, $11,913,682; and High Performance Incentive Program (HPIP), $8,500,000. The total of these is $35,160,017. Some of these benefits are paid over a period of years. The PEAK benefits are payable over seven years, according to the letter, so that’s about $1.1 million per year. These are potential benefits; the company may not actually qualify for and receive this entire amount. But it’s what the state offered.

    It’s true that some of these programs, strictly speaking, are not “cash incentives” of the type Wichita complains of lacking. But if a company is going to make purchases, and the state says you can skip paying sales tax on the purchases — well, that’s about as good as cash. $6,880,000 in the case of NetApp, according to the Kansas Department of Commerce.

    Local tax exemptions

    Besides sales tax exemptions, the city has other types of tax exemptions it regularly offers. These exemptions can have substantial value. In 2008 as Drury contemplated Broadview Hotel 2013-07-09 020purchasing the Broadview Hotel, the city allowed the hotel to escape paying much of the taxes that the rest of us have to pay. According to city information, Drury planned to spend $22,797,750 on the hotel. If we use this as the appraised value for the property when it is complete, the annual property taxes due for this property would be $22,797,750 times .25 times 126.323 divided by 1000, or $719,970. This calculation may be rough, but it gives us an idea of the annual operating subsidy being given to this hotel for the next ten years. Remember, city officials complain of an incentives budget of only $1.65 million per year.

    It's important for citizens to know incentivesWhen Boeing announced in 2012 that it was closing its Wichita operations, city leaders complained that Boeing was leaving Wichita even though it had received many incentives. From 1979 to 2007, Boeing received tax abatements through the industrial revenue bond process worth $658 million, according to a compilation provided by the City of Wichita. At the time, city officials said the average amount of bonds was $120 million per year. With Wichita commercial property tax rates at 3.008 percent ($30.08 per $1,000 of appraised value), according to GWEDC, that’s a tax savings of around $3.6 million per year. To Boeing, that’s as good as receiving cash year after year. Remember, city officials say the incentives budget is $1.65 million per year.

    Tax increment financing

    In 2013 Wichita approved a package benefiting Exchange Place in downtown. Here’s what the city council agenda packet gives as the sources of financing for this project.

    HUD Loan Amount         $29,087,700
Private Equity            5,652,254
Tax Credit Equity        19,370,395
TIF Proceeds             12,500,000
Total Sources of Funds  $66,610,349

    TIF, or tax increment financing, diverts future increased tax revenues away from their normal uses and diverts them back to the project. In this case, the city will borrow $12,500,000 by selling bonds. It will give this money to the developer. Then, TIF proceeds will be used to repay these bonds.

    Some will argue that TIF isn’t really an incentive. The owners of the property will have to pay their property taxes, just like any other property owner. But for this project, the property taxes are used for the project’s own benefit instead of paying for city government. This project gets to spend $12.5 million of its property tax payments on itself, rather than funding the costs of Wichita city government.

    Tax credits

    Ambassador Hotel sign 2014-03-07Note that the sources of financing for the Exchange Place project includes “Tax Credit Equity.” Here’s an example of another downtown project, the Ambassador Hotel, and the incentive package the city prepared:

    • $3,325,000 in tax increment financing.
    • $4,245,000 in city funding under the capital improvement plan (CIP), to build parking for the hotel.
    • $3,800,000 in tax credits from the State of Kansas.
    • $3,500,000 in tax credits from the U.S. government.
    • $537,075 in sales tax exemptions on purchases during the construction and furnishing of the hotel.
    • $60,000 per year in community improvement district (CID) sales tax. The hotel charges an extra two cents per dollar sales tax, which the state returns to the hotel.
    • $127,499 per year (estimated) in rental revenue to the developers from a sweetheart lease deal.
    • Participation in Wichita’s facade improvement program, which provides special assessment financing that is repaid.

    All told, this project was slated to receive $15,407,075 in taxpayer funds to get started, with additional funds provided annually.

    The tax credits for this project are historic preservation tax credits. They have the same economic impact as a cash payment. The federal tax credits are available across the country, while the Kansas tax credits, of course, are a state program. In this case the hotel developers received an upfront payment of $3.8 million from the state in a form that’s as good as cash. Remember, city officials say the incentives budget is $1.65 million per year.

