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Kansas Referendum Seeks Sales Tax Hike to Help Create ‘Education Research Triangle’

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Kansas voters next month will vote whether to approve a plan that would create an “educational research triangle” in Johnson County at the cost of raising the county’s sales tax for the second time in three months.
 
The institutions that would comprise the corners of the triangle — Kansas State University, the University of Kansas, and its KU Medical Center — have promised that the extra tax, projected to generate $15 million annually, will be used for funding a set of bioscience and education projects.
 
County voters will consider ballot Question 2, which would increase the current 6.4-percent county sales tax by 0.125 percent.
 
The Nov. 4 referendum follows an Aug. 5 vote in which a 53-percent voter majority agreed to renew a quarter-cent portion of the one-cent county share of a state and county sales tax.
 
Officials said they needed to extend the quarter-cent tax, originally set to expire Dec. 31, to fund an expansion and future operations of the Adult Detention Center at the New Century Air Center near Gardner, Kan.; convert the downtown Olathe, Kans., jail into a booking facility; and build a new juvenile services complex and a crime laboratory [BRN, Sept. 2].
 
Supporters of the tax hike say the resulting life sciences cluster, to be called the Johnson County Education and Research Triangle, would bring an estimated $1.4 billion in economic development and 613 jobs to the county in the next two decades. KU and KSU have also promised to provide $50,000 in scholarships to Johnson County residents to use Triangle programs and research in return for a “yes” vote.
 
Additional projections and arguments about boosting higher-ed research can be found in two reports released by the Greater Kansas City Community Foundation, Time to Get it Right and One Year Later: Time to Get Things Done. Both are available here with registration.
 
“There would be enormous private activity, particularly on the food safety and animal health side,” Fred Logan, Jr., chairman of the Committee for the Johnson County Research Triangle, formed to drum up support for the research tax hike, told BioRegion News last week. “We have a number of important animal health businesses in the area. For instance, Bayer is in the area. So … we think there’s a pretty important economic development piece there.”
 
Logan, a Prairie Village, Kan., lawyer, cited the lengthy list of community leaders and businesses, real estate, and life-science organizations supporting the Triangle effort, including seven local chambers of commerce, the Home Builders Association of Greater Kansas City, the Kansas City Regional Association of Realtors, the Civic Council of Greater Kansas City, Midwest Cancer Alliance Partners Advisory Board, and the Kansas City Area Life Sciences Institute.
 
“We have pretty broad support, and I just think we have to tell the voters our story, Logan said.
 
That list, and arguments for the research tax, have been posted on the web site of the Johnson County Education Research Triangle, available here.
 
One factor in supporters’ favor is the prospect of an increased turnout on Election Day, and days leading to it, due to the presidential race, according to a veteran journalist who lives in Johnson County.
 
“From the primary, the registration has ballooned hugely. And by and large, that new registration benefits the Democrats, not the Republicans. If indeed it is the case that Barack Obama is doing so incredibly well, the people who are going to support Barack Obama, I would believe, are going to vote for the Johnson County research tax,” Nick Haines, executive producer of news and public affairs programming for public television station KCPT in Kansas City, Mo., told BRN last week.
 
Another factor that augurs a win for Question 2, Haines said, is the affluence of residents of Johnson, a county of nearly 477 square miles. Its median income is the highest in Kansas at $68,013, according to the 2004 US Census estimate, versus $41,664 for the entire state. The county is also home to major Kansas City suburbs Overland Park and Shawnee.
 
“Johnson County has always voted for all of these tax [ballot questions] other than a soccer stadium election recently. In the last two to three years, they have voted for all education increases. They recently voted for the jail tax. They tend to be a community that supports these things,” Haines told BRN. “The way proponents of this ballot measure are making it sound [is that] this is funding higher education and research that could cure cancer. And that has the emotional appeal to many people.”
 
The Triangle would comprise three new academic and institutional projects:
  • A new $28 million, 103,000-square-foot National Food Safety and Security Institute at Kansas State University in Olathe. The institute would focus on threat assessment and prevention, forensic agricultural science, agroinformatics and modeling, communications strategies, and advanced ag technology. Certificate and short courses would be offered for professionals in agricultural and food emergency response; and federal law enforcement and intelligence. The institute would draw a projected 1,000 new students.
  • A $23.3 million, 75,000-square-foot classroom-and-office facility intended to expand and enhance engineering, science, and math programs at the University of Kansas Edwards campus in Overland Park. Ten new degree programs would be offered — four undergraduate, four graduate and two professional science masters — in an expansion projected to draw 1,000 new students to the campus.
  • A new $25 million clinical trials center in Fairway for the KU Medical Center to house a clinical and translational research center, including the clinical trials office for the KU Cancer Center and the headquarters of the Midwest Cancer Alliance.
The clinical trials center would be within a 70,000-square-foot building — all but 3,000 square feet of which would be dedicated to research; the remainder would consist of offices. If Question 2 passes, the building, within Fairway Office Park, would be donated to KUMC by the Hall Family Foundation, which purchased the building and an adjacent building within the park earlier this year.
 
