Tag Archives: Dave Unruh

WichitaLiberty.TV set 2014-04-29 01 800

WichitaLiberty.TV: Government accounting, Government ownership of infrastructure, and Wichita commercial property taxes

In this episode of WichitaLiberty.TV: Government leaders tell us they want to run government like a business. But does government actually do this, even when accounting for its money? Then, is it best for government to own all the infrastructure? Finally, taxes on Wichita commercial property are high, compared to the rest of the nation. Episode 46, broadcast June 8, 2014. View below, or click here to view at YouTube.

Intrust Bank Arena commemorative monument

Intrust Bank Arena: Not accounted for like a business

Proper attention given to the depreciation expense of Intrust Bank Arena in downtown Wichita recognizes and accounts for the sacrifices of the people of Sedgwick County and its visitors to pay for the arena. It’s a business-like way of accounting, but a well-hidden secret.

Sedgwick County Working for YouThe true state of the finances of the Intrust Bank Arena in downtown Wichita are not often a subject of public discussion. Arena boosters promote a revenue-sharing arrangement between the county and the arena operator, referring to this as profit or loss. But this arrangement is not an accurate and complete accounting, and hides the true economics of the arena. What’s missing is depreciation expense.

An example of the incomplete editorializing comes from Rhonda Holman of the Wichita Eagle, who opined “Though great news for taxpayers, that oversize check for $255,678 presented to Sedgwick County last week reflected Intrust Bank Arena’s past, specifically the county’s share of 2013 profits.”

Earlier reporting on this topic in the Eagle did not mention depreciation expense, either.

There are at least two ways of looking at the finance of the arena. Most attention is given to the “profit” (or loss) earned by the arena for the county according to an operating and management agreement between the county and SMG, a company that operates the arena.

This agreement specifies a revenue sharing mechanism between the county and SMG. For 2103, the accounting method used in this agreement produced a profit of $705,678, to be split (not equally) between SMG and the county. The county’s share, as Holman touted, was $255,678. Presumably that’s after deducting the cost of producing an oversize check for the television cameras.

The Operations of Intrust Bank ArenaWhile described as “profit” by many, this payment does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “not intended to be a complete presentation of INTRUST Bank Arena’s financial position and results of operations and are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.”

That bears repeating: This is not a reckoning of profit and loss in any recognized sense. It is simply an agreement between Sedgwick County and SMG as to how SMG is to be paid, and how the county participates.

A much better reckoning of the economics of the Intrust Bank Arena can be found in the 2013 Comprehensive Annual Financial Report for Sedgwick County. This document holds additional information about the finances of the Intrust Bank Arena. The CAFR, as described by the county, “… is a review of what occurred financially at Sedgwick County in 2013. In that respect, it is a report card of our ability to manage our financial resources.”

Regarding the arena, the CAFR states:

The Arena Fund represents the activity of the INTRUST Bank Arena that opened on January 9, 2010. The facility is operated by a private company; the county incurs expenses only for certain capital improvements or major repairs and depreciation, and receives as revenue only a share of profits earned by the operator, if any. The Arena had an operating loss of $4.7 million. The loss can be attributed to $5.3 million in depreciation expense.

Financial statements in the same document show that $5,295,414 was charged for depreciation in 2013, bringing accumulated depreciation to a total of $21,190,280.

Depreciation expense is not something that is paid out in cash. Sedgwick County didn’t write a check for $5,295,414 in depreciation expense. Instead, depreciation accountingit provides a way to recognize and account for the cost of long-lived assets over their lifespan. It provides a way to recognize opportunity costs, that is, what could be done with our resources if not spent on the arena.

But some don’t recognize this. In years past, Commissioner Dave Unruh made remarks that show the severe misunderstanding that he and almost everyone labor under regarding the nature of the spending on the arena: “I want to underscore the fact that the citizens of Sedgwick County voted to pay for this facility in advance. And so not having debt service on it is just a huge benefit to our government and to the citizens, so we can go forward without having to having to worry about making those payments and still show positive cash flow. So it’s still a great benefit to our community and I’m still pleased with this report.”

Intrust Bank Arena commemorative monument
Intrust Bank Arena commemorative monument
The contention of Unruh and other arena boosters such as the Wichita Eagle editorial board is that the capital investment of $183,625,241 (not including an operating and maintenance reserve) on the arena is merely a historical artifact, something that happened in the past, something that has no bearing today. There is no opportunity cost, according to his view. This attitude, however, disrespects the sacrifices of the people of Sedgwick County and its visitors to raise those funds.

Any honest accounting or reckoning of the performance of Intrust Bank Arena must take depreciation into account. While Unruh is correct in that depreciation expense is not a cash expense that affects cash flow, it is an economic fact that can’t be ignored — except by politicians, apparently.

We see our governmental and civic leaders telling us that we must “run government like a business.” Without frank and realistic discussion of numbers like these and the economic facts they represent, we make decisions based on incomplete and false information.

Wichita not good for small business

The Wichita Business Journal reports today:

When it comes to having good conditions to support small businesses, well, Wichita isn’t exactly at the top of the list, according to a new ranking from The Business Journals.

In fact, the Wichita metro area’s small-business vitality score is nearly at the bottom — 99th out of the 101 U.S. metro areas included in the study. (Wichita near bottom for small-business vitality score, April 2, 2014)

Many in Wichita don’t want to recognize and confront the bad news about the performance of the Wichita-area economy. Last year, when presenting its annual report to local governmental bodies, the leaders of Visioneering Wichita would not present benchmark data to elected officials.

wichita-peer-job-growth-1990-2014-01

So what is the record of the Wichita metropolitan area regarding job creation, that seeming to be the most popular statistic our leaders cite and promote? I’ve prepared statistics from the Bureau of Labor Statistics, U.S. Department of Labor for Wichita and a broad group of peer cities. I included our Visioneering peer cities, cities that Visioneers traveled to on official visits, and a few others. The result, shown nearby, is not pretty. (Click on charts for larger versions, or click here to use the interactive visualization)

wichita-peer-job-growth-2007-2014-01

If we look at job creation starting in 1990, Wichita lags behind our Visioneering peers, but not behind all the peer cities that I selected. Wichita does better than Springfield, Illinois, for example. I chose to include that as a peer metropolitan area because that’s the immediate past city that Gary Plummer worked in. He was president of that city’s Chamber of Commerce, and is now president of the Wichita Chamber. Note the position of Springfield: Last place.

In next-to-last place we see Wichita Falls, Texas. I chose to include it because it is the immediate past home of Tim Chase. He was the head of Wichita Falls Economic Development Corporation. He’s now president of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development for the Wichita area.

In second-to-last place we see Pittsburgh, which I added because Visioneering leaders recently made a visit there.

Then, we come to Wichita.

If we look at job creation since 2007 we find Wichita in a common position: Last place in job creation, and by a wide margin except for two cities. One is Wichita Falls, where our present GWEDC president recently worked. The other city that barely out-performs Wichita is Chattanooga, which I included because Visioneering civic leaders recently traveled there to learn from that city.

Over the decades in which Wichita has performed poorly, there have been a few common threads. Carl Brewer has been council member or mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for decades. At Sedgwick County, manager William Buchanan has held that position for more than two decades. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. It is these officials who have presided over the dismal record of Wichita.

Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But he’s becoming part of the legacy of Wichita’s efforts in economic development.

toolbox-29058_640

These leaders often complain that Wichita does not have enough “tools in the toolbox” to compete with other cities in economic development. Wichita does, however, have and use incentives. The State of Kansas regularly offers incentives so generous that Kansas business leaders told the governor that they value these incentives more than they would value elimination of the state corporate income tax.

Incentives: We have them. They haven’t worked for us.

It is nearly certain that this year Wichitans will be asked to approve a higher sales tax in order to pay for many things, including the more aggressive approach to job creation that Brewer mentioned. Based on the track record of our elected officials and bureaucrats, we need to do this: Before approving the tax and expenditures, Wichitans need to take a long look at the people who have been in charge, and ask what will be different going forward.

Wichita Chamber presentation. Click for larger version.

Wichita Chamber of Commerce: Why these panelists?

wichita-chamber-commerce-2013-11-05

Last week the Wichita Metro Chamber of Commerce conducted a panel discussion about economic development and job creation in Wichita. The experts selected as panelists tells us a lot about why the Wichita economy has suffered.

In case anyone is not aware of the performance of the Wichita-area economy, the Wichita Eagle reported “Exhibit No. 1 in their presentation was a Chamber of Commerce chart showing that, five years after the recession ended, Wichita had regained few, if any, jobs from the depths of the economic downturn — while other cities across the region have rebounded strongly.” (Wichita must step up efforts to attract jobs, civic leaders say, Thursday, February 6, 2014)

Wichita Chamber presentation. Click for larger version.
Wichita Chamber presentation. Click for larger version.

On the same event, the Wichita Business Journal reported “But the luncheon opened with a somber look at Wichita’s ranking among peer cities in the Midwest region. The chart shows Wichita area employment growth since January 2005 well below the other cities, barely above its 2005 employment.” (Chamber luncheon speakers: Wichita needs to compete better for jobs)

The news about the poor performance of Wichita in this regard is no surprise to readers of this site, although I’m not sure that those in charge, such as Wichita Mayor Carl Brewer, believe the numbers. Brewer, along with Dave Unruh and Chamber president Wayne Chambers were the three panelists on Wichita economic development.

What is surprising is that Brewer and Unruh were selected as experts in this field, given the city’s poor performance and the tenure of these two leaders. Brewer has been mayor for nearly seven years, and has served on the city council 2001. Unruh has been in office since 2003, and has been chair of the commission several times, as he is currently.

Brewer — after 13 years holding city office — had this to say, according to the Eagle: “Brewer said the Wichita City Council will look at the results of a recent community engagement survey to see how high a priority to place on economic development.”

Imagine that. Our city’s longtime leader, as he enters the last year of his mayorality: Now he’s going to get serious about economic development, and will do so by relying on a citizen survey.

To use interactive visualizations that explore the Wichita economy, see Wichita’s growth in gross domestic product and For Wichita’s economic development machinery, failure.

For Wichita’s economic development machinery, failure

Delano Clock Tower, WichitaCompared to a broad group of peer metropolitan areas, Wichita performs very poorly. As Wichita embarks upon a new era of economic development, we need to ask who to trust with this important task.

The good news: In a recent op-ed, Wichita Mayor Carl Brewer wrote that the city needs to make a decision regarding “A more aggressive approach to job creation.” (Carl Brewer: Wichita can have a great next year, December 22, 2013 Wichita Eagle)

The bad news: Wichita has performed very poorly in job creation in recent decades, and even if we decide on a more aggressive approach, pretty much the same crew is in charge.

Many in Wichita don’t want to recognize and confront the bad news about the performance of the Wichita-area economy. Last year, when presenting its annual report to local governmental bodies, the leaders of Visioneering Wichita would not present benchmark data to elected officials.

Some, however, have recognized the severity of the problem. In 2008 Harvey Sorensen, who has been chair of Visioneering Wichita, chair of the Wichita Metro Chamber of Commerce, and has held other civic leadership positions, wrote in the pages of the Wichita Eagle: “We are losing ground competitively with our peer communities.” (Community Needs a Common Vision, August 24, 2008 Wichita Eagle)

wichita-peer-job-growth-1990-2014-01

So what is the record of the Wichita metropolitan area regarding job creation, that seeming to be the most popular statistic our leaders cite and promote? I’ve prepared statistics from the Bureau of Labor Statistics, U.S. Department of Labor for Wichita and a broad group of peer cities. I included our Visioneering peer cities, cities that Visioneers traveled to on official visits, and a few others. The result, shown nearby, is not pretty. (Click on charts for larger versions, or click here to use the interactive visualization)

wichita-peer-job-growth-2007-2014-01

If we look at job creation starting in 1990, Wichita lags behind our Visioneering peers, but not behind all the peer cities that I selected. Wichita does better than Springfield, Illinois, for example. I chose to include that as a peer metropolitan area because that’s the immediate past city that Gary Plummer worked in. He was president of that city’s Chamber of Commerce, and is now president of the Wichita Chamber. Note the position of Springfield: Last place.

In next-to-last place we see Wichita Falls, Texas. I chose to include it because it is the immediate past home of Tim Chase. He was the head of Wichita Falls Economic Development Corporation. He’s now president of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development for the Wichita area.

In second-to-last place we see Pittsburgh, which I added because Visioneering leaders recently made a visit there.

Then, we come to Wichita.

If we look at job creation since 2007, the year before Sorensen wrote his op-ed, we find Wichita in a common position: Last place in job creation, and by a wide margin except for two cities. One is Wichita Falls, where our present GWEDC president recently worked. The other city that barely out-performs Wichita is Chattanooga, which I included because Visioneering civic leaders recently traveled there to learn from that city.

Over the decades in which Wichita has performed poorly, there have been a few common threads. Brewer has been council member or mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for decades. At Sedgwick County, manager William Buchanan has held that position for more than two decades. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. It is these officials who have presided over the dismal record of Wichita.

Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But he’s becoming part of the legacy of Wichita’s efforts in economic development.

toolbox-29058_640

These leaders often complain that Wichita does not have enough “tools in the toolbox” to compete with other cities in economic development. Wichita does, however, have and use incentives. The State of Kansas regularly offers incentives so generous that Kansas business leaders told the governor that they value these incentives more than they would value elimination of the state corporate income tax.

Incentives: We have them. They haven’t worked for us.

It is nearly certain that this year Wichitans will be asked to approve a higher sales tax in order to pay for many things, including the more aggressive approach to job creation that Brewer mentioned. Based on the track record of our elected officials and bureaucrats, we need to do this: Before approving the tax and expenditures, Wichitans need to take a long look at the people who have been in charge, and ask what will be different going forward.

Wichita performs a reference check, the video

Citizens of Wichita are rightly concerned about whether our elected officials and bureaucrats are looking out for their interests, or only for the interests and welfare of a small group of city hall insiders. The video below explains, or click here to view in HD on YouTube. For an article on this topic, see Wichita performs a reference check, sort of.

Wichita performs a reference check, sort of

Wichita city hall logo

For a video presentation of this material, click on Wichita performs a reference check, the video.

Citizens of Wichita are rightly concerned about whether our elected officials and bureaucrats are looking out for their interests, or only for the interests and welfare of a small group of city hall insiders. Cronies, if you will.

A recent application filed with Wichita City Hall regarding the West Bank Development Project raises two questions: Did the government officials listed as references give their permission, and were any of the references contacted to learn what they knew about the applicants?

The application filed by the River Vista development team shows this: The team, consisting of George Laham, Dave Wells, Dave Burk, and Bill Warren listed numerous local, state, and federal officials as references. Here’s the list of officials that appeared one or more times:

Wichita city manager Robert Layton
Wichita Mayor Carl Brewer
Wichita City Council Member Jeff Longwell (district 5, west and northwest Wichita)
Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita)
Sedgwick County District Attorney Marc Bennett
Sedgwick County Sheriff Jeff Easter
Sedgwick County Commissioner Dave Unruh
Sedgwick County Commissioner Tim Norton
Kansas Governor Sam Brownback
U.S. Representative Mike Pompeo

Except for Jeff Easter, none of these officials gave permission for their names to be used in this way. (We didn’t get a response regarding Tim Norton.)

