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Kansas state government

Kansas texting, seat belt law passes

by Bob Weeks on March 10, 2010

Today the Kansas Senate debated and passed Senate Substitute for House Bill 2437.

This bill creates a “primary” seat belt law, meaning that a law enforcement officer can stop a car when the officer believes someone in the car may not be wearing a seat belt. Currently, the car must have been stopped for other reasons before the officer could cite occupants for not wearing seat belts. The bill would send about $11 million federal dollars to Kansas; $1 million earmarked for transportation safety, but the rest could be shifted into the state general fund. Governor Mark Parkinson has identified this money as being used to close the state’s general fund budget gap.

Senator Tim Huelskamp, a Republican from Fowler, objected to the bill because it’s a federal mandate that interferes with our local state control. The federal government has taken our tax money, he said, and is using it to coax our state into passing the primary seat belt law. Huelskamp’s actual language was stronger, using the term “outright bribery,” and noting with displeasure that the governor was acceding to this action.

Senator Davie Haley, a Democrat from Kansas City, along with Senator Oletha Faust-Goudeau, Democrat from Wichita, expressed concerns that the seat belt law and the texting laws could be used as pretexts for stopping cars when the real aim of the officer is to perform a stop or search that couldn’t have been performed otherwise. “Driving while black” is the term both senators used, perhaps alluding to studies that have shown that minority drivers are stopped more often for minor traffic violations than non-minority drivers.

The bill also bans text messaging or electronic mail while driving. During the debate Senator Chris Steineger, a Democrat from Kansas City, gave Kansans a defense if they’re ticketed for texting while driving: The bill doesn’t prohibit using a phone for making telephone calls while driving. In fact, the bill contains language providing an exception “if the person reads, selects or enters a telephone number or name in a handheld wireless communication device for the purpose of making or receiving a phone call.”

Steineger wondered how a law enforcement officer could tell, just by looking, if a person is dialing a telephone number or entering a text message. He couldn’t get a specific answer from Senator Dwayne Umbarger, who was carrying the bill.

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Kansas Governor misleads Kansans on taxes

by Bob Weeks on March 8, 2010

in Kansas state government

By Dave Trabert, Kansas Policy Institute.

If President Reagan had attended Kansas Governor Mark Parkinson’s press conference last Friday, he likely would have said, “There you go again…” in response to Parkinson’s claim that $9 billion in tax cuts and exemptions over the last decade are to blame for the budget crisis. South Carolina Congressman Joe Wilson (R) might have put it less delicately, but both would have been justified in challenging the governor’s claims.

The $9 billion dollar figure comes from a Department of Revenue (DOR) estimate of the effect of selective tax changes enacted between 1995 and 2009. I say “selective” because DOR only included changes that reduced taxes but conveniently ignored changes that increased taxes; they also made no allowance for taxes generated from economic activity as a result of any changes. Further, the $9 billion total is artificially inflated. The largest item on the list is a property tax “reduction” of $4.4 billion that doesn’t belong on the list. The amount represents the difference between collecting 35 mills for school funding versus the current 20 mills. The change was made in the mid-90s following property revaluation; when property values were adjusted upward to market value, the mill rate was supposed to be lowered so that the higher property values generated the same amount of property tax. By the way, property taxes increased 96% between 1995 and 2008.

The governor also claims that big business and wealthy people have benefited the most from those changes, with “ordinary Kansans” receiving virtually nothing. Well, there he goes again. The second largest amount on the DOR list is car tax reductions at $1.4 billion. A lot of ordinary Kansans benefited from that one. Other large tax reductions that Parkinson seems to be overlooking include:

$616.6 million to reduce the single income rate
$446.5 million to increase the earned income tax credit
$368.7 million to increase the personal exemption
$356.6 million to increase the food sales tax rebate
$174.2 million to increase the standard deduction

There’s also $825.9 million attributed to reductions in the inheritance, or “death” tax. The two primary reasons for making that change are to avoid double taxation (the income was already taxed once when it was earned) and to encourage people to stay in Kansas and continue paying income, sales and property taxes. Those with high-value estates can easily (and do) move to other states where they can avoid double taxation and leave their estates to their families.

It’s also important to understand that most of the changes on that misleading $9 billion list were implemented in the 1990s following 75% revenue growth from 1990 to 1998, much faster than necessary to sustain spending. Government could easily afford to reduce the tax burden and the vast majority of that relief was directed to “ordinary Kansans.”

So what about the governor’s claim that tax reductions are to blame for the budget crisis? Once again, cue President Reagan. Revenue grew another 41% over the next ten years, well beyond inflation (28% according to the Midwest Urban Consumer Price Index). At the same time, however, general fund spending grew 61%. That is the reason we’re in this mess. In fact, if spending had been held to 4.5% growth over just the last five years, we would have finished last year with a $3 billion surplus and could have easily weathered the recession.

Then there’s the claim that the state has already reduced spending by more than a billion dollars. There he goes again! Prior to changes announced last week, the governor’s own estimate put FY 2010 spending at $5,451 billion; last year’s actual spending was $6.064 billion. That’s a reduction of $613 million; a big number to be sure, but not even close to a billion dollars.

There were some tax reductions over the years that were not good policy; sound tax policy says reductions should be broad-based and not favor one group over another. But the facts clearly demonstrate that the vast majority of our budget problems stem from spending well beyond our means. President Reagan once explained it as only he could: “Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”

Speaking of no responsibility, Governor Parkinson failed to mention that he not only voted for, but actually led the charge for some of the sales tax exemptions for which he now castigates the legislature for passing.

It’s bad enough having to work our way out of a budget situation that is largely self-inflicted. Distorting or ignoring the facts to justify a tax increase is a disservice to “ordinary Kansans.”

