A new Kansas state audit shows taxpayers have paid a steep price for property tax exemptions. This is because these political choices just shift the burden of paying for government spending from selected winners to losers.
The Kansas Legislative Division of Post Audit estimates that property tax exemptions tied to Industrial Revenue Bonds reduced local government tax revenue collected by $1.1 billion from 2010 through 2024. This includes $436 million from school districts, $316 million from counties, $182 million from cities, and $151 million from hospitals, townships, and other local governments.
The real cost to taxpayers is higher because Kansas does not fully track the sales tax exemptions tied to these projects, nor does it account for the opportunity cost of those exemptions.
Three related problems stand out.
Government Cannot Pick Winners Well
Supporters say tax incentives bring jobs and investment. That may happen. But the real question is whether politicians can allocate money more effectively than people in the marketplace. Usually, they cannot.
Businesses risk their own money. Government officials risk taxpayers’ money. That changes the incentives. Politicians receive praise when they announce a new project. They hold press conferences and cut ribbons. The costs are spread across taxpayers for years, often with little public attention.
As I explained in ?“Subsidies Cost Kansans Even When Revenues Rise,” every special deal has an opportunity cost. Money used to benefit one company cannot also lower tax rates for every business, reduce property taxes for homeowners, or improve core services. Markets reward businesses that serve customers. Corporate welfare rewards businesses that win political approval.
Nobody Knows the Full Cost
The audit also shows how weak the state’s cost estimates have been.
Auditors reviewed 23 projects and found that some cost-benefit analyses failed to capture the actual property tax impact by enormous amounts. Estimates ranged from 94 percent too low to 6,065 percent too high.
State Sen. Joe Claeys called the process “compliance theater.” That description fits. A cost-benefit study should help policymakers make better decisions. When estimates miss reality by thousands of percent, the study becomes little more than paperwork used to justify a deal already favored by officials.
Oversight was also weak. Sedgwick County found at least 112 property tax exemptions that were never sent to the Board of Tax Appeals for approval as required by law. County officials said the problem may have continued for as long as 30 years. If governments cannot measure the costs or follow their own rules, taxpayers should question why they are handing out special deals at all.
Special Deals Grow Government
Every incentive requires applications, reviews, exemptions, reports, compliance checks, and audits. The system becomes more complicated while accountability becomes weaker.
Kansas has used corporate incentives for decades, yet the state still struggles with long-term growth. The ?2026 Kansas Green Book shows Kansas has ranked poorly in private-sector job growth, wage growth, economic growth, and domestic migration over the past quarter-century. Special favors have not fixed those problems.
Kansas Needs Broad Reform
Kansas does not need better corporate welfare. It needs a better economic policy.
Lawmakers should phase out Industrial Revenue Bond tax abatements and replace them with less spending and lower tax rates to help every business. This could also include simplifying regulations, speeding up permitting, and keeping state spending from growing faster than population growth plus inflation, as recommended by the ?Sustainable Budget Project.
These reforms would help companies already operating in Kansas, not just businesses threatening to move unless they receive a subsidy.
Equal Rules Produce Better Results
Milton Friedman often reminded us that people spend their own money more carefully than they spend someone else’s.
The audit proves his point.
Kansas taxpayers gave up at least $1.1 billion through a system with weak estimates, missing data, and poor oversight. Meanwhile, favored companies received benefits that ordinary businesses and homeowners did not.
Economic development should not depend on which company hires the best lobbyist or negotiates the largest tax break. The best incentive Kansas can offer is equal treatment: lower taxes, restrained spending, simple rules, and a government that protects opportunity instead of choosing winners.
That approach may produce fewer ribbon cuttings. It will produce more lasting prosperity.
