From the Wichita Pachyderm Club: Alan Cobb, who is National Coalitions Director for the Trump/Pence presidential campaign. His topic was “Make America Great Again Presidential Campaign.” This is an audio presentation recorded on September 23, 2016.
In this episode of WichitaLiberty.TV: Radio Show Host Joseph Ashby joins host Bob Weeks to talk about Kansas judges, Kansas schools, and presidential politics. View below, or click here to view at YouTube. Episode 128, broadcast September 11, 2016.
From Kansas Policy Institute and the Kansas Chamber of Commerce, a new website with facts about the Kansas budget, economy, and schools.
GetTheFactsKansas.com aims to provide Kansans with factual information about our state. Sometimes this is in short supply, so this effort is welcome.
As an example, when explaining school spending, the site notes: “At $13,124 per-pupil, 2015 marked the third consecutive year of record-setting funding according to the Kansas Department of Education (KSDE). And if the Department’s estimates hold, another new record will be set when the 2016 final results are reported. Record funding is not the result of accounting changes; emails from KSDE confirm that no accounting changes impacted state or district funding totals for more than ten years. There was a correction effective in 2015 when the state-mandated 20 mills of property tax began being properly recorded as State Aid instead of Local Aid, but there would have been an increase in State Aid without that change.”
Information like this rebuts two arguments that Kansas progressives use. First, that the increase in school spending is due to a recent change in the way KPERS payments are reported. But, there has been no change in ten years. Second, that the shift in the reporting of local property taxes is used to falsely inflate state spending. As KPI notes, even after adjusting for this change, state funding of schools has risen.
Wichitans might be surprised to learn the cost of cultural attractions.
The price of adult admission to the Wichita Art Museum is $7.00, or free on Saturdays thanks to the generosity of Colby Sandlian, a Wichita businessman.
But the cost of admission is much higher. For 2015, Wichita city documents report a cost per visitor of $55.37. This was eight percent over the target cost of $51.24.
The cost per visitor figures the city reports each year are presented in a nearby table. For each year the city reports the cost per visitor along with a target for the next years. In the nearby chart, the target values are represented by dotted lines of the same color as the actual cost.
We should note that for these attractions much of their costs are fixed, meaning they do not vary with the number of visitors. An example is the employment cost of a museum director. As the number of visitors rises or falls, the salary stays the same. This means that if attendance increased, the cost per visitor would fall, and fall dramatically. (Of course, if attendance really boomed, the museum might need more directors. But that’s a long term decision.)
The source of this data is Wichita city budgets and performance reports. All are available on the city’s website at wichita.gov.
Inside jokes or a public shaming: Either way, it isn’t good.
Those who watch meetings of the Wichita City Council may have become accustomed to Wichita Mayor Jeff Longwell and his unusual sense of humor. But an episode from the September 6, 2016 meeting of the council goes beyond bad and unfunny humor, presenting an unfavorable image of our city to anyone watching the meeting. The target of the mayor’s humor — or derision — is Wichita city manager Robert Layton. A video excerpt of the meeting is available here, or at the end of this article.
The mayor’s treatment of the city manager seems cruel. But maybe not. Perhaps there are inside jokes in play here, humor that an outside observer like myself does not understand and can’t appreciate. But that’s the problem. If, in fact, the mayor is joking with the manager, these are inside jokes. Therefore, outsiders won’t understand the humor. This includes most citizens of Wichita and outsiders observing the meetings of the Wichita City Council. I think I can speak for everyone when I say this: We aren’t impressed. It isn’t funny.
If the mayor isn’t joking, then what’s left is public cruelty, and that of a boss (the mayor) to those who work for him (the manager). Former Wichita Mayor Carl Brewer did this too, and to more than one city manager.
If you need help interpreting the mayor’s intent, consider this: The agenda for this meeting, for this item, held the notation “RECOMMENDED ACTION: Defer this item until October 4, 2016” for this item. There was no need for the mayor’s needling of the manager.
Either way — inside jokes or a public scolding — episodes like this are not good for the city’s image.
The Wichita City Council approves economic development incentives, but citizens should not be proud of the discussion and deliberation.
