KS, MO aim to avert wider border war in Chiefs, Royals fight

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As the Kansas Legislature passed a supercharged bonding plan to lure the Kansas City Chiefs and Royals last week, Kansas City Mayor Quinton Lucas summoned reporters to a spot along State Line Road to deliver a warning.

Kansas’ actions, Lucas said, restarted the economic incentive “border war” with Missouri. For years, the two states deployed tax incentives to draw businesses within the metro across state lines, burning up hundreds of millions in revenues with little economic benefit to the region.

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Beginning in 2019, Kansas and Missouri largely put a stop to the economic sniping with an agreement limiting the use of incentives to poach businesses within the metro. The deal had held – until now.

“I think it’s short-sighted,” Lucas said. “And I think the reinitiation of the border war between Kansas and Missouri long term will be bad for taxpayers in the Kansas City metro.”

But a week later, a consensus is emerging that Kansas and Missouri should contain the conflict to the future of the teams and not allow fighting to spread and derail the overall agreement.

In interviews and public comments, officials in both states have argued over whether the Kansas plan – centered on the possibility of issuing 30-year bonds to pay for up to 70% of the cost of new stadiums for one or both teams – violates the 2019 deal. But with few exceptions, they have consistently downplayed suggestions that the competition for the teams will lead to a new era of cross-state poaching.

Several leaders in both states appear eager to treat the Chiefs and Royals as an isolated instance of economic warfare. Others are sidestepping questions about whether the Kansas plan violates the agreement, a sign that some officials have little interest in setting off a broader conflict.

Missouri House Majority Leader Jonathan Patterson, a Lee’s Summit Republican and the presumptive next House speaker, said flatly that he does not believe Kansas’ actions will lead to a new incentives fight over businesses. He largely dismissed the question of whether Kansas broke the agreement.

“I think it’s irrelevant,” Patterson said. “They’re going to act and so I think we should follow up with action and not excuses or complaints.”

How Missouri perceives Kansas’ actions may prove crucial to extending the border war truce. While Kansas Democratic Gov. Laura Kelly issued an executive order to enter her state into the deal, Missouri lawmakers had to enact a law, which will expire in August 2025 unless the General Assembly passes legislation extending it.

Under the agreement, Kelly and Missouri Republican Gov. Mike Parson have limited the use of incentives for companies in Jackson, Clay, Platte and Cass counties in Missouri and Johnson, Wyandotte and Miami counties in Kansas.

Kansas limits its use of the PEAK (Promoting Employment Across Kansas) program, the Kansas Industrial Training and Retraining program, the Job Creation Fund, state loan funds and other state-administered discretionary incentive programs. Missouri limits use of the Missouri Works program, the BUILD (Building Use Incentives for Large-Scale Development) program and the new or expanded business facility tax credit, along with other state discretionary programs.

The Hall Family Foundation, a major supporter of ending the economic border war, previously published research estimating both states spent some $300 million luring companies back and forth across the state line with few new jobs created.

The metro was replete with examples of poaching in the years leading up to the truce. AMC Entertainment secured some $40 million in incentives to move its headquarters from Kansas City to Johnson County. Kansas authorized $3 million in tax breaks to move about 60 jobs at HCA Midwest Health four miles from Kansas City to Overland Park. ServiceMaster DSI relocated roughly 100 employees from Illinois and Kansas City-area offices to a new Shawnee headquarters – and got $1 million in incentives to do it.

Kansas and Missouri leaders eventually forged an agreement after the Hall Family Foundation and others “screamed and yelled at the two states to fix it because the states between them had wasted about a third of a billion dollars prior to 2019 paying companies to move back and forth across state line,” said Greg LeRoy, executive director of Good Jobs First, a Washington-based group that advocates for reforms of economic development incentives.

While agreements to limit poaching between states and local governments aren’t unheard of, they typically don’t last long, said Timothy Bartik, a senior economist at the W.E. Upjohn Institute for Employment Research in Michigan. He indicated the five years the Kansas and Missouri truce has been in place is on the longer side.

“In terms of economic development, if the incentive truce falls apart it’s likely to have some not just neutral effects, it’s likely to have negative effects on local economic development,” Bartik said.

Kelly reaffirms support for truce

When Missouri lawmakers passed the border war truce bill in 2019, the vote was nearly unanimous. Today, proponents still want the agreement to remain in place – even given the dispute over the Chiefs and Royals.

“When a company moves 600 feet across state line and gets tens of millions of dollars in incentives, it truly doesn’t make sense,” Missouri Sen. Mike Cierpiot, a Lee’s Summit Republican who sponsored the 2019 bill, said.

The Kansas plan to win over the Chiefs and Royals relies on issuing billions in Sales Tax and Revenue, or STAR, bonds to finance new stadiums. The bonds would then be paid back by future revenues from within the stadiums and nearby development, along with sports gambling and Kansas Lottery revenues. Kansas lawmakers easily approved the proposal, though extensive research shows stadiums aren’t major drivers of economic growth.