    STAR bonds

    There are more programs the city and state use to provide incentives. Last year, according to city documents, a STAR bonds district in northeast Wichita was approved to receive $31,570,785 from these bonds. The STAR bonds are paid off with sales tax revenue that would otherwise go to the state and overlapping jurisdictions. This is sales tax collected from the business’s customers, and doesn’t cost the business anything. Remember, city officials say the incentives budget is $1.65 million per year.

    This list is not complete. There are other programs and other beneficiaries of economic development subsidies. It’s important for citizens to know that contrary to the claims of officials, Wichita has many economic development incentive programs available, and some have substantial value to the recipients, with corresponding cost to the city and other jurisdictions.

  • Wichitans willing to fund basics

    Wichitans willing to fund basics

    Wichita City Hall SignIn Wichita, voters are willing to pay a higher sales tax for fundamentals like infrastructure and water supply, and less willing for business incentives, downtown development, and convention centers.

    In April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase.

    In a series of questions asking if Wichita voters would be willing to pay a higher sales tax to provide certain services, a pattern appeared: Voters are willing to pay for things that are fundamental in nature, and less willing to pay for others.

    As can be seen in the nearby chart, voters are willing to pay for infrastructure, and more willing to pay for maintenance of existing infrastructure than for new infrastructure. Voters are most willing to pay for securing a long-term water source.

    kansas-policy-institute-2014-04-willing-to-fund

    For business incentives, downtown development, and convention centers, Wichita voters express less willingness to pay higher sales tax to fund these items.

    For the first three items, the average was 68 percent of voters willing to pay a higher sales tax. For the last three, the average is 30 percent.

    Following is the complete text of the questions:

    Would you personally be willing to pay a higher sales tax in the city of Wichita to fund incentives to businesses expanding in Wichita or moving here from other states?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to fund maintenance work on existing infrastructure, such as sewers and roads?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to fund new infrastructure, such as new highways and passenger rail connections?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to continue developing downtown Wichita with apartments, businesses, and entertainment destinations?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to expand or renovate convention spaces, such as the Hyatt Hotel and Century II?

    Would you personally be willing to pay a higher sales tax in the city of Wichita to secure a long-term water source?

  • Few Wichitans support taxation for economic development subsidies

    Few Wichitans support taxation for economic development subsidies

    line-chart-01In Wichita, about one-third of voters polled support local governments using taxpayer money to provide subsidies to certain businesses for economic development.

    In April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase.

    The second question the survey asked was “In general, do you agree? Or disagree? With the idea of local governments using taxpayer money to provide subsidies to certain businesses for economic development?” Following are the results for everyone, and then divided by political party and political ideology.

    Overall, 55 percent disagreed with using taxpayer money to provide subsidies to certain businesses for economic development. 34 percent agreed.

    The results are fairly consistent across political party and ideology, although Republicans are somewhat more likely to agree with using taxpayer funds for economic development incentives, as are those who self-identify as political moderates.

    kansas-policy-institute-2014-04-q02-01

    kansas-policy-institute-2014-04-q02-02

    kansas-policy-institute-2014-04-q02-03

  • Wichita’s benchmark not applicable to overlapping jurisdictions, it seems

    Wichita’s benchmark not applicable to overlapping jurisdictions, it seems

    Wichita Economic DevelopmentThe City of Wichita insists on a certain level of return on investment for its economic development incentives, but doesn’t apply that criteria to overlapping jurisdictions.

    This week the Wichita City Council will consider an economic development incentive to a company. The council requires that incentive projects show a benefit-cost ratio of 1.3 to one or greater, meaning that the city expects to gain $1.30 or more for every dollar it invests in the incentive program.

    For the project the city will consider on May 6, that threshold is met for the city’s general and debt service funds, and also for Sedgwick County and the State of Kansas. But for USD 259, the Wichita public school district, the benefit-cost ratio is 1.23 to one. That’s below the criteria the city requires for itself, although the policy contains many exceptions.

    The program used to deliver this incentive is Economic Development Exemption (EDX) . It provides relief from property taxes based on a formula that considers job creation and capital investment. In this case, the company qualifies for a 93.25 percent real property tax exemption for up to ten years. Not 92 percent, and not 94 percent. Instead, the city has determined that precisely 93.25 percent is the correct amount of property tax exemption to be awarded. (Which reminds me of the saying that economists use a decimal point now and then to remind us they have a sense of humor.)

