Ad Astra jobs bill passes without child-care tax credit

March 16--TOPEKA -- The Ad Astra Rural Jobs Act, rewarding an income tax break to investors bringing new jobs to Kansas communities with not more than 60,000 residents, passed the House 97-22 Wednesday. It moves to the Senate.

House Majority Leader Don Hineman, R-Dighton, said an attempt Tuesday to amend a child-care tax credit into the bill could have threatened the outlook for the rural economic development bill when it advanced to the Senate.

Rep. Tim Hodge, D-North Newton, thinks his amendment "probably would have helped that bill," and he will look for another opportunity to restore the child-care tax credit that was repealed in 2012. "I don't want the clock to run out on this session," he said.

Ad Astra

The lead sponsor of House Bill 2168 is Rep. Troy Waymaster, R-Bunker Hill. It authorizes a 20 percent income tax credit for investors creating new jobs in rural areas, with a maximum cap for the new income tax break program of $20 million a year, beginning in fiscal year 2020.

Typically, said Rep. Erin Davis, R-Olathe, the only urban-area co-sponsor of Ad Astra, economic development incentives are given at the front end of a project, but Ad Astra awards investors after they've made the commitment.

"This is a great jobs bill," Davis said. It "incentivizes outside investors to come into the state of Kansas, take the risk on the front end along with the entrepreneur," she said, with the tax credits paid over five years on the back end.

The Kansas Department of Commerce would have to approve business plan applications for this program. Other states have rural economic development tax programs similar to Ad Astra, and Waymaster said that's how the idea arose.

Other co-sponsors are Reps. Kyle Hoffman, R-Coldwater; J.R. Claeys, R-Salina; and Susan Concannon, R-Beloit.

Rep. Shannon Francis, R-Liberal, previously a county commissioner in Seward County, said often the impediment to bringing in new business is having the dollars to provide the local infrastructure. Francis supported Ad Astra but said it "won't be the cure-all."

Child care

Hodge's amendment failed, 56-63. It needed 63 votes to pass.

Voting for it from this region were Reps. Steven Becker, R-Buhler; Patsy Terrell, D-Hutchinson; and Eber Phelps, D-Hays. Out sick was Rep. Jack Thimesch, R-Spivey; excused on legislative business and not voting was Rep. Joe Seiwert, R-Pretty Prairie. Rep. Don Schroeder, R-Hesston, was among four other legislators absent and not voting.

Hodge said his child-care tax credit would have restored what was repealed five years ago, providing for "25 percent of what you spend, you get back."

While the Ad Astra income tax credits could go to investors who may or may not live in Kansas, Hodge said, his tax credit would help Kansas families.

On Wednesday, as the House took final action on the basic Ad Astra legislation, Hodge, Becker, Terrell and Phelps voted for it. No one from this region voted against. Thimesch and Seiwert were among six lawmakers absent and not voting.

Venture capitalist

Rep. Boog Highberger, D-Lawrence, said he reluctantly voted against Ad Astra. He noted who spoke out for the bill at a Feb. 6 hearing before the House Commerce, Labor and Economic Development Committee -- and who didn't testify.

Agribusiness, the Western Kansas Rural Economic Development Alliance, Smoky Hill Development Corporation, Russell County Economic Development and CVB, and the Kansas Legislative Policy Group were proponents.

Also giving testimony for Ad Astra was Jeff Craver, with Advantage Capital and from the St. Louis area. An outside venture capitalist testified, but not the Kansas Department of Commerce, Highberger noted.

As a former member of the Lawrence City Commission, Highberger said, it's telling who speaks out for proposals.

Bill co-sponsor Rep. Davis said the Department of Commerce ultimately approves participants, and the income tax credit applies to Kansas income tax. The income tax credits cannot be sold, and "these have to be absolutely new jobs in the state of Kansas."

Rep. Tom Sloan, R-Lawrence, also voted against Ad Astra. He said he applauded the effort to attract businesses, but said the state should help existing businesses grow by encouraging the availability of high-speed internet, employee job training and health care.

Sloan doubted income tax credits would help "if four years of no income tax liabilities for many businesses has not resulted in businesses locating in rural Kansas," he said.

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