Voice For Liberty in Wichita — Individual liberty, limited government, and free markets in Wichita and Kansas

Wichita mayor said to be ‘under lockdown’

by Bob Weeks on May 24, 2013

When Wichita ABC affiliate KAKE Television ran a news story critical of Wichita Mayor Carl Brewer, reporter Jared Cerullo wasn’t able to interview Brewer to get his reaction to his critics. The mayor refused to talk to Cerullo.

Jeff Herndon, KAKE Television news anchor, speaking at Wichita Pachyderm Club, May 17, 2013. Herndon is speaking for himself, and not on behalf of KAKE.

Speaking last week at the Wichita Pachyderm Club, KAKE news anchor Jeff Herndon said that KAKE has “repeatedly” tried to get an on-camera interview with Brewer. But the mayor is always busy, Herndon said: “They’ve got him on lockdown. He’s not going to answer that.”

Herndon was speaking for himself, and not for his employer. In his talk to the Pachyderms, he was critical of Wichita news media — both television and print — for not covering city government rigorously, telling the audience: “We need more reporters on that city government beat, and not just on decisions they make. We need to hold them accountable for the decision. We don’t do that.”

Brewer is sometimes mentioned as a candidate for higher office, perhaps challenging Kansas Governor Sam Brownback next year. Brewer’s term as mayor ends in April 2015. He is not eligible for election to another term as mayor because of Wichita’s term limits law.

The KAKE news story referred to is Wichita Mayor Scrutinized For Controversial Vote. Both text and video are available.

On his radio program, Joseph Ashby had an interesting take on Herndon’s remarks and Wichita new media. Video of the city council meeting that was the subject of the KAKE news story is here. Explanation of the public policy angle that drove citizens to testify at the April 16 city council meeting is here. The original article that identified the problem and to solutions is Pay-to-play laws are needed in Wichita and Kansas. In that article I wrote: “When one looks at the candidates these people contribute to, you notice that often there’s no commonality to the political goals and ideals of the candidates. Some people contribute equally to liberal and conservative council members. Then, when these people appear in the news after having received money from the Wichita City Council, it snaps into place: These campaign donors are not donating to those whose ideals they agree with. They’re donating so they can line their own pockets.”

Tagged as: Carl Brewer, Cronyism, Sam Brownback, Wichita city council, Wichita city government, Wichita news media, Wichita Pachyderm Club

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Kansas has a spending problem, not a tax problem

by Guest Author on May 24, 2013

By Kansas Policy Institute.

The data could not be clearer. Kansas has higher state taxes than many states because Kansas spends a lot more than those states. Every state has public schools, highways, social services, safety net programs, etc. But some states find ways to provide those services at a much better price. They spend less and therefore tax less (and grow more).

Kansas spends 34 percent more than the states with no income tax, in both the General Fund and All State Spending. As a result, Kansas has to tax residents at much higher levels than most states.

Opponents of tax reform have tried to claim that oil and gas severance taxes in Texas make up for their lack on income tax, but that clearly isn’t true. Texas only has a $94 per-capita advantage over Kansas on severance taxes. Texas’ real advantage is that it simply doesn’t spend as much as Kansas.

Our dynamic analysis of Kansas’ 2012 tax reform showed that only a one-time reduction of $186 in General Fund per-capita spending was needed to balance the budget. Kansas could do that and still be the high-spender in the region. Instead, many legislators and the administration are trying to make up most of the budget gap by raising the sales tax and other revenue increases.

The argument is that consumption taxes are less damaging to the economy than income taxes. That’s true, but using a sales tax increase to avoid dealing with the real problem of excess spending is foisting an unnecessary tax on citizens that will damage the economy.

The House and Senate budget proposals do have some small spending reductions, and it is certainly a daunting task for legislators to lead real spending reform; they have to face unending requests for more spending and an entrenched bureaucracy that often makes it difficult for reform-minded legislators to get the information they need. And the prospect of re-election is ever-present for most.

