The Gadfly is a series of letters offering commentary on local issues and published in the Warrensburg Gazette.
I find some of the aspects of the City’s decision to provide a sales tax incentive for the new Lowe’s both confusing and disturbing. Apparently, the incentive is for improvements to Holden Street north of US-50, and will be financed by some sort of short term loan involving sales tax rebates. What’s confusing is that none of the articles I read said who was going to actually do the improvements to Holden Street and none said who is to loan money to whom. This is my best guess.
If Lowe’s is going to contract for and pay for the street improvements, that makes some sense from the city’s viewpoint. Lowe’s would not be subject to paying the government-mandated construction wage rates, which are tremendously high for heavy and highway construction work in the Kansas City area. The deal would also (I surmise) improve the street in areas that do not abut Lowe’s property and might not otherwise be improved.
I flat don’t understand what is meant by the “short term loan” I read about. If Lowe’s is putting up the money up front, I guess the city is borrowing from them and will repay the loan by giving Lowe’s back ½ cent of the 1 7/8 cent city sales tax for five years. The approximately $500,000 amount cited indicates that the city believes Lowe’s will generate about $20,000,000 in annual sales.
What is disturbing is the use of tax incentives to bring in businesses that compete with existing ones. When I first moved to Warrensburg in 1969, we had a choice of 4 lumber companies and 3 hardware stores (plus Louie’s and the lumber yards). We’re now down to one independent hardware store and one lumber yard, plus the chains that carry hardware. We have a much larger population now, but I wonder which existing business might go under as buyers move from the existing stores to Lowe’s (and if that loss has been accounted for in the tax revenue forecasts). A competitive marketplace does not guarantee the continuation of any business, but tax incentives to improve access to one business over another distort market forces and constitute a subsidy for the out of town business over the local ones.
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