In this excerpt from WichitaLiberty.TV: There are things simple and noncontroversial that the Kansas Legislature should do in its upcoming session. View below, or click here to view at YouTube. Originally broadcast January 3, 2016.
Difficulty balancing the Kansas budget is different from, and has not caused, widespread spending cuts.
Across the state Kansas newspapers declare Governor Sam Brownback’s tax cuts a failure. There are two prongs of criticism. One is that the budget is not balanced; that is, the state is spending more than it has received in revenue. That has been true, especially for fiscal years 2014 and 2015. That problem can be fixed by either collecting more revenue, or by cutting spending. Last year the Governor and the Legislature decided to balance the budget by relying, almost entirely, on collecting more revenue. Raising taxes, in other words.
The second prong of attack on the tax cuts is to hold them responsible for spending cuts. This is what really upsets the state’s liberals and moderates. Here’s an example. Former Kansas State Budget Director Duane Goossen recently wrote “The Brownback tax cuts brought the revenue stream down so significantly that truly damaging expense cuts coupled with a sales tax increase have not repaired the budgetary mess.” (emphasis added) (I will agree with Goossen that we have a problem with the budget, a problem that could be fixed with relatively small reforms in spending. But Goossen wants more revenue.)
But have there been severe spending cuts in Kansas? “Truly damaging” cuts? While some programs have been trimmed, overall state spending continues on a largely upward trend (for all funds spending) or remains mostly flat (for general fund spending).
So why are Kansas liberals and moderates upset? It is the spending of money by government that is important when considering how well the state is providing the services liberals and moderates (conservatives, too) look for government to provide. Taxation is merely one way to pay for government spending. And spending isn’t declining.
Is this an important distinction?
For the years when Kansas was spending down its bank balance, the state was experiencing the benefit of Washington-style deficit spending. That is, the state was spending more than it collected in revenue. The difference is that Kansas made up the revenue deficit by using savings rather than debt. (At least mostly so.)
(Another difference between Kansas and federal spending is that Kansas can’t continue to borrow to support spending unless it engages in extraordinary measures, some of which may have happened. The federal budget, however, has been in a permanent state of deficit spending since 2000 and appears to remain in deficit for as far as anyone can project.)
The takeaway is that problems with balancing the budget is not the same as spending cuts. We’ve had the former, but not the latter, when considering the entire budget.
Nearby charts show Kansas government spending, from both the general fund and all funds spending. One chart shows total dollars spent, and one shows per-capita spending. Both are adjusted for inflation. On these charts it’s difficult to see where total spending has been cut or slashed in recent years. All funds spending continues its upward trend, with a few exceptions. General fund spending remains level or trending slightly upwards.
Notes for charts:
Data is from Kansas Fiscal Facts 2015
2015 through 2017 are approved figures, not actual spending
2015 and beyond population are my estimates
CPI is Consumer Price Index – All Urban Consumers, CUUR0000AA0
Besides the official Kansas Legislature resources, there are also these:
When tweeting about the legislature, most writers will use the hashtag #ksleg. To see these tweets, search for that. You don’t need a twitter account; just browse to twitter.com and use the search feature. To get the most results, click “Live” from the menu that appears.
Advocacy groups and lobbyists
Advocacy groups often create and publish much material about the legislature and Kansas government. Often these groups have an ideological stance that may color or influence their material. Some of these groups may report on the daily activity at the Capitol that affects their area of interest. Some leading examples:
Some lobbyists and organizations publish material that may be helpful. Examples include League of Kansas Municipalities and
the law firm Foulston Siefkin with its weekly newsletter Kansas Legislative Insights (available on this page).
Many legislators maintain an active presence online. It may be through an active website, email newsletters, Facebook pages, or Twitter feeds. Probably the best way to find these outlets for legislators is to use Google or your favorite search engine. Examples include Amanda Grosserode (sample newsletter here) and Stephanie Clayton (Facebook page here, Twitter feed here).
Has continually “robbing the bank of KDOT” harmed Kansas highways?
The long-time practice of transferring money from the state’s highway fund to the general fund — known as “robbing the bank of KDOT” — is criticized as being harmful to the condition of the state’s highways.
Data from Kansas Department of Transportation shows that the condition of Kansas highways improved during the 1980s and 1990s. The highways have remained in a high level of condition since then.
This is not to argue in favor of transferring highway funds, but to show that Kansas highways are not deteriorating as some alledge.