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Tax increases will cost Kansas jobs, economic freedom

by Bob Weeks on March 7, 2010

in Kansas state government

As Kansas struggles to deal with a budget deficit, Democrats and some Republicans are proposing tax increases, particularly an increase — temporary, they say — in the sales tax. A common argument advanced is that an extra one cent tax on every dollar spent will hardly be noticed. The one cent tax used to build the Intrust Bank Arena in downtown Wichita is cited as an example of a sales tax used for the common good of the people.

Besides the fact that it’s way too early to judge the success (or not) of the arena, sales taxes do hurt.

My post from 2004 Prepare for sales tax-induced job effects now described job losses in Little Rock due to the sales tax that paid for that city’s arena. In this example, the job losses were smaller than the number of jobs created by construction. This is partly because the sales tax lasted just one year, and more importantly, the state of Arkansas paid for 40% of the arena’s cost. In other words, the entire state subsidized the construction job gains in Little Rock. Still, jobs in retail and service industries were lost.

If the state of Kansas raises its sales tax, we won’t have the luxury of a huge inflow of out-of-state money to duplicate the effect observed in Little Rock from the inflow of out-of-city money. Instead, it’s certain that a sales tax increase will negatively affect private sector jobs and our state’s economic growth and future.

As evidence, a 1996 study by the Federal Reserve Bank of Atlanta found that state and local taxes negatively affect a state’s growth rate, and that this effect of taxation is sizable. This study looked at all taxes.

Specifically considering sales taxes, a 1998 study by the Beacon Hill Group looked at the effect of a half-cent increase in Ohio’s sales tax. The study “found that an increase in the state sales tax rate from 5% to 5.5% would result in the loss of at least 49,000 jobs and would leave Ohio’s stock of capital at least $4.4 billion smaller.” The authors concluded there was a 90% certainty that this result would occur.

More recently, a 2009 proposal to increase Washington’s sales tax from 6.5% to 6.8% was analyzed by the Evergreen Freedom Foundation. Its conclusion was that the tax increase “would cost the private sector approximately 6,800 jobs and result in less disposable income for Washington residents.

A sales tax increase will provide funding for more public sector jobs at the expense of private sector jobs. The result is a loss of economic freedom as individual choice is replace by spending controlled by the legislature and government bureaucrats. Does anyone believe that government spends as wisely as people spend their own funds? I don’t.

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Wichita legislative forum highlights differences in approach to government spending

by Bob Weeks on March 7, 2010

in Kansas state government

Yesterday over 200 people packed a room at Wichita State University to attend a forum of Wichita-area Kansas state legislators. The meeting was chaired by Representative Steve Brunk, a Republican who represents Bel Aire and parts of far northeast Wichita.

One of the topics underlying much of the meeting was the subject of tax cuts to business. Proponents of government spending say the state has given up too much revenue by granting tax cuts.

Sometimes, in case of the business franchise tax, the state levies a tax simply for existing. This tax is being phased out over a five-year period starting in 2007. Government spending interests — including Governor Mark Parkinson — want to reinstate this tax, however.

There are sometimes disagreements as to what a “cut” means. In his opening remarks, Representative Jim Ward, a Democrat who represents parts of southeast Wichita and is also assistant minority leader, referred to a recent $95 million tax cut given to business, saying this is not a good thing to do when the state needs more tax revenue. Representative Brenda Landwehr, a Republican who represents parts of northwest Wichita, disagreed with Ward’s characterization.

The program referred to is an expansion of a program that lets companies keep their employees’ Kansas withholding taxes when new jobs are created. Proponents of these types of economic development incentives that are granted through the tax system argue that without the incentive, no jobs would be created, so there would be no new taxes to collect. Therefore, the program is without cost. They also often argue that the new jobs create other economic activity that is taxed, and this is a source of revenue for the state.

There is ample evidence, however, that these targeted economic development incentives often do not work as intended.

In answering one question, Landwehr referred to the Health Care Freedom Act. This possible amendment to the Kansas Constitution would allow Kansas to opt out of certain areas of possible federal health care legislation, such as the requirement that citizens purchase health insurance. Landwehr said that the issue goes back to what the Constitution and the Bill of Rights really say. Freedom and liberty are two key words, she said. “If government decides that they should be the one dictating to you what company your health issuance should be with, what benefits you should have or not have, we’re going to have less providers. … We need to be able to make these decisions ourselves.”

Addressing the number of uninsured in Kansas, Landwehr said that over half are the “invincibles” — young people 18 to 30 years old who choose not to purchase health insurance. Another segment are the underinsured.

On the recently-passed statewide smoking ban, Brunk read a question that asked “Why is smoking not bad for you in state-owned bars?” Brunk remarked that the questioner probably meant state-owned casinos, to the amusement of the audience. I thought to myself if the state can own casinos, why not bars? And if the state owned bars and taverns, would the smoking ban apply to them?

Rep. Landwehr criticized the smoking ban based on liberty, freedom, and property rights. She also mentioned problems with the bill regarding how the casino floor air — where smoking is allowed — would be kept separate from the air in the rest of the building. Representative Geraldine Flaharty, a Democrat who represents parts of south-central Wichita, said that the health issues of smoking overrode these issues.

Education, however, was the topic of interest to many in the audience.

Representative Joe McLeland, a Republican who represents parts of west Wichita and who is chairman of the House Education Budget Committee, said that education funding is a tough issue. He mentioned the large unencumbered fund balances in Kansas school districts, mentioning specifically that the Wichita school district has $252 million in its fund balances as of December. “Schools have a lot of money,” he said to disapproval of the large number of school spending advocates in the audience.

McLeland said that schools routinely transfer unspent money from the general fund — which can’t be carried forward to the next year — to other funds. These other funds generally fall into the category of restricted funds. Schools continually remind everyone that money in these restricted funds can’t be spent with the same degree of flexibility that money in unrestricted funds can. This is part of an effort by schools to treat restricted funds — which according to recent Wichita school district presentations are 59.5% of the district’s spending — as though they don’t exist and shouldn’t be counted as part of school spending.

