The Kansas House is now considering legislation that would extend a sales tax and revenue bond program until July 2028, permitting its use for revitalizing shopping malls. This measure, which has already passed the Senate with a significant majority, aims to bolster economic development initiatives beyond the original expiration date of July 2026. The bill also introduces new restrictions on the use of state funds and limits government powers related to property acquisition.
Proponents of the bill argue that extending the program could facilitate major infrastructure projects without placing undue financial burden on taxpayers. The proposal was introduced by Republican State Senator Stephen Owens, who emphasized the importance of minimizing risk to state finances. Under this initiative, Special Tax Allocation Revenue (STAR) bonds would be repaid through local and state sales taxes generated by the developments they support.
One notable application of STAR bonds has been in attracting professional sports teams. Last year, Kansas lawmakers approved using these bonds to cover up to 70% of the costs for two potential billion-dollar sports stadiums. This move came after Missouri voters rejected a sales tax increase aimed at funding similar projects. Although no official decisions have been made by the teams, time is running out as the current law is set to expire at the end of June.
Additionally, STAR bonds are slated for use in financing an amusement park themed around toys in Bonner Springs, Kansas. Since its inception in the 1990s, the program has established 17 STAR bond districts across 13 cities. However, concerns have arisen over the program's effectiveness. A 2021 audit revealed that only three out of 16 attractions met tourism-related goals set by the state Commerce Department. Moreover, some projects have faced financial difficulties, with the first-ever payment defaults occurring in Overland Park.
The extension of this economic development tool seeks to address these challenges while fostering new opportunities for growth. By adjusting the sunset date and introducing safeguards, lawmakers hope to strike a balance between supporting development and protecting public finances. As the bill moves forward, it will be closely watched to see if it can achieve its intended outcomes.