An interim version of a report presents possibilities of saving the state $2 billion over five years.
This week the Kansas Legislature received an interim version of the efficiency report it commissioned last year. Said by its creators to involve a team of more than 40 professionals who devoted over 6,000 hours, it is described as an “in-depth analysis of the operations of [participating state] agencies.”
The bottom line is this: “This report includes 105 recommendations which cumulatively would provide $2.04 billion in benefits to the State over the next five years.”
Undoubtedly this report will be the subject of discussion and debate over the next few years. It is through that process we will discover which recommendations are feasible, and more importantly, which are within the realm of political possibilities.
It’s important to place this report in context. In 2012 the legislature reduced tax rates. While some, perhaps many, do not like the way the tax cuts were distributed, a central fact remains: The cuts were designed to leave more money in the private sector. Therefore, state government needed to shrink in order to match the lower revenue. But that did not happen. The governor and legislature were unwilling to make meaningful spending cuts. Instead, the state used its positive bank balance to support increased spending, and then in 2015 raised taxes.
The question is this: Why didn’t the legislature initiate this efficiency study in 2012? Why did it wait until 2015? The authors of the study claim there is much savings to be had, more than what was needed to reconcile spending with revenue the past few years. But the last three years are now lost to time. If it’s true that the efficiency study will yield real savings, then the governor and legislature were three years late starting the process. There is no excuse for that, and all parties deserve criticism. The savings could have been used to reduce the burden of the state’s high sales tax on groceries for low-income families. The savings could have been used to tackle the waiting lists for social services. But these opportunities have been squandered.
More context is that Kansas liberals and moderates almost universally condemn the study and its $2.6 million price tag. But if the study produces real savings, they can be used to fund items like the two mentioned in the previous paragraph, or for other spending programs liberals and moderates want.
Finding a copy of the report online is not straightforward. Click here to view.
In order to simplify this chart, I created four groups of taxes. As there are many taxes that are small in amount, I group them together as “Other.” For the group “Sales” I include the general sales and use tax, plus the cigarette and tobacco tax, plus liquor and beer tax, as these are of the same nature as the general sales tax.
Note this is both taxes collected by the state, and also by local governments.
Source of data is Kansas Tax Facts, various years. Values are nominal; not adjusted for inflation. To access the interactive visualization that is the basis of the example shown below, click here.
Citizens who want to be informed of the happenings of the Kansas Legislature have these resources available.
The Legislature’s site at kslegislature.org has rosters of members, lists of committees, lists of bills, journals (the daily record of proceedings in each chamber), calendars (the plan for the day, along with topics for upcoming committee meetings).
A useful feature is the “Current Happenings” link for both the House and Senate. This has a link to the bills that have seen movement in some way each day. The page for each bill is generally useful, too, with the steps in the bill’s history, along with links to the bill text, fiscal and supplemental notes, and other material. Fiscal notes — prepared by the Division of Budget — estimate the financial impact of a bill, while the supplemental notes — prepared by Kansas Legislative Research Department — contain background and explanatory information. When attempting to understand legislation, the fiscal and supplemental notes are very useful.
Audio and video
Both the House and Senate broadcast audio of their proceedings. But you must listen live, as the broadcasts are not made available to the public in any other way. It would be exceedingly simple to make these past broadcasts available to the public, as explained here. But the legislature does not retain audio recordings of sessions.
The Kansas Legislature does not make available video of its proceedings.
Kansas Legislative Research Department (KLRD) has many documents that are useful in understanding state government and the legislature. This agency’s home page is www.kslegresearch.org. Of particular interest:
Kansas Legislative Briefing Book. This book’s audience is legislators, but anyone can benefit. The book has a chapter for major areas of state policy and legislation, giving history, background, and explanations of law. In some years the entire collection of material has been made available as a single pdf file, but not so this year. Contact information for the legislative analysts is made available in each chapter. The most recent version can be found on the Reports and Publications page. The version for 2015 is available here. A version for the 2016 session should be available soon. Update: The 2016 version is now available here.
Of note, versions of the briefing book from years past are useful. KLRD doesn’t provide links to these old documents, but they are available. The search feature of the page (top right corner) will find these documents. It forms a Google site-specific search which looks like this: “site:www.kslegresearch.org summary of legislation.” The same works for old versions of other KLRD documents.
