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Kansas moves to offer $1B or more in breaks for big project

January 27, 2022 GMT

TOPEKA, Kan. (AP) — Kansas is moving quickly to offer $1 billion or more in tax breaks and other incentives in hopes of landing what officials promise is an investment of up to $4 billion in an undisclosed project by a still-unidentified company.

But supporters of a bill that cleared the Republican-controlled state Senate on Thursday sought to undercut criticism of such a big package of incentives by also including an across-the-board cut in the state’s corporate income tax in each year that incentives go to the company doing the project and its major suppliers.

The Senate’s 32-7 vote came after only 20 minutes of debate on the measure, which allows the Kansas Department of Commerce to provide the incentives. The measure had bipartisan support and even backing from Democrats who’ve often criticized the GOP for pushing tax breaks for big corporations. The only no votes came from conservative Republicans who derided it as “crony” capitalism.

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The measure goes next to the Republican-controlled House. Democratic Gov. Laura Kelly’s administration is pushing the legislation, arguing that Kansas has a rare opportunity to attract a facility that the Department of Commerce claims will employ 4,000 people and create more than 16,000 jobs during construction. The department’s authority to offer the incentives expires at the end of March 2023.

A handful of lawmakers know the identity of the company and some details about the project but those who acknowledged knowing after the vote said they had signed agreements barring them from making the information public.

“I’m not a real big subsidies guy,” said Senate President Ty Masterson, an Andover Republican, who knows some details and voted for the bill. “But projects that could be of this magnitude — something that could change the state, you know, for generations, is a little different than your typical subsidy.”

Masterson said the company is expected to decide where to put its new facility within a few weeks.

He and other supporters argued that the new project would generate economic activity and tax revenues to offset the incentives and pay for the corporate income tax cut. Masterson said the incentives are at least $1 billion, but some lawmakers suggested they could be $1.5 billion. The Department of Commerce has not offered an estimate.

The GOP conservatives who opposed the bill were not assuaged by the corporate income tax cuts.

“One of the amendments should be to retitle the bill ‘Crony Capitalism, Kick Existing Kansas Businesses in the Face Bill,’” Sen. Caryn Tyson, a Parker Republican, said, quoting a note to her from a small business owner.

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The incentives include an income tax credit worth up to 15% of the company’s annual investment in the project and a state reimbursement for up to 10% of its payroll.

Half of the value of any new headquarters or manufacturing property would also be exempt from local property taxes and the firm could keep up to 65% of the dollars normally withheld from its Kansas workers for income taxes for 10 years.

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Follow John Hanna on Twitter: https://twitter.com/apjdhanna