A pair of economic researchers on Monday praised legislation that would authorize a comprehensive review of programs that use state funds to support business developments.
John Hamman, a senior associate with Pew Charitable Trusts, and Donna Ginther, an economics professor at the University of Kansas, say the bill before the Senate Commerce Committee follows best practices and would arm lawmakers with information to evaluate programs and make changes.
Lawmakers have expressed concerns about the effectiveness of programs like STAR Bonds and Promoting Employment Across Kansas, as well as the lack of transparency about how the funds are used.
"A regular, comprehensive incentive evaluation process provides an opportunity for policymakers to get good information on both the costs and benefits of the economic development policies they adopt," Hamman said. "And our research shows that when policymakers have this information, they use it."
House Bill 2006 arrived in the Senate committee after the House passed it on a 122-0 vote. Under the terms of the bill, Legislative Post Audit would evaluate each program every three years, examining how programs are designed and the calculations used to determine the state's return on investment.
Additionally, the Commerce Department would establish a searchable online database for information on incentives that exceed $50,000. The database would disclose the principal officers for a development, the money involved, purpose and goals of a project, and qualification criteria, such as job creation or capital improvement.
Sen. Jeff Longbine, R-Emporia, asked Ginther if the database is a good idea.
“Do you think it puts us at a competitive disadvantage, knowing that our competitors will be evaluating that and modeling their incentive programs based on our past history with programs?" Longbine said.
Ginther said the knowledge could help stop the competition between states over who lands a business. Amazon's interest in locating a headquarters in New York City fell apart, she said, because of the lack of transparency in the deal.
Sunlight, she said, is the best disinfectant.
“You’re stewards of the state first, and understanding how that money is allocated and who that money is going to I think is very important," Ginther said.
Longbine turned the tables, reminding the professor she is in a business that competes for students.
“Do you think it would be appropriate if KU had a website that listed by every student what their tuition, what their fees, what their tuition waivers would be, what scholarships they received, what student employment jobs they had, what they were paid?" Longbine said. "Would that put KU at a competitive disadvantage?”
Ginther said the university already has such a program for graduate students, and the university uses it to advertise. She said she would support a database for undergrads, too.
"I'm not afraid of our competitors using that as a competitive advantage," Ginther said.
Sen. Molly Baumgardner, R-Louisburg, raised concerns about a clause in the bill that gives the Commerce secretary discretion to withhold information that could jeopardize a project.
In other departments, she said, similar clauses have allowed a secretary to hide information that could reflect poorly on the agency.
Ginther said there may be reasonable confidentiality concerns, but "You want to provide as much info as possible to policymakers."