Kansas Fiscal Facts. This book, in 134 pages, provides “basic budgetary facts” to those without budgetary experience. It provides an overview of the budget, and then more information for each of the six branches of Kansas state government. There is a glossary and contact information for the fiscal analysts responsible for different areas of the budget. This document is updated each year. The most recent version can be found on the Reports and Publications page.
Legislative Procedure in Kansas. This book of 236 pages holds the rules and explanations of how the Kansas Legislature works. It was last revised in November 2006, but the subject that is the content of this book changes slowly over the years. The direct link is Legislative Procedure in Kansas, November 2006.
How a Bill Becomes Law. This is a one-page diagram of the legislative steps involved in passing laws. The direct link is How a Bill Becomes Law.
Summary of Legislation. This document is created each year, and is invaluable in remembering what laws were passed each year. From its introduction: “This publication includes summaries of the legislation enacted by the 2015 Legislature. Not summarized are bills of a limited, local, technical, clarifying, or repealing nature, and bills that were vetoed (sustained).” 200 pages for 2015. The most recent version can be found on the Reports and Publications page.
Legislative Highlights. This is a more compact version of the Summary of Legislation, providing the essentials of the legislative session in 12 pages for 2015. The most recent version can be found on the Reports and Publications page.
Kansas Tax Facts. This book provides information on state and local taxes in Kansas. The most recent version can be found on the Revenue and Tax page.
Kansas Statutes. The laws of our state. The current statutes can be found at the Revisor of Statutes page.
Kansas Register. From the Kansas Secretary of State: “The Kansas Register is the official state newspaper. This publication provides a wide range of information such as proposed and adopted administrative regulations, new state laws, bond sales and redemptions, notice of open meetings, state contracts offered for bid, attorney general opinions, and many other public notices.” The Register is published each week, and may be found at Kansas Register.
Since statistics were gathered and this article was written in February, several committees have used the commercial file-sharing service Dropbox to make testimony and documents available to everyone. This is a reasonable way to accomplish an important goal.
Availability of testimony in the Kansas Legislature
Despite having a website with the capability, only about one-third of standing committees in the Kansas Legislature are providing written testimony online.
On the Kansas Legislature website, each committee has its own page. On these committee pages there are links for “Committee Agenda,” “Committee Minutes,” and “Testimony.” But in most cases there is no data behind these links.
In particular, the written testimony and informational presentations provided to committees would be of interest and value to citizens. Most committees — perhaps all — require conferees to supply a pdf or Microsoft Word version of their testimony in advance of the hearing. These electronic documents could be placed online before the committee hearing. Then, anyone with a computer, tablet, or smartphone could have these documents available to them.
Having committee testimony online would be extremely useful for those who attend hearings. Often there is only a limited number of printed copies of testimony available, so not everyone gets a copy.
This would not be difficult to accomplish. It would cost very little, perhaps nothing.
Plus, citizens could access these documents. Of note, many organizations that regularly testify before the legislature make their testimony available on their own websites. Examples include Kansas Association of School Boards and Kansas Policy Institute.
Publishing testimony online would be an easy matter to accomplish and would be a great help to those following the legislature. It would cost very little or nothing.
Following is a list of all standing committees of the legislature and whether they have any testimony online for the 2015 session. A notation of “Yes” does not imply that all testimony is available online. It means that I found some testimony. Some committees are not listed as they do not meet for the purpose of receiving testimony. (Calendar and Printing in the House is an example.)
Of the 40 standing committees that I examined, 26 do not provide any testimony online.
Click here for an updated version of this article.
There exists a simple and inexpensive way for the Kansas Legislature to make its proceedings more readily available.
Proceedings of the Kansas Senate and House of Representatives are broadcast on the internet. That’s good. But the broadcasts are carried only live. There is no archive of recordings. Citizens must listen live, or figure out some way to record the audio. It’s possible, but beyond what most people are willing to do. And given the unpredictable schedule of the legislature, you can’t simply set a timer to start at a certain time each day.
There is a desire by some for live video of the proceedings, which would be great. Even better is archived video, where a person doesn’t have to watch live. But these options are expensive. The expenditure would be worthwhile, but there doesn’t seem to be much desire to spend on this.
Audio, however, provides almost all the benefit of video of legislative proceedings. And it’s cheap. For eight dollars per month the legislature could make audio recordings of its proceedings available to listen to at any time.
