Roots of the Border War

Here’s today’s history lesson, to be followed shortly by an exercise in dot-connecting:

May 30, 1854:  Congress approves the Kansas-Nebraska Act, effectively overturning the Missouri Compromise of 1820.

October 1855: Abolitionist John Brown arrives in Kansas.

Dec. 6, 1855: Thomas Barber, a free-stater, is shot to death near Lawrence, among
the first victims of skirmishes that will inspire the moniker “Bleeding Kansas.”

May 24, 1856: Brown’s forces use broadswords to butcher five pro-slavery settlers in Franklin County.

Sept. 23, 1861: Jayhawk James H. Lane leads a raid on Osceola, Missouri, which ends with the town aflame and nine residents executed.

Aug. 21, 1863: William Quantrill’s raid on Lawrence, Kansas, leaves 164 dead and a town in ashes.

Aug. 25, 1863: Gen. Thomas Ewing Jr., Union commander of the District of the Border, including Kansas and Western Missouri, issues Order No. 11, essentially hollowing out the rural populations in a four-county area, burning homes and crops not surrendered to Union forces, and sending refugees pouring into Kansas City and Independence. …

Ancient history, you say? Fast-for-ward to 2014: More than a century after open hostilities ended, t-shirts in the Kansas City area still proclaim “William Quantrill is my homeboy” and “Kansas: Keeping America Safe from Missouri Since 1854.”

The ill will generated more than 150 years ago still bubbles up. It’s just more … civilized. And occasionally, it gets in the way of bi-state collaboration on issues that affect an entire metropolitan area of 2.2 million people. Which is where we find ourselves—still—trying to resolve the Border War of economic incentives each state offers to attract new businesses.

“The reality is, a lot of it still lives on,” says Fred Conboy, executive director of the Freedom’s Frontier National Heritage Area in Lawrence. “Politics reared its ugly head back before the turn of the 20th century, and still does.”

And yet, notes Frank Lenk, director of research services for the Mid-America Regional Council, cross-border collaboration takes place constantly in the region—universities work with community colleges to set in-state tuition rates irrespective of residency, the Scout
traffic management system works on behalf of a regional work force, and in perhaps the most tangible sign of regional collaboration, the Bi-State Sales Tax in the 1990s yielded nearly half the $250 million cost of restoring Union Station. More recently the Google Fiber initiative began with the two urban municipalities collaborating to expand that project’s scope and reach.

“Clearly, local folks here share a lot,” said Lenk. “We cross the border all the time to go to work or to shop or for entertainment—there’s a natural connection. That doesn’t mean we don’t highly prize our own communities, but for the right issue, we’re definitely able to come together.”

It’s just that economic development, he said, is a thorny exception to the rule. “It’s one of the toughest issues, in large part because some key needs that local government has to address, infrastructure and public safety, always seem to exceed available revenues, so there’s always this competition for dollars in economic development.”

That constant drive to increase a city’s tax base—or a state’s—leads indirectly to where we are now.

The Roots of Conflict

History books don’t couch it this way, but the onset of the Missouri-Kansas Border War 160 years ago was largely about unfair economic advantages—the same dynamic that keeps the battle raging today.

The morality factor obscures what was even then, in essence, an economic argument: Free-state farmers in the newly formed Kansas Territory believed they would be at a competitive disadvantage if farms built by slave labor were allowed to flourish. Shortly after the Kansas-Nebraska act became law, the Sunflower State’s biggest issues had far less to do with the natives to the west than to the marauding Missourians from the east, bent on extending slavery’s reach.

In the run-up to the Civil War, the leadership in Kansas City was largely Southern; local unrest gained increasing froth as pioneering emigrants from Northern states surged into the American wilderness, bringing anti-slavery sentiment with them.

Fears of economic disadvantages among landowners were matched by fears that other leaders in KC expressed over the potential economic devastation that would be wrought by war itself. Historian Joe Klassen, in a speech prepared for delivery to a civic club in 1958, said that even before the war began, the prospect of armed conflict alone had inflicted well more than $100 million in losses from property depreciation in Missouri.

Then came the war. Additional millions were lost in property destroyed, lives lost and economic output erased. As the Civil War began to enter its final stretch, the outright hatred and distrust between Kansan and Missourian had fermented for a full decade since passage of the Kansas-Nebraska Act.