Furthermore, none of these officials were contacted by the evaluation committee whose job it is to vet these potential city partners.

A few questions: First, do you think it is appropriate for the city manager to be listed as a reference, given that anyone who reads this document would take it as an endorsement? No, of course it is not appropriate.

Related: Do you think it’s appropriate for the city manager to endorse one of the applicants? We don’t know if the presence of the city manager’s name as a reference implies an endorsement, because George Laham did not ask the city manager if he could be listed as a reference. We know this because we asked.

Further, the committee that evaluated the development teams did not call the city manager to inquire about George Laham. We asked about this, too. But making inquiries of references: Isn’t that what an evaluation committee or vetting team should do? But we know that the evaluation committee did not contact even one of these officials that were listed as references.

These applicants likely knew that the evaluation committee would not contact these references. Therefore, they freely listed these government officials. Which makes us wonder — what is the point of having an evaluation committee?

Even further: Is it appropriate for the city to partner with people who think it’s proper to list the city manager as a reference without asking if that was permissible, knowing that the manager wouldn’t be contacted? Same question regarding the mayor, governor, our U.S. Congressman, and district attorney?

In light of this — numerous government officials listed as references without their permission or knowledge, an evaluation committee that never contacted these officials, and the information that these references could have provided: Do you think the evaluation committee fulfilled its duty to perform due diligence on behalf of the interests of the people of Wichita?

What the evaluation committee might have learned

If the evaluation committee had contacted these references, here’s what might have been learned.

Dave Wells: Wells is president of Key Construction. Last year the Wichita Eagle reported on “city-financed downtown parking garages that spiraled well over budget.” Noting the cost overruns, reporter Bill Wilson wrote: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.” (Wichita city manager proposes eliminating no-bid construction projects.)

Also, two years ago Key Construction proposed — and was awarded by the city council — a no-bid contract for a parking garage. But the city later put the contract to competitive bid. Key, which first bid $6 million, later bid $4.7 million. If the desire of the majority of the city council, including Mayor Carl Brewer, had been realized, Wichita taxpayers would have sent an extra — and unnecessary — $1.3 million to a politically-connected construction company.

By the way, the mayor’s relationship with Wells means he should not have voted on this matter.

Dave Burk, Dave Wells: These two were original partners in WaterWalk, which has received over $40 million in subsidy, with little to show for results.

Dave Burk: He’s received many millions from many levels of government, but still thinks he doesn’t get enough. This is what we can conclude by his appeal of property taxes in a TIF district. Those taxes, even though they are rerouted back to him for his benefit, were still too high for his taste, and he appealed. The Wichita Eagle reported in the article (Developer appealed taxes on city-owned property): “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

rebenstorf-quote-dave-burkA number of Wichita city hall officials were not pleased with Burk’s act. According to the Eagle reporting, Burk was not authorized to do what he did: “Officials in the city legal department said that while Burk was within his rights to appeal taxes on another city-supported building in the Cinema Plaza, he did not have authorization to file an appeal on the city-owned parking/retail space he leases. … As for Burk signing documents as the city’s representative, ‘I do have a problem with it,’ said City Attorney Gary Rebenstorf, adding that he intends to investigate further.”

Council member Jeff Longwell was quoted by the Eagle: “‘We should take issue with that,’ he said. ‘If anyone is going to represent the city they obviously have to have, one, the city’s endorsement and … two, someone at the city should have been more aware of what was going on. And if they were, shame on them for not bringing this to the public’s attention.’”

In a separate article by the Eagle on this issue, Wichita city manager Robert Layton said that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

The manager’s quote is most directly damaging. In a tax increment financing (TIF) district, the city borrows money to pay for things that directly enrich the developers, in this case Burk and possibly his partners. Then their increased property taxes — taxes they have to pay anyway — are used to repay the borrowed funds. In essence, a TIF district allows developers to benefit exclusively from their property taxes. For everyone else, their property taxes go to fund the city, county, school district, state, fire district, etc. But not so for property in a TIF district.

This is what is most astonishing about Burk’s action: Having been placed in a rarefied position of receiving many millions in benefits, he still thinks his own taxes are too high. Now he wants more city taxpayer subsidy.

warren-bailout-poses-dilemma

Bill Warren: In 2008 the Old Town Warren Theater was failing and its owners — Bill Warren being one — threatened to close it and leave the city with a huge loss on a tax increment financing (TIF) district formed for the theater’s benefit. Faced with this threat, the city made a no-interest and low-interest loan to the theater. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

Besides Warren, you may — or may not — be surprised to learn that the theater’s partners included Dave Wells and Dave Burk, the same two men mentioned above. Also, Mayor Brewer’s relationship with Warren means he should not have voted on this matter.

Sedgwick County votes for harmful intervention

man-digging-coinsIt’s harmful when citizens are not armed with information and research. But when government officials and bureaucrats with the power to tax and plan our economies are uninformed, people suffer as our economy becomes less prosperous than it could be.

Today, in the name of creating jobs, the Sedgwick County Commission voted in favor of granting an economic development incentive to an expanding Wichita manufacturing firm. Commissioners Karl Peterjohn and Richard Ranzau voted against the award.

The action taken today is in addition to an award by the State of Kansas, and another likely to be awarded by the Wichita City Council. See Why is business welfare necessary in Wichita? for more background.

Intervention in the economy such as this does more harm than good, as we’ll see in a moment. It’s important that we learn the facts about incentives like these, as the Wichita area has the potential to become even more dependent on incentives and subsidies as a way of economic development.

For example, the president of Greater Wichita Economic Development Coalition recently broadcast an email with the subject heading “Investor Alert: WBJ outlines Mars Deal Development Incentives as one example of Aggressive Competition.” The email read as follows:

Dear Investors,

You are well aware of the Mars deal in Topeka and you are likely aware that no city outside the greater Kansas City Metro Area was given the opportunity to bid this project.

In my mind the take away from this Wichita Business Journal article is that our competition — local, state and international — have enormous tools to ensure economic development success.

The Mars project has the potential to receive $9.1 million in local incentives over the next five years not including the property tax abatement estimated at $10.0M.

Tim Chase

Messages like this — that we don’t have enough tools to compete — are common in Wichita. Politicians like Wichita Mayor Carl Brewer call for devoted revenue streams to fund economic development incentives.

What, though, is the track record of incentives? Those who, like myself, call for an end to their use: Don’t we want people to have jobs?

We need to decide what to believe. Should we believe our own eyes — that is, what we can easily see or are being told by our leaders — or something else?

Here’s a summary of the peer-reviewed academic research that examines the local impact of targeted tax incentives from an empirical point of view. “Peer-reviewed” means these studies were stripped of identification of authorship and then subjected to critique by other economists, and were able to pass that review.

Ambrosius (1989). National study of development incentives, 1969 — 1985.
Finding: No evidence of incentive impact on manufacturing value-added or unemployment, thus suggesting that tax incentives were ineffective.

Trogan (1999). National study of state economic growth and development programs, 1979 — 1995.
Finding: General fiscal policy found to be mildly effective, while targeted incentives reduced economic performance (as measured by per capita income).

Gabe and Kraybill (2002). 366 Ohio firms, 1993 — 1995.
Finding: Small reduction in employment by businesses which received Ohio’s tax incentives.

Fox and Murray (2004). Panel study of impacts of entry by 109 large firms in the 1980s.
Finding: No evidence of large firm impacts on local economy.

Edmiston (2004). Panel study of large firm entrance in Georgia, 1984 — 1998
Finding: Employment impact of large firms is less than gross job creation (by about 70%), and thus tax incentives are unlikely to be efficacious.

Hicks (2004). Panel study of gaming casinos in 15 counties (matched to 15 non-gambling counties).
Finding: No employment or income impacts associated with the opening of a large gambling facility. There is significant employment adjustment across industries.

LaFaive and Hicks (2005). Panel study of Michigan’s MEGA tax incentives, 1995 — 2004.
Finding: Tax incentives had no impact on targeted industries (wholesale and manufacturing), but did lead to a transient increase in construction employment at the cost of roughly $125,000 per job.

Hicks (2007a). Panel study of California’s EDA grants to Wal-Mart in the 1990s.
Finding: The receipt of a grant did increase the likelihood that Wal-Mart would locate within a county (about $1.2 million generated a 1% increase in the probability a county would receive a new Wal-Mart), but this had no effect on retail employment overall.

Hicks (2007b). Panel study of entry by large retailer (Cabela’s).
Finding: No permanent employment increase across a quasi-experimental panel of all Cabela’s stores from 1998 to 2003.

(Based on Figure 8.1: Empirical Studies of Large Firm Impacts and Tax Incentive Efficacy, in Unleashing Capitalism: Why Prosperity Stops at the West Virginia Border and How to Fix It, Russell S. Sobel, editor. Available here.)

In discussing this research, the authors of Unleashing Capitalism explained:

Two important empirical questions are at the heart of the debate over targeted tax incentives. The first is whether or not tax incentives actually influence firms’ location choices. The second, and perhaps more important question, is whether, in combination with firms’ location decisions, tax incentives actually lead to improved local economic performance.

We begin by noting that businesses do, in fact, seem to be responsive to state and local economic development incentives. … All of the aforementioned studies, which find business location decisions to be favorably influenced by targeted tax incentives, also conclude that the benefits to the communities that offered them were less than their costs.

So yes, business firms are influenced by incentives. But the cost of the incentives is greater than the benefit. This research shows, over and over, that the cost-benefit ratio analysis that decision makers use is not meaningful or reliable.

So why do we use incentives? Why do so few in government or the public understand? Continuing from Unleashing Capitalism:

Given serious doubts about the efficacy of tax incentives, why are they so popular? The answer is that businesses looking to expand their plants or to move to new locations have strong incentives to lobby for tax breaks and other subsidies that add to owners’ profits and, moreover, encouraging a bidding war between two or more state or local governments promises to increase the value of the incentives they can extract from any one of them. Politicians interested in re-election, in turn, have strong incentives to respond to private firms’ self-serving subsidy demands in order to take credit for enticing a high-profile company to town or to avoid blame for the jobs that would be lost if an existing employer moved to another location. The politicians will be supported on the tax-incentive issue by other groups having immediate financial stakes in the process, including local real estate developers, investment bankers (who float public bond issues and arrange financing for the incoming firm), and economic development officials whose livelihoods depend on success in chasing after ornaments to add to the local or state economy.

The special interests of subsidy-seeking private firms dominate the political process because voter-taxpayers are only weakly motivated to become informed about the costs of tax incentive programs and to organize in opposition to them. They see the jobs “created” at a new plant; they do not see the jobs that are lost elsewhere in the economy as a result of the higher tax burden imposed on other businesses and as a result of the economic resources reallocated from productive activities toward lobbying government to obtain these favors. Nor can they readily see the higher future tax bill they themselves will be required to pay in order to amortize and service the public debt issued to finance the subsidies diverted into the pockets of the owners of politically influential private companies.

“Politicians interested in re-election.” This describes almost all elected officials.

“Economic development officials whose livelihoods depend on success in chasing after ornaments.” This is Tim Chase and the other members of the economic development regime in Wichita.

Today, in explaining his vote in favor of granting a target economic development incentive, Sedgwick County Commissioner Dave Unruh recognized a “certain pragmatism that is required here.” He said we’re really concerned about jobs, and that jobs is the number one priority. Sometimes creating jobs requires us, he said, to compete in the practical world. It would be better if there were no incentives, he said. “But the truth of the matter is that we have to sometimes provide incentives, subsidies, abatements, whatever category it falls in, in order to compete and secure the jobs and company that we’re trying to win.”

This is the standard argument, even of politically liberal members of commissions and councils. Jobs, jobs, jobs. We don’t like to use incentives — they all say this, especially conservatives — but we learned that we must use incentives if we want jobs. This embrace of pragmatism is called “maturing in office.”

But I would ask these officials like Unruh this question: What about all the research that says incentives do more harm to jobs than good?

What do Commissioners Unruh, Skelton, and Norton believe phrases like these mean?

No evidence of incentive impact on manufacturing value-added or unemployment”

Small reduction in employment by businesses which received Ohio’s tax incentives”

No evidence of large firm impacts on local economy”

No permanent employment increase across a quasi-experimental panel of all Cabela’s stores”

“Employment impact of large firms is less than gross job creation (by about 70%)”

These research programs illustrate the fallacy of the seen and the unseen. It is easy to see the jobs being created by economic development incentives. I do not deny that jobs are created at firms that receive incentives, at least most of the time. But these jobs are easy to see, and government makes sure we see them. We’re going to endure the groundbreaking and ribbon-cutting ceremonies. It’s easy for news reporters to find the newly-hired and grateful workers, or to show video footage of a new manufacturing plant.

But it’s very difficult to find specific instances of the harm that government intervention produces. It is, generally, dispersed. People who lose their jobs usually don’t know the root cause of why they are now unemployed. Businesses whose sales decline often can’t figure out why.

But uncontroverted evidences tells us this is true: These incentives, along with other forms of government interventionism, do more harm than good.

We can understand the average citizen being susceptible to arguments make by the likes of GWEDC’s Chase and the three Sedgwick county commissioners that voted for this incentive. Citizens generally don’t have the education, the time, and the initiative to evaluate these matters.

But for economic development professionals and elected officials with the power to tax and spend? Not knowing this research is inexcusable, and ignoring it is deplorable.

Language makes a difference

No longer is it “Sustainable Communities.” Now it’s “South Central Kansas Prosperity Plan.” Either way, the program is still centralized government planning, with great potential to harm our economy and liberties.

South Central Kansas Prosperity Plan

The newly-renamed planning initiative has a new website set to launch in a few days — Let’s Talk Prosperity.

But no matter how politicians and bureaucrats dress it up, we need to remember the roots of this program. It took from 1987 to 2012, but Sedgwick County actually adopted the language of the United Nations regarding sustainability.

Those critical of sustainability planning are concerned that engaging in the practice has the potential to import harmful policies and practices originating from the United Nations. Critics of these critics say this is nonsense and overreacting. Tin-foil hat stuff, they say. Examples as reported in the Wichita Eagle come from Commissioner Dave Unruh and Commission Chair Tim Norton:

Unruh said he sees the grant simply as an “effort to make decisions about our future for us and our future generations that will save money, conserve resources and be the best solutions for all the folks in our region.” …

Norton said he sees the grant as a way to “look to the future, try to figure out best possible outcomes and make decisions today that will be good for tomorrow.”

“We’re all in this together. You may not like the federal government. You may not like the state government. You may not even like the local government. But I like being at the table and being involved in the future.”

He dismisses any connection to Agenda 21.

“It was a non-binding agreement passed during the first Bush era,” he said of former president George H.W. Bush. “I don’t rail on President Bush because it happened on his watch. I’m not twitchy about it. I’m not worried about it.”

