Legislative Position 2016
PROJECT SALES TAX EXEMPTION
Rural counties need the ability to incent job creation and expansion so rural businesses are not incentivized to move to urban areas or out of state to take advantage of expansion incentives.
Compared to urban jobs, rural employment historically lags in technical skill and wages, and rural companies add jobs one or two at a time rather than undergo large expansions. In the past, the provisions of state-sponsored incentive programs for rural counties included exceptions for lower wage rates and provided incentives for retail business investment and job creation. Rural communities have limited opportunities to access current incentive programs and have lost the competitive edge necessary to incentivize industrial manufacturing, agriculture, healthcare and retail ventures in their counties.
Re-authorize the project sales tax exemption for all communities in Kansas with guidelines that previously existed within the Kansas Enterprise Zone program. This would allow business ventures, with the exception of retail ventures, to participate in the project sales tax exemption incentive. Retail businesses locating or expanding in cities with a population of 2,500 or less or unincorporated areas of counties with a population of 10,000 or less would qualify for the project sales tax exemption.
*As introduced is HB 2354
Because these sales tax collections are unrealized if the projects are not built, this is a revenue neutral proposal. The project sales tax exemption on construction materials will incent re-investment in downtown properties as well. Economic Development practitioners from all sizes of counties can provide multiple examples of how this incentive worked to create additional opportunities within their communities when it was available.
Lack of available, affordable, and quality housing for middle income families continues to be a hindrance to development and population growth in many western Kansas counties.
Since 2012, the MIH program has received $20.3 million in requests and has awarded more than $6.3 million with an average leverage factor of 8.2:1. Of the 24 counties receiving funds, 14 are part of the wKREDA region, which resulted in $4.5 million in awards, leveraging roughly $30 million of housing investment in the region. There is a demonstrated need for this program across the state and certainly within the wKREDA territory.
Moderate income housing is vital for economic development, yet it is difficult to achieve since most federal housing programs serve a lower income bracket, and market supply is limited due to high development costs, low appraisals, tight lending conditions and lack of investor interest. Industries and retail businesses looking to expand continue to state that the biggest obstacle to hiring is the lack of housing.
Continue to appropriate funding for housing programs, such as the Moderate Income Housing Program, as it has a proven track record of working in our communities. The addition of non-profit organizations, those with a focus on housing as eligible entities for applying for the MIH program funding, would simplify access to funding for many local and regional organizations across the state. Also, direct application for MIH funding would help support regional housing projects across multiple governing jurisdictions and make the process more efficient.
SUPPORT FOR NETWORK KANSAS
NetWork Kansas supports the economic needs of entrepreneurs throughout the wKREDA region. One of the mechanisms utilized by Network Kansas to support these efforts is the Kansas Entrepreneurship Tax Credit, which is utilized to raise money for program support and two funding partnerships: StartUp Kansas and the Entrepreneurship (E-) Community Partnership. StartUp Kansas and E-Communities provide matching loans for startups and expansions of existing businesses in rural communities across Kansas.
wKREDA Region Impact
- Provided more than $6.7 million in matching funds to 171 businesses, which has created and/or retained 1,300+ jobs
- 76% of the funded businesses are in communities of 5,000 or less with startups comprising 43% of the businesses funded
- Leveraged more than $81.5 million in additional capital
- 21 wKREDA communities have achieved E-Community standing, creating an additional $1.2 million in loan funds to support projects and leverage other business financing options
- Provided Economic Gardening assistance to 14 businesses, which created and/or retained 641 jobs
Most economic development opportunities in the wKREDA region stem from entrepreneurs willing to invest in rural Kansas. Start-up Kansas and E-Community funds provide the necessary financing, not available through traditional methods, to move entrepreneurial ventures from ideas to reality. These funds are made possible through the Entrepreneurship Tax Credit program.
Continue to support NetWork Kansas and its Kansas Entrepreneurship Tax Credit program because they are among the few effective economic development programs that works in rural Kansas.
New and Emerging Markets
The wKREDA organization supports further development of specialty crops that would add to the diversity of the agricultural industry by creating additional industry and jobs in the State of Kansas.
Property Tax Reliance
The government closest to the people is the most representative of the citizenry and is, therefore, the most responsive to the unique needs of the community. For this reason, the wKREDA supports state and federal policies that ensure the empowerment of local government.
Community Service Tax Credits
Since 2005, the Community Service Tax Credit Program has enabled wKREDA counties to raise over $20 million to finance necessary community development, health service, and crime prevention projects. These tax credits have built rural health clinics and provided much-needed equipment, developed community housing, wellness, and childcare care centers, enhanced arts and culture facilities, and contributed greatly to the viability and sustainability of western Kansas. For this reason, wKREDA supports the Community Service Tax Credit program as it is an essential tool for wKREDA and for Kansas.
WKREDA members represent a large geographic area of the State of Kansas. The long-standing commitment to quality State highway systems has served Kansas well and has allowed many rural communities to grow by connecting them efficiently with the surrounding areas. We are supportive of the sustenance of KDOT funding to ensure that Kansas continues to offer an outstanding transportation network. Without that transportation network, economic development efforts will be hampered significantly.
The education system in Kansas, both K-12 and higher education, must provide a labor force that is rapidly changing due to the skill sets required by our businesses and industry leaders in a global economy. We must continue to give our students the necessary tools to be competitive and productive in emerging markets.
Water is the driving force for many of the industries throughout Kansas, but more specifically in rural sections of the state. The current state of water policy leaves uncertainty for the future and is not allowing industries across the board to grow and prosper. Regulatory uncertainty stifles growth. The membership of wKREDA supports the implementation of a water policy that will allow our businesses to move forward in a more predictable environment.