    Furthermore, the decision to award the tax exemption is made solely by the City of Wichita. The other taxing jurisdictions have no say in the matter and no ability to object. So while Wichita requires a benefit-cost ratio of 1.3 to one or better, it’s saddling the Wichita school district with a benefit-cost ratio of 1.23 to one.

    This is all the more meaningful when we consider that the Wichita school district is the largest participant in the incentive. The amount of tax revenue the school district is giving up — perhaps against its will — is almost as large as the city, county, and state put together. These are the amounts of foregone tax revenue for each jurisdiction, according to city documents.

    City $14,096
    State $651
    County $12,738
    USD 259 $24,810

    Perhaps it’s time to consider laws in Kansas that would allow counties, school districts, and the state to opt out of economic development incentive decisions made by cities.

  • Poll: Wichitans don’t want sales tax increase

    Poll: Wichitans don’t want sales tax increase

    kansas-policy-institute-logoFollowing is a press release from Kansas Policy Institute.

    Scientific Poll: Wichitans Don’t Want Sales Tax Increase

    They’re opposed to business incentives, want to pursue privatization over tax increases, and have concerns about how city hall has recently spent money.

    May 2, 2014 — Wichita — According to a newly released poll from Kansas Policy Institute, Wichitans may want more jobs and a secure water source but they certainly don’t support a sales tax increase as the means to get either. A scientific survey of 502 registered Wichita voters, conducted by SurveyUSA, shows strong opposition to a sales tax increase, as well as a possible explanation for their opposition. Full results, cross tabs, and methodology are available here.

    • 63 percent oppose a sales tax increase to provide incentives to businesses; only 28 percent support the idea
    • 64 percent oppose a sales tax increase to expand or renovate convention spaces such as the Hyatt Hotel and Century II; only 28 percent support the idea
    • 78 percent would be willing to pay a higher sales tax to secure a long-term water source and build new infrastructure but 65 percent believe the City should fund those projects through privatization rather than raise taxes.

    “Government typically claims that citizen support for certain projects means they are also supportive of higher taxes, but that’s often because citizens are presented with false choices,” said Dave Trabert, president of Kansas Policy Institute. “That’s exactly what the City of Wichita did with their ACT ICT community meetings. Wichita officials were simply looking for justification to do what they wanted to do — raise taxes.”

    Trabert believes the survey provides insight on citizens’ opposition to tax increases. “Only 28 percent of Wichitans believe city officials have efficiently used taxpayer money. 78 percent believe the City should adjust spending and be more efficient to fund new infrastructure and secure a long-term water source. City officials would understand that if they had an honest dialogue with citizens about all of the options, instead of just pushing a tax increase.”

    Kansas Policy Institute is planning a series of public forums over the coming months to examine multiple options for long-term water solutions, economic development and infrastructure. National experts on privatization and other options will be brought in, as well as government officials who have successfully used privatization to provide services. The effectiveness of taxpayer subsidies will also be explored. Local elected officials and other civic leaders will be invited to participate.

  • End the wind production tax credit

    wind-power-turbine-closeupU.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, and U.S. Senator Lamar Alexander in 2012 contributed the following article on the harm of the wind power production tax credit (PTC). The NorthBridge Group report referenced in the article is available at Negative electricity prices and the production tax credit. While the PTC is a federal issue, the Kansas Legislature could do taxpayers in Kansas and across the country a favor by ending the mandate to produce more of this taxpayer-subsidized power.

    Puff, the Magic Drag on the Economy
    Time to let the pernicious production tax credit for wind power blow away

    By Lamar Alexander And Mike Pompeo

    As Congress works to reduce spending and avert a debt crisis, lawmakers will have to decide which government projects are truly national priorities, and which are wasteful. A prime example of the latter is the production tax credit for wind power. It is set to expire on Dec. 31 — but may be extended yet again, for the seventh time.

    This special provision in the tax code was first enacted in 1992 as a temporary subsidy to enable a struggling industry to become competitive. Today the provision provides a credit against taxes of $22 per megawatt hour of wind energy generated.

    From 2009 to 2013, federal revenues lost to wind-power developers are estimated to be $14 billion — $6 billion from the production tax credit, plus $8 billion courtesy of an alternative-energy subsidy in the stimulus package — according to the Joint Committee on Taxation and the Treasury Department. If Congress were to extend the production tax credit, it would mean an additional $12 billion cost to taxpayers over the next 10 years.

