Following the enactment of a law that could result in their state turning over more than $1 billion in subsidies to an undisclosed company, Kansas lawmakers are speaking out on the unscrupulous practices considered “corporate welfare on steroids.”
After passing the Kansas House 80-41 and the Senate 31-9, Gov. Laura Kelly (D-Kan.) enacted the Attracting Powerful Economic Expansion (APEX) Act into law. As a result, opponents of the law argue their state could be faced with financial ruin as part of clandestine measures of picking winners and losers.
The APEX law was designed to offer subsidies in the form of reimbursements from the state for expenditures like employee education incentives, and salaries, along with sales and property taxes. However, in order for lawmakers to make an informed decision about the vote, they were required to sign a non-disclosure agreement (NDA) to learn which corporation this potential subsidy would be funding.
“When you’re dealing with taxpayer money, it’s all about transparency, which was clearly swept under the rug,” state Sen. Mark Steffen (R) told Fox Business. “Economic development is about level playing fields. It’s about fair taxation across the board as far as recruiting businesses. You don’t turn your wallet inside out. You don’t sell your future,” he added on the matter of subsidies while further noting the law was tantamount to, “corporate welfare on steroids.”
“The more complicated you can make a bill, the more you can shove something that doesn’t taste very good down somebody’s throat,” he added.
State Sen. Caryn Tyson (R) joined her colleague in disapproval, remarking, “Nobody knows the size of the bill because the tax credits and the tax breaks are based off of what is to be invested by that company in the state of Kansas.”
However, the opposition was not limited to Republicans. State Rep. John Carmichael (D), who did not sign the NDA, expressed his concern that they were risking “flushing $1 billion down the drain,” for a law that establishes a scenario where lawmakers, “can’t tell their constituents what they knew and why they voted the way they did.”
“It appears that the competition is between Oklahoma and Kansas,” Carmichael noted. “We were also told we needed to act before the Oklahoma legislature came into session because we can lure this business to Kansas before Oklahoma had a chance to outbid us.”
The Japan Times reported after the law was enacted in support of that claim, further suggesting that the arrangement was directly linked to Panasonic Corp.
“I have heard from representatives in Oklahoma that told me flat out that this was for Panasonic, and it was to make auto batteries,” Steffen said.
State Sen. Jeff Pittman (D) who voted in favor of APEX, said that the outcry was blown out of proportion and that this was standard procedure, “The secretary of commerce has been appointed by an elected governor to make certain decisions around economic development. Those involved can sign the NDA and find out more information so they can best represent the issues of their community.”
Though he expressed favorability claiming, “It is worth the investment to attract a business and a new industry to Kansas,” the Kansas Policy Institute estimates that it could cost the state $2 billion overall, with $1 billion coming from the State General Fund.
“The income tax on it is refundable, meaning that the company could pay back more than they paid in,” Tyson said. “That means the state of Kansas would be writing them a check. So we need to take a close look at this legislation. This is not something that you should try to pass quickly.”
Gov. Laura Kelly (D) expressed nothing but positivity about APEX when she enacted it, according to Fox 4.
“This positions Kansas to potentially land a once-in-a-generation opportunity that could transform our economy. This tool is about more than just one project. It makes us an economic powerhouse ready to compete on a national and global scale. That means thousands of new jobs, billions more business dollars injected into the economy, and more opportunities for Kansas families,” she said.
However, since Oklahoma Gov. Kevin Stitt (R) recently signed a similar incentive bill, the AP reported, Kansas lawmakers believe they’ve been summarily duped.
“We’re hearing out of Oklahoma that Panasonic never had any intention of coming to Kansas. That this is purely a ruse to extract a better offer from Oklahoma,” Steffen stated of the $700 million in state subsidies that Oklahoma is offering.
Ultimately, Tyson concluded, “This could break the state.”
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