But even this late in the session, solutions exist that would avoid a sales tax increase without arbitrary spending reductions. Our Legislator’s Guide to Delivering Better Service at a Better Price (published in February) shows how to use existing cash balances to close the budget gap and ‘buy time’ to implement thoughtful spending reforms.

Even if the current budget is balanced with a tax increase this year (which, at this writing, seems likely), the spending problem isn’t going away. There are some small spending reductions in the current plans but every plan allows overall spending to continue to increase…while further reducing income taxes in future years. Simply put, the problem only gets worse the longer it is ignored.

Tagged as: Government spending, Kansas Policy Institute, Kansas state government, Taxation

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Joseph Ashby on local news media, anti-conservative bias

by Bob Weeks on May 23, 2013

Last week KAKE Television news anchor Jeff Herndon addressed the Wichita Pachyderm Club. Today, on the Joseph Ashby Show, the host commented on Herndon’s views on Wichita news media, and drew some conclusions about anti-conservative bias in Wichita news media.

Joseph Ashby Show, May 23, 2013 (excerpt).

The KAKE Television news story referred to is Wichita mayor comes under scrutiny for controversial vote.

Tagged as: Carl Brewer, Joseph Ashby Show, Wichita city council, Wichita city government, Wichita Eagle opinion watch, Wichita news media, Wichita Pachyderm Club

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Taxes and state income growth

by Bob Weeks on May 23, 2013

If Kansas wants to experience growth in income, it’s important that the legislature finish the session without raising taxes. The paper The Robust Relationship between Taxes and U.S. State Income Growth by W. Robert Reed, published in National Tax Journal, establishes a link between high taxes and negative effects on income growth. The abstract of the research report explains:

I estimate the relationship between taxes and income growth using data from 1970 to 1999 and the forty-eight continental U.S. states. I find that taxes used to fund general expenditures are associated with significant, negative effects on income growth. This finding is generally robust across alternative variable specifications, alternative estimation procedures, alternative ways of dividing the data into “five-year” periods, and across different time periods and Bureau of Economic Analysis (BEA) regions, though state-specific estimates vary widely. I also provide an explanation for why previous research has had difficulty identifying this “robust” relationship.

As Kansas must produce a balanced budget each year, reducing taxes means reducing spending. Therefore, Kansas needs to get serious about reducing government spending. Some ideas may be found in the article In Kansas, there are ways to reduce the cost of government.

(Although the state must balance its budget each year, Kansas has managed to accumulate over $16 billion in debt, about $5,591 for each person. See Kansas Total Indebtedness Exceeds $16 Billion.)

The full article is on taxation and income growth is The Robust Relationship between Taxes and U.S. State Income Growth.

Tagged as: Kansas legislature, Kansas state government, Taxation

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Do economic development incentives work?

by Bob Weeks on May 22, 2013

Judging the effectiveness of economic development incentives requires looking for the unseen effects as well as what is easily seen. It’s easy to see the groundbreaking and ribbon cutting ceremonies that commemorate government intervention — politicians and bureaucrats are drawn to them, and will spend taxpayer funds to make sure you’re aware. It’s more difficult to see that the harm that government intervention causes.

That’s assuming that the incentives even work as advertised in the first place. Alan Peters and Peter Fisher, in their paper titled The Failures of Economic Development Incentives published in Journal of the American Planning Association, wrote on the effects of incentives. A few quotes from the study, with emphasis added:

Given the weak effects of incentives on the location choices of businesses at the interstate level, state governments and their local governments in the aggregate probably lose far more revenue, by cutting taxes to firms that would have located in that state anyway than they gain from the few firms induced to change location.

On the three major questions — Do economic development incentives create new jobs? Are those jobs taken by targeted populations in targeted places? Are incentives, at worst, only moderately revenue negative? — traditional economic development incentives do not fare well. It is possible that incentives do induce significant new growth, that the beneficiaries of that growth are mainly those who have greatest difficulty in the labor market, and that both states and local governments benefit fiscally from that growth. But after decades of policy experimentation and literally hundreds of scholarly studies, none of these claims is clearly substantiated. Indeed, as we have argued in this article, there is a good chance that all of these claims are false.