It’s instructive to notice, however, that the language Sedgwick County uses when considering sustainability comes directly from the United Nations. General Assembly Resolution 42/187: Report of the World Commission on Environment and Development holds this language: “Believing that sustainable development, which implies meeting the needs of the present without compromising the ability of future generations to meet their own needs, should become a central guiding principle of the United Nations, Governments and private institutions, organizations and enterprises.” (emphasis added)

Sedgwick County’s Sustainability Page holds this: Definition of Sustainability for Sedgwick County … Meeting the needs of the present without compromising the ability of future generations to meet their needs … (emphasis added)

Sedgwick County left out the word “own,” but otherwise the language is identical. This definition was repeated on the county’s 2012 Employee Sustainability Survey.

The Sedgwick County page — and other county documents — mention economic development, environmental protection, institutional and financial viability, and social equity as “the four core factors that Sedgwick County considers when making community policy and program management decisions.” These goals are often mentioned in Agenda 21 documents, especially social equity.

Intrust Bank Arena depreciation expense is important, even today

Proper attention given to the depreciation expense of Intrust Bank Arena in downtown Wichita recognizes and accounts for the sacrifices of the people of Sedgwick County and its visitors to pay for the arena.

Sedgwick County Working for You

The true state of the finances of the Intrust Bank Arena in downtown Wichita are not often a subject of public discussion. Arena boosters promote a revenue-sharing arrangement between the county and the arena operator, referring to this as profit or loss. But this arrangement is not an accurate and complete accounting, and hides the true economics of the arena.

There are at least two ways of looking at the finance of the arena. Most attention is given to the “profit” (or loss) earned by the arena for the county according to an operating and management agreement between the county and SMG, a company that operates the arena.

This agreement specifies a revenue sharing mechanism between the county and SMG. For 2102, the accounting method used in this agreement produced a profit of $703,000, to be split (not equally) between SMG and the county.

While described as “profit” by many, this payment does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “not intended to be a complete presentation of INTRUST Bank Arena’s financial position and results of operations and are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.”

That bears repeating: This is not a reckoning of profit and loss in any recognized sense. It is simply an agreement between Sedgwick County and SMG as to how SMG is to be paid, and how the county participates.

A much better reckoning of the economics of the Intrust Bank Arena can be found in the county’s Comprehensive Annual Financial Report for 2012. It states: “The Arena had an operating loss of $4.8 million. The loss can be attributed to $5.3 million in depreciation expense.”

Depreciation expense is not something that is paid out in cash. Sedgwick County didn’t write a check for the $5.3 million in depreciation expense. Instead, it provides a way to recognize and account for the cost of long-lived assets over their lifespan. It provides a way to recognize opportunity costs, that is, what could be done with our resources if not spent on the arena.

But some don’t recognize this. In years past, Dave Unruh made remarks that show the severe misunderstanding that he and almost everyone labor under regarding the nature of the spending on the arena: “I want to underscore the fact that the citizens of Sedgwick County voted to pay for this facility in advance. And so not having debt service on it is just a huge benefit to our government and to the citizens, so we can go forward without having to having to worry about making those payments and still show positive cash flow. So it’s still a great benefit to our community and I’m still pleased with this report.”

The contention of Unruh and other arena boosters such as the Wichita Eagle editorial board is that the capital investment of $183,625,241 (not including an operating and maintenance reserve) on the arena is merely a historical artifact, something that happened in the past, something that has no bearing today. This attitude, however, disrespects the sacrifices of the people of Sedgwick County and its visitors to raise those funds.

Any honest accounting or reckoning of the performance of Intrust Bank Arena must take depreciation into account. While Unruh is correct in that depreciation expense is not a cash expense that affects cash flow, it is an economic fact that can’t be ignored — except by politicians, apparently.

Without frank and realistic discussion of numbers like these and the economic facts they represent, we make decisions based on incomplete and false information. This is especially important as civic leaders such as Wichita Mayor Carl Brewer ask for a dedicated revenue stream for economic development, or for another sales tax or other taxes to pay for more public investment.

Wichita economic development solution, postponed

Recent reporting in the Wichita Business Journal on Wichita’s economic development efforts has many officials saying Wichita doesn’t have enough incentives to compete with other cities. That is, we are not spending enough on incentives.

Whether these incentives are good economic development policy is open for debate. I don’t believe we need them, and that we in Kansas and Wichita can chart another course to increase economic freedom in Kansas. That will make our area appealing to companies. But our local bureaucrats, most business leaders, and nearly all elected officials believe that targeted incentives are the way to attract and retain business.

(Charts at the end of this article illustrate the record in Wichita on jobs.)

Our leaders have identified what they believe is a solution to a problem, but have not implemented that solution effectively, in their own words.

I should say have not implemented the solution on a widespread basis, because Wichita has devoted more tax money to economic development. According to the 2010 City Manager’s Policy Message, page CM-2, “One mill of property tax revenue will be shifted from the Debt Service Fund to the General Fund. In 2011 and 2012, one mill of property tax will be shifted to the General Fund to provide supplemental financing. The shift will last two years, and in 2013, one mill will be shifted back to the Debt Service Fund. The additional millage will provide a combined $5 million for economic development opportunities.”

So the city has decided to spend more tax dollars on economic development, but this allocation is being phased out — at the same time nearly everyone is calling for more to be spent in this area.

Isn’t this a failure of political and bureaucratic leadership? We have a long-standing problem, officials have identified what they believe is a solution, but it is not being implemented. These leaders have the ability to spend more on economic development, as illustrated by Wichita’s shifting of tax revenue.

Even if we believe that an active role for government in economic development is best (and I don’t believe that), we have to conclude that our efforts aren’t working. Several long-serving politicians and bureaucrats that have presided over this failure: Mayor Carl Brewer has been on the city council or served as mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for many years. At Sedgwick County, manager William Buchanan has held that position for 21 years. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. Unruh has said he wants to be Wichita’s next mayor.

Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But as he approaches his fourth anniversary in Wichita, he starts to become part of the legacy of Wichita’s efforts in economic development.

Wichita’s job creation record

Two charts illustrate the record of job growth in Wichita. The first shows Wichita job growth compared to Kansas and the nation. Data is from U.S. Bureau of Economic Analysis, and indexed with values for 2001 set to 1.00.

As you can see, job growth in Wichita trails both Kansas and the nation.

The next chart shows Wichita job growth by sector.

Private sector job growth is prominently lower than government. This is a problem, because more economic activity is directed away from the productive private sector to inefficient government.

Sedgwick County Commission: Let’s not vote today

At the October 31 meeting of the Sedgwick County Commission, Karl Peterjohn introduced a measure that would let the Kansas Legislature know that the commission supports improving the tax climate in Kansas, and specifically would limit property tax growth. But electoral politics forced a delay in a vote.

In response to Peterjohn’s proposal, the coalition of one Democrat and two liberal Republicans that form the working majority on the commission maneuvered to delay voting on the measure until after the November 6 election. With the item appearing on tomorrow’s agenda, it’s very likely that the majority coalition — Commission Chair Tim Norton, Dave Unruh, and Jim Skelton — will vote against the proposal.

Why the rush for delay? Norton was facing a vigorous challenge in the election. He couldn’t afford to cast a vote against property tax reform. With Skelton publicly supporting Norton, and Unruh doing so behind the scenes, the two Republicans supported their liberal Democratic fellow traveler in delaying the vote until after the election.

But after the election, Norton is free to vote against property tax reform. Skelton and Unruh don’t face the voters for another two years, and they’ll be relying on the short memory span of most voters.

From the United Nations to Sedgwick County

It took from 1987 to 2012, but Sedgwick County has adopted the language of the United Nations regarding sustainability.

Those critical of sustainability planning are concerned that engaging in sustainable communities planning has the potential to import harmful policies and practices originating from the United Nations. Critics of these critics say this is nonsense and overreacting. Examples as reported in the Wichita Eagle come from Commissioner Dave Unruh and Commission Chair Tim Norton:

Unruh said he sees the grant simply as an “effort to make decisions about our future for us and our future generations that will save money, conserve resources and be the best solutions for all the folks in our region.” …

Norton said he sees the grant as a way to “look to the future, try to figure out best possible outcomes and make decisions today that will be good for tomorrow.”

“We’re all in this together. You may not like the federal government. You may not like the state government. You may not even like the local government. But I like being at the table and being involved in the future.”

He dismisses any connection to Agenda 21.

“It was a non-binding agreement passed during the first Bush era,” he said of former president George H.W. Bush. “I don’t rail on President Bush because it happened on his watch. I’m not twitchy about it. I’m not worried about it.”

The language Sedgwick County uses when considering sustainability comes directly from the United Nations. General Assembly Resolution 42/187: Report of the World Commission on Environment and Development holds this language: “Believing that sustainable development, which implies meeting the needs of the present without compromising the ability of future generations to meet their own needs, should become a central guiding principle of the United Nations, Governments and private institutions, organizations and enterprises.” (emphasis added)

Sedgwick County’s Sustainability Page holds this: Definition of Sustainability for Sedgwick County … Meeting the needs of the present without compromising the ability of future generations to meet their needs … (emphasis added)

Sedgwick County left out the word “own,” but otherwise the language is identical. This definition was repeated on the county’s 2012 Employee Sustainability Survey.

The Sedgwick County page — and other county documents — mention economic development, environmental protection, institutional and financial viability, and social equity as “the four core factors that Sedgwick County considers when making community policy and program management decisions.” These goals are often mentioned in Agenda 21 documents, especially social equity.

Sedgwick County tower sale was not in citizens’ best interest

The sale of a radio tower owned by Sedgwick County reveals another case of local government not looking out for the interests of citizens and taxpayers, with the realization that the stain of cronyism is alive and well.

As a result of system upgrades, the county no longer needs a radio tower located near 77th Street North and Interstate 135. Pixius Communications, LLC made an offer to purchase the tower and the five acre tower site for $280,000. The county proceeded making arrangements for the sale, preparing a sales agreement contract between Sedgwick County and Pixius with a sales price of $280,000, along with several other legal documents necessary to support the sale. These documents are available at the agenda file for this item.

According to sources, County Manager William Buchanan supported the Pixius offer. So did commissioners Dave Unruh and Jim Skelton.

But commissioners Richard Ranzau and Karl Peterjohn felt that the best way to sell the tower was through an auction.

Commission Chair Tim Norton, because of his receipt of campaign contributions from Pixius, Jay Maxwell (owner of Pixius), and Penny Maxwell (spouse of owner), was going to abstain from voting. (Skelton has accepted contributions from the Maxwells, but he was going to vote nonetheless.)

So there was not a majority of three votes to accept the Pixius offer. Buchanan suggested the auction. All commissioners agreed.

Now we know the results of the auction: A Florida company offered $610,000. After a sales commission ($55,000) and half of closing costs ($1,128), the county will net $553,872. That’s almost twice the price the county manager and two commissioners were willing to sell the tower for.

There’s something else: What will be the appraised value of the tower and site for tax purposes? The selling price of a property is strong evidence of its value. As a result of the auction, therefore, this property is likely to be appraised at $610,000 instead of $280,000. That’s good for those who think it’s good for government to bring in more tax revenue.

This episode is another instance where no-bid contracts and cronyism cost taxpayers. Maxwell, the almost-beneficiary of this sweetheart no-bid contract, has been the recipient of many benefits at taxpayer expense, such as tax increment financing and community improvement district taxes. He’s tried for more, but even the Wichita City Council has a limit to its cronyism, now and then. Although cronyism and no-bid contracts have been a problem at Wichita City Hall.

Interestingly, a recent KSN Television news story characterized Ranzau and Peterjohn as “hardline fiscal conservatives.” The story went on to report “Incumbent Democrat Tim Norton often sides with the two more moderate members of the commission with many votes being decided by a 3-2 margin.” Those moderate members are, of course, Unruh and Skelton.

Norton didn’t have to take sides — at least publicly — on this issue, but I’m confident that if this was not an election year for Norton, he would have voted for the original Pixius deal that we now see was a disaster for taxpayers.

In the KSN story Norton was quoted as saying “I’m a business man of many years in Wichita. I understand the business climate and job retention.”

Unruh and Skelton are also businessmen. I hope these commissioners look after their personal business with more care and concern than they have shown for the business of taxpayers.

Wichita economic development initiatives to be announced

Tomorrow the Wichita Metro Chamber of Commerce will announce, according to the Wichita Eagle, new economic development initiatives. Said to be the product of months of discussion, past history suggests that the efforts will not be fruitful for the Wichita area. The inclinations of the parties involved in this effort are for more government intervention and less reliance on economic freedom and free markets.

Do economic development incentives work?

Judging the effectiveness of economic development incentives requires looking for the unseen effects as well as what is easily seen. It’s easy to see groundbreaking and ribbon cutting ceremonies. It’s more difficult to see that the harm that government intervention causes.

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

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

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

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

Other economists have studied tax increment financing (TIF) and have concluded that it is an overall negative factor for the entire region where it is used. Another study found that TIF districts created for retail use had a negative effect on municipal employment.

Last week Dave Trabert wrote in the Kansas Policy Institute blog: “There’s a very simple reason that these well-intended initiatives haven’t worked: local government and their public-private partners are offering employers what they want them to have instead of what they need to create jobs. The Wichita Chamber’s own survey of business owners said taxes were too high. WIBA’s member survey identified tax and regulatory issues as their top concerns, as did the US Chamber of Commerce. Yet government and their public-private partners ignore what the customer wants because they don’t want the same things.”

Wichita’s record on economic development

Earlier this year Wichita Mayor Carl Brewer said that the city’s efforts in economic development had created “almost 1000 jobs.” While that sounds like a lot of jobs, that number deserves context.

According to estimates from the Kansas Department of Labor, the civilian labor force in the City of Wichita for December 2011 was 192,876, with 178,156 people at work. This means that the 1,000 jobs created accounted for from 0.52 percent to 0.56 percent of our city’s workforce, depending on the denominator used. This miniscule number is dwarfed by the normal ebb and flow of other economic activity.

It’s also likely that the city’s economic development efforts were not responsible for a large proportion of these jobs. But government still takes credit. Also, the mayor did not mention the costs of creating these jobs. These costs have a negative economic impact on those who pay them. This means that economic activity — and jobs — are lost somewhere else in order to pay for the incentives.

The mayor’s plan going forward, in his words, is “We will incentivize new jobs.” But under the mayor’s leadership, this “active investor” policy has produced a very small number of jobs, year after year. Doubling down on the present course is not likely to do much better.

There’s even confusion over whether our efforts are working. In 2005, a Wichita Eagle editorial commented on a GWEDC report: “Among the points in Thursday’s report worthy of pride was this: the observation by coalition president J.V. Lentell that he’s never seen the cooperation on economic development between the public and private sectors as good as it is now. ‘I’m here to tell you, I think it’s on track,’ Lentell said, emphatically.” (July 29, 2005)

But in January of this year, an Eagle article listed several things Wichita needs, such as free land and buildings, money for closing deals, and a larger promotions budget. The reporter concluded “The missing pieces have been obvious for years, but haven’t materialized for one reason or another.”

So even if we believe that an active role for government is best, we have to conclude that our efforts aren’t working. Several long-serving politicians and bureaucrats that have presided over this failure: Mayor Carl Brewer has been on the city council or served as mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for many years. At Sedgwick County, manager William Buchanan has held that position for 21 years. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. (Unruh has said he wants to be Wichita’s next mayor.)

