Small business owners in Kansas criticized a new law that only gives mega companies huge subsidies, saying they would hire more staff and invest in growing their businesses if they were given similar tax breaks.
The Attracting Powerful Economic Expansion Act (APEX) provides businesses with more than $1 billion in government subsidies through measures such as tax and salary refunds. The Republican-led state legislature passed the bill, which will affect companies investing at least $1 billion in Kansas, after Democratic administration Laura Kelly pushed it to entice an undisclosed company that is considering a location. in the state to open.
“I’m skeptical that tax dollars that I pay, which the other members of the community pay, are given to one company,” Kansas-based 27Global founder and CEO Steve Roatch told Fox News. “I’m doubly skeptical if that price tag is on the order of $1 billion.”
“And I could be triple skeptical if the legislature or the Department of Commerce tries to pass that in a short time and without full transparency,” Roatch continued.
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Opponents criticized the secrecy surrounding the mysterious company, as lawmakers had to sign non-disclosure agreements to learn basic details, including its name. They also said that the APEX Act unfairly benefits large businesses and that such subsidy programs typically do not benefit a state’s economy.
“In addition to attracting major projects and expanding our workforce, [APEX] also has residual effects on small businesses by increasing revenue whether more people eat at restaurants, shop in local stores or patronize other businesses,” Kelly spokeswoman Lauren Fitzgerald told Fox News. “It’s a big win for Kansas. ”
Kelly’s office said the unnamed company would “bring 4,000 new jobs to Kansas and inject $4 billion in business investment into the Kansas economy.”
State Representative Ken Corbet, owner of Ravenwood Lodge in Topeka, told Fox News: “I’ve read all the benefits [the undisclosed company] got. I can’t think of anything else you could have asked for.”
‘I would put it right back in the company’
Small business owners told Fox News that they would invest additional profits in their businesses if they had access to the resources APEX provides to large companies. In addition to tax and salary refunds, the APEX Act also provides grants related to employee training.
“People in small businesses are like farmers,” said Corbet, a Republican who opposed the bill. “If we ever get a chance to make money, most people put it right back into the business, grow it, buy new equipment, try to expand, hire more people.”
“If small businesses had any of that package, the state would probably explode with small businesses,” he added.
Kansas Lt. gov. David Toland, who also serves as Secretary of Commerce and helped push through the APEX law, said the law will help the state’s general economy.
“The APEX Act gives us a realistic opportunity to win major economic development projects that will generate massive business investment and job creation for our state,” he said after Kelly signed the legislation. “We are excited about our opportunities with the current prospect that would be transformative for our state and provide long-lasting benefits for Kansas.”
Roatch told Fox News that he would use the increased income from tax breaks to hire more employees, launch internship programs and invest in new technologies.
“I would put it right back into the business,” says Rob Arnold, founder of We Got Your Back Apparel & Local Goods. “The same thing I’ve been doing since day one is just constantly reinvesting in myself and my business and, you know, my employees too because they’re coming along for the ride.”
Arnold told Fox News that his company serves the community by selling products from other local artisans.
Mike Tracy, owner of Omni Human Resource Management, said he would invest in more staff to better serve local markets if he had access to government grants such as APEX. He told Fox News that his top priority as a business owner is the “health, wellbeing and welfare of other small businesses,” including nonprofits that his business serves.
‘Choosing a whole series of winners and losers’
The small business owners believed that the state government, through APEX, was prioritizing the secretive business over local businesses.
“All we say in small businesses is that tax cuts are for the other guy,” Roatch told Fox News. “They never seem to come to us.”
“If [government officials] To create opportunities, they need to do so on a level playing field, something that can benefit all businesses in the state, not just a single large corporation,” Roatch added.
State Sen. Jeff Pittman, a Democrat who voted in favor of the bill, defended the subsidies as commonplace in Kansas.
“We have to pick a whole host of winners and losers,” he said. Pittman pointed to examples of farm subsidies and local bond programs.
The Kansas Department of Commerce offers a variety of business incentives, including programs focused on minority and women’s business development, rural opportunity zones, and industrial training.
Tracy told Fox News there was “no chance” that the state government would consider giving his company grants like those offered under APEX.
Kansas has the highest effective tax rates for established businesses, in part thanks to its subsidy programs, according to the Kansas Policy Institute.
“It bothers me because we haven’t really had many breaks,” Arnold said. “I don’t like to see it go to someone who probably doesn’t even need it.”
State Senator Caryn Tyson, a Republican who opposed the APEX bill, told Fox News, “We’re not taking care of ourselves. We’re creating competition for our existing businesses.”
The unemployment rate of 2.5% in Kansas is the lowest in state history, meaning companies are already competing for a limited talent pool, according to the Kansas Department of Labor. According to the U.S. Department of Labor, there were 90,000 job openings in Kansas in February 2022, compared to 74,000 the year before.
“We couldn’t find anyone to work,” Corbet told Fox News. “Labour services couldn’t help anyone, so we had to invest some money to automate as many things as possible to stay in business.”
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Pittman said workers in Kansas will benefit from working for the undisclosed company, as it will likely offer higher wages than existing job openings.
“We have a shortage of low-wage workers,” he said. “I’d rather have a job in an institution like the one we’re looking at now than maybe work minimum wage.”
‘Mass transfer of wealth from Kansas to Japan’
Roatch told Fox News that the subsidies provided through APEX amplify the profits of an international corporation at the expense of Kansas taxpayers. He called the program a “net negative for Kansas.”
“I’ve heard from representatives in Oklahoma telling me outright that” [APEX] was for Panasonic, and it was to make car batteries,” Senator Mark Steffen, a Republican who voted against the bill, told Fox News earlier.
The Japan Times reported that Panasonic plans to build a factory in Oklahoma or Kansas to produce batteries for: Teslas new factory in Texas. The Japanese company did not respond to a request for comment.
“The benefits of that grant and additional profit will go to shareholders, who are global, and the C-level executives who have higher bonuses,” Roatch said. “This is a massive transfer of wealth from Kansas to Japan.”
Corbet told Fox News, “There’s no such thing as government-funded. It’s all taxpayer-funded.”
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“So the gift that was given to… [the undisclosed company] didn’t come from the state of Kansas,” he added. “It belonged to all the people who live here.”
Tracy was more optimistic about the law.
“I’m going to take a position that says these are states making an investment that is no different than a private equity firm,” he told Fox News. “I hope that keeps the tax base low, keeps property taxes low, and does all the things you should if you have business businesses.”
Ethan Barton contributed to this report.