STAR Bonds program extension divides Kansas lawmakers (Topeka Capital-Journal)

A financing program aimed at spurring economic development is causing a rift among Kansas Republican legislators.

While Republicans tend to stick together and overwhelm the other party with their two-thirds majority, this particular issue has not recognized any party lines.

STAR Bonds, short for Sales Tax and Revenue Bonds, allows municipalities to issue bonds to finance development of major commercial, entertainment and tourism projects. Bonds are paid off through sales tax revenue generated by the project.

The program expires June, but the Kansas Department of Commerce wants to extend it five more years. 

“While the program has had a lot of success, there are a lot of things we can do better,” said David Soffer, with the department, during a hearing last month. 

The bill would have reforms such as adding rural redevelopment projects and major business facilities as eligible for the bonds. There would be a visitor tracking program and a feasibility study to be conducted. A requirement to ensure public input and support is added. In general, there would be more oversight from the department.

This comes after the program has had mixed success. While many point to successful projects made possible by the bonds such as the Kansas Speedway, there have been others where projects aren’t performing as expected.

Some state lawmakers have expressed that same skepticism over extending the STAR Bonds, even believing it hurts the economy by giving recipients an unfair advantage.

“I know that Nebraska Furniture Mart was one of the companies to benefit from this. I’d like to know… how many furniture stores mom-and-pop went out of business in Kansas City or surrounding area as a result of that opening,” said Sen. Caryn Tyson, R-Parker.

Sen. Alicia Straub, R-Ellinwood, asked why there was a need for this program for big projects in the first place, as private investors could fund everything themselves like Main Street businesses.

“In a perfect world, we’d all agree, no states would offer incentives, everybody would compete on what’s great for the state,” answered Soffer. “The problem is, if we don’t offer incentives, 49 other states do.”

But fellow Republican colleagues defended the program. Sen. John Doll, R-Garden City, said a STAR Bond project in his home city in western Kansas was a huge boost.

This “will save or help keep the migration out because we have developed jobs and lifestyle to keep some of our people home that would have left for the bright lights, I guess,” he said.

Sen. Robert Olson, R-Olathe, who chairs the commerce committee, also thought the program was great despite its flaws.

“Over the last 20 years, just think of all the jobs and revenue that have been created from it,” he said, noting that NASCAR and Sporting KC came to Kansas City because of it.

Democrats mostly have been supportive of extending the STAR Bonds program, since it has the backing of Democratic Lt. Gov. David Toland, also the Secretary of Commerce. But that didn’t mean there were no concerns.

“The concept of it is very important to Wyandotte County,” said Sen. David Haley, D-Kansas City. “Looking at what benefits have been conferred… not everybody in Wyandotte County has benefited. The return of investments that we have put in, the jury is still very much out.”

Sen. Tom Holland, D-Baldwin City, sought to add in a provision Tuesday that all multi-sport athletic complexes could only have up to 35% of the project cost financed by STAR Bonds, instead of the current 50%. 

“We’ve got to be sure that the development that we’re doing is not just for the ultra-wealthy,” he said.

The proposed amendment failed but had some Republican support, a sign of how divisive the issue was.

Tyson, a Republican, tried and failed to add in a provision that would add more oversight, indicating her distrust in the program in general. The State Finance Council and Department of Revenue would have been able to supervise, too.

Sen. Molly Baumgardner, R-Louisburg, successfully amended the bill that no elected or appointed official can benefit directly or indirectly from a STAR Bond project, though some said they would specify later what “indirectly” meant.

She also sought and failed to add more regulations to the program, such as having the secretary of commerce be confirmed and vetted by the Senate in order to approve projects. Olson lambasted all the proposed amendments as unnecessary restrictions.

Baumgardner said restrictions are necessary, saying the bond program just isn’t successful, listing a number of projects she deemed failed.

“Before we even broaden the scope [of the program], we saw we had… right about 20% lack of success rate,” she said. 

The Kansas Senate ended up giving the green light to the program extension after hours-long debate late into Tuesday night. After a final vote, it will head to the House.

“We need the revenue in this state. We need the growth in this state. We need the investment in the state,” said Olson.

This article originally appeared on the Topeka Capital-Journal website, here.