These people all believe in government-directed economic development. We need to hold them accountable.

Finally, consider Wichita job growth. As shown in the accompanying chart, the growth in government employees has outstripped private sector job growth. The increase in local government employees is particularly striking.

Wichita job growthWichita job growth. Data is indexed, with 1990 equal to 1. Source: Bureau of Labor Statistics.

What our leaders want

I don’t know what will be in the economic development plan, but it is possible — likely, even — that there will be a call for a tax revenue stream for economic development. In February a company location consultant told Wichita leaders “Successful communities need a dedicated stream of money for economic development.” The news story reported “He was preaching to the choir. GWEDC leaders have been saying for some time that now is the time to go to the business community and the public to make the case for more money and resources.” (Consultant: Wichita needs sites, closing fund to lure business, Wichita Eagle February 16, 2012.)

Wichita leaders continually call for more “tools in the toolbox” for economic development. They have spoken approvingly of a sales tax for such purposes. Money, of course, is what funds the tools.

At one time local chambers of commerce would oppose tax increases. They would promote free market principles as the way to create a positive business environment. But this year it was the official position of the Wichita Chamber that eight government subsidy programs was not enough for a downtown hotel, and that there should be a ninth.

A few years ago Stephen Moore wrote a piece for the Wall Street Journal that that shows how very often, local chambers of commerce support principles of crony capitalism instead of pro-growth policies that support free enterprise and genuine capitalism: “The Chamber of Commerce, long a supporter of limited government and low taxes, was part of the coalition backing the Reagan revolution in the 1980s. On the national level, the organization still follows a pro-growth agenda — but thanks to an astonishing political transformation, many chambers of commerce on the state and local level have been abandoning these goals. They’re becoming, in effect, lobbyists for big government. … In as many as half the states, state taxpayer organizations, free market think tanks and small business leaders now complain bitterly that, on a wide range of issues, chambers of commerce deploy their financial resources and lobbying clout to expand the taxing, spending and regulatory authorities of government. This behavior, they note, erodes the very pro-growth climate necessary for businesses — at least those not connected at the hip with government — to prosper. Journalist Tim Carney agrees: All too often, he notes in his recent book, ‘Rip-Off,’ ‘state and local chambers have become corrupted by the lure of big dollar corporate welfare schemes.’”

Does Wichita have the will?

Dr. Art Hall, who is Director of the Center for Applied Economics at the Kansas University School of Business has made a convincing case that less government involvement, not more, is needed. He argues that a dynamic economy is what Kansas needs, not one where government directs taxpayer investment for economic growth.

Hall writes this regarding “benchmarking” — the bidding wars for large employers that are the foundation of Wichita economic development, and the battle for which Wichita is likely preparing: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

Hall’s paper on this topic is Embracing Dynamism: The Next Phase in Kansas Economic Development Policy.

We need to recognize that government as active investor doesn’t work. A serious problem with a plan for increased economic interventionism by government is the very nature of knowledge. In a recent issue of Cato Policy Report, Arnold King wrote:

As Hayek pointed out, knowledge that is important in the economy is dispersed. Consumers understand their own wants and business managers understand their technological opportunities and constraints to a greater degree than they can articulate and to a far greater degree than experts can understand and absorb.

When knowledge is dispersed but power is concentrated, I call this the knowledge-power discrepancy. Such discrepancies can arise in large firms, where CEOs can fail to appreciate the significance of what is known by some of their subordinates. … With government experts, the knowledge-power discrepancy is particularly acute.

Relying on economic freedom and free market solutions for economic growth and prosperity means trusting in the concept of spontaneous order. That takes courage. It requires faith in the values of human freedom and ingenuity rather than government control. It requires that government officials let go rather than grabbing tighter the reins of power, as will probably be the key feature of Wichita’s new economic development plan.

But Wichita’s mayor is openly dismissive of economic freedom, free markets, and limited government, calling these principles “simplistic.” Instead, he and most others prefer cronyism and corporate welfare. That hasn’t worked very well so far, and is not likely to work in the future.

Special interests will capture south-central Kansas planning

Special interest groups are likely to co-opt the government planning process started in south-central Kansas as these groups see ways to benefit from the plan. The public choice school of economics and political science has taught us how special interest groups seek favors from government at enormous costs to society, and we will see this at play over the next few years.

Sedgwick County has voted to participate in a HUD Sustainable Communities Regional Planning Grant. While some justified their votes in favor of the plan because “it’s only a plan,” once the planning process begins, special interests plot to benefit themselves at the expense of the general public. Once the plan is formed, it’s nearly impossible to revise it, no matter how evident the need.

An example of how much reverence is given to government plans comes right from the U.S. Supreme Court in the decision Kelo v. New London, in which the Court decided that government could use the power of eminent domain to take one person’s property and transfer it to someone else for the purposes of economic development. In his opinion for the Court, Justice Stevens cited the plan: “The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” Here we see the importance of the plan and due reverence given to it.

Stevens followed up, giving even more weight to the plan: “To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.”

To Stevens, the fact that the plan was comprehensive was a factor in favor of its upholding. The sustainable communities plan, likewise, is nothing but comprehensive, as described by county manager Bill Buchanan in a letter to commissioners: “[the plan will] consist of multi-jurisdictional planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic prosperity, social equity, energy use and climate change, and public health and environmental impact.”

That pretty much covers it all. When you’re charged with promoting economic prosperity, defending earth against climate change, and promoting public health, there is no limit to the types of laws you might consider.

Who will plan?

The American Planning Association praised the Court’s notice of the importance of a plan, writing “This decision underscores the importance for a community to have a comprehensive development plan formulated through a democratic planning process with meaningful public participation by everyone.”

But these plans are rarely by and for the public. Almost always the government planning process is taken over and captured by special interests. We see this in public schools, where the planning and campaigning for new facilities is taken over by architectural and construction firms that see school building as a way to profit. It does not matter to them whether the schools are needed.

Our highway planning is hijacked by construction firms that stand to benefit, whether or not new roads are actually needed.

Our planning process for downtown Wichita is run by special interest groups that believe that downtown has a special moral imperative, and another group that sees downtown as just another way to profit at taxpayer expense. Both believe that taxpayers across Wichita, Kansas, and even the entire country must pay to implement their vision. As shown in Kansas and Wichita need pay-to-play laws the special interests that benefit from public spending on downtown make heavy political campaign contributions to nearly all members of the Wichita City Council. They don’t have a political ideology. They contribute only because they know council members will be voting to give them money.

In Wichita’s last school bond election, 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms and others who directly stand to benefit from new school construction, no matter whether schools are actually needed. The firm of Schaefer Johnson Cox Frey Architecture led the way in making these contributions. It’s not surprising that this firm was awarded a no-bid contract for plan management services for the bond issue valued at $3.7 million. This firm will undoubtedly earn millions more for those projects on which it serves as architect.

The special interest groups that benefit from highway construction: They formed a group called Economic Lifelines. It says it was formed to “provide the grassroots support for Comprehensive Transportation Programs in Kansas.” Its motto is “Stimulating economic vitality through leadership in infrastructure development.”

A look at the membership role, however, lets us know whose economic roots are being stimulated. Membership is stocked with names like AFL-CIO, Foley Equipment Company, Heavy Constructors Association of Greater Kansas City, Kansas Aggregate & Concrete Associations, Kansas Asphalt Pavement Association, Kansas Contractors Association, Kansas Society of Professional Engineers, and PCA South Central Cement Promotion Association. Groups and companies like these have an economic interest in building more roads and highways, whether or not the state actually needs them.

The planners themselves are a special interest group, too. They need jobs. Like most government bureaucrats, they “profit” from increasing their power and sphere of influence, and by expansion of their budgets and staffs. So when Sedgwick County Commissioner Jim Skelton asks a professional planner questions about the desirability of planning, what answer does he think he will get? It’s not that the planners are not honest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.

And we have evidence that planners watch out for themselves. It is not disputed that this planning grant benefits Regional Economic Area Partnership (REAP). Sedgwick County Commissioner Richard Ranzau says that John Schlegel, Wichita’s Director of Planning, told him that “acceptance of this grant will take REAP to another level, because right now they are struggling, and this will help plot the course for REAP.” He said that REAP, which is housed at the Hugo Wall School of Public Affairs at Wichita State University, needs to expand its role and authority in order to give it “something to do.”

We see that REAP is another special interest group seeking to benefit itself. In this case, our best hope is that REAP engages in merely make-work, that the plan it produces is put on a shelf and ignored, and that the only harm to us is the $1.5 million cost of the plan.

By the way, did you know that Sedgwick County Commissioner Dave Unruh, who voted in favor of the plan that benefits REAP, is now chairman of REAP? Special interest groups know how to play the political game.

Open records again an issue in Kansas

Responses to records requests made by Kansas Policy Institute are bringing attention to shortcomings in the Kansas Open Records Act.

Those who have made records requests in Kansas are probably not surprised that KPI has had difficulty in having its records requests respected and filled. In 2007 Better Government Association and National Freedom of Information Coalition gave Kansas a letter grade of “F” for its open records law. Last year State Integrity Investigation looked at the states, and Kansas did not rank well there, either. See Kansas rates low in access to records.

This week KPI president Dave Trabert appeared before the Sedgwick County Commission to express his concerns regarding the failure of Greater Wichita Economic Development Coalition to fulfill a records request made under the provisions of the Kansas Open Records Act. Video is at Open government in Sedgwick County Kansas.

While commissioners Karl Peterjohn and Richard Ranzau spoke in favor of government transparency and compliance with records requests, not all their colleagues agreed.

Dave Unruh asked Trabert if GWEDC had responded to his records request. Trabert said yes, and the response from GWEDC is that the agency believes it has complied with the open records law. This, he explained, is a common response from agencies.

Commission Chair Tim Norton expressed concern that any non-profit the commission gives money to would have to hire legal help, which he termed an unintended consequence. He made a motion to receive and file Trabert’s remarks, which is routine. His motion also included taking this matter under advisement, which is what politicians do in order to bury something. Unruh seconded the motion.

Peterjohn made a substitute motion that a representative from GWEDC would appear before the commission and discuss the open records act. This motion passed four to one, with Unruh in the minority. Even though Norton voted in favor of Peterjohn’s motion, it’s evident that he isn’t in favor of more government transparency. Unruh’s vote against government transparency was explicit.

Wichita school district records request

USD 259, the Wichita public school district, also declined to fulfill a records request submitted by KPI. In a press release, KPI details the overly-legalistic interpretation of the KORA statute that the Wichita school district uses to claim that the records are exempt from disclosure.

In a news report on KSN Television, school board president Lynn Rogers explained the district’s reason for denying the records request: “But some school board members with USD 259 in Wichita say, the numbers brought up in court are preliminary numbers. That’s the reason they are not handing them over to KPI. ‘We have worked very hard over the years to be very forthright and we’ve tried to disclose the information when we have it,’ says Lynn Rogers.’”

This claim by Rogers — if sincere — is a break from the past. In 2008 Rogers told me that it is a burden when citizens make requests for records.

Until recently the Wichita school district had placed its monthly checkbook register on its website each month, and then removed it after a month had passed. Rogers explained that the district didn’t have space on its servers to hold these documents. That explanation is total nonsense, as the pdf check register documents are a very small fraction of the size of video files that the district hosted on its servers. Video files, by the way, not related to instruction, but holding coverage of groundbreaking ceremonies.

City of Wichita

KPI has made records requests to other local governmental agencies. Some have refused to comply on the basis that they are not public agencies as defined in Kansas statutes. This was the case when I made records requests to Wichita Downtown Development Corporation, Greater Wichita Economic Development Coalition, and Go Wichita Convention and Visitors Bureau.

In 2009 I addressed the Wichita City Council and asked that the city direct that WDDC follow the law and fulfill my records requests. (Video is at Video: City of Wichita and the Kansas Open Records Act.)

In my remarks, I told Mayor Carl Brewer and the council this:

The Kansas Open Records Act (KORA), in KSA 45-216 (a) states: “It is declared to be the public policy of the state that public records shall be open for inspection by any person unless otherwise provided by this act, and this act shall be liberally construed and applied to promote such policy.”

But in my recent experience, our city’s legal staff has decided to act contrary to this policy. It’s not only the spirit of this law that the city is violating, but also the letter of the law as well.

Recently I requested some records from the Wichita Downtown Development Corporation. Although the WDDC cooperated and gave me the records I requested, the city denies that the WDDC is a public agency as defined in the Kansas Open Records Act.

This is an important issue to resolve.

In the future, requests may be made for records for which the WDDC may not be willing to cooperate. In this case, citizens will have to rely on compliance with the law, not voluntary cooperation. Or, other people may make records requests and may not be as willing as I have been to pursue the matter. Additionally, citizens may want to attend WDDC’s meetings under the provisions of the Kansas Open Meetings Act.

Furthermore, there are other organizations similarly situated. These include the Greater Wichita Economic Development Coalition and the Go Wichita Convention and Visitors Bureau. These organizations should properly be ruled public agencies as defined in the Kansas Open Records Act so that citizens and journalists may freely request their records and attend their meetings.

Here’s why the WDDC is a public agency subject to the Open Records Act. KSA 45-217 (f)(1) states: “‘Public agency’ means the state or any political or taxing subdivision of the state or any office, officer, agency or instrumentality thereof, or any other entity receiving or expending and supported in whole or in part by the public funds appropriated by the state or by public funds of any political or taxing subdivision of the state.”

The Kansas Attorney General’s office offers additional guidance: “A public agency is the state or any political or taxing subdivision, or any office, officer, or agency thereof, or any other entity, receiving or expending and supported in whole or part by public funds. It is some office or agency that is connected with state or local government.

The WDDC is wholly supported by a special property tax district. Plain and simple. That is the entire source of their funding, except for some private fundraising done this year.

The city cites an exception under which organizations are not subject to the Kansas Open Records Act: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.”

The purpose of this exception is so that every vendor that sells goods and services to government agencies is not subject to the Kansas Open Records Act. For example, if a city buys an automobile, the dealer is not subject simply because it sold a car to the city.

But this statute contains an important qualifier: the word “solely.” In this case, the relationship between the City of Wichita and the WDDC is not that of solely customer and vendor. Instead, the city created a special tax district that is the source of substantially all WDDC’s revenue, and the existence of the district must be renewed by the city soon. The WDDC performs a governmental function that some cities decide to keep in-house. The WDDC has only one “customer,” to my knowledge, that being the City of Wichita.

Furthermore, the revenue that the WDDC receives each year is dependent on the property tax collected in the special taxing district.

The only reasonable conclusion to draw is that in terms of both funding and function, the WDDC is effectively a branch of Wichita city government.

The refusal of the city’s legal department to acknowledge these facts and concede that the WDDC is a public agency stands reason on its head. It’s also contrary to the expressly stated public policy of the state of Kansas. It’s an intolerable situation that cannot be allowed to exist.