Today’s meeting of the Wichita City Council saw the council discuss and approve economic development incentives for a project in downtown Wichita.
The item contemplated economic development incentives for redevelopment of an empty building in downtown Wichita to become a Hilton Garden Inn Hotel. The incentives being considered were a Community Improvement District (CID), Industrial Revenue Bonds (IRB), a parking agreement, and a skywalk easement. The discussion by the council was useful for revealing two members who are opposed to some targeted economic development incentives, but it also showed a troubling lack of knowledge and consideration by others.
The hotel is requesting industrial revenue bonds. These bonds do not mean the city is lending any money. Instead, IRBs in Kansas are a mechanism to convey property tax abatements and sales tax exemptions.
The agenda packet for this item states: “[Hotel developer] WDH is not requesting abatement of property taxes in conjunction with the IRBs.”1 This is presented as a magnanimous gesture, as something the hotel developers (WDH) could have requested, but did not, presumably out of some sort of civic duty.
But: Property tax abatements may not be granted within the boundaries of a TIF district, which this hotel is located within.2 3 So the developers did not request something that they are not entitled to request. This is not news. Nonetheless, several council members were grateful.
As to property taxes, Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) asked what would be the increase in value in the building, once finished. Later Wichita City Council Member Jeff Blubaugh (district 4, south and southwest Wichita) praised the property taxes that will be paid. He also mentioned the “nearly-empty parking garage.” When the city built this garage and accompanying retail space it was to be a showpiece, but has been suffering from blight and lack of tenants paying market rates for rent.4
Asking about tax abatements, Wichita City Council Member Pete Meitzner (district 2, east Wichita) asked “They didn’t apply for other …” His voice trailed off before finishing the question, but the “other” tax abatement that could be applied for is the property tax abatement. Except, the law does not allow for a property tax abatement for this project.
All these questions alluded to the increased property taxes the renovated building will pay. Except, being within a TIF district, property taxes may not be abated. So where will the hotel’s property taxes go?
First, the property tax generated by the present value of the property (the “base”) will be distributed as before. But the increment — which will be substantial — will go to the TIF district, not the city, county, and school district. Except: This is an unusual TIF district, in that an agreement between the city and county provides that only 70 percent of the incremental property taxes will go to the TIF district, with the remainder being distributed as usual. This was not mentioned during today’s discussion.
There was talk about a “gap.” Some economic development incentives require documenting of a “financing gap” that makes the project not economically feasible. But that is not required for the incentives considered for this hotel.
Regarding the sales tax exemption: City document do not state how much sales tax will be forgiven, so we’re left to speculate. Previous city documents5 indicate spending $3,000,000 on furniture and fixtures, which is taxable. Sales tax on this is $225,000.
The same city document mentioned spending of $6,250,000 on construction of the hotel, and of $1,000,000 for construction of retail space. Sales tax on this combined total is $543,750. Based on material from the Kansas Department of Revenue, these amounts would be due if not for the action of the city council.6
In total, the development of this hotel will escape paying $768,750 in sales tax. It should be noted that Kansas is one of the few states that charges sales tax on groceries at the same rate as other purchases, making Kansas food sales tax among the highest in the nation.7
Curiously, council members Clendenin and Williams, who represent low-income districts where families may be struggling to buy groceries — and the sales tax on them — did not object to this special sales tax treatment for a commercial developer.
No more cash?
In his remarks, the mayor talked about how we can continue with economic development “without handing cash to corporations.” But when a project is going to buy materials and services on which $768,750 in sales tax is normally due, and the city council takes action to extinguish that liability, well, that’s better than cash to the receiver.
Kudos to Wichita City Council Member Bryan Frye (district 5, west and northwest Wichita), who actually cited the United States Constitution in his statement from the bench. He said that the issues surrounding this project are a far cry from what our Founding Fathers envisioned as the role of government, saying “I struggle with using city resources to collect and distribute sales tax for the sole benefit of one commercial entity.” He offered a substitute motion which would have approved all the parts of the agreement except for the CID tax. His motion failed, with only he and Wichita Mayor Jeff Longwell voting in favor.
On the original motion, which was to approve all parts of the incentive agreement, Longwell and Frye voted in opposition, with everyone else voting in favor.