    There are many reasons to let this giveaway expire, including wind energy’s inherent unreliability and its inability to stand on its own two feet after 20 years. But one of the most compelling reasons is provided in a study released Sept. 14 by the NorthBridge Group, an energy consultancy. The study discusses a government-created economic distortion called “negative pricing.”

    This is how it works. Coal- and nuclear-fired plants provide a reliable supply of electricity when the demand is high, as on a hot summer day. They generate at lower levels when the demand is low, such as at night.

    But wind producers collect a tax credit for every kilowatt hour they generate, whether utilities need the electricity or not. If the wind is blowing, they keep cranking the windmills.

    Why? The NorthBridge Group’s report (“Negative Electricity Prices and the Production Tax Credit”) finds that government largess is so great that wind producers can actually pay the electrical grid to take their power when demand is low and still turn a profit by collecting the credit — and they are increasingly doing so. The wind pretax subsidy is actually higher than the average price for electricity in many of the wholesale markets tracked by the Energy Information Administration.

    This practice drives the price of electricity down in the short run. Wind-energy supporters say that’s a good thing. But it is hazardous to the economy’s health in the long run.

    Temporarily lower energy prices driven by wind-power’s negative pricing will cripple clean-coal and nuclear-power companies. But running coal and nuclear out of business is not good for the U.S. economy. There is no way a country like this one — which uses 20% to 25% of all the electricity in the world — can operate with generators that turn only when the wind blows.

    The Obama administration and other advocates of wind power argue that the subsidy provided by the tax credit allows the wind industry to sustain American jobs. But they are jobs that exist only because of the subsidy. Keeping a weak technology alive that can’t make it on its own won’t create nearly as many jobs as the private sector could create if it had the kind of low-cost, reliable, clean electricity that wind power simply can’t generate.

    While the cost of renewable energy has declined over the years, it is still far more expensive than conventional sources. And even the administration’s secretary of energy, Steven Chu, calls wind “a mature technology,” which should mean it is sufficiently advanced to compete in a free market without government subsidies. If wind power cannot compete on its own after 20 years without costly special privileges, it never will.

  • Renewables portfolio standard bad for Kansas economy, people

    Renewables portfolio standard bad for Kansas economy, people

    Kansas wind turbinesA law that forces Kansans to buy expensive electricity is not good for the state and its people.

    A report submitted to the Kansas House Standing Committee on Energy and Environment in 2013 claims the Kansas economy benefits from the state’s Renewables Portfolio Standard, but an economist presented testimony rebutting the key points in the report.

    RPS is a law that requires the state’s electricity utilities to generate or purchase a certain portion of their electricity from renewable sources, which in Kansas is almost all wind. An argument in favor of wind energy requirementy from the Polsinelli Shugart law firm is at The Economic Benefits of Kansas Wind Energy.

    Michael Head, a Research Economist at Beacon Hill Institute presented a paper that examined each of Polsinell’s key findings. The paper may be read at The Economic Impact of the Kansas Renewable Portfolio Standard and Review of “The Economic Benefits of Kansas Wind Energy” or at the end of this article. An audio recording of Head speaking on this topic is nearby.

    [powerpress url=”http://wichitaliberty.org/audio/michael-head-kansas-rps-2013-02-14.mp3″]Michael Head, Beacon Hill Institute

    Here are the five key findings claimed to be economic benefits to the Kansas economy, and portions of Head’s responses.

    Key Finding #1: “New Kansas wind generation is cost-effective when compared to other sources of new intermittent or peaking electricity generation.”

    The first observation to make from this key finding is that if it were true the state RPS policy is not necessary. If wind power is truly cost-effective compared to other sources of energy, state mandates that wind power be used should be repealed, allowing wind power to compete with other technologies to provide low cost electricity in Kansas.

    This point is obvious. The actions of the wind power industry — insisting on mandates and subsidies — lets us know that they don’t believe their own claim.

    Key Finding #2: “Wind generation is an important part of a well-designed electricity generation portfolio, and provides a hedge against future cost volatility of fossil fuels.”