Mr. Mayor and members of the council, it doesn’t take a liberal application of the Kansas Open Records Act to correct this situation. All that is required is to read the law and follow it. That’s what I’m asking this body to do: ask the city legal department to comply with the clear language and intent of the Kansas Open Records Act.

The following year when WDDC’s contract was before the council for renewal, I asked that the city, as part of the contract, agree that WDDC is a public agency as defined in Kansas law. (Video is at Kansas Open Records Act at Wichita City Council.) Then-council member Paul Gray, after noting that he had heard all council members speak in favor of government transparency, said that even if WDDC is not a public agency under the law, why can’t it still proceed and fulfill records requests? This is an important point. The Kansas Open Records Act contains many exclusions that agencies use to avoid releasing records. But agencies may release the records if they want.

Any council member could have made the motion that I asked for. But no one, including Gray, former council member Sue Schlapp, former member Jim Skelton (now on the Sedgwick County Commission), Mayor Carl Brewer, and council members Jeff Longwell (district 5, west and northwest Wichita), Janet Miller (district 6, north central Wichita), and Lavonta Williams (district 1, northeast Wichita) would make a motion to increase government transparency and citizens’ right to know. Wichita city manager Robert Layton offered no recommendation to the council.

Last year I appeared again before the council to ask that Go Wichita agree that it is a public agency as defined in the open records act. Randy Brown, who is chair of the Kansas Sunshine Coalition for Open Government and former opinion page editor of the Wichita Eagle was at the meeting and spoke on this matter. In his remarks, Brown said “It may not be the obligation of the City of Wichita to enforce the Kansas Open Records Act legally, but certainly morally you guys have that obligation. To keep something cloudy when it should be transparent I think is foolishness on the part of any public body, and a slap in the face of the citizens of Kansas. By every definition that we’ve discovered, organizations such as Go Wichita are subject to the Kansas Open Records Act.”

Brown said that he’s amazed when public officials don’t realize that transparency helps build trust in government, thereby helping public officials themselves. He added “Open government is essential to a democracy. It’s the only way citizens know what’s going on. … But the Kansas Open Records Act is clear: Public records are to be made public, and that law is to be construed liberally, not by some facile legal arguments that keep these records secret.”

He recommended to the council, as I did, that the contract be contingent on Go Wichita following the Kansas Open Records Act.

Discussion on this matter revealed a serious lack of knowledge by some council members regarding the Kansas Open Records Act. In remarks from the bench James Clendenin (district 3, southeast and south Wichita) asked the city manager a series of questions aimed at determining whether the city was satisfied with the level of service that Go Wichita has provided. He then extended that argument, wondering if any company the city contracts with that is providing satisfactory products or service would be subject to “government intrusion” through records requests. Would this discourage companies from wanting to be contractors?

First, the Kansas Open Records Act does not say anything about whether a company is providing satisfactory service to government. That simply isn’t a factor, and is not a basis for my records request to Go Wichita. Additionally, the Kansas Open Records Act contains a large exception, which excepts: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.” So companies that sell to government in the ordinary course of business are not subject to the open records law. Go Wichita is distinguished, since it is almost entirely funded by taxes and has, I believe, just a single client: the City of Wichita.

Finally, we should note that the open records law does not represent government intrusion, as Clendenin claimed. Open records laws offer citizens the ability to get an inside look at the working of government. That’s oversight, not intrusion.

Pete Meitzner (district 2, east Wichita) asked that there might be a workshop to develop a policy on records requests. He expressed concern that departments might be overwhelmed with requests from me that they have to respond to in a timely fashion, accusing me of “attempt to bury any of our departments in freedom of information acts [sic].” Such a workshop would probably be presented by Wichita City Attorney Gary Rebenstorf. His attitude towards the open records law is that of hostility, and is not on the side of citizens.

In making this argument, Mr. Meitzner might have taken the time to learn how many records requests I’ve made to the city. The answer, to the best of my recollection, is that I made no requests that year to the city citing the open records act. I have made perhaps a half-dozen informal requests, most of which I believe were fulfilled consuming just a few moments of someone’s time.

As to Meitzner’s concern over the costs of fulfilling records requests: The law allows for government and agencies to charge fees to fulfill requests. They often do this, and I have paid these fees. But more important than this, the attitude of council member Meitzner is troubling. Government should be responsive to citizens. As Randy Brown told the council, government should welcome opportunities to share information and be open and transparent.

Michael O’Donnell (district 4, south and southwest Wichita) made a motion that the contract be approved, but amended that Go Wichita will comply with the Kansas Open Records Act. That motion didn’t receive a second.

Brown and I appeared on the KAKE Television public affairs program This Week in Kansas to discuss this matter. Video is at In Wichita, disdain for open records and government transparency.

Enforcement of Kansas Open Records Act

In Kansas, when citizens believe that agencies are not complying with the Kansas Open Records Act, they have three options. One is to ask the Kansas Attorney General for help. But the policy of the Attorney General is to refer all cases to the local District Attorney, which is what I did. The other way to proceed is for a citizen to pursue legal action at their own expense.

After 14 months, Sedgwick County DA Nola Foulston’s office decided in favor of the governmental agencies. See Sedgwick County DA Response to KORA Request to Wichita Downtown Development Corporation.

When newspapers have their records requests refused, they usually give publicity to this. The Wichita Eagle is aware of my difficulties with records requests in Wichita, as their reporters have attended a number of meetings where my records requests were discussed, sometimes at length. But so far no coverage of an issue that, were the newspaper in my shoes, would undoubtedly covered on the front page. Something tells me that KPI won’t get any coverage, either.

Additional information on this topic is at:

Wichita voters reject cronyism — again

Tuesday’s primary election in Kansas was notable for the large number of victories by conservative challengers over Republican senate incumbents. Also important is that voters in Wichita and the surrounding area rejected, for the second time this year, the culture of political cronyism that passes for economic development in Wichita.

On Tuesday incumbent Sedgwick County Commissioner Karl Peterjohn defeated a challenge by Wichita City Council Member Jeff Longwell. The contrast was clear: Peterjohn with his long-time, outspoken advocacy for limited government and free market principles, although perhaps tempered a bit based on some votes he’s made. Longwell, however, advocates for “more tools in the toolbox.” In other words, a larger role for government in economic development and centralized planning.

The result: Peterjohn won, 57 percent to 43 percent.

Longwell had the endorsements of many Wichita-area politicians, including Wichita Mayor Carl Brewer and all other Wichita City Council members except Michael O’Donnell (district 4, south and southwest Wichita): Vice Mayor Janet Miller (district 6, north central Wichita) and council members Lavonta Williams (district 1, northeast Wichita), James Clendenin (district 3, southeast and south Wichita), and Pete Meitzner (district 2, east Wichita).

Sedgwick County Commission members Tim Norton, Jim Skelton, and Dave Unruh also endorsed Longwell.

In addition to these endorsements, Longwell had a large money advantage over Peterjohn. According to campaign finance reports filed July 30, Longwell had raised nearly $62,000.

Peterjohn’s July 30 report showed about $20,000 raised, so as of that date Longwell had over three times as much campaign money at his disposal than Peterjohn.

The money advantage and the endorsements are linked. On Longwell’s July 30 campaign finance report we learned that executives of a Michigan construction company made campaign contributions immediately before and after Longwell participated in a city council voted that benefited them. Key Construction, a heavy contributor to Longwell’s campaign, also benefited from Longwell’s vote that day. This was just another episode in Longwell’s history of voting for overpriced no-bid contracts and no-interest city loans for his large campaign contributors.

The day after Peterjohn held a news conference questioning Longwell’s Michigan contributions, Longwell held the news conference that announced the above-mentioned endorsements. Many of those endorsers also receive campaign money from those they award with no-bid contracts and other taxpayer-funded largesse.

Despite the advantage in campaign funds and the endorsements, voters in west Wichita and west Sedgwick County rejected the political cronyism that is Jeff Longwell’s legacy in government service.

It’s the second time this year voters have rejected cronyism. In February Wichita voters voted down a tax giveaway to the Ambassador Hotel by a margin of 62 percent to 38 percent.

Longwell played a role in that election, too. When citizens exercised their constitutional right to challenge the taxpayer-funded giveaway to the hotel, Jeff Longwell said it was “disappointing,” and a “stunt.” He said that using this fundamental aspect of democracy causes citizens to “lose credibility.”

When it came time for the council to set the date for the special election on the hotel tax, Longwell attempted to have the election commissioner set the date as early as possible, obviously thinking that a short campaign would benefit the hotel developers.

Those hotel developers, by the way, included many of Longwell’s long-time campaign contributors.

After Wichita voters rejected this special tax deal, the Wall Street Journal in a column titled “A Wichita Shocker: You can beat city hall” wrote: “Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.”

It’s no wonder Longwell was disappointed when citizens petitioned their government. Voters soundly rejected the political cronyism and sweetheart deals that are Longwell’s legacy.

Skelton, Sedgwick County Commissioner, censured by party

Yesterday evening the Sedgwick County Republican Party censured a Sedgwick County Commissioner for supporting a Democrat in an upcoming election.

Treatha Brown-Foster, who is chair of Kansas Black Republican Council, offered a resolution critical of Jim Skelton.

The resolution read: “Whereas, Jim Skelton, an elected Republican official in Sedgwick County, who has benefited from the support of the Sedgwick County Republican Party, has publicly supported a Democratic candidate over a Republican candidate for election to the Sedgwick County Commission. Be it resolved that Jim Skelton be censured for this action.”

The resolution was met with applause. The motion was seconded and the vote to approve it was unanimous.

In June Skelton expressed his support in a Wichita Eagle article for incumbent Tim Norton over challenger Ben Sauceda. Norton is a Democrat; Sauceda is a Republican. The two face no primary challenges, and will meet in the November 6th general election.

In January Skelton joined with fellow Republican Commissioner Dave Unruh to elect Norton as commission chair. Despite Republicans holding a four to one majority, the commission is chaired by a Democrat.

Sedgwick County will hold Southfork TIF hearing

Since the Wichita City Council passed a resolution authorizing the formation of the Southfork tax increment financing district, the affected county (Sedgwick) and school district (Wichita) have an opportunity to veto the district’s formation. They don’t have to take action to approve the district — only silent assent is required. But they can take action, as Sedgwick County did in January, to cancel the formation of the district.

At Tuesday’s commission staff meeting, commission chair Tim Norton along with commissioners Dave Unruh and Jim Skelton didn’t believe a public hearing was necessary the matter should not be placed on the agenda. That would mean the county gave its silent consent to the district’s formation.

But after learning of that action, myself and at least two others contacted the county manager’s office and asked to be placed on the public agenda portion of the meeting, where citizens may address any topic.

Whether we would be allowed to speak was touch-and-go. County policy is that speakers must “provide your request in writing to the Sedgwick County Manager’s Office at least nine days prior to the meeting date.” The emphasis is in the original. (I wonder if email counts as writing?)

(That lengthy nine day lead time is a problem in itself. I believe that good public policy requires that the lead time be at least one day less than the period between meetings of the body, which is case of this commission, is normally seven days.)

But late Tuesday someone at the courthouse had a change of heart or mind, and now there will be a public hearing on Wednesday May 9th on this matter. Strictly speaking, it’s not a public hearing, but the item will be on the agenda, and it’s anticipated that chairman Norton will allow the public to address the commissioners on this issue.

I can understand (but not approve of) the motives of the three commissioners who approve of this district not wanting to hear members of the public speak against this item and their policies. Especially when the public has shown their skepticism on these matters, an example being the vote turning down an incentive for the Wichita Ambassador Hotel. In that election, voters repudiated the big-spending, big-government programs of the liberal Republicans on the Wichita City Council. If citizens could vote on the formation of this TIF ddistrict, commissioners Skelton and Unruh might find themselves in the same situation.

In Kansas, planning will be captured by special interests

The government planning process started in south-central Kansas will likely be captured by special interest groups that see ways to benefit from the plan. The public choice school of economics and political science has taught us how special interest groups seek favors from government at enormous costs to society, and we will see this at play again over the next few years.

This week the Sedgwick County Commission voted to participate in a HUD Sustainable Communities Regional Planning Grant. While some justified their votes in favor of the plan because “it’s only a plan,” once the planning process begins, special interests plot how to benefit themselves at the expense of the general public. Then once the plan is formed, it’s nearly impossible to revise it, no matter how evident the need.

An example of how much reverence is given to government plans comes right from the U.S. Supreme Court in the decision Kelo v. New London, in which the Court decided that government could use the power of eminent domain to take one person’s property and transfer it to someone else for the purposes of economic development. In his opinion for the Court, Justice Stevens cited the plan: “The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” Here we see the importance of the plan and due reverence given to it.

Stevens followed up, giving even more weight to the plan: “To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.”

To Stevens, the fact that the plan was comprehensive was a factor in favor of its upholding. The sustainable communities plan, likewise, is nothing but comprehensive, as described by county manager Bill Buchanan in a letter to commissioners: “[the plan will] consist of multi-jurisdictional planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic prosperity, social equity, energy use and climate change, and public health and environmental impact.”

That pretty much covers it all. When you’re charged with promoting economic prosperity, defending earth against climate change, and promoting public health, there is no limit to the types of laws you might consider.

Who will plan?

The American Planning Association praised the Court’s notice of the importance of a plan, writing “This decision underscores the importance for a community to have a comprehensive development plan formulated through a democratic planning process with meaningful public participation by everyone.”

But these plans are rarely by and for the public. Almost always the government planning process is taken over and captured by special interests. We see this in public schools, where the planning and campaigning for new facilities is taken over by architectural and construction firms that see school building as a way to profit. It does not matter to them whether the schools are needed.

Our highway planning is hijacked by construction firms that stand to benefit, whether or not new roads are actually needed.

Our planning process for downtown Wichita is run by special interest groups that believe that downtown has a special moral imperative, and another group that sees downtown as just another way to profit at taxpayer expense. Both believe that taxpayers across Wichita, Kansas, and even the entire country must pay to implement their vision. As shown in Kansas and Wichita need pay-to-play laws the special interests that benefit from public spending on downtown make heavy political campaign contributions to nearly all members of the Wichita City Council. They don’t have a political ideology. They contribute only because they know council members will be voting to give them money.

In Wichita’s last school bond election, 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms and others who directly stand to benefit from new school construction, no matter whether schools are actually needed. The firm of Schaefer Johnson Cox Frey Architecture led the way in making these contributions. It’s not surprising that this firm was awarded a no-bid contract for plan management services for the bond issue valued at $3.7 million. This firm will undoubtedly earn millions more for those projects on which it serves as architect.

The special interest groups that benefit from highway construction: They formed a group called Economic Lifelines. It says it was formed to “provide the grassroots support for Comprehensive Transportation Programs in Kansas.” Its motto is “Stimulating economic vitality through leadership in infrastructure development.”

A look at the membership role, however, lets us know whose economic roots are being stimulated. Membership is stocked with names like AFL-CIO, Foley Equipment Company, Heavy Constructors Association of Greater Kansas City, Kansas Aggregate & Concrete Associations, Kansas Asphalt Pavement Association, Kansas Contractors Association, Kansas Society of Professional Engineers, and PCA South Central Cement Promotion Association. Groups and companies like these have an economic interest in building more roads and highways, whether or not the state actually needs them.