McLeland said that this week he will introduce legislation that will reduce the number of funds from 27 to five and will prohibit transferring general fund dollars to restricted funds, including capital building funds.

McLeland also said that state law requires school districts to spend 65% of their budgets in the classroom. Since the state average is about 55%, McLeland said schools are not following this law.

Uniform accounting is a new law passed recently, McLeland said. With 293 school districts in the state, each reporting numbers differently, it is difficult to compare budgets.

McLeland also referred to the voluntary efficiency audits that school districts could participate in. The Derby school district is the only local school district that participated. The audit found that Derby instructional services spending was above average for its peers, but teacher salaries were below the peer average. McLeland said that the reason for this surprising finding couldn’t be determined due to the lack of standard accounting and reporting.

Representative Judy Loganbill, a Democrat who represents parts of east and southeast Wichita and who is also a Wichita school teacher, asked the rhetorical question “how often do you visit a school?” She mentioned the battle between unencumbered and encumbered funds. “Approximately 60 percent of a school’s budget must go to certain places. It has to. … What’s left over is where we get the unencumbered funds. … When you’re looking at your unencumbered funds, that’s where your salaries come from.”

She also mentioned the difficulty of determining what constitutes spending in the classroom. Things like transportation, utilities, books, materials — all are essential to schools, she said. She also mentioned the need to produce highly qualified and educated students to lead us into the next generation. She said that businesses don’t come into our state because of the employee withholding tax break discussed above, but because of quality of life issues like schools, good roads, and safe neighborhoods.

After a short break so that many of the legislators could leave to attend a funeral of a former legislator, Representative Kasha Kelley of Arkansas City gave an overview of the Kansas budget and the budget process.

A question to her referenced the large number of unemployed in Kansas. If tax breaks to business are such a good deal, why are there so many unemployed? Rep. Jim Ward expressed similar sentiment earlier. A proper answer to this question is that yes, there are large numbers of unemployed in Kansas at this time. Our unemployment rate is lower than the nation’s, however, and we should be grateful for that. Furthermore, we don’t know what our jobs situation would be if taxes on business had not been reduced. Since taxes in all forms are a drag on jobs creation, it is certain that there would be fewer jobs in Kansas if not for some tax reductions.

Also, some of the tax breaks given are quite small in relation to the state budget. In 2007, which is when the franchise tax reductions started, that tax brought in about $4.6 million. To place this number in some context, in February alone the state fell $71 million short of projected revenue.

Another questioner who identified himself as a former family business owner and a teacher for 12 years questioned the effectiveness of tax abatements and breaks on job creation.

One questioner criticized the state’s economic forecasts, calling for an honest assessment, perhaps by different company. It has been the case that over the past year or so, actual revenues have been significantly less than forecast. Brunk responded that the projections are developed by economists from state universities. It should be noted that economic forecasting is very difficult, and very few people foresaw the tremendous decline in the nation’s and state’s economies. If someone could forecast these things with certainty, they could make trades in financial markets that would generate very high returns.

Analysis

Regarding the claim that business tax cuts are costing the state too much lost revenue: The problem with this analysis is that it presumes that the government has first claim on the income of businesses — and people too, for that matter. Those who believe in the principle of self-ownership, meaning that people own themselves and the things they produce, have a problem with this attitude.

I fully agree with the critics of targeted tax breaks. The state, as do all governments, has a poor record of being able to choose which companies or class of companies should benefit from special tax treatment and subsidy. A report by the Division of Legislative Post Audit from 2008 found that “it’s difficult to accurately assess the results of economic development expenditures.” Overall, the report was skeptical of the expenditures on economic development and its ability to produce jobs.

The school spending lobby, hungry for more tax dollars, refuses to acknowledge simple facts. The existence of the unspent fund balances is vigorously disputed, even though Kansas Deputy Education Commissioner Dale Dennis has said that schools can use these funds if they want. This is contrary to school spending advocate and Kansas school board member David Dennis in his flawed Wichita Eagle op-ed.

The schools also have no explanation for why the unspent balances in the funds grow rapidly, from $74 million to $94 million over the last four years for the Wichita school district. Instead, the schools would rather be left alone and unaccountable. Hopefully some initiatives in the legislature, such as the common accounting requirements, will lead to greater transparency and accountability.

The school spending lobby must also face the fact that the Kansas state achievement tests, which show large increases in school performance, are almost certainly fraudulent, as is the case in most states. The link between the huge increase in Kansas school spending and these test scores is used as an argument not to cut schools spending.

We also saw again the school spending lobby’s claim that restricted funds don’t count, as though schools are totally hamstrung when it comes to this money.

The contentiousness in the audience between the school spending lobby and the rest of the audience should lead us to question why we turn over such an important matter to government.

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Kansas historic preservation tax credits: the hearing

by Bob Weeks on March 5, 2010

in Kansas state government

On Wednesday, the Taxation Committee of the Kansas House of Representatives heard testimony on HB 2496, which would expand the historic preservation tax credit program. This program provides tax credits to qualified historic preservation projects. I testified at the hearing, and my written testimony is at Kansas historic preservation tax credits should not be expanded.

The idea of tax credits confuses some people. Some may confuse credits with a tax deduction. Some may believe that tax credits are given out at no cost to the state. But in fact, the tax credits are quite costly. As I told the committee members, if the state grants a tax credit, and then does not reduce state spending by the amount of the tax credit, other taxpayers in Kansas have to make up the difference.

That’s one of my core reasons for opposing the tax credits. Since the state does not — and is not likely to — reduce spending by the amount of credits granted, the result is a transfer of money from Kansas taxpayers to the recipients of the credits. But even if the state did reduce its spending, the result would still be a implied decision by the state that it can better decide how to spend money than its citizens can.

