Merry Christmas, Kansas—or should I say Whos of Whoville?
We finally have a major professional sports team. To quote my little sister: “We get what we want, but one thing.” Don’t we always want one thing more? In this case, we all know it’s the Royals – but it doesn’t stop there. We need to have a serious discussion about the overuse of National STAR Bonds.
Yes, I’m feeling extra Grinch this year.
To be fair, STAR bonds have served Kansas well for nearly 30 years. The construction of Legends Speedway and Kansas Speedway is a good thing for Wyandotte County and Kansas City, Kansas, which were once food deserts. Other communities across the state, such as Dodge City, Hutchinson, Wichita and others, have benefited from STAR bonds by enhancing the cultural and recreational appeal of their communities.
However, the Grinch professor became convinced that STAR bonds were becoming a problem. This has been a blowout year for the old STAR Bond Credit Card – because we buy gifts now, but then we’ll pay for them for the next 20 years. All the celebrities will insist that they are not actually raising taxes with STAR bonds, but that is not the case. The state and its municipalities are giving up all the extra revenue that would have naturally compounded.
In the case of the Chiefs, by my count, the proposed stadium and entertainment district spans two counties and eight municipalities. The big money, though, will come from the state of Kansas, which has a sales tax rate of 6.5%, while my little corner of Douglas County has a sales tax rate of 1.25%. As a result, Kansas will repay the cost of the stadium project over the next 20 years with lower sales tax proceeds from what is already the fastest-growing region of the state.
The Whos may also point out that the bonds offered to the Chiefs, like all STAR bonds, are designed to increase sales tax revenue, so they would only capture that expansion. Professor Grinch would point out that inflation is nearly constant, which means sales tax yields will naturally increase anyway.
This is already This year is shaping up to be a blowout year for STAR Bonds, with projects in Wichita, Lawrence, Bonner Springs and elsewhere. At least three former STAR bond projects failed, including the Schlitterbahn water park, Heartland Park in Topeka and the Prairiefire Museum. It’s hard to see where this all ends, but when communities can hold the state accountable for new facilities, they and their developer partners won’t demand the cancellation of the STAR bond program.
The question that needs to be asked is whether projects like sports stadiums and amusement parks are something the state needs and whether all the celebrities in Kansas are willing to pay for them.
Professor Grinch may have a smaller heart, but he really wants someone to steal that STAR Bond credit card, cut it into a million pieces, and throw it in the trash.
Zach Mohr is an associate professor of public budgeting and finance at the University of Kansas, and even his children think he’s the Grinch.