The planners themselves are a special interest group, too. They need jobs. Like most government bureaucrats, they “profit” from increasing their power and influence, and by expansion of their budgets and staffs. So when Sedgwick County Commissioner Jim Skelton asks a professional planner questions about the desirability of planning, what answer does he think he will get? It’s not that the planners are not honest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.

And we have evidence that planners watch out for themselves. It is not disputed that this planning grant benefits Regional Economic Area Partnership (REAP). Sedgwick County Commissioner Richard Ranzau says that John Schlegel, Wichita’s Director of Planning, told him that “acceptance of this grant will take REAP to another level, because right now they are struggling, and this will help plot the course for REAP.” He said that REAP, which is housed at the Hugo Wall School of Public Affairs at Wichita State University, needs to expand its role and authority in order to give it “something to do.”

We see that REAP is another special interest group seeking to benefit itself. In this case, our best hope is that REAP engages in merely make-work, that the plan it produces is put on a shelf and ignored, and that the only harm to us is the $1.5 million cost of the plan.

By the way, did you know that Sedgwick County Commissioner Dave Unruh, who voted in favor of the plan that benefits REAP, is a board member of REAP, and may become the next chairman? Special interest groups know how to play the political game, that’s for sure.

Federal, United Nations planning imported to Wichita

Yesterday the Sedgwick County Commission voted to participate in a HUD Sustainable Communities Regional Planning Grant.

Republican commissioners Dave Unruh and Jim Skelton joined with Democrat Tim Norton to pass the measure. Below, Paul Soutar of Kansas Watchdog explains why this planning process is a bad idea.

Local Planning Initiative Has Federal Strings, UN Roots

by Paul Soutar, Kansas Watchdog

The Sedgwick County Commission will decide Wednesday whether to give a consortium of South Central Kansas governments and organizations broad control over community planning funded by a federal grant and based on a United Nations agenda.

The Regional Economic Area Partnership (REAP) Consortium for Sustainable Communities seeks to implement a Regional Plan for Sustainable Development (RPSD) for South Central Kansas.

REAP’s application for a federal grant said the plan will “provide an overall vision and commitment for sustainable growth in South Central Kansas. The RSPD will provide goals, strategies, and action steps to support that vision. Specifically, that RPSD will create a regional integrated transportation, housing, air quality and water infrastructure plan that aligns federal resources and provides for sustainable development and resources (fiscal, human and capital) to support our economic centers.‘

Much of the language and goals of sustainable communities grants reflect the goals of the U.N.’s Agenda 21, a global environmental agenda for the 21st century revealed at the 1992 U.N. Conference on Environment and Development in Rio de Janeiro.

Agenda 21 is a comprehensive framework for global, national and local action aimed at improving environmental equality through massive changes in how resources are consumed and allocated.

According to Sustainable Development in the 21st century (SD21), a December 2011 UN review of implementation of Agenda 21, “Achieving greater equity requires a significant reduction in consumption by industrialized countries.”

Continue reading at Local Planning Initiative Has Federal Strings, UN Roots.

A Wichita shocker

“Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.” So starts today’s Wall Street Journal Review & Outlook editorial (subscription required), taking notice of the special election last week in Wichita.

The editorial page of the Wall Street Journal is one of the most prominent voices for free markets and limited government in America. Over and over Journal editors expose crony capitalism and corporate welfare schemes, and they waste few words in condemning these harmful practices.

The three Republican members of the Wichita City Council who consider themselves fiscal conservatives but nonetheless voted for the corporate welfare that voters rejected — Pete Meitzner (district 2, east Wichita), James Clendenin (district 3, southeast and south Wichita), and Jeff Longwell (district 5, west and northwest Wichita) — need to consider this a wake up call. These members, it should be noted, routinely vote in concert with the Democrats and liberals on the council.

For good measure, we should note that Sedgwick County Commission Republicans Dave Unruh and Jim Skelton routinely — but not always — vote for these crony capitalist measures.

The Wichita business community, headed by the Wichita Metro Chamber of Commerce endorsed this measure, too.

Hopefully this election will convince Wichita’s political and bureaucratic leaders that our economic development policies are not working. Combined with the startling findings by a Tax Foundation and KMPG study that finds Kansas lags near the bottom of the states in tax costs to business, the need for reform of our spending and taxing practices couldn’t be more evident. It is now up to our leaders to find within themselves the capability to change — or we all shall suffer.

Carl Brewer: State of the City for Wichita, 2012

Last night Wichita Mayor Carl Brewer delivered his annual State of the City Address. The text of the address may be read at State of the City Address.

In his speech, Brewer several times criticized those who act on “partisan agendas.” This is quite a remarkable statement for the mayor to make. Partisan usually refers to following a party line or platform. The mayor didn’t mention who he was criticizing, but it’s likely he was referring to myself and others like John Todd, Susan Estes, and Clinton Coen, as we appear regularly before the city council, usually in disagreement with the mayor and his policies.

What’s remarkable is that the council, even though it has four Republican members, almost always votes uniformly with Democrat Brewer and the other two politically liberal members of the council. The only exception is Michael O’Donnell (district 4, south and southwest Wichita), who is often in a minority of one voting in opposition to the other six. The other Republican members — Pete Meitzner (district 2, east Wichita), James Clendenin (district 3, southeast and south Wichita), and Jeff Longwell (district 5, west and northwest Wichita) — routinely vote in concert with the Democrats and liberals on the council.

Remarkable also are the many members of the business community who appeal to the council for subsidies, increased government intervention, and more central planning from city hall: many of these are Republicans. Conservative Republicans, many have personally told me.

This describes a lack of partisanship. Most of the mayor’s critics, such as myself, are more accurately characterized not as acting along party lines, but as acting on their belief in economic freedom, free markets, and limited government.

Economic development

The mayor said that the city’s efforts in economic development had created “almost 1000 jobs.” While that sounds like a lot of jobs, that number deserves context.

According to estimates from the Kansas Department of Labor, the civilian labor force in the City of Wichita for December 2011 was 192,876, with 178,156 people at work. This means that the 1,000 jobs created accounted for from 0.52 percent to 0.56 percent of our city’s workforce, depending on the denominator used. This miniscule number is dwarfed by the normal ebb and flow of other economic activity.

The mayor did not mention the costs of creating these jobs. These costs have a negative economic impact on those who pay these costs. This means that economic activity — and jobs — are lost somewhere else in order to pay for the incentives.

The mayor’s plan going forward, in his words, is “We will incentivize new jobs.” But under the mayor’s leadership, this “active investor” policy has produced a very small number of jobs, year after year. Doubling down on the present course is not likely to do much better.

But there are those who disagree, despite all evidence to the contrary. Sedgwick County Commissioner Dave Unruh — a conservative Republican, for those keeping track of partisanship — recently called for a “deal-closing” fund of $100 million. A funding source of this magnitude would undoubtedly require a new tax. There are many who feel there should be a new sales tax devoted to economic development and downtown Wichita development. We should not be surprised to see such a proposal emerge, and not be surprised that civic and business institutions will support it.

The mayor repeatedly said that the city has been “courageous.” In reality, Wichita does about the same as everyone else. But there is a way Wichita could distinguish itself among cities.

Professor Art Hall of the Center for Applied Economics at the Kansas University School of Business has made a convincing case that Kansas needs to move away from the “active investor” approach to economic development. This is where government decides which companies will receive special treatment, be it in the form of tax abatements, tax credits, grants, tax increment financing, community improvement district special taxes, and other forms of subsidy. Being an “active investor” has been the approach of the City of Wichita, and according to the mayor’s vision, this plan is to be stepped up in the future.

In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”

Later, Hall writes this regarding “benchmarking” — the bidding wars for large employers that Wichita and Kansas rely on for economic development: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

We need business and political leaders in Wichita and Kansas who can see beyond the simplistic imagery of a groundbreaking ceremony and can assess the effect of our failing economic development policies on the entire community. Unfortunately, we don’t have many of these — and Mayor Brewer leads in the opposite direction.

Critical of misinformation campaigns

In his speech, Brewer was critical of those who “spread misinformation.” He was not specific as to who he’s criticizing, and I wouldn’t expect him to name specific people in a speech like this.

But when the mayor criticizes people for being uninformed or misinformed, he needs to look first at himself. He and city staff also need to engage their critics and be responsive to requests for information.

As an example of misinformation, the mayor cited this evidence that city policies are working: “The proposed Ambassador Hotel with a 3-to-1 private to public investment ratio.”

The city arrived at this ratio by employing a very narrow definition of public investment. When tax credits from the State of Kansas and federal government as well as other sources of public subsidy are accounted for, the ratio drops to less than two to one.

It’s true that considering only the city’s artificially narrow definition of public funding, the ratio does reach three to one. But Wichitans also have to pay part of the costs of the tax credits and other subsidies.

The city has also been less than honest in its promotion of the cost-benefit ratio for the Ambassador Hotel project. The city officially cites a cost-benefit study produced by Wichita State University Center for Economic Development and Business Research. Part of that study produced a cost-benefit ratio of 2.63 to one, and that’s what the city uses as justification for its participation in the project.

But the full story of the costs and benefits of this project are contained in these numbers from the WSU analysis:

                                    ROI   Cost-benefit ratio
City Fiscal Impacts General Fund  163.2%        2.63
City Fiscal Impacts Debt Service  -17.2%        0.83
City Fiscal Impacts                -9.8%        0.90

WSU evaluated the impact of the Ambassador Hotel on the City of Wichita’s finances in two areas: The impact on the city’s General Fund, and separately on the city’s Debt Service Fund. The two were combined to produce the total fiscal impact, which is the bottom line in this table.

The City of Wichita cites only the positive impact to the General Fund figure. But the impact on the Debt Service fund is negative, and the impact in total is negative.

It’s true that the ROI and cost-benefit ratio for the General Fund indicate a positive investment return. But the cost of the Ambassador Hotel subsidy program to the General Fund is $290,895, while the cost to the Debt Service Fund is $7,077,831 — a cost factor 23 times as large.

Citizens ought to ask: Who is spreading misinformation?

It is difficult to get a response from city hall regarding questions like these. So far city economic development director Allen Bell has not agreed to meet with representatives of Tax Fairness for All Wichitans, a group opposed to the subsidies for the Ambassador Hotel. (I am part of that group.) The city and its allied economic development groups will not send representatives to participate in a public forum on this matter.

Simplistic answers

The mayor criticized those who “provide simplistic answers to very complicated challenges.” He may be — we don’t really know — referring to those like myself who advocate for free market solutions to problems rather than reliance on government. Certainly the mayor believes that government must act — “courageously” he said — to confront our problems.

A problem with the mayor’s plan for increased economic interventionism by government is the very nature of knowledge. In a recent issue of Cato Policy Report, Arnold King wrote:

As Hayek pointed out, knowledge that is important in the economy is dispersed. Consumers understand their own wants and business managers understand their technological opportunities and constraints to a greater degree than they can articulate and to a far greater degree than experts can understand and absorb.

When knowledge is dispersed but power is concentrated, I call this the knowledge-power discrepancy. Such discrepancies can arise in large firms, where CEOs can fail to appreciate the significance of what is known by some of their subordinates. … With government experts, the knowledge-power discrepancy is particularly acute.

Relying on free market solutions for economic growth and prosperity means trusting in the concept of spontaneous order. That takes courage. It requires faith in the values of human freedom and ingenuity rather than government control. It requires that government officials let go rather than grabbing tighter the reins of power.

Mayor Brewer, five of six city council members, and the city hall bureaucracy do not believe in these values. Wichita’s mayor is openly dismissive of economic freedom, free markets, and limited government, calling these principles of freedom and liberty “simplistic.” Instead, his government prefers crony capitalism and corporate welfare. This is the troubling message that emerges from Brewer’s State of the City address.

Sedgwick County commissioners vote Democratic

This morning the Sedgwick County Commission voted to select member Tim Norton of Haysville as chairman for the upcoming year. Norton, a Democrat, received the votes of two of the board’s four Republican members: Those of outgoing Chairman Dave Unruh and Jim Skelton.

Commissioner Karl Peterjohn nominated Richard Ranzau for the position, but he received only two votes.

It may be remarkable that a board with a four to one majority in one party elected a member of the minority party to serve as chair, or it may simply be a reflection of the actual ideological makeup of the board. Peterjohn and Ranzau consistently take stances and make votes that favor limited government and free markets, while Unruh and Skelton generally join with the politically-liberal Norton on most issues. The chairman is more than just a ceremonial position, as the chairman presides over commission meetings. On many agenda items, the commission is not obligated to hear testimony from citizens, although it must when there are items that have public hearings required by law. It was the practice of Kelly Parks and Peterjohn, when they served as chair, to allow anyone who appeared at meetings to speak. In his term as chair, Unruh was seen as less accommodating, although I think that anyone who really cared to was allowed to speak, sometimes with a gentle admonition to hurry along. It is unknown in what manner Norton will run the meetings while he is chair. A hint: He’s objected to the term “ObamaCare” as pejorative, so I wouldn’t use that word around the courthouse.

For Chairman Pro Tem, the commissioners selected Skelton. Ranzau’s name was placed into nomination by Peterjohn, and he received the same two votes as he did for chairman. The votes for Skelton by Norton and Unruh are surprising. Skelton’s recent behavior has been erratic, even bizarre at times. His recent appearance at the Wichita City Council (video here) brought laughter and guffaws from both the bench and the public. I got the sense, however, the people were laughing at Skelton, not with him.

Unruh’s selection for 2011 Chairman’s award

Chairman Unruh selected Visioneering Wichita as the recipient of the annual Chairman’s award. This organization is in favor of government intervention into the economy — and people’s lives — on a large and increasing scale. Most of the items on its legislative agenda involve more government spending. While Visioneering — its chair Jon Rolph, anyway — denies advocating for increased taxes, Milton Friedman has taught us that it is the level of spending that is the true measure of the size of government. The size of that Visioneering seeks to expand.

Sedgwick County considers a planning grant

This week the Sedgwick County Commission considered whether to participate in a HUD Sustainable Communities Regional Planning Grant.

A letter from Sedgwick County Manager Bill Buchanan to commissioners said that the grant will “consist of multi-jurisdictional planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic prosperity, social equity, energy use and climate change, and public health and environmental impact.”

The budget of the grant is $2,141,177 to fund the three-year plan development process, with $1,370,000 from federal funds and $771,177 of “leveraged resources” as a local match. These leveraged resources are in the form of in-kind contributions of staff time, plus $60,000 in cash.

While Sedgwick County will be the grant’s “fiscal agent,” the work will be done by Regional Economic Area Partnership (REAP), an umbrella organization with the mission of, according to its website: “Guide state and national actions that affect economic development in the region and adopt joint actions among member governments that enhance the regional economy.”

REAP’s members include city and county governments in a nine-county area in south-central Kansas. One of its duties is to administer the Kansas Affordable Airfares Program, the program that pays subsidies to airlines to provide service to the Wichita airport. In 2011, Sedgwick County paid $15,272 in “assessments” for its membership in REAP, while the City of Wichita paid $27,192. Governments pay smaller amounts as part of REAP’s water resources program.