The center would include a Phase I Clinical Trials Unit, and continue KUMC’s effort to expand and upgrade its research. Last year, the med center opened the $57.6 million Kansas Life Sciences Innovation Center, a 205,000-square-foot building that houses 80 separate laboratories.
 
At least two nearby counties collect sales taxes for higher-education institutions, among them Shawnee, the seat of capital Topeka, and Sedgwick, the seat of Wichita, though neither has set aside proceeds strictly for research purposes, as proposed in Johnson County.
 
Logan and supporters say the new facilities could draw researchers, students, patients, and other professionals from around the region — including Kansas City, which has been until now the focal region of Kansas’ life-sciences effort given the presence of some 120 companies comprising an animal health and nutrition sub-cluster, as well as expansion-minded institutions like the University of Kansas Medical Center [BRN, June 25, 2007] and the Stowers Institute.
 

“Let’s say [Triangle researchers] do cure cancer. We wouldn’t get a discount. We wouldn’t get any thank you at all.”

Supporters have also played up the KU Medical Center’s surge in research grants from the National Institutes of Health, arguing Johnson County could see similar success for its own institutions with the Triangle in place. Between the 1998 and 2007 federal fiscal years, KUMC during that time more than doubled its haul of grants from NIH, to $48.9 million from $23.8 million. KUMC said it fared even better last year, racking up $50.6 million in grant funding.
 
“A key part of this campaign has been the growing success the KU Cancer Center has had in attracting NIH grants. Gaining [a National Cancer Institute] designation as a comprehensive cancer center is one of the major stated goals of the University of Kansas,” and a goal that would be facilitated through establishment of the educational triangle, Logan said.
 
The NCI designation, he added, would not just benefit KU: “It’s going to benefit St. Luke’s [Health System], and Children’s Mercy [Hospitals and Clinics], and anybody else who participates in this Midwest Cancer Alliance.”
 
Tracy Thomas, the owner of an eponymous public relations and advertising business in Shawnee, questioned the wisdom of expanding cancer services at KUMC, saying an NCI designation would take almost a decade to achieve at best, and that KUMC was unlikely to draw as many cancer patients as nationally known institutions like MD Anderson and the Mayo Clinic.
 
She also said KUMC would have a hard time attracting new cancer patients despite affiliating with St. Luke’s last year, since St. Luke’s announced earlier this year it would end its network-provider contract with United HealthCare — which accounts for about one-third of all policies in the Kansas City region — in February 2009 due to reimbursement rates St. Luke’s said were too low.
 
The promise of new research and other life-sciences activity holds sway with many supporters of the proposed tax hike, who note that Johnson County’s economy has sputtered along compared with the US as a whole.
 
“At this very point in time when the economy is sinking, in Johnson County, every day in the newspaper, you’re seeing another tiny little three-line brief about another restaurant – indeed some very affluent restaurants — going down. There’s always another pocket of bad news in Johnson County in terms of the economy,” Haines said. “I think that’s the best hope of the opposition.”
 
Question 2 is being vigorously opposed by a former president of the Shawnee City Council, among others — for the same reason. Opponents argue that the current weak economy is not the right time to pursue a sales-tax hike.
 
They also contend the Triangle’s economics does not make sense for Johnson County, and that the county was at best an also-ran in the national life-sciences scramble.
 
Thomas cited comments made by health-care consultant Quint Studer, who projected that spending for research on cancer and other diseases will all but dry up as institutions suffer declining donations, rising interest rates, and falling investment income due to the economy.
 
“In essence, health care has had one strike, two strikes, three strikes right now,” said Studer. “The healthcare crisis has hit Main Street hospitals, cancer centers, research centers, [and] children’s hospitals.”
 
Thomas said the upheaval in the global financial markets, and the likelihood that it will spread to the broader worldwide economy, would increase local anti-tax sentiment and give Triangle opponents a shot at defeating the tax measure.
 
“We go in with 39 percent ‘No.’ But this [financial] meltdown has really awakened people,” she told BRN in an interview last week. “It’s like building free labs for Glaxo[SmithKline], Monsanto, and any drug company that does research at the universities. Let’s say they do cure cancer, let’s say they cure Lyme disease at K State. We wouldn’t get a discount. We wouldn’t get any thank you at all.
 