As Lenk and others noted, there’s been much cooperation between the two states since, but in some ways, old rivalries are still barriers to collaboration. And in some ways, the he said/she said dynamic still applies. Quantrill was a murderous brigand, says the Free-State purist—without acknowledging that the Lawrence massacre occurred nearly two full years after abolitionists executed those nine souls during that fiery raid on Osceola. Lawrence wasn’t just an outrage, it was an outrageous act inspired by revenge.

And ugly memories die hard: As recently as 2011, the Osceola Board of Aldermen passed a resolution asking that the University of Kansas stop using “Jayhawk” as the mascot for its athletic teams. Apparently believing that their guidance could go further, the aldermen implored Missouri residents to stop using capital letters in the spelling of KU or Kansas, because “neither is a proper name or a proper place.”

For the record, that vote came two months before the final MU-KU football game as fellow members of the Big XII conference. (Somewhat fittingly, the series was deadlocked at 55-55-9 going into that game, which Missouri won, 24-10.) More than two years separated from competition between their schools, fans of each still harbor plenty of animosity for the other.

A Long Dormancy

From 1865 to 1945, a lot was going on in the Kansas City area, but economic-development rivalries weren’t in the mix.

“Between the Civil War and the civil-rights movement,” Conboy said, “it was a very formative time for Kansas City in terms of the arts and the economy, and even during the Depression era, we saw the jazz era, where Kansas City was up there with New York and Los Angeles
as jazz capitals of the U.S.”

There wasn’t much in the way of econ-omic conflict across the Kansas City metro area, authorities today say, because, for the most part there wasn’t a metro area—until the blossoming of the suburbs after World War II, KC largely consisted of Kansas City, Mo., and Kansas City, Kan. Olathe, the county seat of Johnson County, wasn’t even established until 1857; the largest city in the county, Overland Park, didn’t exist until the 20th century, and didn’t even incorporate until a century after Abraham Lincoln was elected.

“If you look at urbanized area of the region, it was basically Kansas City, Mo., and Kansas City, Kan., and a few close-in suburbs,” says Lenk. “All the jobs were in the two Kansas Citys. The growth of the suburbs and the incomes there attracted first the retail, then ultimately the office and industrial, as well.”

That, say those who study the issues underlying current conflicts, set in play the events that would lead us where we are: We issued low-interest loans on the GI bill that led to demand for new housing, built interstate highways to connect those enclaves with Downtown—and one another—and turned Kansas City from a Downtown-centric jobs magnet into more of a jobs web. Today, as much traffic flows west on I-435 into Johnson County for the morning rush hour as flows north on I-35 from Johnson County into Downtown.

“That growth,” Lenk says, “has its own dynamic; growth begets more growth, especially as it related to housing values. New housing became an investment, and folks began to value it for more than its original purpose; they expected to sell it and make a profit. The recession may have reminded folks that values can go down as well as up, or not up as fast, and it’s now valued more for its original purpose, which is shelter, Nonetheless, that dynamic is still in play.”

Conflicts once resolved with a muzzle-loading rifle or broadsword have given way to what critics say are economic-development weapons, in the form of incentives like the Promoting Employment Across Kansas program, the Missouri Quality Jobs program, property-tax abatements and dozens of other state programs designed with a noble purpose in mind: Strengthening the state’s overall economy by luring new employers to a particular city, county or the state.

“If I put on my historian’s hat a bit, for the longest time, Johnson County didn’t even offer tax incentives,” said Lenk. “The first I remember is the Sprint campus (in the 1990s). Before that, cities competed on quality—the quality of the labor force, the quality of life, and they were justly proud of that.”

In that context, he said, an offer of incentives was a sign of weakness in a community, interpreted by business an indicator that conditions there weren’t sufficient to ensure success absent a subsidy.

“That’s changed in the last 10 to 15 years,” Lenk said. The current sets of incentives from the two states, he said, “almost made it so that corporations would be foolish not to ask for these things” even if it is a dangerous game that the states themselves set up.

Raising the Stakes

The incentive game, of course, has been played across America for decades. Missouri and Kansas today both have economic-development offices that spend millions trying to sell their attributes to executives who’ve had enough of less-than-friendly business climates in California and the Rust-Belt states. But like many instances of public policy driven by good intentions, programs in Missouri and Kansas were fraught with unintended consequences.

The programs weren’t primarily aimed at luring businesses just a few miles across a state line. But that has been the most visible impact from those policies, say those who are calling for an economic truce.

