Regional Review: Pro-Business Environment Invites Economic Success in Plains States
Boasting low tax rates and aggressive recruitment programs, the Plains States point to major expansion projects as evidence of their economic health over the past year.
Dan Calabrese (August 2012)
Ralph Acs, vice president and general manager of Learjet, Bombardier Business Aircraft, commented in July that the company’s final assembly line in Wichita, Kansas, is ready and workers are eager to assemble their first L-85 aircraft there.
A common theme among Plains States officials in citing economic development success is a business-friendly economic environment. While North Dakota points to the state's budget surplus and fiscal stability, Kansas officials credit recent tax cuts and targeted recruitment efforts. South Dakota, meanwhile, points to its lack of a personal or corporate income tax as a major asset in its business recruitment efforts.
Tax & Other Incentives
The expansion trend in the Plains states was relatively diverse over the past 12 months, with no one industry or sector dominating the news.
In Kansas, state officials note that several expansion projects have boosted employment and show that the state's economy is on the upswing; they hope a series of new tax and incentive policies will help to accelerate growth all the more. Among these expansions is Bombardier LearJet's headquarters facility in Wichita, which will add between 400 and 600 workers and will make Wichita the new home of all product tests, including the L-85 business jet.
In addition, the AMC movie theater chain broke ground on a new complex in Leawood, and Cerner Corporation is working on a new office complex in Kansas City. Kansas cites a recent $1.1 million tax cut, which state officials predict will ultimately generate 23,000 new jobs, as well as an incentive program aimed at attracting professionals to rural western Kansas. Professionals who move from another state to one of 50 designated counties are exempt for five years from any state income tax, and can also get up to $15,000 of their student loans paid back by the state.
The French company Bell Brands provided the major boost to South Dakota's generally stable economy over the past year. A manufacturer of brands including Laughing Cow cheese wedges, the company is building a $120 million facility in the city of Brookings that is expected to employ a minimum of 400 people. Pat Costello, commissioner of the Governor's Office of Economic Development, says the state offered a property tax abatement and a tax increment financing deal to help attract the project - along with some work force incentives and a sales tax rebate.
A Stable Environment
Various corporate expansions have boosted employment in North Dakota. Among the companies expanding over the past year are Caterpillar (250 new jobs), Monsanto (20), Phoenix International (60), and Amazon (200). And Microsoft, while not adding new jobs over the past year, has just completed an 185,000-square-foot expansion of operations in North Dakota. North Dakota's Director of Economic Development and Finance Paul Lucy says he expects the company will be adding people shortly to fill out that space.
The widespread business expansion, according to Lucy, results from several factors: "Besides the high-level productivity that people get out of North Dakota, it also is the result of a financially stable state that has a significant billion-dollar-plus budget surplus and has reduced taxes both for individuals and corporations to the tune of over $1 billion over the last three legislative sessions, so our companies have confidence while they're doing their expansions that their tax liabilities are not going to go up."
Railroads Make Economic Contribution
The railroad industry has also made a very significant impact on economic activity in the Plains States. BNSF Railway Company announced plans to invest $202 million on maintenance and rail capacity improvement, including a second mile line track in the Grand Island, Nebraska, area. It also is investing in a replacement of BNSF's bridge over the Missouri River at Plattsmouth, Nebraska, as well as an expansion of its locomotive shop and car shop in Lincoln.
At the same time, the Union Pacific Railroad announced an investment of $1 billion in Nebraska to be expended over the next several years. The money will be spent on an expansion of its North Platte rail yard, new crew change buildings, and a bridge over the Elkhorn River.
More Good News
Nebraska has more good news. Other companies announcing significant expansions included Novozymes, which inaugurated the largest plant dedicated to biofuels in the United States - a $200 million facility in Blair, Nebraska, that will employ 500 and specialize in making enzymes to serve as a key technology component for existing and advanced biofuels markets.
In addition, the state announced the expansion of the Nebraska Innovation Campus, a public/private sustainable research campus that aims to capitalize on research by faculty at the University of Nebraska Lincoln to strengthen the state's economic growth potential. The expansion includes an $80 million investment in four new or renovated buildings. Going forward, the state sees information technology as a strong potential driver of growth, and has therefore created a $35 million venture fund for IT companies.