- City of Wichita. Agenda packet for September 6, 2016. Available here. ↩
- “Certain property, even though funded by industrial revenue bonds, does not qualify for exemption: … property located in a redevelopment project area established under K.S.A. 12-1770 et seq. cannot be exempt from taxation.” Kansas Department of Revenue. Property Tax Abatements. Available at www.ksrevenue.org/taxincent-proptaxabate.html. Also, Kansas Department of Commerce. Industrial Revenue Bond Exemptions. Available at www.kansascommerce.com/DocumentCenter/Home/View/1082. ↩
- Gilmore & Bell PC. Economic Development tools. Available here. ↩
- Weeks, Bob. As landlord, Wichita has a few issues. Available at http://wichitaliberty.org/wichita-government/landlord-wichita-issues/. ↩
- Wichita City Council Agenda packet for August 16, 2016. Available at wichita.gov/Government/Council/Agendas/08-16-2016%20City%20Council%20Agenda%20Packet.pdf. ↩
- “General rule: Materials are taxable.” (p. 4) Also: “Taxable labor services in Kansas are the services of installing, applying, servicing, repairing, altering, or maintaining tangible personal property performed on real property projects in the general category of commercial remodel work.” (p. 8) Kansas Department of Revenue. Sales & Use Tax for Contractors, Subcontractors, and Repairmen. Available at www.ksrevenue.org/pdf/pub1525.pdf. ↩
- Food sales tax a point of shame for Kansas. Wichita Eagle. January 25, 2016. Available at http://www.kansas.com/opinion/editorials/article56532903.html. ↩
There is no Wichita city retail sales tax, but the city collects tax revenue from citizens when they buy utilities, just like a sales tax.
Some Wichita city officials tout the fact that Wichita has no city sales tax, even though this is contrary to their and the city’s recommendation to voters in November 2014.
But the city has a sales tax. It’s called a “franchise fee” or “franchise tax,” depending on which city documents you’re reading. Either way, it’s just like a sales tax applied to your utility bill: gas, electric, cable television, water, sewer, or telephone.
In 2015, Wichita collected $44.3 million in franchise taxes. By comparison, the city’s share of the county-wide one cent per dollar sales tax was $58.0 million.1 Another context: In 2014 the city estimated that a one cent per dollar city sales tax would generate $80 million per year.
For 2017 the city is budgeting for $48.4 million in franchise fees.2 For 2018, $49.8 million.
What is the purpose of franchise taxes? The Wichita city budget explains: “Franchise Fees — These revenues are based on agreements between the City and local utilities. Generally, these agreements are long term and result in payments to the City of 5% of utility revenues. All franchise fee revenues are credited to the General Fund.”
The Wichita city code amplifies:
Sec. 3.93.350. — Payment of taxes — Franchise fee not a tax.
The franchise fees required herein as part of any franchise shall be in addition to, not in lieu of, all taxes, charges, assessments, licenses, fees and impositions otherwise applicable that are or may be imposed by the city, except that the franchisee shall be entitled to a credit in payment of franchise fees in the amount of any telecommunications service occupation tax due pursuant to Chapter 3.01 of this Code, as may be amended. The franchise fee is compensation for use of the right-of-way and shall in no way be deemed a tax of any kind.
There is some confusion over the naming of this concept. The city’s Comprehensive Annual Financial Report uses “franchise taxes.” The budget documents and the code shown above use “franchise fees.” Either way, this is extra money people must pay when they use utilities, as illustrated on these excerpts from electric and gas bills.
But should city residents have to pay this tax or fee? The city explains that the fee is “compensation for use of the right-of-way.” That makes sense. If someone owns something and someone else wants to use it, charging a fee is reasonable, if the parties agree.
Except: Who owns the right-of-way? The people of Wichita, of course. So our city government is charging us a tax (or fee) to use something we own. That’s clever — deviously clever. And something that only government can do.
I don’t want to give our city leaders any ideas, but when the city is complaining about not having enough revenue to fund everything it wants, it should look at franchise taxes. (Sorry, I mean fees.) While the city budget explains that the rates are the results of agreements between the utility companies and the city, why would utility companies object to an increase in franchise tax rates? They would simply pass along the tax to their customers, just as retail stores do when the state raises the sales tax rate. Certainly the water and sewer utilities would not object, as they are owned by the city.