Besides this, the arguments of those in favor of the historic preservation tax credits are self-serving and in some cases misleading. Some of the conferees are involved in projects that were to receive tax credits. They are not happy now that they may not get them.

Other conferees were local units of government such as Dale Goter, lobbyist for the City of Wichita. Wichita has a big stake in the tax credits, as the renovation of the Broadview Hotel is on hold because the developers may not receive the tax credits. The developers and the city claim that the project is not economically feasible without the tax credits. We don’t really know whether this is true. When government subsidy is available, people have a way of designing project budgets in a way the requires the subsidy. Why would someone turn down free money?

It should also be noted that the tax credits the Broadview developers are seeking — perhaps $3 million to $4 million — are on top of many millions in subsidy the city has already approved.

The arguments of other conferees must be questioned. Brenda Spencer of Wamego, who owns a preservation consulting business, told of a project in Leavenworth that will house a company employing 400 people. This results, she said, in an annual payroll of $26 million, with resultant tax dollars flowing to the state and local government.

The problems with this illustration of the purported success of the historic preservation tax credit program are these: Would the jobs not have been created unless there was a historic property to house the workers? Could the workers work somewhere that wouldn’t require tax credits? These jobs: are they new jobs? Were the workers formerly unemployed, or did they leave other jobs to work in the historic building? To the extent that happened, the jobs, with their tax payments to the state, can’t be counted as new.

Christy Davis, owner of another preservation consulting firm, testified that since 2001, the tax credit program has leveraged $264 million in private dollars, which she said is a 400% return on investment for the state. The problem with this analysis (it was made by others, too) is that it assumes that none of the projects would have proceeded if not for the tax credits. It credits the program as being the only reason why this activity took place. This is undoubtedly false.

Further, this analysis treats the state as though it were the owner of these properties. That isn’t true, either.

Davis also testified that since work on historic buildings is 50% more labor intensive than new construction, the tax credit program has the effect of a jobs creation program. I doubt that the developers of historic preservation projects see creating a lot of jobs as a benefit. To business, workers are a cost to be controlled, not a benefit to be expanded. If the state wants to view historic preservation as a jobs creation program — meaning that more jobs are better than fewer jobs — let the state mandate that, say, power tools can’t be used on these projects. Then even more workers will be needed.

Can we also agree that owners of firms that profit from a government program qualify as a special interest?

Goter, Wichita’s lobbyist, also stated in his written testimony: “The return on investment for the public dollar spent on historic renovation is totally recovered in a 10 year span from increased property taxes alone. That return is shared by local and state governments through their respective mill levies.”

This statement reveals the flaw in the reckoning used by government in making economic development calculations. To government, the return is in the form of increased tax revenue. Many citizens don’t view things the same way. For government to make an investment of taxpayer funds just so it can receive even more tax revenue is appealing to government bureaucrats and politicians who want to expand their sphere of influence and control. But not so much for everyone else.

For me a lesson I learned from the hearing is how easily those who consider themselves fiscal conservatives can become derailed by programs like this. Olathe Representative Arlen Siegfreid, a member of the Taxation Committee as well as Speaker Pro Tem of the Kansas House of Representatives, offered written and oral testimony in favor of this bill.

Support of this bill is at odds with his stated positions. On his personal website, under the heading “Fiscal Responsibility” appears this sentence: “However, particularly in times of economic peril, sometimes the ‘wants’ we’ve fertilized with ample resources grow to become ‘needs’ and our well intentioned investments in promising ideas and programs become the dangerous government growth that each candidate swears to defend against at all costs on the campaign trail.”

The historic preservation tax credit program, as reported in an audit recently completed by the Legislative Division of Post Audit, has grown tremendously from its initial cost. The audit, titled Kansas Tax Revenues, Part I: Reviewing Tax Credits, identifies the historic preservation tax credit as a program that the legislature may want to re-evaluate, as the program is significantly more expensive than originally planned. The fiscal note that accompanied the tax credit legislation when passed in 2001 and revised in 2002 reported an estimated annual cost of $1 million. In 2007, the actual cost was $8.5 million.

This is an example of a government spending program growing out of control — the type of “dangerous government growth” Siegfreid mentioned above.

Siegfreid’s website also states: “My subsequent re-elections affirm that notion, and I’m now more committed than ever to reducing the strain government and it’s [sic] failed policies are placing on individual taxpayers — and our local businesses.”

As mentioned above, when the state grants tax credits, other Kansas taxpayers have to pay more taxes to make up the shortfall in revenue. This is an example of the type of strain Siegfreid says he is against.

Finally, Siegfreid has authored a tax simplification bill, stating that “Kansas tax policy is too complicated.” Tax credits are an example of increasing complexity of the state’s tax code.

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Kansas historic preservation tax credits should not be expanded

by Bob Weeks on March 3, 2010

in Kansas state government

Testimony to be delivered to the Kansas House Taxation Committee.

The Kansas historic preservation tax credit system should not be expanded beyond its current limit.

We must recognize that a tax credit is an appropriation of Kansans’ money made through the tax system. If the legislature is not comfortable with writing a developer a check for over $1,000,000 — as in the case with one Wichita developer — it should not make a roundabout contribution through the tax system that has the same economic impact on the state’s finances.

While I would not recommend writing checks to developers, this practice would be more efficient than the current system of subsidy through the tax system. Last month the Legislative Division of Post Audit (audit 10PA03.1) found that the system is not efficient: “Our review showed that, on average, when Historic Preservation Credits were transferred to generate money for a project, they only generated 85 cents for the project for every dollar of potential tax revenue the State gave up.”

Furthermore, the Department of Revenue has not been tracking the tax credits accurately, significantly under-reporting the cost of the program to the legislature. The audit found that “Finding problems like these in a relatively small sample raises questions about the integrity of the Department’s tax credit information.”