The most fundamental problem is that many public officials appear to believe that they can influence the course of their state or local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering their expectations about their ability to micromanage economic growth and making the case for a more sensible view of the role of government — providing the foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.

Following is the full paper, or click here.

Tagged as: Economic development, Interventionism, Kansas state government, Role of government, Sedgwick county government, Wichita city government

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What Kansas should do

by Bob Weeks on May 20, 2013

As the Kansas Legislature struggles to end its 2013 session, budgetary and taxation issues remain to be resolved. It’s important that the legislature resolve these issues in a way that positions Kansas for economic growth, rather than retaining the policies that have led to stagnation compared to other states.

Here’s what the Kansas Legislature needs to do:

Keep the current sales tax rate.
Eliminate sales tax on food.
Reduce individual income and corporate income tax rates.
Get serious about reducing spending.

The legislature should reduce Kansas income tax rates by an amount that would be revenue-neutral, so that state spending does not grow. This moves Kansas towards more of a “Fair Tax” model, which many economists agree is better than taxing income. Elimination of the sales tax on food removes much of the regressive nature of the sales tax.

To the extent that the legislature believes it needs other funds, take it from transportation funding. We’ve spent a lot on roads and highways in recent years. It’s enough for now.

Another important thing the legislature needs to do is get serious about reducing government spending. Kansas lost an important chance to save money — although a relatively small amount — when school choice programs failed to pass. These programs, across the country, save state and local governments money. Unfortunately, Kansas legislative leaders did not use this argument.

How to save

In 2011 the Kansas Legislature lost three opportunities to save money and improve the operations of state government. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the moderate-controlled Senate, or had its contents stripped and replaced with different legislation.

Each of these bills represented a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy.

One bill was called the Kansas Streamlining Government Act, another would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships, and another would have created performance measures for state agencies and report that information to the public. More information on these bills is at Kansas budget solution overlooked.

We have to wonder why these bills — or similar measures — were not introduced and advanced this year when the opposition in the Senate is weaker. These are the types of measures we need to take as a state.

Tagged as: Economic development, Government spending, Kansas legislature, Kansas state government, Privatization, School choice, Taxation

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Starwood calls on Wichita

by Bob Weeks on May 20, 2013

Office worker using telephone and computer

This Tuesday the Wichita City Council considers economic development incentives to Starwood Hotels & Resorts for a call center to open in Wichita.

Besides the usual problems with cronyism and corporate welfare (see Wichita-area economic development policy changes proposed for explanation of some problems), there are a few issues to consider regarding this item.

First, the site where the Starwood call center will be located is owned by Max Cole. He and his wife are significant campaign contributors to Wichita City Council Member James Clendenin (district 3, southeast and south Wichita). Under the concept of pay-to-play laws that Wichita needs, Clendenin should refrain from voting on this matter.

Second, a table of salaries supplied in the agenda packet makes an implied promise that probably won’t be kept. The table shows numbers of jobs (actually full-time equivalents), the hourly pay rate, and the annual wage. The annual wage, in all cases, is 2,080 times the hourly rate, meaning it is assumed that workers will work 40 hours per week, 52 weeks per year.

Information from the Kansas Department of Commerce offers more detail. Initially, 495 full-time and 55 part-time jobs will be created. In year five, the total will be 860 full-time and 95 part-time total. There is also this notation: “The company will pay at least 50% of employee health insurance benefits.”

As you may be aware, one of the provisions of Obamacare is that if employees work over 30 hours per week, the employer must provide health insurance or be fined. As a result, many companies across the county are scaling back weekly work hours to less than 30.

We ought to ask if Starwood intends to hire employees who will work 40 hours per week, if they want to. Will the liberals on the Wichita City Council — Mayor Carl Brewer, Council Member Lavonta Williams (district 1, northeast Wichita), and Council Member Janet Miller (district 6, north central Wichita) — ask that Starwood operate under the standards of Obamacare? The table presents data as “full-time equivalents,” which provides room for Starwood to go either way.