Tip to the Wichita Eagle editorial board: When a lobbying group feeds you statistics, try to learn what they really mean.
When investigating the claims of a lobbying group, Kansas Policy Institute found that the statistics — when examined closely — do not support the narrative the group promotes. Unfortunately, the Wichita Eagle editorial board did not examine the group’s claims closely enough to determine their validity.
At issue is the claim that transfers from the Kansas highway fund have lead to the loss of highway construction jobs. It’s repeated not only by the state’s highway construction lobbyists, but also by others. The statistics that are cited deserve further investigation, which is what KPI did on its article Media and highway contractors mislead again. KPI’s Dave Trabert found:
Had the Eagle bothered to examine Mr. Totten’s claim, they would have learned that only 2 percent of the construction job decline was attributable to highway construction and that the loss of 100 jobs is less than 1 percent of total highway jobs.
In addition to learning that Mr. Totten was grossly exaggerating, they would have learned that employment for construction of new homes and non-residential buildings showed very nice growth and the real problem is in specialty trade contractors for non-highway projects.
Trabert is referring to the Wichita Eagle editorial board citing figures from a self-interested lobbying group — in this case, Bob Totten, executive vice president of the Kansas Contractors Association — without investigating the true nature of the figures.
I’ve taken the same numbers from the Bureau of Labor Statistics. Because these values are available only in not seasonally adjusted form, I’ve created a chart using the moving average of the past 12 months. A second chart shows the change from the same month of the previous year. The charts confirm what KPI found, which is employment in the “Heavy and Civil” category is not responsible for the decline in Kansas construction jobs. In fact, employment in this category is on an upward trend over the past 18 months. It is employment in the category “Specialty Trade” that has fallen. This isn’t related to highway construction.
School spending in the states, presented in an interactive visualization.
The Elementary/Secondary Information System (ElSi) is a project of National Center for Education Statistics (NCES). NCES is “the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations. NCES is located within the U.S. Department of Education and the Institute of Education Sciences.”1 Here is data from ElSi regarding per-pupil revenue and spending in the states.
Near the end of this article are definitions of each measure. There are measures for total expenditures and total current expenditures. The major difference is that the current expenditures measure does not include the cost of construction of schools and the expense of debt associated with that.
Of note, the values for “United States” are the average of the values for the states, computed with equal weight without regard for the total spending or number of students in each state.
As of the date of publication, data was available through the school year ending in 2013.
Since these data series cover substantial periods of time, I’ve also used the Consumer Price Index2 to adjust the figures for the effects of inflation. Each measure has a companion whose name starts with “i.” This is the value adjusted for inflation, based on the CPI. You may choose to view the values as reported by ElSi, which are in current dollars. These are the values not adjusted for inflation. Or, you may use the “i.” measures, which are in constant dollars.3
Definitions of measures
Total Revenues (TR) per Pupil (MEMBR) [State Finance]
Total revenues per student ate the total revenues from all sources (tr) divided by the fall membership as reported in the state finance file.
Total Expenditures (TE11+E4D+E7A1) per Pupil (MEMBR) [State Finance]
This is the Total Expenditures (Digest) divided by the fall membership as reported in the state finance file. The Total Expenditures (Digest) is the subtotal of Direct State Support Expenditures for Private Schools (e4d).
Total Current Expenditures for Public El-Sec (TE5) per Pupil (MEMBR) [State Finance]
This is the total current expenditures for public elementary and secondary education (te5) divided by the fall membership as reported in the state finance file. The Expenditures for equipment, non-public education, school construction, debt financing and community services are excluded from this data item.
Local Revenues (STR1+R2) per Pupil (MEMBR) [State Finance]
Local revenues per student are the total of all local revenue categories (strl and r2) divided by the fall membership as reported in the state finance file. Local revenues are raised and allocated by local governments.
State Revenues (R3) per Pupil (MEMBR) [State Finance]
State revenues per student are revenues received by the LEAs from the state (r3). divided by the fall membership as reported in the state finance file.