The confusing nature of tax credits leads citizens to believe that they have no cost to the state. A leader of an economic development group in Wichita recently asked questions of me that lead me to conclude that he did not understand the economic effect of tax credits.

The program often ends up being welfare for the wealthy. In Wichita the tax credits have been used to renovate a building with condos selling for $300,000 to $950,000. A current case would have a developer in Wichita receive over $1,000,000 for rehabbing apartments that will rent for $1,000 to $2,000. Perhaps $3 million to $4 million will go to the developer of a hotel in downtown Wichita.

We should recognize that living or working in a historic building is a premium amenity that one chooses, just like one might choose granite countertops in their kitchen. We shouldn’t expect others to pay for these voluntary choices.

In Wichita, many of the projects where historic preservation tax credits are sought are already receiving other forms of subsidy, such as TIF financing and property tax abatements.

Some have said that the tax credits put people to work on projects. I would suggest that when Kansans keep their own money — instead of subsidizing wealthy developers — they spend or invest it in ways that they feel best advances their position in life. This too is economic activity that creates jobs.

I have more material about this issue at my website “Voice For Liberty in Wichita” at WichitaLiberty.org. Along the top, click on “Search” and search for historic tax credits for more information. Or, please contact me by email or telephone and I will send you articles.

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Strange happenings in Kansas at Washington Days

by Bob Weeks on February 28, 2010

in Kansas state government

As reported by Martin Hawver in Hawver’s Capitol Flash:

Lobbyists were talking about one of the stranger receptions that they’ve attended in recent memory: one organized by [Kansas Governor Mark] Parkinson to introduced lobbyists and political operatives to Tom Holland, D-Baldwin City, who is seeking the governorship.

Strange: Lobbyists weren’t asked for checks, weren’t pressured, just given a chance, for free, to talk to Holland and learn more about him. That isn’t often done in Kansas.

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Kansas long-term debt on the rise

by Bob Weeks on February 28, 2010

in Kansas state government

On Saturday in Arkansas City, Kansas House Member Kasha Kelley gave an overview of the Kansas budget. One of the topics she presented was the rise in long-term debt issued by the state.

I investigated, and found these figures from the Kansas Comprehensive Annual Financial Report for 2009. As you can see, the debt in Kansas has been rising.

Kansas long-term debt per person

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AFP-Kansas launches website about tobacco taxes

by Bob Weeks on February 28, 2010

in Kansas state government

Following is a press release from Americans for Prosperity, Kansas chapter.

TOPEKA, KAN. – The Kansas chapter of the grassroots group Americans for Prosperity is working to educate Kansans on the effects of tobacco tax increases on Kansas businesses by creating a new Web site, StopTheWarOnSmokers.Com.

Gov. Mark Parkinson last month proposed a cigarette tax increase of 55 cents per pack, raising the rate from its current 79 cents per pack to $1.34 per pack.

“History has shown us that raising the cigarette tax has not increased the revenues coming into the state over the long run,” said AFP-Kansas state director Derrick Sontag. “There may be an initial boost, but with nearby states like Missouri only adding a 17-cent tax per pack, more Kansas smokers are likely to cross the state line to purchase cigarettes.

“This means Kansas retailers are losing out on those sales, as well as the sales of other items smokers may purchase when buying tobacco products.”

Economist Patrick Fleenor of Fiscal Economics has prepared a study, “Masters of Tax Avoidance: Kansans and the Cigarette Excise, 1927-2009,” which outlines the state’s history of taxes on tobacco. It illustrates the problems the state runs into when taxes are raised too high on items such as cigarettes, and the lengths to which citizens will go to avoid paying that additional tax.

“In looking at our state’s history with cigarette taxes, it is apparent raising these taxes does not serve as a deterrent from smoking,” Sontag said. “It also makes little sense to try to raise revenues from cigarettes when just yesterday the Kansas Legislature approved a ban on smoking in public places.

“Additionally, we know the revenues have dwindled not long after the cigarette taxes increased in the past, so it’s simply unwise for our state government to depend on such an unreliable revenue stream.”

For more information on Kansas cigarette/tobacco taxes, or to read Fleenor’s study, visit www.stopthewaronsmokers.com.

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Your Kansas Tax Dollars: Efficient, Effective & Targeted?

by Bob Weeks on February 25, 2010

in Kansas state government

Following is a press release concerning an event of interest this Saturday in Arkansas City.

Arkansas City (February 16, 2010) – “In any economy, but especially our current economy, the use of tax dollars is an issue every Kansas taxpayer should be interested and involved in. As we visit with citizens, we’re finding they do not truly understand how their state tax dollars are spent. Unfortunately this makes it difficult for them to participate in the discussion over how to solve our state’s fiscal crisis, and we certainly want and need their input. We are excited about the opportunity to have a broad public dialogue regarding use of tax dollars,” said Steve Abrams and Kasha Kelley, 32nd District Senator and 79th District Representative respectively.
[click to continue…]

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Kansas sales tax exemptions don’t hold all the advertised allure

by Bob Weeks on February 22, 2010

in Kansas state government

Advocates of eliminating sales tax exemptions in Kansas point to the great amount of revenue that could be raised if Kansas eliminated these exemptions, estimated at some $4.2 billion per year. Analysis of the nature of the exemptions and the amounts of money involved, however, leads us to realize that the additional tax revenue that could be raised is much less than spending advocates claim, unless Kansas was to adopt a severely uncompetitive, and in some cases, unproductive tax policy.

Tax exemption policy is an important economic policy matter. A recently-released study by the Kansas Legislative Division of Post Audit is titled Kansas Tax Revenues, Part II: Reviewing Sales Tax Exemptions. In its background discussion, the report noted “the U.S. Supreme Court’s opinion that tax exemptions and tax deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income.”