Whether the STAR bonds plan breaks the 2019 agreement is in dispute. STAR bonds aren’t explicitly mentioned in the 2019 agreement but would appear to count as a discretionary incentive program.

But the Kansas plan is worded to technically allow NFL and MLB teams from any adjacent state – such as the Denver Broncos – to apply, though it is clear to everyone in the Kansas Capitol that the bill was passed with the Chiefs and Royals in mind. And top lawmakers will have to sign off on any STAR bonds for either team – allowing Kansas officials to argue that even if such a plan violates the agreement, it hasn’t happened yet.

Kelly has taken the position that the new law isn’t a violation, even as she reaffirms her commitment to the deal.

“Governor Kelly supports modernizing our economic development tools in order to increase private investment in Kansas. The modifications to the STAR Bonds statute do not equate to incentives as outlined in the economic border war truce,” Kelly spokesperson Grace Hoge said in a statement. “It’s premature to speculate on what will result from this new legislation. The Governor continues to support the truce established in 2019.”

Cierpiot said the Kansas plan is at least a violation of the spirit of the Kansas-Missouri deal but questioned whether it violates the letter of the agreement, saying he was told it doesn’t. Regardless, he said keeping the deal in place is worthwhile even if “this thing didn’t hold up” amid the competition for the teams.

The 2019 Missouri law allows the state to leave the agreement if Kansas breaks it. The measure contains provisions suspending the state’s cooperation if the director of the Missouri Department of Economic Development determines Kansas has offered economic incentives in violation of the deal and top Missouri lawmakers unanimously affirm the finding.

At least publicly, Missouri officials show little interest in exploring that option.

The Missouri Department of Economic Development didn’t answer questions about whether Director Michelle Hataway had conducted or planned to conduct a review to determine whether Kansas violated the agreement. Instead, the agency provided a statement that praised the accomplishments of the Chiefs and Royals and affirmed Parson and its commitment to continuing to support the teams.

Parson’s office also didn’t answer questions about whether the governor believes Kansas violated the agreement. Parson spokesperson Johnathan Shiflett in a statement emphasized that the teams’ leases don’t expire until 2031 (though if one or both teams wants a new stadium ready by then, the development process will need to begin years in advance).

Parson plans to communicate with leadership from both teams, as well as state and local leaders, to work on a deal, Shiflett said, adding that the governor has meetings planned within the next couple of weeks. Missouri lawmakers have said a special session is possible, but would likely be held after the August primary election.

“Governor Parson has said Missouri will be competitive when it comes to keeping the Chiefs and Royals on the Missouri side of Kansas City. As in all things, we are focused on doing what is best for the State of Missouri and bringing economic opportunity to Missourians,” Shiflett said.

‘I didn’t sign anything’

For their part, Kansas officials appear unconcerned about the possibility the state violated – or could violate – the agreement.

Kansas Senate President Ty Masterson, an Andover Republican, and House Speaker Dan Hawkins, a Wichita Republican, both emphasized that the teams face a ticking clock when it comes to developing new stadiums. Few states have a STAR bonds program, giving Kansas a significant advantage, Hawkins said.

“To a large degree, they’re under a time crunch, right? I mean to acquire land, design a stadium like that,” Masterson said. “I say you snooze, you lose.”

Unlike in Missouri, Kansas lawmakers didn’t need to sign off on the border war truce. Asked about the agreement, Masterson said, “I didn’t sign anything.”

That’s the attitude that concerns Lucas, who fears a slippery slope in the deployment of incentives. Allowing the teams to slip by the truce opens the door to arguing that other developments also don’t count.

“Is the next big industrial business, is the next big factory, is the next big anything under the sun something that’s not contemplated by the truce?” Lucas said.

But one factor that made some Kansas officials more comfortable courting the Chiefs and Royals – and more confident the effort won’t lead to a renewed border war – is the failed Jackson County vote. In April, voters rejected a 40-year, ⅜-cent sales tax for stadiums that would have guaranteed the teams remain in the county.

The vote made the future of the teams a political matter, not just a question of economic development.

The STAR bonds package approved by the Kansas Legislature came after the Jackson County vote, which put those “assets in play,” said Greg Kindle, president of the Wyandotte Economic Development Council. Not bringing forward an option for the teams to at the very least remain in the region, he said, would be irresponsible.

The teams are important to the region, Kindle said, while adding that he recognizes that going back to the days of moving projects back and forth across the state line isn’t positive. Economic development coordinators realize there’s no real gain simply by having a company change its address.

“I’m aware of what Mayor Lucas said,” Kindle said, “but he’s just responding to the heat of the moment.”

The Star’s Jenna Barackman, Bill Lukitsch, Ilana Arougheti and Kacen Bayless contributed reporting.