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Audit critical of Kansas incentive program

KANSAS CITY, Kan. (AP) -- A new audit of a Kansas incentive program called Promoting Employment Across Kansas shows that counties in suburban Kansas City have been the main beneficiaries of the program.

PEAK allows a firm creating jobs to keep 95 percent of those employees' state income taxes for up to seven years. The state auditors estimated PEAK has created 5,200 jobs in Kansas -- 2,800 of them moving from outside the state -- in exchange for $21 million in withholding taxes through December 2012.

The PEAK audit also says the program in the Kansas Department of Commerce has done a poor job monitoring companies that are receiving the tax incentives, The Kansas City Star reported ( ).

"Our conclusion is this program has grown faster than people expected, and it doesn't appear to have the horsepower to administer it," said Scott Frank, legislative post auditor.

Commerce Secretary Pat George defended the department's management of the incentive tools.

"No incentives were awarded or misappropriated because of a delayed review by us," George said. "They can't find a place where a dollar was misspent."

The audit also found that most of the 38 companies using tax incentives from PEAK to move since the program was enacted in 2009 have relocated to Johnson County, according to documentation in a recent performance audit commissioned for the Kansas Legislature, The Star reported.

Cherokee County was the only Kansas county outside the Kansas City metro area that reported any jobs relocated by PEAK during the audit period.

About 1,550 jobs went to Johnson County as of December 2012, the period covered by the audit. All but 110 were from Missouri. Four companies also moved about 1,200 jobs to Wyandotte County. Of those, however, almost 1,100 were described as moving from Canada and Michigan to a General Motors Co. plant in Kansas City, Kan.