hen Kathleen Sebelius became the 44th governor of Kansas in 2002, she brought more than a distinguished heritage to the state house. As the first daughter of a governor in U.S. history to be elected to that same position, she also brought a pro-business philosophy and a pledge to run a "leaner, smarter government." Her promise was simple but straightforward: "I believe we can make this government work smarter and more efficiently, do more with less, and make it more accountable to the people it serves."

Gov. Kathleen Sebelius

      By adopting the language of business, the Democratic Sebelius hopes she can convince more executives in corporate America to call Kansas home. Her approach appears to be working. A recent study by San Francisco-based Pacific Research Institute for Public Policy, conducted for Forbes magazine, concluded that Kansas is the most business-friendly state in the nation. The study measured all 50 states according to 143 variables, including tax rates, state spending and overall bureaucracy.
      Site Selection recently caught up with Gov. Sebelius to ask her how she plans to keep Kansas at the top and, in so doing, bring more corporate expansion projects to the state.      
     
      Site Selection: How will the new Economic Growth Act that you signed into law help solidify your state's position at the top of the Forbes ranking?
      Gov. Kathleen Sebelius: There are two new initiatives under way that will keep us at the forefront of economic growth. As of July 1, these new initiatives show that we are not resting on our laurels. The Economic Growth Act is a terrific opportunity to look at Kansas as having a number of very impressive regions, all with a lot of potential. With the EGA, we have identified specific barriers to economic growth in several parts of the state, and they are all different. Our new programs include a very exciting bio-sciences initiative to support and develop life sciences companies, an entrepreneurial center that will assist startup companies with grants and mentoring, and a series of investment programs to bring in new sources of capital.
      The other piece of the puzzle is a great companion -- the Emerging Job Opportunities initiative. It moves Kansas' work-force training efforts to be aligned with our community colleges and vocational training schools and puts them under the Kansas Department of Commerce. This makes for a more business-friendly environment for our worker training programs. By doing this, we are prospecting for employment growth five to 10 years into the future. We will be developing the human capital to fill the positions created by emerging industries.

KANSAS GOV. KATHLEEN SEBELIUS CAREER: Democrat; elected 44th governor of Kansas in 2002; made history by becoming nation's first daughter of a governor to be elected to same position (her father, Democrat John Gilligan, served as Ohio's governor from 1971-1975); first term began in 2003; served in Kansas House of Representatives 1987-1994; elected insurance commissioner of Kansas in 1994 and served two terms. PERSONAL: Native of Cincinnati, Ohio; political science degree from Trinity College and master's degree in public administration from University of Kansas; married to Gary Sebelius and has two sons, Ned and John.

     
      SS: The Kansas Legislature is considering eliminating the state franchise tax for most businesses. How important to your state's economic future is the passage of this bill?
      Sebelius: We are analyzing the tax structure overall. Given the number of tax deductions that are possible and the available tax credits, it is now a very different-looking system from five to 10 years ago. My goal is to streamline the tax code of Kansas to encourage more business expansion.
     
     
      SS: If you were to identify one public policy most in need of improvement in Kansas, what would it be and why?
      Sebelius: I would say it is the ongoing need to make sure we don't have regulatory barriers to business opportunity growth. We must conduct a constant cost-benefit analysis of all state policies on the environmental side, on the permitting side and anywhere government must interface with the private market. The process of regulatory oversight needs as minimal intervention in the private marketplace as possible. The public sector doesn't create jobs, the private sector does.
     
     
      SS: Leaner, smarter government is a touchstone of your administration. What is happening in your state to make Kansas government more efficient for meeting the needs of growing companies?
      Sebelius: Beginning with the 2003 inauguration, we convened 60 volunteers from the private sector to analyze every public agency in state government. They were asked to make recommendations to the 2003 state legislature. This process has resulted in $123 million in identified savings through greater efficiencies. The recent cost-of-living increase for state employees was paid for entirely by savings identified and captured by these greater efficiencies.
      In some cases, the dollars captured in savings have been shifted into other programs. That effort will continue. From analyzing energy efficiencies in state office buildings to a full inventory of vehicles used by the state, we identified and captured significant savings. We found out we had way too many state vehicles. So we put a moratorium on buying any new vehicles for two years, and we sold about 900 excess vehicles. We are inviting cities, counties, school districts and state universities to join in and negotiate a much better rate for computers, and we anticipate saving literally millions of dollars. Also, we have about 10 percent fewer state workers than we had in place three years ago. Our workers have become more efficient through the use of technology. We've encouraged our employees to come forward with cost-saving ideas. They share in the savings if their ideas work. It has given our employees some incentive to move this forward.
     
     
      SS: As insurance commissioner of Kansas, you were named one of America's Top Ten Public Officials in 2001 by Governing Magazine for the leadership you brought to the regulation of the insurance industry. Are there any major insurance issues that still need to be addressed to make Kansas more competitive for expanding businesses?
      Sebelius: We have a very robust insurance market in Kansas. Employers are not at the mercy of one or two companies for insurance for workers' compensation, health insurance, etc., and that is very good for business. We are always in the bottom 10 in workers' comp rates across the country. We struggle, as do other states, in trying to get a handle on health-care costs. They have been increasing in Kansas, just as they have across the nation. I am putting forward a package of proposals for next year's legislature to provide help to small business owners and seriously tackle the administrative costs of health care, which are 25 to 30 percent of overall health-care costs. We will seek simplification of provider credentialing and simplification of billing forms. We will also push a very significant initiative that incentivizes individuals to consider some basic lifestyle changes such as smoking cessation and weight and fitness programs.
      SS: As the state's top economic development recruiter and most influential spokesperson, how are you using the Office of the Governor to help Kansas land more expanding companies?
      Sebelius: I have done everything from talking to CEOs to promoting Kansas nationally and internationally. I just pick up the phone and call them whenever they show an interest in moving or relocating to Kansas. I want to make sure that our state agencies are as cooperative as possible, whether it involves permitting, tax abatement from Commerce, tax structure from Revenue, and so on. Companies have my assurance that they will get answers from us as quickly as possible. When I call these CEOs, it always comes as a surprise to them to learn that they are talking to the governor of Kansas. But it is a way for me to register with that CEO that we are really interested in their company. I am willing to spend some time and energy to personally recruit them. That is one of my major jobs -- to be the chief economic developer for the state.