As mentioned in previous posts here and here the Kansas Legislature recently passed “Rural Opportunity Zone” legislation to encourage growth and development in areas of the state where the population has been decreasing.
The bill provides two possible incentives to individuals moving to a ROZ. For the years 2012 to 2016, individuals can receive a full credit for his or her Kansas state income tax if they meet certain conditions, including:
- Establish domicile within one of the rural opportunity zones on or after July 1, 2011, and have been domiciled outside of Kansas for at least five years before doing so, and
- Be domiciled for the entire taxable year in a ROZ
The new law also allows counties designated as ROZs to establish a student loan repayment program in conjunction with the state. County commissions may adopt a resolution obligating them (and the state, in equal shares) to pay 20% of a student’s loan each year for five years, up to a total maximum amount of $15,000. Thus, each year, an ROZ county and the state can contribute up to $1,500 each toward repayment of a student’s loan. To qualify, individuals must be domiciled in the participating ROZ county.
The following counties have been established as “rural opportunity zones” (“ROZs”):
Barber, Chautauqua, Cheyenne, Clark, Cloud, Comanche, Decatur, Edwards, Elk, Gove, Graham, Greeley, Greenwood, Hamilton, Harper, Hodgeman, Jewell, Kearny, Kingman, Kiowa, Lane, Lincoln, Logan, Marion, Mitchell, Morton, Ness, Norton, Osborne, Pawnee, Phillips, Pratt, Rawlins, Republic, Rooks, Rush, Russell, Scott, Sheridan, Sherman, Smith, Stafford, Stanton, Trego, Thomas, Wallace, Washington, Wichita, Wilson and Woodson
A recent article in the Kansas City Star questions the effectiveness of the income tax break in bringing new residents to the ROZs. The newspaper quotes several academics, including one from Brown University in Rhode Island:
“I have a hard time seeing this as being immediately persuasive in setting in motion a large population movement,” said Mike White, a demographer at Brown University.
While economic factors motivate people to move — and taxes are part of that — much of it has to do with job opportunities and the cultural and recreational amenities that a community has to offer.
“In the prime working ages, people not only emphasize issues like taxes … but also the availability of employment and the quality and growth prospects for that employment,” White said.
Some counties, like Kearny County, are jumping on board hoping to see benefits:
“We do feel we have an opportunity to grow, but that hinges on other things happening,” said Ralph Goodnight, the county’s director for community development.
Meshing the tax incentives and the student loan subsidy with jobs created by the [proposed expansion of a nearby] power plant could help a county where the population dropped 12 percent in the last decade, Goodnight said.
Goodnight praised the governor for using his incentive plan to spotlight the population decline.
Other counties, like Washington County, are taking a wait-and-see attitude:
Washington County Commissioner Gene Helms says it’s not fair to use general tax dollars to supplement student loans.
“I think they can pay for it themselves if they’re making a living on their own,” Helms said.
Christy L’Ecuyer, Washington County’s business coordinator, couldn’t say for sure what effect the program would have on the county.
Another approach, she said, might be to offer more incentives for middle-income housing. Washington County has a lot of jobs — its unemployment rate is 4.2 percent — but it doesn’t have enough rental and affordable housing, she said.
Potential workers often have too much money to qualify for low-income housing credits, she said, but can’t afford the higher-end housing that’s available.
“It’s kind of a Catch-22.”
For guidelines and more information about the ROZ program, visit the website of the Kansas Department of Commerce. The state agency produced the following map showing ROZ counties and which of those have signed up to participate in the student loan program.
Read the full KC Star article here.