Sometimes these tax exemptions are issued to specific organizations. Others are issued to organizations that fall within certain categories. In this case, the exemption is like an entitlement, granted to any organization that falls within the scope of definition of the exemption. Some exemptions are for categories of business activity that shouldn’t be taxed.

It’s this last category that is important, because of the large amount of economic activity that falls within its scope. An example is exemption 79-3606 (m), described as “Ingredient/Component parts: Of items manufactured or produced for sale at retail.” The audit report estimates that for 2009, this exemption cost the state $2,248.1 million in lost sales tax revenue.

But this exemption isn’t really an “exemption,” at least if the sales tax is a retail sales tax designed to be levied as the final tax on consumption. That’s because these goods aren’t being sold at retail. They’re sold to manufacturers who use them as inputs to products that, when finished, will be sold at retail. Most states don’t tax this type of sales. If Kansas decided to tax these transactions, it would place our state’s manufacturers at a severe disadvantage compared to almost all other states.

There are two other exemptions that fall in this category of inputs to to production processes, totaling an estimated $461 million in lost revenue.

Another big-dollar exemption is “items already taxed” such as motor fuel. This is an estimated $232.5 loss in revenue. Two other categories of exemptions are purchases made by government, or purchase made by contractors on behalf of government. Together these account for an estimated $449.9 million in lost revenue. If these two exemptions were eliminated, the government would be taxing itself.

All told, these six exemptions account for $3,391.5 million of the total $4,234.2 million in exemptions for 2009. That’s about 80%.

So $4.2 billion has shrunk to $842.7 million. That’s still a lot of money, but not near as much as spending advocates would like to have Kansans believe is lying in wait just for the taking.

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Smoking ban advocate says some claims just smoke

by Bob Weeks on February 22, 2010

in Kansas state government

In Kansas, accurate information is sometimes in short supply when talking about smoking bans. From Kansas Watchdog:

Opponents to a statewide total smoking ban say anti-tobacco advocates are playing a little loose with their facts.

They have an unlikely ally in Michael Siegel, a medical doctor and professor of community health sciences at Boston University’s School of Public Health. He’s a long-standing anti-tobacco advocate, a proponent of smoking bans and a strong critic of bad science.

In a story published Feb. 18 on his weblog, “The rest of the Story: Tobacco News Analysis and Commentary,” Seigel wrote, “It is irresponsible to disseminate conclusions that are not supported by any scientific evidence, especially if that information will be used to infringe upon the freedom, autonomy, and rights of individuals.”

Read the entire story at Smoking Ban Advocate Says Some Claims Just Smoke.

Additional coverage of recent legislative testimony on this issue is at Fuzzy “Facts” vs Freedom in Smoking Ban Debate and Smoking Ban Bill Causes Controversy in House Committee.

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Americans for Prosperity model budget to be presented

by Bob Weeks on February 21, 2010

in Kansas state government

This Friday Derrick Sontag, Kansas State Director for Americans for Prosperity, will address members and guests of the Wichita Pachyderm Club. His topic is “An update on the budget shortfall in Kansas, how we got there through excessive spending, and how our state’s tax burden compares with neighboring states.”

AFP’s model budget for Kansas is titled Commonsense Budget Proposal. It contains “a roadmap for legislators seeking to make Kansas government more efficient — and less costly — without turning to Kansas taxpayers,” according to Sontag.

All are welcome to attend Pachyderm club meetings. The program costs $10, which includes a delicious buffet lunch including salad, soup, two main dishes, and ice tea and coffee. The meeting starts at noon, although it’s recommended to arrive fifteen minutes early to get your lunch before the program starts.

The Wichita Petroleum Club is on the ninth floor of the Bank of America Building at 100 N. Broadway (north side of Douglas between Topeka and Broadway) in Wichita, Kansas (click for a map and directions). Park in the garage just across Broadway and use the sky walk to enter the Bank of America building. Bring your parking garage ticket to be stamped and your parking fee will be only $1.00. There is usually some metered and free street parking nearby.

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Eric Payne, Joseph Scapa address county Republicans

by Bob Weeks on February 19, 2010

in Kansas state government

Last night’s meeting of the Sedgwick County Republican Party featured speeches by two candidates for the Republican party nomination for the Kansas House of Representatives from the 87th district. Democrat Raj Goyle is the incumbent, and he is not seeking re-election.

Eric Payne (campaign website) and Joseph Scapa (campaign website not available) each spoke for about 15 minutes. Both are young businessmen running for office for the first time. The filing deadline is not until June, so more Republicans could enter this race. No other party has announced a candidate. Payne has been running for six months and has raised substantial campaign funds. Scapa announced his candidacy at the end of January.

Eric Payne

Payne, who works in his family’s propane business, told of growing up in Salina and graduating from Kansas State University. He said that after building a house in the 87th district, he became concerned about Goyle’s representation of the district.

Payne said that Kansas government needs to be run as he does his business, keeping expenses low and running as efficiently as possible. He noted the all-time high number of Kansas government employees, presently numbering 40,000. He noted that Kansas government spending has increased rapidly since 2004 while revenue increased at a slower pace, which he called unsustainable. This happened while the Kansas economy and population remained relatively stable, he said.

He spoke in favor of limited government, mentioning four core principles: lowering the tax burden, refocusing government agencies on their core missions, improving efficiency and transparency in spending, and promoting a common sense government.

Payne said that Kansas needs to be a leader in attracting business and driving our economy through entrepreneurship and productivity, two concepts he said were not foreign to Wichitans.

He called for simplification of the Kansas tax structure, one that would have low rates on a broad base.

Payne said he is a pro-life Republican, committed to protecting traditional family values. He supports the second amendment right to self-defense.