Starwood is asking for a forgivable loan of $200,000 from Wichita, and another of the same amount from Sedgwick County. I asked the Kansas Department of Commerce if it would reveal the programs and incentives that Starwood will receive from the State of Kansas. It would not supply that information at this time, but I obtained the information by another means. The state describes its offer to Starwood as worth “up to $1,583,272.” Of this, $750,000 would be in the form of direct cash grants.

Here is a link to the relevant pages from the Wichita city council agenda: Starwood Hotels & Resorts Economic Development Incentive Agreement with City of Wichita, Kansas. Also, from the Department of Commerce: Starwood Hotels & Resorts Economic Development Incentives offered by State of Kansas.

Tagged as: Capitalism, Carl Brewer, Corporate welfare, Cronyism, Economic development, James Clendenin, Janet Miller, Kansas state government, Lavonta Williams, Wichita city council, Wichita city government

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Kansas freedom scorecard released

by Bob Weeks on May 20, 2013

To help Kansans understand how legislators vote, Kansas Policy Institute has produced the Kansas Freedom Index for 2013.

Legislative scorecards like this are important as they let citizens know how legislators have actually voted, which is sometimes different from their campaign rhetoric, and even different from their current proclamations. Generally, scorecards include a large sampling of votes, so that no single issue paints a member into a corner.

James Franko of Kansas Policy Institute joins Bob Weeks on the Joseph Ashby Show to discuss the Kansas Freedom Index. Then, Bob runs down the scores for Wichita-area legislators.

The Kansas Freedom Index, as produced by KPI this year, is important and significant because it focuses on issues of economic freedom along with education freedom, which was added this year. So far, 45 bills have been included in the scorecard, and as the legislature is still in session and has at least two important bills to pass, there may be additions to the scorecard.

This year’s index is a continuation of the construction of indexes for past years, many of which may be found at Kansas Economic Freedom Index.

In a press release KPI president Dave Trabert said “An informed citizenry is an essential element of maintaining a free society. Having a deeper understanding of how legislation impacts education freedom, economic freedom and the constitutional principles of individual liberty and limited government allows citizens to better understand the known and often unknown consequences of legislative issues.”

He added, “Our 2012 index made clear that support of economic freedom isn’t an issue of political affiliation — the highest and lowest score in the Senate were both held by Republicans. The 2013 results bear out the same as a wide range of scores exists within both parties. Too often votes come down to parochial or personal issues and the idea of freedom is left on the legislature’s cutting room floor. Hopefully, the Kansas Freedom Index can start to recalibrate citizens and legislators towards supporting the freedoms of everyday Kansans and not be driven by politics.”

The importance of economic freedom

Milton Friedman: Capitalism and Freedom

Why is economic freedom important? Here’s what Milton Friedman had to say in the opening chapter of his monumental work Capitalism and Freedom some 50 years ago:

The Relation between Economic Freedom and Political Freedom

It is widely believed that politics and economics are separate and largely unconnected; that individual freedom is a political problem and material welfare an economic problem; and that any kind of political arrangements can be combined with any kind of economic arrangements. The chief contemporary manifestation of this idea is the advocacy of “democratic socialism” by many who condemn out of hand the restrictions on individual freedom imposed by “totalitarian socialism” in Russia, and who are persuaded that it is possible for a country to adopt the essential features of Russian economic arrangements and yet to ensure individual freedom through political arrangements. The thesis of this chapter is that such a view is a delusion, that there is an intimate connection between economics and politics, that only certain arrangements are possible and that, in particular, a society which is socialist cannot also be democratic, in the sense of guaranteeing individual freedom.

Economic arrangements play a dual role in the promotion of a free society. On the one hand, freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself. In the second place, economic freedom is also an indispensable means toward the achievement of political freedom.

For more about Friedman and his thoughts on economic freedom, see Milton Friedman, the Father of Economic Freedom.

