TOPEKA — A bill before Kansas legislators Wednesday would extend and revamp a state program providing financial incentives to those moving to rural areas struggling with workforce retention.
The Rural Opportunity Zones program provides designated counties an opportunity to offer income tax credits and student loan repayments in an effort to reverse population decline. Previously, these zones were decided by population loss, but under House Bill 2341 any county with a population of less than 35,000 would qualify.
This would expand the program by 16 counties, bringing the total qualifying counties to 93. Estimates from the Kansas Department of Revenue indicate this would pull nearly $2 million from the State General Fund in 2022. It would also extend the program set to expire at the end of June until 2026.
However, a 2020 study indicated 30 counties did not commit any resources to the program and 80% of student loan recipients would have moved to the county regardless. While the study indicated the program has not reversed population decline as expected, supporters of the program believe a lack of incentive does not mean it has failed.
“We believe with this new approach, we could create a far more effective tool for rural communities, while affording communities multiple options in how they would like to utilize the resources provided to them,” said David Soffer, legislative policy director for the Kansas Department of Commerce.
The legislation is the result of six months spent examining the program by a working group in coordination with legislators, county commissioners and economic development experts. A bill introduced earlier this session sought to extend the deadline until 2023, but the measure before the House Committee on Financial Institutions and Rural Development would serve as a more permanent solution.
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 currently provides up to $15,000 over five years in student loan repayments. Participants must have lived out of state for a minimum of five years before moving to Kansas to qualify for the income tax waiver.
If the bill is passed, the ROZ program would then provide participants the choice of either student loan repayment or down payment assistance when purchasing a home in a ROZ county. It would also allow students who maintained their home address while attending college to return to their hometown and still qualify for the program.
Counties must commit $10,000 toward these sponsorships to be eligible.
Wendi Stark, research associate with the Kansas League of Municipalities, noted the benefits this would provide in employee retention.
“Several communities, ranging from WaKeeney to Beloit, have shared their experiences from using the ROZ program,” Stark said. The income tax waiver, student loan repayment, and employer-sponsored portions have been components of the current ROZ program that cities have found beneficial for recruitment and retention in their communities.”
In addition to expanding current programs, the bill would establish a second track focused on community building. The 5-year program would seek to address housing issues, one of the major drivers of rural migration.
In the first year, counties would undergo an intensive 12-month program ensuring a positive outward image of the community. This would entail rehabbing the online presence of the community to provide anyone Googling the area the image of an attractive location to live.
During the second year, counties would implement small-scale improvement projects to improve the physical look and feel of the community. Years three through five would be spent assessing current housing dilemmas, planning and constructing new residences.
Trisha Purdon, executive director of Montgomery County Action Council, praised the new track as an important step in recruiting highly sought-after employees in fields such as health care, education and manufacturing. Montgomery has been a part of the program for seven years, and as a border county, with nearby Oklahoma cities growing, they have often found themselves struggling to pay competitive rates for professionals to reside in Kansas, she said.
“The new down payment assistance program combined with the housing assessment and development program will begin to make rural Kansas communities finally become truly competitive when our area employers are recruiting new employees,” Purdon said.