by Noah Taborda, Kansas Reflector
Topeka — Kansas House members dissecting a financial incentive package to encourage manufacturers to pursue multi-billion-dollar investments in the state lamented the rushed nature of the legislation as they considered what guardrails were necessary to include.
Senate Bill 347 provides companies planning to invest at least $1 billion in Kansas over five years with several special incentives. The package is a response to a request front the Kelly administration to adopt a measure that would improve the state’s bid for an unnamed company expected to invest $4 billion in a production plant.
Amendments added in the Senate would reduce the state corporate income tax rate of 4% by 0.5% each year project funds are sent to these companies, make a tax credit non-refundable and establish a sunset of June 30, 2023. Paul Hughes, deputy secretary for the Kansas Department of Commerce, said the sunset was far too soon and asked for that date to be pushed back to 2027.
“A one-year sunset sends the wrong message to the business community,” Hughes told legislators Monday. “Kansas needs to be in the game for these megaprojects, especially during a time when the number of megaprojects seeking new locations is high. We must capitalize on this moment.”
The Senate approved the bill last week by a vote of 32 to 7, sending it to the House Commerce, Labor, and Economic Development Committee for consideration. On the first of three planned days to work through the bill, several members of the House panel expressed concerns with the speed the bill was moving despite apparent issues.
For example, Rep. Blaine Finch, R-Ottawa, found an issue with the wording of a provision providing 50% state property tax abatement for these companies.
“This says they shall be exempt for 50%,” Finch said. “If the local government only wants to give a 25% ad valorem property tax abatement, this bill says they can’t do that. So, you are preempting local authority, correct?”
“That is not the intent,” Hughes said.
“It probably needs to be revised then,” Finch said.
Finch was not the only legislator to find issues within the legislation. While some legislators agreed the sunset would dissuade companies, Rep. Sean Tarwater, a Stilwell Republican and chairman of the House commerce panel, said the sunset was a key to ensuring there were not more slip-ups that haven’t been exposed.
“If we can get one or two companies in with the sunset, we can then kind of moderate it and see how it’s going and make sure that we don’t bankrupt the state by trying to get people to move here or have to raise taxes,” Tarwater said.
Chamber of commerce representatives from across the state testified in support of the measure.
Rep. Rui Xu, D-Westwood, said he was excited about the potential to attract business but struggled with the potential unintended consequences.
“I generally believe this could be a transformative investment into Kansas and materially change how the state is viewed in the larger scheme of things, but that’s if we get it right,” Xu said. “There are lots of scenarios where that doesn’t happen.”
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