    Hedging has been, and will continue to be, a useful tool for utilities, and benefits the consumer. But the Kansas state government should not engage in this level of industrial policy by regulating just how much utilities can hedge, all for the sake of requiring wind power production. This is not a benefit in itself. Utilities will attempt to maximize profits by consistently analyzing the energy market and making the best decisions, often through long term purchasing agreements. … In short, hedging is a valuable tool when left to the discretion of the utility, but by utilizing a heavy-handed mandate, state lawmakers are actually constraining the ability of the utilities to make sound business decisions.

    Key Finding #3: “Wind generation has created a substantial number of jobs for Kansas citizens.”

    This key finding fails to take into consideration opportunity costs, a concept that Bastiat explained in his 1850 essay, and is a prime example of the reviewed paper only considering benefits. If a shopkeeper has a window broken, this creates work for a glazer to replace the window. However, this classic “broken window” fallacy mistakes breaking windows as job creation policy. At this point “The Economic Benefits of Kansas Wind Energy” is correct, wind generation does create jobs, just as a broken window creates jobs. But the report stops at this point and fails to provide a complete analysis of the effect of wind generation on total employment in Kansas.

    As Bastiat showed, a consideration must be made to the opportunity cost. How would the shopkeeper have spent his money if he did not need to replace his window? He could use the money on capital investment, further growing his business, hire another worker or make various other purchases. Regardless of what it was, they would have all brought him more benefit, than replacing his window. If not, he would have broken the window himself.

    This is one of the most important points: By forcing Kansans to pay for more expensive electricity, we lose the opportunity to use money elsewhere.

    Key Finding #4: “Wind generation has created significant positive impact for Kansas landowners and local economics.”

    This key finding makes a common mistake by assuming transfer payments are a benefit, a fallacy. The transfers of money via lease payments or property tax payments are not benefits. This transfer of money is a cost to one party and a benefit on the other, and can be illustrated easily.

    What if Kansas wind farms vastly overpaid for their land and lease payments were valued at $1 billion a year. This report would place the benefit of wind power leasing this land at $1 billion a year. But the project has not changed, where did these new benefits come from?

    In fact, there would not be any change to the net benefit of the project. Landowners would amass benefits equal to $1 billion minus the land value and utilities would amass costs equal to $1 billion minus the land value. These costs would in turn be passed along to rate payers in the form of higher utility costs. This illustrates the point that this policy is industrial policy. By dispersing the costs of a project to all citizens in the state, small, but powerful, groups with strong lobbying efforts are able to gather the rewards.

    Key Finding #5 “The Kansas Renewable Portfolio Standard is an important economic development tool for attracting new business to the state.”

    This key finding is related closely with the analysis of the job benefits that wind power purportedly conveys. Of course, legally requiring that utilities use specific sources of electricity will attract new business in that sector to the state. But we need to see the whole picture. This policy has costs, which will be borne by state residents and businesses via higher utility prices.

    In conclusion, Head asked the obvious question: “With all of these supposed benefits of wind power, why does it require a government mandate and taxpayer funding?”

  • What is the cost to visit the Wichita Art Museum?

    What is the cost to visit the Wichita Art Museum?

    wichita-art-museum-website-example-2014-04The normal adult admission to the Wichita Art Museum is $7.00, but that isn’t anywhere near the cost of each visit.

    According to most recent edition of Wichita’s Performance Measure Report, the cost per visitor for the Wichita Art Museum in 2012 was $48.62.

    That’s a little higher than the three previous years, but much lower than 2009, when the city reported a cost of $59.00 per visitor.

    Cost per visitor for Wichita attractions. Click for larger version.
    Cost per visitor for Wichita attractions. Click for larger version.
    As can be seen in the nearby table, other city cultural attractions registered costs per visitor that are much higher than their admission costs. The Mid America All Indian Center has a per-visitor cost of $11.37. For The Wichita Historical Museum it’s $36.59. Cowtown’s cost per visit is $15.94.

    So while each person who visits the art museum may or may not be willing to pay $48.62 for admission, someone is paying that.

    Visiting the Wichita Art Museum 540

  • In Kansas, tax giveaways for job creation found ineffective

    In Kansas, tax giveaways for job creation found ineffective

    Kansas-Watchdog-Logo-3-Mark-512From Kansas Watchdog.

    Study: State tax giveaways to big business don’t really bring jobs

    By Travis Perry, Kansas Watchdog

    BIG SUBSIDIES: Kansas has forked over millions in tax breaks since 2009, but new research says it has been ineffective at accomplishing its main goal: Creating new jobs.

