Megaproject financial incentive package heads to Kansas governor with Senate backing

By: - February 9, 2022 6:30 pm

Sen. Jeff Pittman touted the APEX act as a necessary tool in the toolbox to put Kansas on a level playing field nationally and internationally. The Senate approved the measure, 31 to 9. (Sherman Smith/Kansas Reflector)

TOPEKA — After concurring with a House proposal, Kansas senators sent a bill providing an incentive package to a secret company expected to invest billions of dollars in the state to the governor for final approval.

Gov. Laura Kelly is expected to sign the Attracting Powerful Economic Expansion Act, or APEX, which looks to provide the state an advantage over the competition in Oklahoma for the site of a production plant into which the unnamed company plans to invest $4 billion. The bill provides a refundable tax credit of up to 15% to be paid back over 10 years, payroll reimbursement of up to 7.5% and a relocation incentive fund.

Estimates from nonpartisan legislative staff indicate the package would cost well over $1 billion, but an analysis by Wichita State University indicated the measure could eventually generate $2.5 billion annually in new economic activity.

“We need something. We need a tool in the toolbox that can attract new industry and grow our economy,” said Sen. Jeff Pittman, D-Leavenworth. “We’re looking at competing not only in the United States but globally with this bill.”

Despite some concern that the bill modified by the House did not reflect the desire of the Senate, lawmakers voted 31 to 9 to concur with their counterparts across the rotunda. The final iteration modifies the proposal from the governor and Senate to include additional guardrails and protections should issues arise.

The Department of Commerce will reportedly make a final offer to the mystery company later this week.

Some legislators took exception to comments made by House members that the proposal sent over from the Senate was a rushed “train wreck.”

“The house is challenging the Senate. They have put the gauntlet down, and we need to rise to their challenge,” said Sen. Caryn Tyson, R-Parker. “They said that we rushed, we’re not doing our homework and that this body is not diligent. We need to send them the message that we are very diligent.”

Sen. Virgil Peck, R-Havana, along with Tyson and a handful of other senators, backed a counterproposal to send the measure to a conference committee to ensure any discrepancies between the two chambers were ironed out. 

For example, the House reinstated the refundable tax credit, notably absent from the Senate version, and modified a corporate income tax reduction to cut the state rate of 4% by 0.5%, but only once for each project, rather than each year the company benefits from the incentives offered, as the Senate proposed. 

The House also inserted a $10 million fund to assist with employee relocation to Kansas and a claw back provision should the company leave 10 to 15 years after the deal.

“I’ve asked several senators to explain to me some things in the bill and I get different answers,” Peck said. “That tells me that we are not all fully aware of even what we’re going to be voting on, whether we’re going to be supporting or not supporting.”

Sen. Molly Baumgardner, R-Louisburg, argued many of the policy desires legislators had coming into the session would be in jeopardy due to this budgetary albatross. 

“We came to the session Jan. 10 with all kinds of optimistic plans,” Baumgardner said. “With the breaks that (the company) is receiving, we’re not going to be able this session to pass legislation that pulls down those food taxes, perhaps addresses property taxes to some extent and helps to pay down KPERS.”

With Oklahoma beginning its legislative session earlier this week and similar legislation in the pipeline, however, Sen. Robert Olson said the bill should be passed with haste. He said the thousands of jobs that would be created both at the production plant and the potential benefits to the area’s economy and state more than made up for these concerns.

The measure includes oversight by the State Finance Council before any agreement or any payout rates are amended.

“It’s going to be a boom for somewhere, and I hope it’s somewhere in Kansas, not somewhere else,” the Olathe Republican said. “We need to quit messing around. We need to act quickly, and we want to show him we want this business and these jobs in Kansas.”

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Noah Taborda
Noah Taborda

Noah Taborda started his journalism career in public radio at KBIA in Columbia, Missouri, covering local government and producing an episode of the podcast Show Me The State while earning his bachelor’s degree in radio broadcasting at the University of Missouri School of Journalism. Noah then made a short move to Kansas City, Missouri, to work at KCUR as an intern on the talk show Central Standard and then in the newsroom, reporting on daily news and feature stories.