Federal Revenues (STR4) per Pupil (MEMBR) [State Finance]
Federal revenues per student are federal revenues (str4) divided by the fall membership as reported in the state finance file.
- National Center for Education Statistics. About us. nces.ed.gov/about/. ↩
- United States Bureau of Labor Statistics. Consumer Price Index. www.bls.gov/cpi/. ↩
- The U.S. Census Bureau explains: ” Constant-dollar values represent an effort to remove the effects of price changes from statistical series reported in dollar terms. The result is a series as it would presumably exist if prices were the same throughout as they were in the base year-in other words, as if the dollar had constant purchasing power.” Current versus Constant (or Real) Dollars. www.census.gov/topics/income-poverty/income/guidance/current-vs-constant-dollars.html. ↩
From the Wichita Pachyderm Club this week: Radio Host Joseph Ashby, host of The Joseph Ashby Show. His talk focused on the administration of Kansas Governor Sam Brownback. Bob Weeks provided the introduction. This is an audio presentation recorded on August 26, 2016.
The depreciation expense of Intrust Bank Arena in downtown Wichita recognizes and accounts for the sacrifices of the people of Sedgwick County and its visitors to pay for the arena.
The true state of the finances of the Intrust Bank Arena in downtown Wichita are not often a subject of public discussion. Arena boosters cite a revenue-sharing arrangement between the county and the arena operator, referring to this as profit or loss. But this arrangement is not an accurate and complete accounting, and hides the true economics of the arena. What’s missing is depreciation expense.
There hasn’t been much talk of the arena’s finances this year. But in February 2015 the Wichita Eagle reported: “The arena’s net income for 2014 came in at $122,853, all of which will go to SMG, the company that operates the facility under contract with the county, Assistant County Manager Ron Holt said Wednesday.” A reading of the minutes for the February 11 meeting of the Sedgwick County Commission finds Holt mentioning depreciation expense not a single time.
In December 2014, in a look at the first five years of the arena, its manager told the Wichita Eagle this: “‘We know from a financial standpoint, the building has been successful. Every year, it’s always been in the black, and there are a lot of buildings that don’t have that, so it’s a great achievement,’ said A.J. Boleski, the arena’s general manager.”
I didn’t notice the Eagle opinion page editorializing this year on the release of the arena’s profitability figures. So here’s an example of incomplete editorializing from Rhonda Holman, who opined “Though great news for taxpayers, that oversize check for $255,678 presented to Sedgwick County last week reflected Intrust Bank Arena’s past, specifically the county’s share of 2013 profits.” (Earlier reporting on this topic in the Eagle in 2013 did not mention depreciation expense, either.)
All of these examples are deficient in some way, and contribute only confusion to the search for truthful accounting of the arena’s finances. As shown below, recognizing depreciation expense is vital to understanding profit or loss, and the “net income” referred to above doesn’t include this. In fact, the “net income” cited above isn’t anything that is recognized by standard accounting principles.
The problem with the reporting of Intrust Bank Arena profits
There are at least two ways of looking at the finance of the arena. Most attention is given to the “profit” (or loss) earned by the arena for the county according to an operating agreement between the county and SMG, a company that operates the arena.1
This agreement specifies a revenue sharing mechanism between the county and SMG. For 2105, the accounting method used in this agreement produced a profit of $1,150,206, to be split (not equally) between SMG and the county. The county’s share was $375,103.
While described as “profit” by many, this payment does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “not intended to be a complete presentation of INTRUST Bank Arena’s financial position and results of operations and are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.”2
That bears repeating: This is not a reckoning of profit and loss in any recognized sense. It is simply an agreement between Sedgwick County and SMG as to how SMG is to be paid, and how the county participates.
A much better reckoning of the economics of the Intrust Bank Arena can be found in the 2015 Comprehensive Annual Financial Report for Sedgwick County.3 This document holds additional information about the finances of the Intrust Bank Arena. The CAFR, as described by the county, “… is a review of what occurred financially last year. In that respect, it is a report card of our ability to manage our financial resources.”
