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Even at $200,000 Per Job, Kansas Paid Below the Going Rate in Panasonic Factory Deal

Governor Laura Kelly chairs the meeting where she and legislative leaders agreed to give $829 million in tax breaks and other incentives to Panasonic Energy to build its electric vehicle battery plant in De Soto, Kansas. (Photo by Dylan Lysen, Kansas News Service)

 

Even at roughly $200,000 per job, analysts say the tax breaks and other incentives Kansas put on the table to bring Panasonic’s battery-making plant to De Soto fall short of the giveaways other states have made in recent years.

Still, the tax dollars devoted to bringing the $4 billion electric vehicle battery plant to Johnson County bust any records in Kansas for tempting a business to the state.

And few details have been made public about the $829 million incentive plan that was negotiated behind closed doors.

The factory will be the largest economic development plan in Kansas history. The company is promising 4,000 jobs subsidized at the rate of $200,000 per worker.

Additionally, the package to Panasonic appears to be the fourth largest in the country since 2018, according to a subsidy tracker from Good Jobs First, a group largely skeptical about government giveaways to businesses.

Greg LeRoy of Good Jobs First said Kansas would spend less than the national average for each new job created.

“There are certainly some deals that are more expensive,” LeRoy said. “In fact, the average cost is $658,000 per job, so more than three times higher.”

Governor Laura Kelly and other state officials touted the deal as a major victory, with Kansas beating out Oklahoma to land Panasonic. They said the plant would provide a large boost to the state’s economy.

But some economists don’t think “megadeal” incentive packages are a good buy.

Michael Farren, an economist at George Mason University, said he opposes states competing with each other to offer ever-increasing incentives. Instead, he said, states should work together to create fairer negotiations with businesses.

“They should cooperate so that they don’t get their arms twisted and that they can dictate the terms to these companies instead,” Farren said.

But as long as other states continue to offer similar or even bigger economic incentives, Kansas may need to join the race.

Earlier this year, Lt. Gov. and commerce secretary David Toland said Kansas needed to make the offer to be competitive for large business investments. Since 2017, other states had swooped in and beat out Kansas 11 times for companies looking to invest $1 billion or more.

The deal with Panasonic changes that, he said, and puts Kansas on the national stage to compete for growing industries.

“And we can say loudly and proudly Kansas is the best state for business investment,” Toland said during the Panasonic announcement.

That’s how states see the issue, Farren said, but it hurts the nation as a whole. He said Panasonic would have moved to either Kansas or Oklahoma, regardless of their incentive packages, because it wants to work with a Tesla factory in Texas.

If they didn’t offer incentives, he said one of them would have gotten the plant for free. And Farren said the funds in neither of the state’s proposed packages would be used on a corporation, but state services that people need.

“This,” Farren said, “is an absolute rat race.”

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Dylan Lysen reports on politics for the Kansas News Service. Follow him on Twitter @DylanLysen. The Kansas News Service is a collaboration of Kansas Public Radio, KCUR, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy. Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to ksnewsservice.org.

 

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