Moody's says Kansas layoffs threaten government tax revenues

WICHITA, Kan. (AP) — Moody's Investors Service said Friday that layoffs at Spirit AeroSystems are “credit negative” for the city of Wichita, Sedgwick County and local communities because the workforce reduction threatens retail sales, lowering sales tax revenues that support government budgets.

Most local governments in the Wichita area would be able to weather a short-term economic slowdown stemming from the layoffs, the credit rating service said. However, it anticipated that workers will move out of the area if the lower staffing at Spirit and other suppliers continues for an extended time.

Spirit AeroSystems, the city's largest employer, depends on its work on the Boeing 737 Max for half of its income. It plans to layoff 2,800 workers. More than 40 aerospace companies in Kansas also provide parts and services for the 737 Max.

Sedgwick County and the city of Wichita have relatively low reliance on sales tax revenue and maintain healthy general fund reserves, Moody's said. Derby relies more on sales tax revenue but it has high reserves to soften a short-term downtown. Haysville, which is located near the Spirit plant, is the most vulnerable city with nearly a third of its revenue coming from sales taxes and very narrow general fund reserves.