Regarding the arena, the CAFR states:
The Arena Fund represents the activity of the INTRUST Bank Arena. The facility is operated by a private company; the county incurs expenses only for certain capital improvements or major repairs and depreciation, and receives as revenue only a share of profits earned by the operator, if any, and naming rights fees. The Arena Fund had an operating loss of $4.1 million. The loss can be attributed to $4.4 million in depreciation expense.
Financial statements in the same document show that $4,443,603 was charged for depreciation in 2015, bringing accumulated depreciation to a total of $30,791,307.
Depreciation expense is not something that is paid out in cash. Sedgwick County didn’t write a check for $4,443,603 to pay depreciation expense. Instead, depreciation accounting provides a way to recognize and account for the cost of long-lived assets over their lifespan. It provides a way to recognize opportunity costs, that is, what could be done with our resources if not spent on the arena.
But not many of our public leaders recognize this. In years past, Commissioner Dave Unruh made remarks that show the severe misunderstanding that he and almost everyone labor under regarding the nature of the spending on the arena: “I want to underscore the fact that the citizens of Sedgwick County voted to pay for this facility in advance. And so not having debt service on it is just a huge benefit to our government and to the citizens, so we can go forward without having to having to worry about making those payments and still show positive cash flow. So it’s still a great benefit to our community and I’m still pleased with this report.”
Earlier in this article we saw examples of the Sedgwick County Assistant Manager, the Intrust Bank Arena manager, and several Wichita Eagle writers making the same mistake.
The contention — witting or not — of all these people is that the capital investment of $183,625,241 (not including an operating and maintenance reserve) in the arena is merely a historical artifact, something that happened in the past, something that has no bearing today. There is no opportunity cost, according to this view. This attitude, however, disrespects the sacrifices of the people of Sedgwick County and its visitors to raise those funds. Since Kansas is one of the few states that adds sales tax to food, low-income households paid extra sales tax on their groceries to pay for the arena — an arena where they may not be able to afford tickets.
Any honest accounting or reckoning of the performance of Intrust Bank Arena must take depreciation into account. While Unruh is correct that depreciation expense is not a cash expense that affects cash flow, it is an economic fact that can’t be ignored — except by politicians, apparently. The Wichita Eagle aids in promoting this deception.
We see our governmental and civic leaders telling us that we must “run government like a business.” Without frank and realistic discussion of numbers like these and the economic facts they represent, we make decisions based on incomplete and false information.
- Management Agreement between Sedgwick County and SMG. August 1, 2007. Available here. ↩
- The Operations of INTRUST Bank Arena, as Managed by SMG. December 31, 2015. Available here. ↩
- Sedgwick County. Comprehensive Annual Financial Report of the County of Sedgwick, Kansas for the Year ended December 31, 2015. Available here. ↩
Trends for the nation and each state in teachers, administrators, and students, presented in an interactive visualization.
Each year states report data to the National Center for Education Statistics. While NCES provides methods for extracting data, it isn’t an easy process, and opportunities to produce charts are limited. Here I present trends in teachers, administrators, and students for each state from 1998 to the school year ending in summer 2014, the most recent year of data that is available.
For each state, the charts show the growth in teachers, administrators, and students. For both teachers and students, the value used is full-time equivalency. A table also shows pupil/teacher ratio and pupil/administrator ratio.
There are some obvious mistakes in the data. An example is the number of administrators reported for Kansas for years 2007 through 2009. Figures obtained directly from Kansas State Department of Education show no sudden drop and increase in the count of administrators. Nonetheless, I have presented the data as retrieved from NCES.
For the nation as a whole, the count of students has increased 8.5 percent since 1998. The count of teachers (full-time equivalent) rose by 13.4 percent, and the number of administrators by 19.4 percent. Individual states vary widely, with many having increased administrators at a far faster pace than either students or teachers. Some states, however, have reduced the number of administrators, or the rate has grown slower than students and teachers.
Click here to open and use the visualization.
Data is from the Elementary/Secondary Information System (ElSi) at National Center for Education Statistics, part of the U.S. Department of Education and the Institute of Education Sciences. The number of administrators is calculated as the sum of “LEA Administrators” and “LEA Administrative Support Staff.” LEA Administrators is defined by NCES as “The count of Local education agency superintendents, deputy and assistant superintendents, and other persons with district-wide responsibilities such as business managers and administrative assistants. Excludes supervisors of instructional or student support staff.” LEA Administrative Support Staff is defined as “The count of Staff members who provide direct support to LEA administrators, including secretarial and other clerical staff.”
