Kansas Republican Proposes State Income Tax Exemption to Lure Newcomers
Freeport, Kansas (AP) - It was only a year ago that this tiny hamlet proudly boasted as its motto that it was "the smallest incorporated city in the United States having a bank."
But the Freeport State Bank has since abandoned the town of five residents. The old bank building is now the City Hall, where these last die-hard town dwellers along with farm folks from the surrounding area still gather once a week for coffee and gossip. Long gone are its grocery store, gas station, garage, barbershop and newspaper. No children are left to play on the rusted swing sets outside the old schoolhouse.
Established in 1884, Freeport in its heyday had 500 residents along with the surrounding family farmers to support its local economy. Today it could well be the poster child for rural depopulation in the nation's Great Plains states.
Towns such as this are the focal point of a plan by new Gov. Sam Brownback to fight the demographic forces hollowing out the farm belt and to protect Kansas' political clout in Congress.
Brownback has called for giving new residents to any county that lost more than 10 percent of its population a five-year exemption from state income taxes. The state would also help newcomers repay student loans they might owe.
The plan is the latest, but one of the most ambitious, offered by towns, organizations and even individual benefactors in middle America to bring new life to dying communities. Because Brownback, a Republican, enjoys strong GOP majorities in both houses of the Kansas Legislature, the idea has a good chance of winning approval. But whether it would work is another question.
Freeport Mayor Bill Peterson scoffed at the notion of rescuing Freeport. "The only thing left in this town is the government that runs it," Peterson said bitterly.
Some Democrats also questioned whether the offer was more than appealing politics. "Moving back to a community where there basically are no jobs? I don't how you are going to make a living and enjoy the benefit of that income tax exemption," said Senate Minority Leader Anthony Hensley, a Democrat from Topeka.
The Great Plains contains 18 percent of the land mass of the lower 48 states and roughly three percent of its population, according to the U.S. Census Bureau. Stretching across the nation's midsection from the Mexican border to the Canadian border, the region encompasses parts of 10 states: Colorado, Kansas, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wyoming.
The rural populations there peaked around the time of the Great Depression and have declined since. The growth in the region has come around the metropolitan areas.
Census data from 2010 shows the extent of the depopulation in rural Kansas. Kiowa County in the southwestern part of the state fared the worst -- losing more than 22 percent of its people since 2000. In all, 77 of the state's 105 counties lost population.
Laszlo Kulcsar, director of the Kansas Population Center at Kansas State University, said the reasons for the exodus from farm country are clear. Most people now prefer to live in urban areas because of the jobs and cultural amenities such as theaters and restaurants. Farm consolidations and modern agricultural technology have also eliminated the need for many farm workers.
"It is much easier to keep people in rural areas than to try to attract them back," Kulcsar said.
A number of states are granting tax abatements to lure new industry. Brownback says his personal income tax exemption would help Kansas compete with those states, as well as with Florida, Texas, Tennessee and New Hampshire, which have no statewide income tax.
Brownback says he is convinced Kansas is losing residents to states that have no income taxes, although he has no specific evidence to prove it. His conclusion is based on conversations he's had while traveling across the state. "I know and I've heard individuals who do that and leave this state. What I'm trying to do is to fight back," said Brownback, who was elected last November by pledging to help the economy and the state's fiscal health.
Brownback said he believes the state can lure back young people who may have graduated from Kansas schools or retirees looking to return home. He hopes an influx would prevent Kansas from losing one of its four congressional districts to a fast-growing state after the next census.
One resident who moved back was Carol Peterson, the Freeport treasurer and the mayor's wife. She grew up in Freeport and returned in 1985 after the couple retired.
"We do not want to lose the identity of this town," she said.
The governor's proposal is a welcome addition to the efforts of small Kansas towns to staunch their population losses. Some have given free building lots or tax breaks to new residents. Others have offered incentives to businesses -- all with mixed results.
The hospital in the small central Kansas community of Ellsworth recruited an aspiring doctor by providing a monthly stipend. Katie Moore, 26, says she plans to return to Ellsworth, her hometown, after receiving her medical degree later this year. "With the economic changes, it has been hard on everybody, but especially with the smaller communities," she said.
Rob Fillion, executive director of the Smokey Hills Development Corp. in Ellsworth County, said 42 families responded to an offer of free city lots, including 15 from other states. But in the town of Osborne, just three families took advantage of a similar program in the six years it was offered.
Freeport's residents are willing to try anything. Tacked up on the wall of City Hall is a small sign: "Help Keep Our Post Office -- Buy Stamps."
Milburn reported from Topeka.