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Wed May 1, 2013
Kansas seeks turning point for rural communities
When the Homestead Act of 1862 made land in the Great Plains virtually free, people rushed in to settle rural Kansas. But 150 years later, the dust has truly settled. Between 2000 and 2010, more than half of Kansas counties declined in population — many by 10 percent or more.
To turn things around, the state has taken a cue from the past, offering financial incentives for settling in one of 50 designated counties, called Rural Opportunity Zones. Move to one of these counties from out of state, and you'll get a Kansas income tax waiver for five years. Or if you graduated college with student loans, the state will repay $15,000 of those — even if you live in Kansas already.
Since the Rural Opportunity Zone (ROZ) program started in July 2011, more than 800 people have applied, and 450 have been approved. And although some are questioning the use of state funds on the program — $1 million a year — supporters say it’s only a matter of time before the benefits are clear.
“In many areas in rural Kansas, the employment problem isn't always a matter of lack of jobs, but rather a lack of people to fill the necessary jobs,” said program director Chris Harris.
He said the program aims to attract young professionals — in fields such as health care and education — who will end up settling down in rural Kansas. Student loan benefits are portioned out over five years, he said, to get them to not only come there but to stay there.
“They'll lay down roots, they'll become part of the community,” Harris said.
But Marci Francisco, a state senator, isn't so sure the program actually does that.
“It's not very targeted in terms of who it helps,” she said. “It doesn't help people who are there to stay.”
She said the ROZ program rewards people coming in from out of state while ignoring those who have lived and worked here all along. And in a state that’s getting national attention for its efforts to cut its budget, she said, it doesn't make sense to start waiving income tax and repaying people's student loans.
“At the same time we were saying you can get a tax deduction, we were saying we don't have enough taxes in Kansas to pay for the arts, to support public broadcasting, to support expansion of Medicare or other ways we can help our rural hospitals,” Francisco said.
But Luke Mahin, co-director of economic development in Republic County, Kan., said the ROZ math works. The county covers half of student loan repayment, which works out to $1,500 a year for each ROZ recipient. Each year, it gets about half that back in property tax.
“That doesn't even count the sales tax. They buy products here, support local businesses, buy gas. That money's coming back into the county. If they had students, that money would go into the local school systems, providing more jobs,” Mahin said. “We'd definitely recoup that money less than 10 years for each of these people.”
Of course, that plan only works if recipients stay in rural Kansas. Program director Harris thinks they will. Nearly 80 percent of applicants have some sort of ties to rural Kansas. They know what they're signing up for.
That’s the case for Kendra Short, a dance instructor who grew up in Belleville, a town of 2,000 in Republic County.
“When I was growing up, my parents had to drive me an hour each way for dance lessons. And they did that 2-3 days a week,” she said.
When she left Belleville to attend college at the University of Kansas, she had no intentions of moving back. Now, married and in her mid-20s, Short sees her rural hometown differently.
“As we're thinking about starting a family — Belleville, there's no other place,” she said.
But Short and her husband Shannon weren't sure about the timing. The couple lives in Salina, a much bigger city about an hour away. Kendra Short started a dance studio in Belleville three years ago, and then the couple bought a fitness center there last year. That’s when they heard about the ROZ program.
The Shorts, who together have about $90,000 in student loans, are hoping their ROZ applications will be approved soon. They recently closed on property in Belleville and plan to start building a house this summer.
Meanwhile, business is booming at the fitness center. Membership has doubled since last year. And the dance studio has grown from 30 students to around 100. Short named her dance studio The Turning Pointe, in part, because she hopes it will be one. She knows living in a rural area is easier when activities are available close to home.
“I had always said that if we did end up back in this area that I was going to start something in Belleville so kids would have the opportunity and parents wouldn't have to drive that far,” she said.
It's perhaps with stories like this in mind that the state is looking to expand the Rural Opportunity Zone program. In early April, the Kansas Senate voted to add 23 counties to the program — many in southeast Kansas. The bill is still under consideration in the House. And while Kansas is the only state with a program like this one, Harris said, other states are taking note.
Still, despite the early buzz, it will be years before the state knows if ROZ will bring long-term growth to rural communities. Kansas may find that it takes more than a few dance studios and a few million dollars to bring about a real turning point.
This story originally aired as part of Business Beat, a weekly program about business and economics in mid-Missouri.