From the Wichita Pachyderm Club: Don Sherman, Vice President Community Relations and Strategic Partners with Westar Energy introduced Jeff Beasley, Vice President of Customer Care with Westar for an informative presentation titled, “An overview of Westar Energy — Solar, Conservation, Community.”
From the Wichita Pachyderm Club this week: Martin Hawver briefed members and guests on the state of Kansas politics. Judge Phil Journey provided the introduction. Recorded August 19, 2016.
Hawver is the dean of Kansas Statehouse press corps, having covered the beat longer than any current Statehouse reporter — first for 17 years as a Statehouse reporter for the Topeka Capital-Journal and since 1993 for Hawver’s Capitol Report, for which he is the primary reporter/writer. He also writes a column syndicated to Kansas newspapers, is interviewed about Kansas government and politics on TV and radio shows, and is a speaker for seminars and conventions.
Hawver’s Capitol Report is owned by Martin and his wife Vickie Griffith Hawver, who met and married while both worked at the Topeka Capital-Journal newspaper. Their website is havernews.com.
Here is the delinquent property tax list for Sedgwick County for 2015, summarized and presented in an interactive table that you may sort.
Of note, the two property owners with the largest delinquent balances are the City of Wichita and the Kansas Turnpike Authority.
Inquiry to the City of Wichita reveals that two properties, 3239 E 1st and 3244 E Douglas ($72,282.69 and $47,878.37), are left over from a real estate developer’s default. He, not the city, was responsible for these taxes. A third property is a leased property related to the East Kellogg expansion, and the tenant is responsible for the taxes. For another property, the taxes were paid late, and another was an error that has been corrected.
The Sedgwick County Treasurer issues this caution:
Public notice is hereby given that taxes on Personal Property located in Sedgwick County, State of Kansas, is unpaid, in whole or in part, and here appears the name of each delinquent taxpayer followed by his/her last known address and the total amount of unpaid taxes, penalties and costs.
Some of the names listed may have already paid their personal property taxes or may be awaiting results of a tax grievance or tax protest before paying the taxes due. Unfortunately, it is not practical to delete these names.
I regret any undue embarrassment this may cause those who are still awaiting tax protest decisions.
Sedgwick County Treasurer
Click here to access this data.
In this episode of WichitaLiberty.TV: Wichita’s economic development, Sedgwick County spending, editorials ignoring facts, your house numbers, Kansas governors, taxpayer-funded political campaigns, and the nature of economic competition. View below, or click here to view at YouTube. Episode 127, broadcast August 21, 2016.
What did the nation’s governors tell their constituents this year?
American Legislative Exchange Council (ALEC) has examined the “State of the State” addresses delivered this year by state governors. Its report State of the States 2016 analyzes each for proposals that will affect economic competitiveness.
The good news, according to the report? “The majority of governors seem to understand that lower tax rates and limited government give citizens and businesses a greater incentive to reside and operate in their states compared to others with higher tax rates and more regulations.”
But some states received bad news. Louisiana Governor John Bel Edwards told his state: “So, if you insist on saying that I never said I would raise taxes — that I’m going back on my word — that’s fine. Say it. Get it out of your system, and then please come back here ready to work with me to do the job we were all hired to do.”
In Minnesota — which has a budget surplus — Governor Mark Dayton told his constituents, “They say, ‘give it all back’ to the taxpayers. But that slogan is based upon a wrong premise and a wrong conclusion.”
Kansas wasn’t highlighted in this report, as Governor Brownback’s State of the State address contained little regarding economic policy.
The report is available at no charge from ALEC at State of the States 2016.
Kansas tax receipts by category, presented in an interactive visualization.
The Kansas Division of the Budget publishes monthly statistics regarding tax collections. These figures have been gathered and are presented in an interactive visualization.
For the past two years, individual income tax collections have been relatively flat. There are variations each month, but overall the trend is slightly up. Corporate income tax collections are on a slight downward trajectory.
