Harvey County Now
“Your scientists were so preoccupied with whether or not they could, they didn’t stop to think if they should.” – Ian Malcolm, “Jurassic Park”
Should the state spend $1.3 billion in public handouts to bring a secret factory to Kansas?
Pretty hard to give an informed “yes” on this one due to the glaring “secret” part.
Right now, the Kansas Department of Commerce is asking the legislature to pass a bill allocating $1.3 billion in various incentives, including reimbursing up to 10 percent of payroll costs, as well as providing various tax credits and exemptions.
The promised return is a high-end technology factory that provides 4,000 jobs averaging $50,000 in pay a year.
We don’t know what the company is or what it does. We don’t know where the company will go.
Obscuring both points makes sense to those who want to get this deal done in case Kansans won’t want the company or simply won’t care to fund it once they find out it’s in Johnson County.
What we do know is that those in favor continue to laud it as “transformative.”
The information on the project is hidden by various non-disclosure agreements signed by state employees and legislators.
Let’s remove the politics for a second. If Sam Brownback did this, every Democrat in Kansas would have lined up and said, “This is stupid.” Laura Kelly’s administration is drawing its share of GOP skeptics of the plan.
Instead, let’s talk about numbers. $1.3 billion is an astronomical sum that we mortal ants can’t wrap our heads around.
But we can do some division.
If our local city said we have to spend $1.3 million to bring in four jobs – a proportional analogy – would anyone in town call that a smart decision? We sure wouldn’t.
If they then said these expenditures are all on a super-secret company and you can’t know who, we’d yell bloody murder, as would most residents. And that’s for something in our backyard that we’re much more likely to benefit from.
We’d reason that we shouldn’t pay $320,000 in incentives for a $50,000 job. The public return is minuscule.
If this was how we did business at a local level, we’d give $1.3 million to the vast majority of our businesses for the four jobs they create. And quickly go broke.
“We shouldn’t focus on the jobs but the transformative effect the business would have,” those in favor have argued. OK. So it needs suppliers. Are the estimated amount of new suppliers already baked into the 4,000 permanent jobs figure?
Would those suppliers be in the state? Is the location of this super factory near, say, the Missouri border and most of the employees end up living in Missouri? Jobs averaging $50,000 a year do not mean $50,000 a year jobs. A company where an executive makes $1 million and 39 employees make $25,000 averages around $50,000 a year per job payroll.
How long does it take to get to 4,000 jobs?
There are enough questions to give us no way of understanding what “transformative” means or entails. We just have a request to have faith. In our eyes, from the state with its failed STAR Bond incentive system, that is a bridge too far. As a newspaper, we find it difficult to trust any numbers thrown out in such a scenario. The two people providing numbers of the benefits – the company or politicians in favor – have a direct incentive to make them look as rosy as possible.
With the incredibly sparse amount of information about this factory, we have a hard time seeing any return on it to regular Kansans or to Harvey County. Something tells us we’re not in the running down here. It’s not our local legislators pushing for the secret expenditures, for instance.
The entire issue highlights the damaging role that non-disclosure agreements play in public discourse. They’re becoming common place, even at our local level. Economic development is hard, but NDAs provide elected officials an excuse in some cases to not provide information. And when the public must have no idea what’s going on to get a factory built, perhaps the factory isn’t the best for the community or for the public.
Who knows? If we knew what the super-secret factory was, perhaps we’d support it. But we don’t. And it’s their problem they keep it secret, not ours.
We’ve always been loudly in favor of growth or jobs. We’re making the point that this represents an opportunity cost. We think we could simply do better by investing this money into local Kansas businesses. We think that $1.3 billion dedicated to growing small businesses in Kansas, by providing increased low-interest capital, incubators and training, could create more than 4,000 jobs and benefit much more of the state by supporting local companies.
This $1.3 billion will help some dude build another spaceship or a doomsday bunker or whatever the people who get these kinds of incentives are doing nowadays.
Editor’s note: This column was written by the Harvey County Now editorial board.