The counties that are considering participating in this planning grant are Reno, Harvey, Sedgwick, Sumner, and Butler.

County documents specify the county’s in-kind contribution as $120,707. That consists of portions of the salary and benefits for four existing employees, plus $85,800 in “indirect administration costs.” There is no cash match at this time.

John Schlegel, Director of Planning for the Wichita-Sedgwick County Metropolitan Area Planning Department, told commissioners that the end product of this grant would be the development of a regional plan for sustainable development. He said that we don’t know what the plan would contain, but that the purpose of the grant program is to get regions to work together on sustainability issues. The target area of the grant is a five-county area around Sedgwick County.

He said that examples of issues would be economic development, workforce development, fiscal sustainability such as balanced budgets and spending priorities, and working together to create efficiencies in the region like joint purchasing and cost sharing.

Commissioner Richard Ranzau asked to see a copy of the completed application, but the application is not complete.

In his remarks, Ranzau described the application process, reading from the application document: “The applicant must show a clear connection between the need that they have identified within the region, the proposed approach to address those conditions, and the outcomes they anticipate the plan will produce.” He said that it appears that REAP will do these within the application, but the commission is being asked to approve and commit to these items without having seen them, which he described as irresponsible. He made a motion that action on the grant be delayed until these things are known.

Joe Yager, chief executive officer of REAP, said that last year’s grant application is available on the REAP website, and that is the closest thing to a draft application that is available today. This year’s application is a second year of the program. Last year the commission voted not to participate in the grant by a 3 to 2 vote.

Commissioner Karl Peterjohn wondered if the new planning consortium is a duplication of existing regional authorities. He listed seven different groups, besides REAP, that are involved in planning for the region.

In further remarks, Peterjohn was concerned that smaller counties will have the same voting representation as Sedgwick County, which is many times larger than the small counties.

In response to a question from Peterjohn, Yager said that the current application is for category 1 funds only, which are for planning purposes. If REAP is successful in the application, it could apply for category 2 funds, which are for implementation of a plan.

Answering another question, Yager said that “livability principles,” which applicants must be committed to advance, are providing more transportation choices, promoting equitable and affordable housing, enhancing economic competitiveness, supporting existing communities, coordinating policies and leveraging investments, and valuing communities and neighborhoods. Peterjohn said these principles were not supplied in the information made available to commissioners.

Peterjohn said these principles sound innocuous on their face, but when details are examined, he said he could not support a “Washington-driven agenda” that could not pass the present Congress. He described this effort as part of an “administrative end-around,” baiting us with a federal grant, that will allow Washington, HUD, and EPA to “drive what we do in our community.”

The motion on deferring the item failed on a 2 to 3 vote, with Peterjohn and Ranzau voting for it.

The commission heard from three citizens. In his remarks, John Todd referenced a slide titled “Common Concerns” from a presentation given by REAP. Todd listed these concerns, which include: “A method of Social Engineering to restrict residence in the suburbs and rural areas and force Americans into city centers; a blueprint for the transformation of our society into total Federal control; will enforce Federal Sustainable Development zoning and control of local communities; will create a massive new ‘development’ bureaucracy; will drive up the cost of energy to heat and cool your home; will drive up the cost of gasoline as a way to get you out of your car; and will force you to spend thousands of dollars on your home in order to comply.”

Susan Estes of Americans for Prosperity challenged the attitude of some commissioners, particularly Jim Skelton, which is that approving the planning grant does not commit us to implementing the plan. She told the commissioners “If you know you don’t like the federal government coming in and planning for you, say so now. Let’s get it over with and be upfront and honest to those involved,” referring to the other cities and counties that may participate in the grant and planning process.

She characterized the language that appears in the grant materials as meaning “more control and less liberty.”

In his remarks, Ranzau asked Schlegel what problem we will solve by participating in the grant. Schlegel answered that the purpose of the grant is to “build the greater regional capacity for regions to better compete in what is really becoming a global marketplace.” This is the end product, he said.

Ranzau said that we don’t need more planning, that we have more than enough planning at the present time. This grant, he said, would create another consortium that is unaccountable to the people, as no one is elected to them. The organizations receive tax dollars, and while some elected officials serve on these bodies, it is not the same as being directly accountable to the people. The fact that the grant requires a new consortium to be formed is evidence that the agenda is to circumvent the will of the people, he said.

Ranzau also said that Schlegel told him that “acceptance of this grant will take REAP to another level, because right now they are struggling, and this will help plot the course for REAP.” He said that REAP, which is housed at the Hugo Wall School of Public Affairs at Wichita State University, needs to expand its role and authority in order to give it “something to do.” He said the grant will promote the “progressive agenda” of the Obama administration in this way.

Later Commission Chair Dave Unruh disputed the contention regarding the workload of REAP.

Ranzau also questioned whether we want the federal government to be a “source of solutions” for our local communities. He also questioned one of the stated goals of the program, which is to reduce cost to taxpayers. It’s a new program, he said, and would not reduce the cost to taxpayers.

He further questioned the ability of the grant program to help teach local communities to be fiscally responsible. With federal spending out of control, he said the federal government is not in a position to help in this regard.

He further said that talking in generalities sounds benign, and that he wanted to know what he is committing the county to this year. Repeating the concerns of Peterjohn, Ranzau said that accepting this grant would be accepting the policies of the Obama Administration as our own. He said that in the 2010 elections the people repudiated the agenda of the president, and this grant program is an example of the type of programs people have said they don’t want. It is concern with the agenda behind this grant program that is his greatest concern, he later explained.

Continuing, Ranzau questioned the ability of the federal government to create conditions for sustainable growth: “You’ve got to be kidding me. Look at the vision they now have for growth in this county. It’s a disaster. And now they want to take the same policies that have created and made our current economic situation worse — they want to bring them to our local communities by these sorts of grants.”

Both Ranzau and Peterjohn questioned the ability of this grant to produce affordable housing, citing the government’s role in the ongoing housing crisis.

Ranzau, who has voted against many grants, added that this is the “the worst and most troublesome grant” he’s seen in his time in office, adding that the grant is clearly an agenda created by President Obama. He said there are politicians who ran for office on platforms of limited government and fiscal responsibility, and this grant is an opportunity for them to “act on those values.”

In further discussion, it was brought out that each region makes its own definition of what sustainability means to it, but Yager provided this definition of sustainability: “Meeting the needs of the present without compromising the ability of future generations to meet their own needs.”

In his remarks, Unruh said that Sedgwick County has been involved in sustainability thinking and planning for at least two years. He said this is a strategy that helps the county plan for the future. He asked manager Buchanan if the county had a definition of sustainability. Buchanan replied the County has taken a similar approach to the International City/County Management Association, which he said involves four factors: Economic stability — sufficient jobs and economic development; ensuring that local governments are fiscally healthy so that they can provide quality services; social equity, which he said ensures that the delivery of services in communities is equitable; and the environment, which he said was not about global warming, but rather making sure we’re not wasting natural resources.

Unruh said that we are not opposed to these principles, that these are reasonable activities for elected officials. He added that regionalism is the “whole measuring stick.” We must consider communities close to us when planning, he added. It is reasonable to get these people together on a voluntary and non-binding basis. While he said he didn’t like excess spending at the federal level, it is his money that the federal government is spending, and we should take advantage of this program, adding that we need to plan. If the plans are not acceptable, he said we could simply not adopt them. He disagreed with the contention of Ranzau and Peterjohn that this process causes the county to yield to any master plan developed by the federal government. He again mentioned that we are using our money to develop this plan, and asked our federal officeholders to stop spending money in this way.

He added that he believes in limited government and fiscal responsibility, and that accessing these resources does not make him “hypocritical, insincere, or untruthful.”

In rebuttal to Buchanan, Ranzau said that the grant funding document says that one of the goals is to reduce greenhouse gas emissions, which are believed by many to be a cause of global warming or climate change. The document does mention helping regions “consider the interdependent challenges of … energy use and climate change.” This language was transmitted to commissioners in a letter from Buchanan. Ranzau again said it is important not to downplay the agenda that is associated with the grant funds. In earlier remarks, Ranzau had described how applications would be scored or ranked, and that winning applications would need to conform to the goals of HUD.

The commission voted to approve the grant, with Unruh, Norton, and Skelton voting in favor, and Ranzau and Peterjohn voting against.

Commentary

Discussions such as these, where the role of government and the nature of the proper relationship between the federal government and states, counties, and cities, are a regular feature at Sedgwick County Commission meetings, due to the concerns of Peterjohn and Ranzau. These discussion do not often take place at the Wichita City Council, unless initiated by citizens whose testify on matters.

The remarks of chairman Unruh illustrated one of the important conundrums of our day. Many are opposed to the level of federal (and other government) spending. Polls indicate that more and more people are concerned about this issue. Yet, it is difficult to stop the spending.

In particular, the grant process is thorny. The principled stand of Ranzau, and sometimes Peterjohn, is that we should simply refuse to participate in the spending — both federal and local — that grants imply, and in the process also accepting the strings attached to them. Others, Unruh and Skelton in particular, have what they believe is a pragmatic view, arguing that it is our money that paid for these grant programs, and so by participating in grants we are getting back some of the tax funds we send to Washington. This reasoning allows Unruh to profess belief in limited government and fiscal responsibility while at the same time participating in this spending.

But there is no doubt that accepting federal money such as these grant funds means buying in to at least parts of the progressive Obama agenda, something that I think conservatives like Unruh and Skelton would not do on a stand-alone basis. This is an example of the power and temptation of what appears to be “free” federal money, and Ranzau and Peterjohn are correctly concerned and appropriately wary.

It is even more troublesome to realize that this power over us is exercised using our own money, as Skelton and Unruh rightly recognize, but nonetheless go along.

There may be a legislative solution someday. First, we can elect federal officials who will stop these programs. But the temptation to bring money back to the home district, either through grant programs or old-fashioned pork barrel spending, is overwhelming. Just this week U.S. Senator Jerry Moran, who voted against raising the debt ceiling in August, pledged to find more federal funds to pay for Wichita’s aquifer storage and recovery program.

An example of legislation that may work is a bill recently introduced by U. S. Representative Mike Pompeo of Wichita and others. The bill is H. R. 2961: To amend the Patient Protection and Affordable Care Act to have Early Innovator grant funds returned by States apply towards deficit reduction. The purpose of the bill is to direct the early innovator grant funds that Kansas Governor Sam Brownback returned towards deficit reduction, rather than being spent somewhere else.

The fiscal conservatives who vote to accept federal grant funds should be aware of research that indicates that these grants cause future tax increases. In my reporting on such a study I wrote: This is important because, in their words, “Federal grants often result in states creating new programs and hiring new employees, and when the federal funding for that specific purpose is discontinued, these new state programs must either be discontinued or financed through increases in state own source taxes.” … The authors caution: “Far from always being an unintended consequence, some federal grants are made with the intention that states will pick up funding the program in the future.”

The conclusion to this research paper (Do Intergovernmental Grants Create Ratchets in State and Local Taxes?) states:

Our results clearly demonstrate that grant funding to state and local governments results in higher own source revenue and taxes in the future to support the programs initiated with the federal grant monies. … Most importantly, our results suggest that the recent large increase in federal grants to state and local governments that has occurred as part of the American Recovery and Reinvestment Act (ARRA) will have significant future tax implications at the state and local level as these governments raise revenue to continue these newly funded programs into the future. Federal grants to state and local governments have risen from $461 billion in 2008 to $654 billion in 2010. Based on our estimates, future state taxes will rise by between 33 and 42 cents for every dollar in federal grants states received today, while local revenues will rise by between 23 and 46 cents for every dollar in federal (or state) grants received today. Using our estimates, this increase of $200 billion in federal grants will eventually result in roughly $80 billion in future state and local tax and own source revenue increases. This suggests the true cost of fiscal stimulus is underestimated when the costs of future state and local tax increases are overlooked.

The situation in which we find ourselves was accurately described by economist Walter E. Williams in his recent visit to Wichita. As I reported: “The essence of our relationship with government is coercion,” Williams told the audience. This, he said, represents our major problem as a nation today: We’ve come to accept the idea of government taking from one to give to another. But the blame, Williams said, does not belong with politicians — “at least not very much.” Instead, he said that the blame lies with us, the people who elect them to office in order to get things for us. A candidate who said he would do only the things that the Constitution authorizes would not have much of a chance at being elected.

The further problem is that if Kansans don’t elect officials who will bring federal dollars to Kansas, it doesn’t mean that Kansans will pay lower federal taxes. The money, taken from Kansans, will go to other states, leading to this conundrum: “That is, once legalized theft begins, it pays for everybody to participate.”

We face a moral dilemma, then. Williams listed several great empires that declined for doing precisely what we’re doing: “Bread and circuses,” or big government spending.

Intrust Bank Arena depreciation expense ignored

Reports that income earned by the Intrust Bank Arena is down sharply has brought the arena’s finances back into the news. The arena, located in downtown Wichita and owned by Sedgwick County, is deemed to be a success by the county and arena boosters based on “profit” figures generated during its first year of operations. But these numbers are not an honest assessment of the arena’s financial performance.

When the numbers were presented to Sedgwick County commissioners this week, commission chair Dave Unruh said that he is “pleased that we we still are showing black ink.”

He then made remarks that show the severe misunderstanding that he and almost everyone labor under regarding the nature of the spending on the arena: “I want to underscore the fact that the citizens of Sedgwick County voted to pay for this facility in advance. And so not having debt service on it is just a huge benefit to our government and to the citizens, so we can go forward without having to having to worry about making those payments and still show positive cash flow. So it’s still a great benefit to our community and I’m still pleased with this report.”

The contention of Unruh and other arena boosters is that the capital investment of $183,625,241 (not including an operating and maintenance reserve) on the arena is merely a historical artifact, something that happened in the past and that has no bearing today. This attitude, however, disrespects the sacrifices of the people of Sedgwick County and its visitors to raise those funds.

Since it is only one year old, presumably the arena could be sold for something near its building cost, less an allowance for wear and tear. If not, then the county has a lot of explaining to do as to why it built an asset that has no market value.

But even if the arena has no market value — and I suspect that in reality it has very little value — it still has an economic cost that must be recognized, that cost being the sales tax collected to pay for it. While arena boosters dismiss this as past history, the county recognizes this cost each year, and will continue to do so for many years.

The county, however, doesn’t go out of its way to present the complete and accurate accounting of the arena’s cost. Instead, the county and arena boosters trumpet the “profit” earned by the arena for the county according to an operating and management agreement between the county and SMG, a company that operates the arena.

This agreement specifies a revenue sharing mechanism between the county and SMG. Based on the terms of the agreement, Sedgwick County received payment of $1,116,442 for the 2010 year. While described as profit by many — and there was much crowing over the seemingly large amount — this payment does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “not intended to be a complete presentation of INTRUST Bank Arena’s financial position and results of operations and are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.”

That bears repeating: This is not a reckoning of profit and loss in any recognized sense. It is simply an agreement between Sedgwick County and SMG as to how SMG is to be paid.

