March 27, 2023

Keeping Media and Government Accountable.

Commerce can’t – or won’t – substantiate “jobs created” claim

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In late November of last year, the Kansas Department of Commerce announced that there had been $2 billion in new capital investment in 2020 and credited themselves for more than 8,100 jobs created.

“The arrival of COVID-19 threatened to undermine the significant progress my administration has made to rebuild Kansas’ economic development recruitment efforts,” Governor Kelly said in a release. “But with the assistance of Secretary David Toland and the dedicated team at the Department of Commerce, we have continued to bring in new projects or grow existing businesses. This significant milestone in investment illustrates our strong momentum, which will allow us to continue creating jobs and strengthening our state’s economic foundation.”

However, the Commerce cannot — or will not — provide documentation to substantiate their claims.

In early January the Sentinel sent in a series of open records requests asking for more detailed information, such as the dollar amount of subsidies the state provided, metrics for how “jobs saved” and “jobs created” are calculated, as well as the same information from 2019 for comparison.

Commerce provided a pdf document, which legitimately redacted the names of projects which had yet to close, and directed the Sentinel to the department’s transparency database to look up what sorts of incentives were provided.

However, the “transparency database” is anything but, and Commerce has still not complied with our Open Records request.

Attempts to look up company names by this reporter did not return any results, and often looking by county did not find the specific project listed in the document. Moreover, since the document did not list which incentives — such as STAR Bonds or Angel Investor Credits — the projects may have received, it would be very difficult to find in that fashion as well.

Moreover, on Jan. 11, 2021, the Sentinel specifically asked Commerce to provide: “any incentives the state provided to the employers in the previous request, or any action taken by the state for each ‘success,’ and if the FTE (Full Time Equivalent) listings are being counted as new jobs or are simply a listing of how many jobs an employer currently has. Please provide the time-frame for which any new jobs are expected to be created and the methodology used to determine ‘jobs saved.”

On Jan. 13, Commerce responded that “’New jobs’ are jobs the company has pledged to create as part of the announced project. ‘Retained jobs’ represents those jobs the company defines as jobs retained/saved as a result of the project. Additionally, they don’t necessarily reflect all the jobs the company has at the location.”

The problem is that this, again, was not responsive to the request, and after asking for clarification, the Sentinel received no further communications until sending in a further request on Feb. 1, asking for — again — the methodology used to determine jobs saved and any policy documents setting such a formula.

The response was that no such documents existed.

The lack of transparency is troubling, because — while $2 billion in new capital investment is good news — it’s unclear how much state money went into securing those investments, and it would appear that the state is simply taking an employer’s word for how many jobs are “created” or “saved.”

As an example, Old Dominion Freight Lines, in Bonner Springs does not show up in the transparency database with a name search or county search, but Commerce lists a total capital investment of $53 million, with 30 new FTE created and 280 jobs retained. But what incentives and what — or any — cost to the taxpayers for those jobs is unknown, as is whether 280 jobs were actually saved, since there is no metric for comparison.

In their release, Governor Laura Kelly and Lt. Gov. (and Secretary of Commerce) David Toland cite Amazon locating two fulfillment centers in the state, one in Kansas City and one in Park City.

However, welcome as that news is, it begs the question of whether Amazon and other logistics facilities would have opened without subsidies.  Those companies locate facilities where it is geographically strategic to do so.

That announcement also ignores the fact that in 2015 Amazon closed a fulfillment center in Coffeyville with the concomitant loss of 630 jobs.

New capital investment is always welcome, but when the Commerce Department won’t say how they justify their claims, it is impossible to know if handing out subsidies produces a net benefit to taxpayers – especially knowing that independent academic studies on some programs find no real benefit to taxpayers.

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