Economic freedom is the most important factor in determining the well-being of people across the world. Where economic freedom exists, countries become wealthy. In introducing the Economic Freedom of the World report, its authors write: “Economic freedom has been shown in numerous peer-reviewed studies to promote prosperity and other positive outcomes. It is a necessary condition for democratic development. It liberates people from dependence on government in a planned economy, and allows them to make their own economic and political choices.”

One of the authors of the Economic Freedom of the World report, Robert Lawson, expands on the importance of economic freedom: “The big question is: Do countries that exhibit greater degrees of economic freedom perform better than those that do not? Much scholarly research has been and continues to be done to see if the index [of economic freedom] correlates with various measures of the good society: higher incomes, economic growth, income equality, gender equality, life expectancy, and so on. While there is scholarly debate about the exact nature of these relationships, the results are uniform: measures of economic freedom relate positively with these factors.”

Tagged as: Capitalism, Economic freedom, Economics, Free markets, Joseph Ashby Show, Kansas Economic Freedom Index, Kansas legislature, Kansas Policy Institute, Kansas state government, Politics

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Governing by extortion destroys freedom

by Guest Author on May 15, 2013

By Dave Trabert, Kansas Policy Institute.

Merriam-Webster defines extortion as the “… exaction of money or property through intimidation or undue exercise of authority.” It’s illegal for individuals or corporations to engage in extortion, but some governments are increasingly using forms of extortion to exact higher taxes, make citizens more dependent upon government and ultimately, strip away economic and political freedom.

Government intimidation may not come with Soprano-like threats of violence. Some government officials may not even realize they are extorting the populous — the practice of presenting the government solution as the only option has become that commonplace. But no matter how politely or subtly phrased, the message is “give us what we want or else …” The “or else” comes in many forms.

The federal government punishes citizens with flight delays and service cuts to senior citizens while continuing to lavish taxpayer money on favored political friends and countless other examples of waste and duplication. The federal government will either get to borrow and spend as much as it wants or innocent citizens will pay the price.

Some state officials in Kansas want to extend a temporary sales tax and/or take away deductions for home mortgage interest and property taxes. They say it’s necessary to avoid massive budget deficits that would de-fund schools and services. The message is that higher taxes are the only alternative, when in fact they could choose to bring down the cost of government services and stop giving out corporate welfare in the name of economic development.

University officials in Kansas say they will raise tuition, eliminate professors, and restrict student admissions if state aid is even slightly reduced. They say nothing of reducing administrative costs that rose three times faster than inflation or using large cash reserves that accumulated from a 137 percent increase in tuition and fees over the last ten years. Give them what they want or students, parents, and staff will suffer.

Local governments routinely tell citizens that taxes must be increased to avoid police and fire layoffs, pool closings and other direct service reductions. Why not consolidate overlapping government programs and bureaucracy instead of raising taxes? Or maybe stop giving taxpayer money away to friendly developers who support the growth of government and help underwrite campaigns for public office?

Our state and nation were founded on the principles of freedom and limited government. Yet those who stand in defense of freedom are often met with ridicule. Carl Brewer, the Mayor of Wichita, recently issued a thinly veiled threat to sue a woman for asking him to recuse himself from a vote to give a $700,000 sales tax exemption to a campaign contributor (and fishing buddy). A columnist for the Hutchinson News falsely blamed those who want less government intrusion in our lives for poverty, high property taxes and other woes as opposed to following his prescription for progressive, big government solutions.

Thomas Jefferson said, “Government exists for the interests of the governed, not for the governors.” Some in our state seems to have forgotten that and are working to prove another of his maxims, “The natural progress of things is for liberty to yield and government to gain ground.”

Citizens must be persistent and vocal in reminding elected officials of the former or we shall continue to suffer the loss of liberty.

Tagged as: Carl Brewer, Corporate welfare, Cronyism, Economic development, Free markets, Freedom, Kansas Policy Institute, Liberty

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Bankrupting America: There’s an app for that

May 15, 2013

If you spot government waste and you have an iPhone, you can make a difference. There’s now an app for that.

Tagged as: Bankrupting America, Government spending, Government waste, Wichita city government

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