2 top Kansas officials skeptical of Goodyear's proposal for $38M in state incentives

Two top officials in Gov. Kathleen Sebelius' administration are skeptical of a request from Goodyear Tire & Rubber Co. for nearly $38 million in state incentives.

Goodyear officials say the firm will commit to $250 million worth of equipment upgrades at its Topeka plant if the state provides the help. The company says without the upgrades, it might have to cut up to 700 jobs.

But Revenue Secretary Joan Wagnon and Commerce Secretary Dave Kerr noted that approving the incentives would not generate new jobs.

"There's nothing in it for the state," Wagnon said Tuesday, during a hearing on the proposal by the Senate Commerce Committee.

Kerr says he's getting calls regularly from other big businesses that want the state's help and aren't seeking to add jobs.

"How do we deal with that financially as a state?" Kerr said.

Goodyear hopes legislators will add its proposal to a bill providing similar incentives to wind and solar equipment companies locating in Kansas. Some backers of the bill, who note it is designed to generate new jobs, are nervous that adding Goodyear's proposal will hurt the measure's chances for passage.

Goodyear proposes that the state issue 20-year bonds, paid back with payroll taxes collected from company employees. The new equipment would support the production of massive off-road tires.

Wagnon said the state estimates it would pay about $78 million in interest over the life of the bonds, bringing the total long-term cost of Goodyear's plan to $116 million.

The company has a lower figure, and spokesman Whitney Watson said it's because the state mistakenly projects an interest rate for the bonds 3 percentage points higher than Goodyear does.

Sen. Julia Lynn, an Olathe Republican, said stopping employment losses is as important as fostering expansion of employment.

Goodyear's proposal has bipartisan support from the Topeka-area legislative delegation.

The company's Topeka plant employs about 1,600 people, but union workers there recently approved a contract that allows the company to cut up to 225 jobs.

Goodyear, based in Akron, Ohio, announced last month that it will cut nearly 5,000 jobs, or almost 7 percent of its work force, this year, following the elimination of about 4,000 jobs in the second half of last year.

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On the Net:

Kansas Legislature: http://www.kslegislature.org

Goodyear Tire & Rubber Co.: http://www.goodyear.com/

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Information from: The Topeka Capital-Journal, http://www.cjonline.com