A metropolitan regional agenda can avoid an economic zero-sum game

Kansas City, MO

Job poaching between states is a familiar game. Illinois raises its state tax and Wisconsin puts on the full court press to lure businesses north. North Dakota runs radio ads in Minnesota boasting of its lower costs of doing business. Kansas City regularly launches cross-border raids on its sister city  in Missouri.

But is it healthy? And isn’t there a better way?

No, and yes. “It’s a little bit of a zero sum game, Timothy Bartik of the W.E. Upjohn Institute told the New York Times, “because one part gains and the other part loses. And the gains are much more modest than the losses.” Bartik was commenting on the situation that Kansas City metro area finds itself as the AMC movie theater chain weighs a move to Kansas from Missouri. Decades of rapid growth in the Kansas City suburbs have positioned it as a key rival to Kansas City, Missouri’s, downtown.

In many respects, BRR is at the forefront of this dilemma, seeking to refocus the conversation away from this kind of between-government rivalry, and toward a broader metropolitan regional agenda. Check out our governance working group and background papers as a start.

The situation in Kansas City points to many of the negative effects of this kind of rivalry. As Don Hall, Jr., CEO of Hallmark, based in Kansas City, MO, told the Times, “Success as a regional city is not based on one side or the other, but so many of our mechanisms for competing are really aimed at each other.”  Hall is pushing more aggressively for a detente between the two metro governments.

In the case of Kansas City, which straddles two states, the cross-border “poaching expedition” as Kansas City’s mayor puts it, drains time and money that could be better spent on education and infrastructure. The latest battle is over AMC, which is seeking to move to a different office. Kansas has offered a package of incentives that includes a 10-year tax rebate of more than $40 million, the Times reports– an amount Missouri has difficulty matching. Governors of both Kansas and Missouri have chimed in and lobbied hard. Even though AMC has been a fixture in downtown Kansas City, MO, since 1920, the incentives are enticing, says its CEO.

Those incentives appear to matter to other businesses as well. Of the 53 companies that have received tax incentive to move to Kansas since 2009, 45 have been from Missouri. Just one company made the reverse trek.

New jobs are crucial to economic development, and as Brent Miles, president of the economic development council in Wandotte County, which includes Kansas City, KS, says “When you’re tax driven, that’s imporant. Now the State of Kansas gets the tax instead of the State of Missouri.”

But in the long run, as Bartik said, the gains are much more modest than the losses. A better way is to consider the metro region as a whole, as BRR researchers have found. Several publications by BRR researchers address this issue directly or indirectly. We encourage you to take a look around this website.

Here’s a sample:

Governing Cities in the Coming Decades, by Bill Barnes (in Public Administration Review): How will cities be governed in 2020? The answer will depend to a significant degree on reducing two “disconnects”: one between municipal government and its citizenry, and the other between municipal government and its region. Elected, managerial, and intellectual leaders need to strengthen their understanding, capacities, and skills regarding public engagement and regional engagement across jurisdictional boundaries. Enhanced performance of these functions will improve cities’ ability to address problems and seize opportunities in the decade ahead.

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