| This article originally appeared in the Eagle on Monday, June 24, 1985. |
Wichita, aviation reach out to each other
By Clark Spencer
The Wichita Eagle
The relationship between state and local government and the aviation
industry has been described as a symbiotic one: Government has supported
aviation through direct and indirect means and aviation has returned the favor
by benefiting the community served by the government.
It’s a trade-off, industry and government officials say, that has allowed
Wichita and aviation manufacturing to grow together, work together and live
together.
“We, as a group of individuals, reach out to the community, and we feel the
community reaches out to us,” says Allen Hobbs, spokesman for the Boeing
Military Airplane Co.
Says Don Anderson, director of Housing and Economic Development for the
City of Wichita: “It’s a two-way relationship. There are benefits to the
community as well as to business.”
In recent years, most of the city’s efforts to assist aviation have been
in the form of industrial revenue bond financing.
Since 1966, the city has issued or committed more than $800 million in
IRBs to Boeing, Cessna, Gates Learjet Corp. and Beech Aircraft Corp., Anderson
says. About $785 million has been issued to or earmarked for Boeing alone.
The money was used by the companies, particularly Boeing, to expand
facilities or to buy property. Boeing, for instance, used an IRB in 1979 to
buy 573 acres of federally owned property and buildings it had been leasing
and modernize and expand facilities.
“Without the plant expansion, we just wouldn’t have been able to take on
additional work,” Hobbs says. “We had to modernize or we wouldn’t have been
been cost-competitive. We build a building and, yes, we don’t pay property tax
on it. But that building allows us to build more things, and everything that
goes out the other end is taxed.”
To show what effect expansion has had, Hobbs points to an increase in tax
payments pumped back into the state and local communites.
In 1978, he said Boeing paid out $867,000 to state and local governments
in the form of taxes. In 1984, the figure had increased to nearly $7 million –
mostly due to an increase in inventory tax. Employment also doubled during
that time.
The city also voted in the late 1970s and early 1980s not to annex “or
even threaten to annex” the four aircraft manufacturing companies into the
city limits for at least 20 years, Anderson said.
“There used to be some distance from the city to those businesses,” he
said. “The city grew out into each one of those manufacturers. There was
always some debate in terms of annexation for years and years. But it would
have been an expensive result to the businesses to be annexed because they
would have had to start paying property taxes. And there were some very
strong indications from one or two of the manufacturers that they would do
their expansion elsewhere.”
The decision not to annex, he said, allowed those companies to make
expansion plans without having to worry about the threat of taxation. But it
also made it more attractive for industries to expand, thus opening up more
jobs and bringing more dollars into the community, he said.
“The real benefit to the city from all this is jobs,” he said. “I’m
confident that the expansion that has occurred here has resulted in the
increase in jobs in the last 10 to 15 years.”
Some people, though, such as former city commissioner Garry Porter,
thought the additional income the city would have netted in property taxes by
annexing those companies would have lessened the burden on individual
taxpayers.
“You always heard those kind of threats, but it’s hard to believe you can
just pick up a big plant and move,” Porter said. “It felt to me that it was
all one way. Many of those people who work at those plants don’t live in the
city.”
On another level, the Wichita Area Chamber of Commerce has used
aviation as a way to attract new business to the city.
“Where we think aviation is effective is selling Wichita,” says Jerry
Mallot, president of the Chamber of Commerce. “Aviation executives from this
community have gone with us in trying to recruit new industries.”
The state has also gotten into the act but in an indirect way. The Kansas
Legislature in 1976 passed the Job Expansion and Investment Credit Act which
provided tax credits to businesses that substantially expanded their
facilities. In 1982, the Legislature increased credits through the Enterprise
Zone Act. It allowed cities to establish enterprise zones where businesses
could receive even greater tax benefits by locating or expanding here.
In Wichita, these enterprise zones include areas surrounding Beech,
Cessna, Boeing and Learjet.
Tony Redwood, the executive director of the Center for Public Affairs/
Institute for Economic and Business Research at the University of Kansas, said
it “would seem to be wise for the city to help it (aircraft industry) as best
it could because the city depends on it.”
“I’d hate to conjecture on Wichita if Boeing Military wasn’t going
strong,” Redwood said.
Anderson agrees.
“I definitely feel like the city has worked very effectively with the
major employers in Wichita,” Anderson said. “They might have gone someplace
else. We don’t know.
©The Wichita Eagle