Joseph Scapa

Scapa said he was born and raised in Wichita, attending North High School, Wichita State University, and Tabor College. He was president of Association of Collegiate Entrepreneurs at WSU. He said he learned about marketing and business during this time. After working in Management for three years, he has worked as a real estate agent for ten years. He has also served as a substitute teacher in the Wichita public school system.

Scapa said the he’s been planning to run for office for about two years. He said he is a Todd Tiahrt conservative. He wants to make Kansas one of the most business- and family-friendly states. He said the current representative of the 87th district doesn’t represent the values of the district.

He said we should reduce the size of government, which has increased the tax burden on individuals and business. We’ve moved too far away from the Constitution, he said, and we need to return to sustainable government and the Constitution.

People need to know that their tax dollars are being spent wisely, he said, and this requires transparency and integrity.

Reducing the tax burden would help create jobs, and he said he would sign a no new tax pledge.

He said that he is in favor of consolidating school districts to reduce costs. Other agencies could be consolidated where there are duplication of services. He referenced the quote: “Nobody spends someone else’s money as carefully as he spends his own,” saying that if we did that with the Kansas budget, we’d start cutting a lot of things.

On education, Scapa said we need to produce students that are competitive in the job market. Parents need to control the direction of their children’s education, and he supports school vouchers. He said that financial literacy is important to teach. Citing his experience helping young couples buy their first home, he said this is not being taught in schools.

Scapa said he believes in the second amendment and is strongly pro-life.

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Meeting to support Kansas medical marijuana legislation

by Bob Weeks on February 18, 2010

in Kansas state government

Representative Gail Finney, a Democrat who represents parts of east and northeast Wichita, has introduced a bill that would allow the use of medical marijuana in Kansas. On Friday there will be a “call to action meeting” in Wichita regarding this bill.

The meeting will be Friday, February 19th, at 2:00 p.m. The location is Watermark Books & Cafe downstairs meeting room. The address is 4710 East Douglas Ave., at the corners of Douglas and Oliver. The telephone number 316-682-1181.

Rep. Finney says that Chairwoman Rep. Brenda Landwehr of the Health and Human Services Committee has stated she will try to give the Medical Marijuana Bill a hearing after the Feb. 20th turnaround without a specified date. She also stated that she will not work the bill despite the hearing.

She added that without knowing whether or not there will be a hearing, a supportive group from different parts of Kansas has decided to meet. You are welcome to attend and provide suggestions. Or, if you can’t make it and would like to be included, please email me or give me a call.

Contact Rep. Finney at gafinney5@yahoo.com or 316-768-0615. The bill is HB 2610. There is an accompanying fiscal note.

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Kansas historic preservation tax credits audit reveals inefficiency, data problems

February 18, 2010

Yesterday the Kansas legislative Post Audit Committee received an audot recently completed by the Legislative Division of Post Audit. The audit, titled Kansas Tax Revenues, Part I: Reviewing Tax Credits, revealed that the historic preservation tax credit is not efficient. Further, the Department Revenue is not accurately tracking the cost of the program.

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Kansas advocates for disabled face well-funded challenger

February 15, 2010

Friday’s press event held by ACT (Advocates in Communities Team) of South Central Kansas provided an opportunity to learn about disabled Kansans and their families, and the challenges they face from reduced spending by the state.

The stories told at the event and in supplementary materials are compelling. If there is a role for government-provided services to those who can’t help themselves, these are the people.

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Wichita-area legislators to meet with public

February 15, 2010

The South-central Kansas legislative delegation will meet with citizens on Saturday March 6 from 9:00 am to 11:00 am. The location is the Hughes Metropolitan Center at Wichita State University. There will be a presentation on the Kansas budget and written questions from the audience. Representative Steve Brunk is chair of the delegation.

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Ad spotlights rise in Kansas taxes, spending

February 15, 2010

A second ad from the Kansas Policy Institute illustrates the rapid rise in Kansas general fund revenues and spending in recent years. Click on Money Management 102 to view.

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Kansas historic preservation tax credits should be eliminated

February 9, 2010

It’s time to recognize historic buildings for what they are: a premium feature or amenity whose extra cost should be born solely by those who chose to own them or rent them.

Supporters of historic buildings tell us that renovating them is more expensive than building new. Likewise, building a home with granite kitchen counter tops and marble floors in the bathrooms is more expensive than a plainer home. These premium features are chosen voluntarily by the homeowner, and it is right and just that they alone should pay for them.

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Insurance commissioner candidate to speak in Wichita

February 8, 2010

At the Wichita Pachyderm Club this Friday, candidate for the Republican party nomination for Kansas Insurance Commissioner David Powell speak to members and guests.

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State budget ‘gap’ is all about perspective

February 8, 2010

When businesses or individuals talk about cutting their expenses, it means they are going to spend less money that they did in the past. But when governments talk about budget cuts they often have a different perspective: they are spending less than they had hoped to but not necessarily less than the year before. For example, we often heard how Kansas schools had to cut their budgets last year but they still spent $12,660 per pupil, or 3.9% more than the previous year.

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Goal of Kansas tax reform is economic growth

February 4, 2010

Dr. Art Hall, who is Director of the Center for Applied Economics at the University of Kansas has proposed a radical change and simplification to the Kansas tax system. Besides simplification of the way the state collects taxes, the major goal of the proposal is to encourage economic growth in Kansas.

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Kansas model budget released

February 4, 2010

The Kansas Chapter of Americans for Prosperity has released its model Kansas budget for fiscal year 2011. Titled Commonsense Budget Proposal, it contains “a roadmap for legislators seeking to make Kansas government more efficient — and less costly — without turning to Kansas taxpayers,” according to AFP Kansas state director Derrick Sontag.

Read the full article →

Kansas bill would forbid taxpayer-funded pleas for tax increases

February 4, 2010

A bill just introduced in the Kansas Legislature by Representative Joe Patton, a Topeka Republican, would bar taxpayer-funded lobbying for tax increases. The bill is House Bill 2622, captioned “an act concerning the use of public funds for lobbying.”

