Rep. Jim Kelly, R-Independence, testified on behalf of the Rural Opportunity Zones program. He said it has been an “important recruiting tool” for his county, Montgomery County. (Jan. 26, 2021, photo by Sherman Smith/Kansas Reflector)
TOPEKA — Kansas legislators are considering separate efforts to extend and revamp a rural development tool that has not reversed population decline as intended.
The Rural Opportunity Zones program is currently offered to 77 counties in rural areas suffering from years or sometimes decades of population decline. Designated counties can offer income tax credits and student loan repayments for up to five years as a means to recruit full-time residents.
However, a 2020 study by the Kansas Department of Commerce showed 70 counties participating in the program continued to show population loss. Only two counties showed above 1% population growth.
In response to issues exposed in the study, a working group was formed to craft a bill expanding on the ROZ program. The bill is set to be introduced shortly, but legislators are reviewing a second bill that would extend the expiration of the current ROZ program should the new version sputter.
“We don’t want the ROZ program to sunset and then be in a position where we have a number of people still wanting to apply and no program to apply to,” said Rep. Jim Kelly, R-Independence. “For my county, Montgomery, this program has been a very important recruiting tool to draw new residents to our county to work and more importantly live, rather than across the Oklahoma border.”
The current iteration of the rural development program will expire at the end of June. The bill heard Monday by the House Committee on Financial institutions and Rural Development would extend the program and tax credit incentive through June 2023.
The ROZ program began in 50 counties in 2012, replacing other investment programs for rural Kansas, including the popular Main Street Program. To help attract new workers, the state provides up to $3,000 per year for five years. Participants must have lived out of state for a minimum of five years before moving to Kansas to qualify for the income tax waiver.
The program also offers student loan repayments of up to $15,000 over five years, provided by the county and state.
While last year’s study showed the program may not be achieving its underlying goal, counties and industries reported benefits in workforce retention and recruitment.
Teresa Mays, vice president of state legislative relations for the Kansas Hospital Association, said the ROZ program is a key complement to ongoing workforce recruitment efforts in the Kansas health care field.
“According to the Kansas Department of Health and Environment, over 80 Kansas counties have a designation as a primary care health professional shortage area,” Mays said in written testimony to the committee. “Accordingly, hospitals from all parts of the state continually report difficulty in recruiting and retaining physicians and other health care professionals.”
With legislators still wary of COVID-19 potentially shutting down the legislative session for a second consecutive year, supporters of the ROZ program are hopeful the bill heard Monday can serve as a stopgap should the rehabbed program not pass this session.
David Soffer, legislative policy director at the Kansas Department of Commerce, was among stakeholders to work on what the bill would entail. He said one issue encountered in the old program was counties not committing funds to the student loan program.
To address that, the minimum county match was lowered to $10,000, and the updated program would expand eligibility beyond associates and bachelor’s degrees to vocational and tech certificates.
The proposed expansion would also offer a second track for counties more focus on housing development.
“Rural communities across the state have remarkably different needs, opportunities and visions. Some want to simply manage the decline. Others are more ambitious and want to change their trajectory,” Soffer said. “For those communities that aspire to do more, we have developed a five-year approach that addresses the key drivers of community development: image, placemaking and housing.”
In year one, counties would work on their image to ensure they “put their best face forward” in recruitment efforts. In the second year, counties would implement small scale community improvement projects to improve the “look and feel” of the area.
Years three through five would be spent assessing current housing, mobilizing and planning, and constructing new buildings.
Trisha Purdon, executive director of the Montgomery County Action Council, said the program update would be essential to recruiting and retaining workforce for border counties like hers and Kelly’s. Montgomery County has had more than 125 people sign up to participate in the program since the county joined in 2015.
Purdon, who was part of the working group on ROZ, said the proposed changes would help cut a county waitlist for the program of longer than 60 people.
“Consistently, we hear from all of our area businesses that workforce recruitment is the No. 1 issue facing their business,” Purdon said. “Although we know that rural Kansas is an amazing place to live, it is harder for our employers to recruit highly qualified candidates to this region without additional incentives to compete with neighboring states and urban areas with a wider range of amenities than a rural community might enjoy.”
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