For eight dollars per month at least one podcast hosting company offers an unlimited plan. Unlimited storage, and unlimited bandwidth. That’s just what is needed 1. Since the audio of the proceedings is broadcast on the internet, it must pass through a computer somewhere. That computer could also be recording the audio. Once recorded, the process of uploading the audio to the podcast host is a trivial procedure. The recording needs no editing. (In fact, any editing other than cutting away silence before the start and after the end of the session must be disallowed.)
But there’s a problem. Neither Kansas legislative chamber records their proceedings, according to the Secretary of the Senate and the Chief Clerk of the House.
Making audio archives or podcasts of legislative session would be so simple. It is almost without cost. It would have great benefit. Interns could do the work, and it would be good experience for them.
But the Kansas Legislature doesn’t do this. We need to ask legislative leaders to make this happen.
- For $79 per month the same company offers a plan geared towards business, with features like multiple administrative users. This is probably more appropriate for the Legislature. But the eight dollar plan would work, too. ↩
Kansas Senate President Susan Wagle spoke to members and guests of the Wichita Pachyderm Club on Friday December 18, 2015. She addressed challenges the legislature will face when the session starts in January.
Todd Johnson, Chair of the Sedgwick County Republican Party, introduced Senator Wagle.
This is an audio presentation.
Natalie Bright and Marlee Carpenter of Bright and Carpenter Consulting briefed members and guests of the Wichita Pachyderm Club on the results of the 2015 session of the Kansas Legislature, and what to look for in next year’s session and elections. December 4, 2015.
The accompanying visual presentation may be viewed here.
The Center on Budget & Policy Priorities (CBPP) is at it again, pushing their political viewpoint disguised as economic analysis, writes Dave Trabert of Kansas Policy Institute.
CBPP pushes political viewpoint as economic analysis
By Dave Trabert, Kansas Policy Institute
Well, the Center on Budget & Policy Priorities (CBPP) is at it again … pushing their political viewpoint disguised as economic analysis. CBPP’s November 30 blog post attempts to use Gross Domestic Product (GDP) data to warn other states that Kansas’ tax reform is failing.
CBPP’s simplistic look at annual changes in GDP seems merely designed to support their political preference for higher taxes and spending, as a look at the underlying data throws a lot of cold water on their contention.
First of all, CBPP is talking about total real GDP, which includes government and is adjusted for inflation. The intent of tax reform was to grow the private sector, not government, so an honest analysis would at least show the difference. The CBPP chart shows 2013 growth at -0.3% for Kansas and 1.9% for the nation; Kansas also trailed (1.8% to 2.2%) in 2014. The adjacent table shows private sector growth is closer to the national average, but that is just the beginning.
Tax policy certainly has an impact on economic growth but some change is unrelated to tax policy. For example, Kansas is much more reliant on aerospace that most states and changes in that industry are driven by global demand more than anything else. The Kansas economy is also more reliant on oil and gas than most states, so declining oil prices have disproportionate economic impact on extraction and refining.
Each of those three areas declined in 2013 (aerospace is a sub-sector of Other Transportation Equipment Manufacturing) in Kansas but they increased in the nation as a whole. But Kansas outperformed the nation on everything else (97% of the U.S. economy, 95.4% in Kansas), growing 2.5% to the nation’s 2.2%.
That’s not to say that tax reform is a success — it’s far too early to judge — but it does show that factors other than tax reform had a very significant negative impact in 2013.
Let’s now look at 2014. BEA has not yet published sub-sector data for 2014 but we can look at the sectors that include them. Mining (oil & gas extracting) increased in Kansas and the nation, but much less so in Kansas. Non-Durable Goods (petroleum manufacturing) did slightly better in Kansas than across the nation but Durable Goods (aerospace) declined in Kansas while the nation as a whole increased. But once again, everything else grew faster in Kansas (2.5%) than the nation overall (2.3%).
We won’t know for certain until the sub-sector data is published, but there is a reasonable possibility that, aside from those three relatively small sub-sectors, Kansas again outperformed the rest of the nation in private sector GDP.
This is really easy information to find if one bothers to look, but CBPP apparently isn’t interested in real economic analysis; they distort data to support their political perspective as we have shown here and here.
The 2015 projection comes from Kansas Legislative Research and appears to include government rather than just reflect the private sector. Their underlying rationale has been requested and will be addressed here once they provide the data.