Among their numbers is Bill Hall of the Hall Family Foundation, who has calculated that the Kansas City region has foresworn $210 million in local tax revenues because of the incentive battle—money that isn’t available for infrastructure improvements or other programs that could help attract out-of-state businesses, and a shortfall that must be offset with higher property taxes on residents and businesses that either elect to stay put or don’t qualify for the incentives.

The concept of job creation has likewise proven illusory, critics say; Hall’s scoreboard had Kansas leading the cross-border job pull by about 3,200-2,800—just before CBIZ indicated recently that it might take its staff of 400 out of Lea-wood, into Missouri.

In any case, says Pat George, secretary of commerce in Kansas, any westward tilt in the playing field has little to do with incentives and much more to do with natural patterns of business growth.

“You hear comments that all these businesses are going to Johnson and Wyandotte counties; well, that’s where most of the economic development in the Kansas City area has happened the last five or six years,” George said.

He’s just as thrilled to see state programs bringing new companies to any part of the state, whether it’s Johnson County or far-western Thomas County, where he recently helped celebrate the arrival of a dairy-processing plant in Rexford, Kan.

But, since the state’s current economic engine happens to be in northeast Kansas, he says, “it’s natural that more incentives will flow that way, just like it used to in Sedgwick County, which Wichita was booming in general aviation. But we have to take a long view and look at this from a statewide perspective.”

Nonetheless, George says he’s happy to engage his Missouri counterparts in discussions to resolve the incentive battle. “We would love to work with our peers to the east on this, and we have on some different projects,” George said. “But our No. 1 loyalty is to the people of Kansas.”

Searching for Solutions

Two views of the Border War’s impact hold that what we’re seeing isn’t all bad.

The first is that, because Kansas and Missouri have highly competitive incentive programs, every city and county must sharpen its game if they’re to remain in the hunt for business attraction.

The other view is that, absent incentives that companies have already taken advantage of, there would have been a greater chance of losing border-hopping firms to other states. AMC Entertainment, for example, made the move from Downtown to Leawood, despite having been recently bought out by a Chinese company.

In what ways, this school of thought holds, would a move across the metro area have benefitted that new parent more than bringing AMC three hours of flying time closer to the entertainment mecca of the West Coast?

“That’s a great argument to throw into the mix when you’re trying to kill any potential truce,” said Missouri Sen. Ryan Silvey, who introduced a measure in the General Assembly this year to reach an accommodation with Kansas. “I haven’t seen any scenario where that’s the case with a company, and if there is, it certainly isn’t statistically significant.”

Companies that are playing the two states against one another, he said, are not making decision to jump the state line in Kansas City or move to Dallas; they’re moving in the first place because it fits the organization’s needs, and then making decisions on location based on the respective merits of site location.

After years of sniping at one another over PEAK or Missouri Quality Jobs, lawmakers in Missouri took the first step by advancing Silvey’s measure out of the Senate; it’s expected to clear the House as well, and would then be in front of Gov. Jay Nixon for his signature. The measure seeks an agreement that would prohibit use of the cross-border incentives in nine counties at the core of the metro area.

But, Silvey notes, one trigger in that measure—a reciprocal legislative response from Kansas—is redundant. “Kansas doesn’t need legislation,” he said. “We left the option for a legislative or executive order. They came to us and said we want you to give your governor the same flexibility ours has” to approve or deny incentives. In Missouri, he said, that’s not the case—if a company qualifies, the incentives are automatic.

Giving Nixon, a Democratic governor, that kind of clout “is a non-starter over here,” Silvey said. “We’re not going to let the governor pick and choose. We’ve tried hard to craft incentives to keep the politics out of it.”

George says he never believed Missouri could legislate a solution.

“I said three or four months ago that this wouldn’t fix anything, and Gov. Brownback was on record a year ago, as I was, that on the Kansas side, business is too dynamic to put in a box and try to legislate; we’d absolutely shoot ourselves in the foot and lose companies,” he said.

Kansas is holding out for some sort of Missouri-side structure that allows deals to be explored on a case-by-case basis. “We’ve suggested that they get some form of discretion for their incentives, like we have,” George said. “Then take each deal as it comes along. It’s not that hard to do; that’s how we look at every deal now.

“Let’s work together,” he said, and with a nod in Missouri’s direction, added: “They’re squabbling amongst themselves.”