Retail sales tax and compensating use tax have been rising for two years. A higher sales tax rate took effect on July 1, 2015, with the rate rising from 6.15 percent to 6.50 percent.
Cigarette taxes have risen rapidly since July 2015 when higher tax rates on these products took effect. The same trend is present in the tobacco products tax.
Severance taxes — tax collected on natural gas and oil as it is extracted from the ground — have been on a downward trend as prices for these produces have fallen. This is a sizable tax. In June 2014 collections of this tax were running at about $143 million per year. Two year later the rate is $28 million annually.
Click here to use the visualization.
Source of data is Kansas Division of the Budget.
A proposal for a community improvement district in downtown Wichita includes a public hearing, but much information the public needs is missing.
This week the Wichita City Council will consider starting the process of creating a community improvement district and other economic development incentives. The action the council will consider Tuesday is to accept the petition of the property owners and set September 6 as the date for the public hearing. Also, on September 6, “a development agreement defining the City and Developer’s responsibilities will be presented to the City Council.”1
A community improvement district, or CID, is a geographical district in which merchants add extra sales tax, known as the CID tax. This extra tax is then routed to the property owners. CIDs may be of two types. In one, the city borrows money to give to the developers, and the CID tax repays the bonds. In the second, no money is borrowed. Instead, the CID tax is periodically remitted to the developers as it is collected. The proposed CID is of the latter type. It is proposed to collect a CID tax of 1.5 percent for up to ten years, with a limit of $930,000. (For more information about how CIDs work, see Community improvement districts in Kansas.)
City documents also state the developers will request industrial bond financing. In this case, according to city documents, the purpose of the IRBs is to avoid paying sales tax on property purchased. The developers are also requesting use of the nearby state office building parking garage, but no details are given.
A public hearing?
The September 6th meeting will include a public hearing regarding the CID, industrial revenue bonds, parking agreement, and development agreement. As of today, we have information about the CID. But we have little or no information about the other items to be considered that day, which is billed as a public hearing.
If a public hearing is to include meaningful input from the public, the city needs to provide citizens with information about these items, and soon.
What is the need for these economic development incentives? No reason is given. Some incentive programs require that the applicant demonstrate financial necessity. In other words, if the incentive is not given, it is impossible to proceed. No such argument has been advanced for this project. And if such an argument were to be made, we have to ask why are incentives needed to develop in downtown Wichita?
Since these incentives are proposed for a hotel, supporters argue that the cost of the incentives — at least the CID — will be borne by visitors to Wichita. This development, however, will contain a rooftop bar and ground floor commercial space. To the extent that Wichitans patronize these business firms, they will pay the CID tax. Even considering only the hotel, there are many Wichita-based companies whose employees travel to Wichita, staying in hotels at their companies’ expense. Wichita companies will be paying the CID tax in these cases. They will also pay the tourism fee, even though their employees are not tourists.
Besides, we shouldn’t view visitors to Wichita as a cash cow. Visitors staying in this hotel will pay these taxes:
State of Kansas sales tax, 6.5%
Sedgwick County sales tax, 1.0%
Wichita hotel tax, 6%
City tourism fee, 2.75%2
CID tax, 1.5%
The total of these taxes is 17.75%. (Yes, Wichita does charge visitors a “tourism fee.” If Wichita voters had followed the recommendation of the city, its bureaucrats, and the political class, there would be an additional tax of one percent.3)
Finally: As with all CIDs, why don’t the merchants simply raise their prices? Part of the answer is that the CID tax goes to benefit the landowners, which may not be the same party as the merchants who collect the tax.
Other than that, it’s convenient to have someone to blame higher prices on.
- Wichita City Council Agenda packet for August 16, 2016. Available at wichita.gov/Government/Council/Agendas/08-16-2016%20City%20Council%20Agenda%20Packet.pdf. ↩
- Weeks, Bob. Wichita seeks to add more tax to hotel bills. Available at wichitaliberty.org/wichita-government/wichita-seeks-add-tax-hotel-bills/. ↩
- Ballotpedia. City of Wichita Sales Tax Measure (November 2014). Available at ballotpedia.org/City_of_Wichita_Sales_Tax_Measure_(November_2014). ↩