    OSAWATOMIE, Kan. — By the time theMcQueeny Group signed up for tax breaks through Kansas’ primary economic development engine, vice president Rod Slump said the business was already looking to make a move.

    Tax breaks provided through Promoting Employment Across Kansas were just icing on the cake.

    Like numerous other firms who have relocated to Kansas to take advantage of PEAK benefits, Overland Park-based McQueeny Group has been handed thousands in tax breaks for creating new jobs — more than $160,000 since 2011, according to the Kansas Department of Commerce.

    The state contends McQueeny’s relocation from the Crossroads near downtown Kansas City, Mo., has brought 15 jobs to Kansas, though Slump said only two or three were new to the company after the move.

    PEAK allows an employer to retain 95 percent of the payroll tax for creating jobs that pay at or above the county median wage, with the goal of spurring new hiring. In the last two years alone, the program has granted more than $28 million in tax breaks, according to annual reports prepared by the state.

    But Slump told Kansas Watchdog all PEAK did was help make the relocation decision easier.

    “It’s hard for us to tie creation of jobs to that, as much as it was a business opportunity,” Slump said.

    New research suggests McQueeny Group is the rule, not the exception.

    “It looks like there’s no evidence that PEAK incentives work in the sense of job creation any way we cut this,” said Nathan Jensen, associate professor of political science at Washington University in St. Louis, who compared data between numerous companies to see if the tax breaks had any real-world effect. “Doing this over and over again, you kind of come up with the same result.”

    Prof. Nathan Jensen

    Jensen presented the findings in his working paper, “Evaluating Firms-Specific Location Incentives,” during a conference April 17 at Kansas City’s Ewing Marion Kauffman Foundation.

    Through statistical research, Jensen discovered that PEAK tax breaks had little to no effect on whether a company created new jobs.

    “They’re just incentivizing firms that are already going to expand and relocate,” Jensen said, noting that issues with incentives are hardly restricted to the Sunflower State. “Most of the data is that about two-thirds to three-fourths of firms that get an incentive, globally, were basically getting an incentive to do what they were going to do anyway.”

    Jensen compared companies of similar size and industry, examining the job creation figures from 2006 and onward; PEAK was signed into law in 2009. For each of the 72 PEAK firms examined, Jensen matched them with five comparable firms in Kansas that didn’t receive PEAK tax breaks.

    Then he did it again.

    Jensen said what he found was incredibly unsurprising.

    Not only is there no statistical link between PEAK benefits and job creation, Jensen also wrote the “PEAK program is disproportionately used to attract investment from across the (Missouri) border.”

    Despite noting that PEAK played a minimal role in Mcqueeny Group’s job creation, Slump disagreed it doesn’t help fuel new jobs, contending the tax breaks free up funds for additional hiring.

    While Jensen’s findings are damning enough, he said more information is still needed to see whether PEAK is worth the massive taxpayer support it has received since its inception. Information such as when a firm applied for PEAK benefits and when tax breaks were awarded, as well as tracking which firms were rejected from the program, would go a long way toward determining the value of PEAK, Jensen noted.

    More than anything, Jensen would just like to see a little transparency.

    “It’s the sort of thing I think should just be on a website,” he said.

    Currently, the Kansas Department of Commerce only makes PEAK data available through an open records request. Darla Price, PEAK program director, told Kansas Watchdog she couldn’t say why the information wasn’t posted online; decisions like that aren’t made at her level, she said.

    Dan Lara, deputy secretary for public affairs for the state commerce department, said the agency is considering allowing greater levels of transparency regarding the PEAK program, but has yet to make an actual decision.

    The Docking Institute of Public Affairs at Fort Hays State University all but confirmed the ineffectiveness of the program after surveying PEAK firms last year. Respondents admitted that 75 percent of new hires would have happened whether or not they received the tax breaks. However, the report justifies the massive program by simply stating that, hey, jobs are jobs.

    “(A)ll of the new employees hired by PEAK firms relocating to Kansas represent additional jobs for the State, regardless of whether they would have been hired without the PEAK Program,” the Docking report stated.

    Contact Travis Perry at travis@kansaswatchdog.org, or follow him on Twitter at @muckraker62. Like Watchdog.org? Click HERE to get breaking news alerts in your state!