The Kansas Department of Commerce violated state law by extending about $1.5 million more in incentives through an economic development program than is allowed, according to a state audit released Wednesday.
Auditors told a House-Senate Committee that the commerce department authorized $7.5 million in incentives through the Promoting Employment Across Kansas, or PEAK, program in the current fiscal year, above the $6 million cap.
Republicans on the Legislative Post Audit Committee said the administration was doing a good job of using the economic development programs to create employment opportunities and bring companies to Kansas. PEAK allows companies that create 100 new jobs within two years to keep 95 percent of employee withholding taxes for up to 10 years.
Auditors said it was difficult to assess the benefits of PEAK because the commerce department is more than a year behind in reporting outcomes to the Legislature, the Kansas Department of Revenue’s tax incentive information was incomplete and the department did not follow up with companies that didn’t submit reports.
Commerce department officials said they believed the cap was a cumulative amount that increased by $6 million each year. Commerce Secretary Pat George said the agency disagreed with some of the audit findings but he acknowledged some shortcomings.
“While Commerce disagrees with several of the characterizations and findings,” George said, “I hope the report will lead to improved administrative processes for the state’s economic development programs.”