Mike O’Neal, President of Kansas Chamber of Commerce, spoke to members and guests of the Wichita Pachyderm Club on October 9, 2015. His topic was “The Kansas Budget and Taxes: The 2015 Legislative Session and Looking Ahead to the 2016 Legislative Session.” This is an audio presentation.
Reporting from the Wichita Eagle on this event is here, but be sure to read the comment by Dave Trabert of Kansas Policy Institute:
The Eagle’s analysis here is just wrong. The statute does not refer to current spending as the Eagle used, but total spending.
72-64c01. Sixty-five percent of moneys to be spent on instruction. (a) It is the public policy goal of the state of Kansas that at least 65% of the moneys appropriated, distributed or otherwise provided by the state to school districts shall be expended in the classroom or for instruction. http://www.kslegislature.org/…/072…/072_064c_0001_k/
Absent a qualification limiting the analysis to current spending or anything else, the statue applies to total spending.
Total spending according to KSDE in 2014 (2015 hasn’t been publised) was $5,975,517,681 and Instruction spending (downloaded and tabulated across all funds in the KSDE Comprehensive Fiscal and Performance System) was $3,293,217,088, which is 55.1% of spending. Mike O’Neal correctly said that Instruction accounted for 55% of total spending.
The difference between actual spent on Instruction and 65% is therefore $591,576,250. That is more than $500 million…and the Eagle is again wrong on the facts.
FYI, the definition of Instruction comes from KSDE and the US Dept of Education…and has not changed over the period.
Can eliminating sales tax exemptions in Kansas generate a pot of gold?
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 $5.9 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 and harshly regressive tax policy.
A recent advocate for eliminating some sales tax exemptions is Phillip Brownlee of the Wichita Eagle editorial board. In a previous op-ed on this topic he wrote ” And with each added exemption, the state is losing out on more revenue — $5.9 billion this fiscal year, according to the Kansas Department of Revenue. That’s money the state could be using to cover its budget shortfalls, increase funding to public schools or further reduce its income-tax rates.” At least he mentioned reducing other tax rates. Usually advocates of closing sales tax exemptions simply want more tax money to spend.
$5.9 billion dollars, by the way, is a lot of money, almost as much as the state’s general fund spending. But we need to look at the nature of these exemptions. I’ve prepared a simplified table based on data from the Kansas Department of Revenue. I simplified because there are many deductions that probably should be eliminated, but they represent very small amounts of money.
Some sales tax exemptions are for categories of business activity that shouldn’t be taxed, at least if we want to constrain the state to a retail sales tax only. An example is exemption 79-3606 (m), described as “Property which becomes an ingredient or component part of property or services produced or manufactured for ultimate sale at retail.” The tax that could be collected, should the state eliminate this exemption, is given as $3,083.24 million ($3,083,240,000).
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 production processes, totaling an estimated $632 million in lost revenue. Another similar exemption is “Machinery and equipment used directly and primarily in the manufacture, assemblage, processing, finishing, storing, warehousing or distributing of property for resale by the plant or facility.” Its value is nearly $159 million.
Together, these exemptions account for $3,874 million of the $5,900 million in total exemptions.
Another big-dollar exemption is “items already taxed” such as motor fuel. This is an estimated $318.90 million loss in revenue. Other exemptions are purchases made by government, or purchase made by contractors on behalf of government. These account for an estimated $624.90 million in lost revenue. If these two exemptions were eliminated, the government would be taxing itself.
Not taxing prescription drugs means lost revenue estimated at $96.49 million. If the state started taxing residential and agricultural use utilities, it could gain an estimated $169.98 million. These taxes, like the sales tax on food and the motor fuel tax, fall hardest on low-income families. As Kansas is one of the few states to tax food, do we want to make life even more difficult for low-income households?
Adding these exemptions comes to about $5,084 million. There are other exemptions for which we could make similar arguments for their retention. What’s left over — the exemptions that really should not exist — isn’t much at all. The entire category of “Exemptions to Charitable Organizations by Name.” amounts to $3.05 million in exempted sales tax. These represent the organizations where a lawmaker has crafted an exemption like “Property and services purchased by Jazz in the Woods and sales made by or on behalf of such organization.”
So when the Eagle’s Brownlee writes “As is, favored groups are saving billions of dollars a year, worsening the tax burden for everybody else” he must be including broad categories of business like “All Kansas manufacturing companies” as a “favored group.” Or maybe he means prescription drug users are a “favored group.” Or families struggling to pay utility bills.
