Kansas Bankrolls Buc-ee the Beaver
The WasteWatcher
In the latest government boondoggle masquerading as “economic development,” taxpayer funds are being used to buck up a Buc-ee’s convenience store. In August 2024, the Unified Government of Wyandotte County, Kansas moved forward with negotiations to issue public STAR bonds to finance the construction of a Buc-ee’s supersized gas station convenience store. The company’s trademark beaver has set his eager eyes on the 10 Wyandotte County commissioners as the proposal winds its way through the committee on economic development and finance in hopes of gaining their support.
The Kansas Legislature began issuing STAR bonds in 1993. According to an August 2021 Kansas Legislative Division of Post Audit Economic Development Incentive (EDI) Evaluation Report, STAR bonds can be used to “finance tourist attractions within development districts they create. STAR bonds can help pay for property acquisition, site preparation, and infrastructure costs. … State law generally requires STAR bonds to be retired in 20 years. After that time, the attraction should be self-sufficient.” Internal Revenue Code Title 26 Section 103 makes all income from these bonds, like any bond issued by state or local governments to finance public infrastructure projects, exempt from federal income taxes that investors would have to pay on interest earned from corporate bonds or any other private debt instrument.
The deal with Buc-ee’s is not the first time Wyandotte County has sought access to state bonds to finance private developments. The EDI report noted that the county used STAR bonds to finance the Kansas Speedway and Village West, in 1997 and 1998 respectively. The Speedway is owned by NASCAR while the Village West complex includes a pro soccer stadium, a baseball stadium, and a Hollywood Casino.
Using bond programs like STAR bonds, state and local policymakers can subsidize favorite businesses using taxpayer resources by granting them access to tax-free interest-bearing assets even when they are capable of financing their projects in private capital markets. As a privately held company, Buc-ee’s does not publish its revenues, but it’s frequent use of public funds is a matter of public record.
A September 12, 2023, article in The Center Square, noted that a Buc-ee’s location in Loxley, Alabama, “received a deal in 2019 that included 20 years to allow Buc-ee’s to keep 37.5% of the sales tax revenue generated there, along with 25% of the gas tax proceeds.” On August 17, 2022, the Board of Supervisors of Harrison County, Mississippi “unanimously approved a tax increment financing package for the project that could add up to $25 million for the Buc-ee's facility and an associated mixed-use development. Tax increment financing diverts the increase in assessed property value to finance a development.” On April 12, 2021, Alabama Governor Kay Ivey (R) announced a $750,000 grant for infrastructure for a Buc-ee’s location in Athens, Alabama financed by the federal Appalachian Regional Commission, which makes a frequent appearance in CAGW’s annual Prime Cuts report. In January 2023, the city of Ruston, Louisiana agreed that the new Buc-ee’s store would be exempt from property and sales taxes for 20 years. On March 4, 2024, the San Marcos, Texas, city council voted to work with Hays County to provide 15 years of tax cuts to Buc-ee’s to build a new gas station on I-35 between San Marcos and Kyle, while expecting “to collect $5.9 million in property taxes and $3.2 million in net sales taxes from the store.”
A September 19, 2024, Cato Institute report on state and local economic development subsidy reforms noted that the value of these subsidies has more than tripled in inflation-adjusted terms since 2000, with a “sharp increase” in 2012-2022 when the federal government was handing out tens of billions of dollars of pandemic “relief” that included funding for economic development programs. While the report’s authors suggested that all subsidies should be eliminated, they recognized that is not likely to occur and provided several recommendations to make these subsidies less onerous to taxpayers, including state compacts, greater transparency, and legislative approval of incentives negotiated by state agencies.
The Kansas STAR bond program is set to automatically sunset in July 2026. Kansas legislators should learn from the record of publicly financed “economic development” schemes around the country and refuse to renew this corporate welfare program. But in April 2024, Gov. Laura Kelly (D) signed into law House Bill 2483, which repeals the requirement for periodic Economic Development Incentive Evaluation Reports, reducing transparency and accountability on how these projects are achieving their objectives and impacting the economy. This is tantamount to declaring open season for special interests who, like Buc-ee the Beaver, are eager for taxpayer dollars.