“If subsidies worked, Kansas City would look like Dubai on the Missouri River.”
That old joke among economic development reformers makes an incredibly important point: Places that have spent more on economic development subsidies aren’t any better off than places that have spent less, or that didn’t play the game at all. (Famous urbanist Richard Florida did the math to prove this, years ago.)
But for more than a decade, elected officials in Kansas and Missouri ignored the evidence in front of them and played a battle of back-and-forth corporate subsidies in the Kansas City area that eventually became known around the country as the “Kansas City Border War.”
In much of Kansas City, the state line between Kansas and Missouri is literally a road – State Line Road . This means that it’s very easy for companies to move operations from one state to the other without making any meaningful difference in their operations – or any meaningful difference to the local economy.
And they did, scooping up increasingly large subsidies from state and local governments on either side in the process. Research supported by the Kansas City-based Hall Family Foundation, created by the founders of Hallmark Cards, estimated that over time, the two states lost a combined $335 million in tax revenues “largely to shift commuting patterns.”
The supposed “winner” of the war? Kansas, with an overall net gain of 1,200 jobs. That’s equivalent to .04% of the state’s population.
By 2019, the futility of the Border War had gotten so obvious to the average Kansas Citian that politicians started to worry that they were getting more blame than credit from voters for subsidy deals. The Kansas City Star editorialized that “If there ever was a time to finally shut down, once and for all, the senseless, useless, ridiculously costly and wasteful economic border war between Kansas and Missouri, it is now.”
Critically, while the companies that got subsidies were happy with the back-and-forth, the broader business community could see the damage this corporate welfare was doing to the business environment. The Kansas City Chamber of Commerce ranked a Border War truce as one of its “highest legislative priorities.”
That’s when the governors of Missouri and Kansas signed a “truce” in the border war, limiting incentive usage in four Missouri counties and three Kansas counties in the Kansas City metro area.
“Sometimes common sense does prevail,” Missouri Governor Mike Parson said at an event celebrating the truce. “Because you don’t have to be a scientist to figure out this was a bad deal for both states.”
Of course, the truce isn’t perfect. “Grandfathered” companies that had a deal in the works before the truce are still moving through the process. And that old favorite American pastime of making economically disastrous deals to subsidize billionaire sports team owners is also rearing its head, as the Kansas City Chiefs started discussing a new stadium. “When I signed the Border War truce with Missouri, it didn’t include the Chiefs,” Kansas Gov. Laura Kelly said in 2022, which prompted the mayor of Kansas City, Missouri to say that losing the Chiefs to Kansas would “scuttle the entire truce.”
Of course, all the Chiefs may need to do is wait. The “Border War” truce was temporary, and expires in 2025.