The bill is very short, the important part being: “No taxpayer funds shall be used for the purpose of employing or contracting for the services of any person whose duty and responsibility includes lobbying for a tax increase.”

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Kansas sales tax increase would cost jobs

February 3, 2010

The Goldwater Institute has issued a report on the lost jobs that an increase in the Arizona sales tax would cause. According to projections by the Beacon Hill group, the one cent increase in the sales tax would bring in $1 billion annually to Arizona state government. But the cost of this sales tax would be 14,400 private sector jobs.

Arizona has about 2.3 times the population of Kansas, so a similar analysis would probably show fewer jobs lost in Kansas. But the number would still be high, we can be sure.

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Kansas scores poorly in initiative and referendum rights

February 2, 2010

Citizens in Charge Foundation — a transpartisan national voter rights group focused on the ballot initiative and referendum process — has released its 2010 Report Card on Statewide Voter Initiative Rights. Those familiar with Kansas will not be surprised to learn that our state scores poorly, as do many other states.

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Kansas taxes have impact

January 28, 2010

Do Kansas taxes have an impact on business location decisions? Are Kansas taxes lower than surrounding states, as claimed by supporters of raising Kansas taxes?

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Kansas tax alert system launched

January 28, 2010

The Kansas chapter of Americans for Prosperity has created an information system to help keep Kansans notified when legislators propose to increase taxes.

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Cause of Kansas budget gap is spending

January 28, 2010

Kansas Governor Mark Parkinson says Kansas has a $400 million budget gap, and he’s proposed increasing sales and cigarette taxes to close it. … If we could hold spending steady for next year — and remember that inflation is running at very low levels — we could get by without a tax increase. If the governor and the legislature would consider tapping some of the available Kansas fund balances, we could even increase spending without tax increases.

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Kansas Senate blocks new journalism

January 24, 2010

Does the application for press credentials to the Kansas Senate contain questions designed to limit or restrict the types of organizations that apply?

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Kansas alternative media discussed on Kansas Week

January 23, 2010

Access to the Kansas Senate by alternative media is discussed on the KPTS Television public affairs program Kansas Week. Bob Weeks is the guest. Tim Brown is the host.

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Dale Swenson on Kansas tax exemptions

January 22, 2010

Do Kansas business tax exemptions benefit only business at great cost to the state? Member of the Kansas House of Representatives Dale Swenson thinks so, according to a recent letter written by him that appeared in the Wichita Eagle.

He cites a Kansas sales tax exemption on the purchase of hearing aids, something Swenson says helps “regular folks.” The way it helps folks — and only those folks with hearing problems, by the way — is by making these purchases less expensive.

But right after this Swenson complains about tax exemptions for business, that, he claims, benefit only business to the detriment of everyone else: “This means average citizens are paying more and more to fund public services, while business pays less and less.”

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Kansas alternative media senate access discussed on WIBW

January 21, 2010

Kansas Watchdog reporting at Kansas Senate decides who is press and who is not may have caught the eye of Topeka radio talk show hosts Raubin Pierce and Megan Mosack, as they invited me to appear on their show today to talk about my inability to obtain press credentials at the Kansas Senate.

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Kansas property tax reform proposed

January 20, 2010

The Kansas Policy Institute has released a proposal for property tax reform in Kansas that will protect property owners from what some call “stealth” tax increases. These increases result from the fact that the property tax system has two factors or moving parts: appraised valuations, and the mill levy (or tax rate). Governments — the state and local units such as counties, cities, school districts, fire districts, townships, etc. — may not increase their mill levies, but when appraised values rise, property owners pay more tax and more revenue flows from the private sector to government.

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Kansas Governmental Ethics Commission hearing today

January 20, 2010

Today the Kansas Governmental Ethics Commission is holding a hearing to consider changes to its rules regarding confidentiality. James Meier of Lawrence has experience with these rules, as he relates in Kansas Governmental Ethics Commission in need of reform. Following is the testimony that Meier will deliver at the hearing this afternoon.

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Kansas tax exemptions should be cut

January 19, 2010

One of the ways that Kansas might increase revenue this year is to reduce or eliminate the many sales tax exemptions that our state has issued over the years. The governor didn’t mention this in his state of the state address, but this reform would be a good thing to do, even if we’re not in a tight budget year with legislators desperately looking for revenue or savings.

The Tax Foundation provides some principles of sound tax policy. The many exemptions in Kansas don’t conform to several of these principles.

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Resolution seeks to clarify role of Kansas courts, legislature

January 15, 2010

Kansas House of Representatives member Pete DeGraaf, a Republican from Mulvane, will soon introduce a resolution “concerning the expenditure of public moneys to finance certain litigation against the Legislature or the State of Kansas.” Dick Kelsey will introduce the resolution in the Kansas Senate.

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Kansas governor proposes taxes, smoking ban, green energy projects

January 11, 2010

Kansas Governor Mark Parkinson’s State of the State address Monday proposed two new taxes, a ecomprehensive statewide smoking ban, and a cabinet team to promote green energy projects. He didn’t propose closing tax exemptions, and he made no mention of a way that could help Kansas make it through a fiscal shortfall.

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Kansas legislative scorecards, rankings

January 9, 2010

As the 2010 Kansas Legislature prepares to convene, Kansans need to know the true voting record of members of the legislature. Legislative scorecards or ratings can be a valuable resource for leaning about the actions and record of legislators.

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Kansas fund balances disputed despite evidence of their existence, benefit

January 7, 2010

The Wichita Eagle op-ed by Kansas State School Board Member David Dennis (Fund balances won’t save schools) and another by Rhonda Holman dispute evidence that Kansas can make it through the current financial situation by making use of large fund balances in state agency accounts.

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