“It’s a sucker deal, not a partner deal,” Thomas added. “If this were a partnership, where if we had a breakthrough, we would get something back, that would be something else. But it’s not. It’s a one-way street. Every county, every city wants to be the Silicon Valley of medicine. Well, we’re real late to the game.”
 
Logan disagreed that the financial turmoil would hurt support by contending that voters will likely look beyond current economic conditions when considering the research tax. He said the county and residents would ultimately benefit from the Triangle’s research and that Johnson County would not be too late in stepping up life sciences activity.
 
“I feel pretty good about Johnson County voters deciding that this question presents an opportunity to invest in the future; I don’t think the economy is going to affect the outcome of this,” Logan told BRN. “Given the nature of what they’re voting on, I don’t think the economy is going to hurt our chances of victory.”
 
Thomas and opponents have laid out economic and other arguments against the research tax on a blog named BermudaTriangleNo. 
 
Among those arguments:
  • The county should not pay even in part for projects she said should be funded through private philanthropy: “If this is so great, they would invest in it,” Thomas said.
  • Johnson County voters should be able to directly elect the seven members of the Triangle’s oversight board, to ensure accountability for its actions.
  • The proposed tax hike should not be permanent, since most other taxes levied by Johnson County and its cities — and even the state income and sales taxes — require renewal every set number of years.
“We’re against all ‘forever’ taxes. Every tax should have an expiration. Why should we obligate our children and grandchildren forever?” Thomas told BRN last week.  
 
Private benefactors are supporting the Triangle effort, Logan said, citing the Hall Family Foundation’s plan to donate the Fairway building, another donation announced last week, and the promise of more benefactors to come: “In addition, there are additional private donors who are poised to make additional gifts, but nothing that we’re ready to announce.”
 
One gift that was announced last week was the $20 million donated by Annette Bloch, widow of H&R Block co-founder Richard Bloch, to KUMC’s University of Kansas Hospital Cancer Services. In return for the gift, the outpatient cancer area at the med center’s Westwood campus will be renamed the Richard and Annette Bloch Cancer Care Pavilion. Richard Bloch earmarked the money for cancer patients through the Greater Kansas City Community Foundation’s R.A. Bloch Cancer Foundation Fund.
 
The total in private money and resources raised for the Triangle to date was unavailable. Triangle supporters will not disclose how much they are spending on their campaign, with Logan only saying: “We’ve been able to raise a sum that will allow us to run a good campaign. We’re not going to be up on broadcast television networks, but we’ve raised a pretty good sum of money.”
 
Logan said the revenues generated by the tax must be permanent because the money will be required to build, then equip and operate the institutions comprising the Triangle; and because researchers need confidence that the regional life-sci effort will develop a dependable revenue stream to fulfill its goals and complete its proposed projects long-term.
 
“It would be much more difficult, for instance, for the KU Cancer Center to recruit top oncological researchers if they said, ‘Oh, by the way, your job sunsets in 10 years,’ or, ‘the clinical trial sunsets after five years.’” Logan said. “The other reason a sunset won’t work is that we’re building three buildings as part of this proposal, and we don’t want to add to the deferred maintenance problem that higher education institutions already have in the state of Kansas. We don’t think the sunset argument holds any water.”
 
As for the oversight board, Logan said “considerable” accountability will exist by the fact all members of the Johnson County Education and Research Triangle Authority will be elected officials from across the county, to be appointed by the Triangle’s member institutions. The authority’s duties will include evenly distributing tax revenues to the three project sites, conducting annual audits, ensuring that money is spent in the county; and administering a $100,000 scholarship fund for county students.
 
Another argument cited by Logan and other supporters: The possibility of additional research collaborations if the US Department of Homeland Security selects Kansas as the site of its planned $451 million National Bio- and Agro-Defense Facility. NBAF’s Kansas site is one of six options under study by DHS for the biolab; a decision is expected by year’s end [BRN, Sept. 15].
 
“Kansas State University has acquired a national reputation in food safety and animal health, and of course that’s what they’re bringing to their Innovation campus in Oletha. We think the NBAF facility doesn’t directly impact this, but it sure is a strong argument that supports our position that K State has acquired a national reputation, and that’s good for Johnson County,” Logan said.
 
A federal rejection of Kansas wouldn’t hurt the Triangle, he added: “The mere fact that K State is a finalist is very impressive.”
 

Thomas said she surmised NBAF would bypass Kansas, negating its potential value to the Triangle, in favor of Texas since it is President Bush’s home state; DHS has insisted its decision will be based on more objective criteria such as cost, economic benefits, and proximity to other research institutions and facilities.

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