But there are more problems. Brownlee describes these sales tax exemptions as a “cost in lost revenue of $5.9 billion last fiscal year.” The only way this makes sense is if one thinks that our property (our money) first belongs to the state, and that in order to spend it, we have to give the state its cut. That’s an opinion — ideology, if you will — that you may agree with, or you may oppose. What’s remarkable — shocking, really — is that in his previous career Brownlee was a Certified Public Accountant. He ought to understand the nature of sales taxes meant to be applied to retail sales, not components of manufactured goods.
There’s no need for Kansas state government to exaggerate the value of agriculture to the Kansas economy.
A recent press release from the office of Kansas Governor Sam Brownback quoted the governor thusly: “Agriculture is our largest economic driver, bringing more than $63 billion into the Kansas economy.” (Governor Sam Brownback visits will reinforce the importance of Kansas agriculture, August 17, 2015.)
$63 billion is a lot of output. It’s about 43 percent of the Kansas economy. A document supplied by the Kansas Department of Agriculture provides more detail: “As shown in the above table, agriculture, food, and food processing supports 229,934.1 jobs, or 12% of the entire workforce in the county [sic]. These industries provide a total economic contribution of approximately $62.8 billion, roughly 43% of Gross Region Product (GRP).” (Estimated Economic Impact of Agriculture, Food, and Food Processing Sectors, May 7, 2015.)
The document explains how such a large number is obtained. It includes three components, explained here: “Direct, indirect, and induced effects sum together to estimate the total economic contribution in the state. Direct effects capture the contribution from agricultural and food products. Indirect effects capture the economic benefit from farms and agricultural businesses purchasing inputs from supporting industries within the state. Induced effects capture the benefits created when employees of farms, agricultural businesses, and the supporting industries spend their wages on goods and services within the state.”
This method of reckoning economic impact is from a model called IMPLAN. It is a proprietary system with methodology and assumptions not open to inspection. It often used by those who are asking government for money or tax breaks. IMPLAN comes up with some real whoppers as to how important an industry is to the economy. When shown these figures, government officials are usually swayed to grant incentives.
There’s a problem, however. Agriculture cannot possibly be responsible for 43 percent of Kansas GDP. The U.S. Bureau of Economic Analysis (BEA) has figures for each state showing the contribution to GDP for industry categories. I’ve gathered the data and calculated percentages for each industry. As you can see, the category “Agriculture, forestry, fishing, and hunting” accounts for $8,136 million or 5.5 percent of Kansas GDP. There are seven other industry categories that rank above agriculture.
5.5 percent is a long way from the governor’s claim of 43 percent. It is true that the title of the paper is “Estimated Economic Impact of Agriculture, Food, and Food Processing Sectors.” So consider these industry subsectors:
Food and beverage and tobacco products manufacturing of $3,463 million (2013 value; 2104 not available)
Food services and drinking places $2,776 million (Also 2013 value)
If we add these to agriculture, we have production worth 9.8 percent of Kansas GDP. This is being overly generous to agriculture. It counts all bars and restaurants as part of the agriculture industry, something that makes no sense.
So how do we take these numbers and pump them up to 43 percent? IMPLAN, that’s how. It’s true that when an industry causes economic activity to occur, it spawns other economic activity. These are the indirect and induced effects that IMPLAN produces. But these numbers are hugely inflated. And when we take all industries, economic activity is counted more than once.
Recall there are seven industry categories ranking above agriculture. When it suits its needs, each of these uses IMPLAN to boost its importance to the state. Consider manufacturing, which at 13.1 percent of GDP is the third-largest industry in Kansas. When manufacturing companies appeal to state or local government for subsidies, they use IMPLAN or related mechanisms to inflate their importance. Almost everyone does this. It’s standard procedure.
Except: When everyone claims the same indirect and induced economic activity, such analysis becomes meaningless. If we added up the IMPLAN-calculated value of each industry to the Kansas economy, we’d end up with a value several times larger than the actual value.
This is what the Kansas Department of Agriculture and Governor Sam Brownback have done. We expect this behavior from companies or local economic development agencies when they appeal for economic development incentives. They need to inflate their importance to gullible government bureaucrats and elected officials. But Governor Brownback doesn’t need to do this, and neither does the Kansas Department of Agriculture. From them, all we want is the truth, and nothing more.