Commissioner Karl Peterjohn has warned that these figures — and the monthly “profit” figures presented to commissioners — do not include depreciation expense. That expense is a method of recognizing and accounting for the large capital cost of the arena — the cost that arena boosters dismiss.

In April Sedgwick County released that depreciation number in its 2010 Comprehensive Annual Report. The number is pretty big: $4.4 million, some four times the purported “earnings” of the arena.

Any honest accounting or reckoning of the performance of Intrust Bank Arena must take this number into account. Unruh is correct in that this depreciation expense is not a cash expense that affects cash flow. That cash was spent during the construction phase of the arena.

But depreciation expense provides a way to recognize and account for the cost of long-lived assets like buildings over their lifespan. It recognizes and respects the investment of those who paid the sales tax. When we follow standard practices like recognizing the cost of capital assets through depreciation expense, we’re forced to recognize that there’s a $4.4 million gorilla in the room that arena boosters don’t want to talk about.

Using information about arena operations contained in the operations report, we can construct what an actual income statement for the arena would look like, following generally accepted business principles. According to the statement, total operating income for 2010 was $7,005,224. Operating expenses were $4,994,488. Subtracting gives a figure of $2,010,736. This number, however, is not labeled a profit in the report. Instead, the report calls it “Increase in Net Assets Arising from Operating Activities Managed by SMG.”

An accounting of profit would have to subtract the $4.4 million in depreciation expense. Doing that results in a loss of $2,389,264. This — or something like it — is the number we should be discussing when assessing the financial performance of Intrust Bank Arena.

Fiscal conservatives — and sometimes even liberals — often speak of “running government like a business.” As an example, Unruh’s campaign website from last year states “… as a business owner he works hard to apply good business principles to County government …”

But here’s an example of conservative government leaders ignoring a basic business principle in order to paint a rosy picture of a government spending project. Unruh is not alone in doing this.

Without honest discussion of numbers like these, we make decisions based on incomplete and false information. This is especially important as civic leaders agitate for another sales tax or other taxes to pay for more public investment. The sales pitch is that once the tax is collected and the assets paid for, we don’t need to consider the cost. They contend, as is the attitude of Unruh and arena boosters, that we can just sweep it under the rug and pretend it doesn’t exist. This is a false line of reasoning, and citizens ought not to be fooled.

Sedgwick County, Golf Warehouse, reveal shortcomings in procedure

Wednesday’s decision by the Sedgwick County Commission to grant a forgivable loan of $48,000 to The Golf Warehouse is yet another example of local government relying on corporate welfare as economic development, and exposes how little deliberation is given to making these decisions.

This subsidy was promoted by the county and TGW’s consultant as necessary to persuade the applicant company to expand its operations in Wichita rather than Indiana, where the company has other operations and had also received an offer of subsidy. The same argument had been made to the Wichita City Council in May 10th, and it was successful in persuading all council members but one to vote in favor of granting a forgivable loan of the same amount as the county.

At the county commission meeting, commissioners received a presentation by Leslie Wagner, Director of Project Management and Development for Ginovus, an economic development and site location advisory services firm working on behalf of TGW.

While The Golf Warehouse was started in Wichita by entrepreneurs, Wagner told commissioners that the company is now owned by Redcats, a Paris, France company. That acquisition took place in 2006, she said.

A focus of Wagner’s presentation was how large and successful an enterprise Redcats is, with $4.8 billion in annual sales revenue and over 14,000 employees. As to TGW specifically, Wagner said it offers the largest and broadest selection of golf products in the world, and has expanded to included baseball, softball, and soccer products.

Right away some might be inclined to ask why, with the company so large and successful, local governments find it necessary to prop up this company with public assistance.

According to Wagner, TGW will add 105 new employees by 2015, and the company’s average annual payroll by then will be $9,995,000.

The argument for subsidy

In her presentation, Wagner listed the incentives offered to TGW by both Indiana and Kansas. But she did not supply the value of each incentive, which makes the comparison largely meaningless. Additionally, the list of the incentives and subsidies offered by the State of Kansas was not complete. Further, some of the incentives offered by Indiana are already present in Kansas.

For example, one incentive offered by Indiana was an abatement on personal property tax, which Wagner indicated was a factor in favor of that state. But Kansas does not tax business personal property, that is, business machinery and equipment newly purchased, leased, or moved into Kansas. This ranges from desks, computers, and copiers to large pieces of machinery and equipment. The incentive offered by Indiana, therefore, is already in place in Kansas without companies needing to ask for it, and Wagner should not have included this as a distinguishing factor between Indiana and Kansas.

In addition, Kansas has added “expensing,” which allows businesses to depreciate purchases in one year instead of several, which reduces Kansas state income tax. As TGW expands and makes these purchases, it will be able to take advantage of this new provision in the Kansas tax code.

Wagner also mentioned an Indiana program called EDGE (Economic Development for a Growing Economy), which rebates employees’ state income tax withholding back to the company. We have that in Kansas, too. It’s called Promoting Employment Across Kansas (PEAK), and the range of situations where this program can be applied has been expanded by this year’s legislature. This, again, is an example where an incentive offered by Indiana and promoted by Wagner as a reason as to why the county must grant a subsidy of its own to TGW is already present in Kansas.

Another part of Wagner’s presentation that deserves a second look is her analysis of the economic impact of TGW. Wagner said that over ten years the payroll — the wages paid to its employees in Wichita — of TGW would be $100,623,437, with a “conservative” apportionment to the county of $50,311,718.

She then showed the commission a slide where she computed the return on the county’s investment. For the “return,” she used the $50,311,718 figure of payroll that she attributed to the county. For the “investment,” she used $96,000, which is the sum of the forgivable loans from both Wichita and Sedgwick County. (Why she used both entity’s investment but only county payroll, I don’t know.)

Her calculations from these numbers produced a return on investment of 524 percent. “If I were making an investment, that’s a phenomenal return, and I’d make that one all day long,” she told commissioners.

But her actual calculation should have been as follows ($50,311,718 – $96,000) / $96,000 * 100 = 52,308 percent for the rate of return, if she was looking to fluff up her numbers as much as possible.

But even that calculation wouldn’t make economic or financial sense. The $50,311,718 is returned over a period of 10 years, so the receipt of that money needs to be spread over that time. Then, since long time periods are involved, the returns in future years need to be discounted, because a dollar expected to be received in ten years is not worth as much as a dollar received this year. I made a few other assumptions and used Excel’s internal rate of return function to compute a rate of return of 5,241 percent.

This tremendous rate of return, of course, makes no economic sense either. The $50,311,718 used as the “return” to the county is not that at all. This money is wages paid to workers. It belongs to them, not to the county. True, the county will get some of that in the form of sales taxes these workers pay as they make purchases within the county, and perhaps in other forms of taxes. Using an estimate of that number would make sense on some level, and that is the type of reasoning the Wichita State University Center for Economic Development and Business Research uses to compute the cost-benefit figures the city and county often rely upon in making decisions.

But the figures and calculations Wagner used to make the case for TGW make absolutely no economic or financial sense. Worse than being merely absurd, they are deceptive. Compounding the error, elected officials such as commission chair Dave Unruh cited them as a factor in making his vote in favor of granting the forgivable loan.

Completing her presentation, Wagner said “Perhaps as important, it’s goodwill. … Does the state want us to stay, does the community want us to stay, and are they willing to help us grow?” Brad Wolansky, CEO of TGW, said the loan is part of the “element of partnership” between the county and TGW, which he said was indicative of the county’s support. This is the same attitude expressed at the Wichita City Council meeting: Many of these companies requesting incentives and subsidies believe they deserve some sort of reward for investing in Wichita and creating jobs. The profits of entrepreneurs or capitalists are no longer sufficient, it seems, for some companies.

In remarks from the bench, Sedgwick County Commissioner Richard Ranzau questioned the need for this incentive, citing the recent example of a Save-A-Lot store which will be built by a developer without incentives, after the original developer failed to acquire all the incentive he asked for. Video of his remarks and an exchange with Wagner is below.

In his remarks, Commissioner Jim Skelton said this decision is a “no-brainer,” and that he was proud to do this for the community. Chairman Unruh said “we’re competing with someone else for this company.” He referenced the “great return” on the county’s investment, and that he could not find a reason not to support it.

All commissioners except Ranzau voted to grant the forgivable loan, with Karl Peterjohn absent.

City and county information not complete

The forgivable loan subsidy granted by both Wichita and Sedgwick County is not the only subsidy TGW will receive. An inquiry to the Kansas Department of Commerce indicates that from the state of Kansas, TGW will receive $125,000 from the Kansas Economic Opportunity Initiatives Fund, $125,000 in Kansas Industrial Retraining, $50,000 in Kansas Industrial Training, $96,000 in sales tax savings, $315,918 in personal property tax savings, and $623,796 from the High Performance Incentive Program, for total incentives from the state of $1,310,714.

These state incentives were not mentioned by the county. The value is also much higher than the City of Wichita reported in its material for its May 10th meeting when the city approved its forgivable loan to TGW. At that time, city documents reported the value of state subsidies at $275,000, a figure just 21 percent of the value reported by the Department of Commerce.

Corporate welfare, again

This episode, where subsidy is heaped on a company who presents a threat — real or imagined — of leaving Wichita or expanding elsewhere, represents local officials not grounding a decision on actual facts. The wild claims of return on investment made by the company’s representative simply can’t be believed. Her information about the incentives offered and available, as well as that from the City of Wichita, is incomplete or misleading.

With some time to analyze the claims made by Wagner (and others who appear in similar situations), we can expose them for what they are. But commissioners — city council members too — often don’t have time or expertise to examine the facts. Commissioner Ranzau told me that he did not receive Wagner’s slides before the meeting. The information delivered to the council by Sherdeill Breathett, Economic Development Specialist for the county, did not appear in the new agenda system the county recently implemented. During meetings there is not time to analyze calculations or examine the claims made by presenters.

We have to ask, however, if local government officials have the desire to examine these presentations and claims. Once the veneer of economic development hucksterism — thin as it is — is stripped away, we are left with what Ranzau has stated several times from his position on the commission bench: a simple transfer of one person’s money to another using the force of government as the agent. This reality of corporate welfare is something that officials would rather not recognize, and it’s not economic development in my book.

Kansas and Wichita quick takes: Monday February 21, 2011

Kansas legislature website. Over the weekend a new version of the website for the Kansas Legislature appeared. It has a new design over what’s been available for the last six weeks or so. It will take a while to shake out the new site, but here are a few observations: Finally, pdf documents are displayed in a standard — that is to say plain — method that should be usable on devices of all types. … Attempting a search produces a “page not found” error. … There is no mobile version that works on devices like an Iphone, which is a popular thing to have these days. … There is a link named “A/V Live” which is not active at this time, but points to the goal of having committee testimony broadcast on the website. Here’s a better idea: almost all conferees that testify before committees have written testimony that is provided to committee members. Make that testimony available to the people of Kansas. This could be done fairly easily — and inexpensively — and is more useful. … The Wichita Eagle has some reporting today about the troubles with the new site. But the biggest question is: why is this work being done during the legislative session? Why not do it from June through December when the legislature is not in session and demand for the site is less? Why wasn’t the old site left running while the new site was built?

Legislators on Governor’s plan. At a meeting with Wichita-area legislators on Saturday, some spoke on Governor Brownback’s economic development plan. As with much of the news media, legislators seem mostly oriented on the reorganization of some agencies rather than the call for an end — or at least reduction — of targeted incentives and subsidies. Some legislators emphasized that we are competing with other states for jobs. It will be difficult for elected officials to give up the arms race of offering subsidy to companies to come to Kansas, or as we see in the Hawker Beechcraft deal, simply agree to remain in Kansas, even with a smaller number of jobs. … The governor’s plan still contains a slush fund for attracting jobs to Kansas, which should keep the big-government fans happy for a while.

Could Wisconsin demonstrations come to Kansas? At the meeting with legislators, I asked if the demonstrations taking place in Wisconsin could be seen in Kansas. There, state employees are protesting the governor’s proposal to ask them to pay more for health insurance and pensions. Also proposed are measures that would reduce the power of the state workers union. Representative Jim Ward said: “I don’t think it would happen in Kansas.” While people in Kansas are passionate, we have a tradition of civility, he added. … The Kansas public employee retirement system is among the most underfunded and will probably require someone to pay more. The process of selecting who has to pay — employees or taxpayers — is likely to be contentious.

Wichita trash. It seems likely that Wichitans will see another trash plan proposed, according to Wichita Eagle reporting. The urge by government bureaucrats like city manager Robert Layton to create a solution to a problem that doesn’t exist is compelling, it seems. While some Wichitans are paying much more than others for trash service, the publicity generated by the Eagle reporting has informed everyone as to how much trash service should cost. … Most candidates for city council seem to be against city involvement in trash service.

Wichita mayoral forum didn’t go well. According to reporting from KWCH, a forum for candidates for Wichita mayor didn’t go well: “Wichita residents came to a political forum to listen to political issues, but left shaking their heads.” Continuing in the story: “Some say they weren’t impressed with incumbent Carl Brewer either. ‘The Mayor was just relying on his name and everyone else just had wild views,’ said one listener. ‘The Mayor basically knew he wasn’t going anywhere,’ said another listener. Onlookers say a meeting that was supposed to educate them on important issues, just left them with a bad feeling about the political future of Wichita. ‘They just proved why I shouldn’t vote for them in my opinion,’ said Graham.”

Wichita City Council this week. The Wichita City Council will not meet this week, as it’s a Tuesday after a holiday. Most private sector workers might have trouble remembering there is a holiday today, but not so for the city council.

Sedgwick County commission this week. At Wednesday’s meeting, the Sedgwick County Commission has several important items on its agenda. The commission will be asked to adopt Project Downtown: The Master Plan for Wichita, November 2010 as an amendment to the Wichita-Sedgwick County Comprehensive Plan. This is the plan for the revitalization of downtown Wichita prepared by planning firm Goody Clancy. This item is not a public hearing, and it is not known how much time commission chair Dave Unruh, who assumed that position in January, will allow for citizens to address the commission. Previous chairs Karl Peterjohn and Kelly Parks — as well as current Wichita Mayor Carl Brewer — always asked if citizens wanted to speak on an item and were generous with time allotted. … Also Jeremy Hill of Wichita State University Center for Economic Development and Business Research will make a presentation. CEDBR has been criticized for for a report it produced on the economic impact of the Affordable Airfares program. That report was produced before Hill started his tenure at CEDBR. … The appraiser will report on real estate valuation trends in Sedgwick County.

Kansas and Wichita quick takes: Wednesday November 3, 2010

Republican Party on probation. Noted conservative figure Richard A. Viguerie of ConservativeHQ.com expressed a common idea: “Voters have given Republicans one more chance to get it right. They are on probation, and if they mess up again, they won’t get another chance. The last time the Republicans were in charge, they became the party of big spending, Big Government, and Big Business. They abandoned the philosophy of Ronald Reagan and cozied up to lobbyists and special interests. And they paid a price at the polls.”

Limited government and economic freedom not desired. In today’s Wichita Eagle editorial assessing the election results, Rhonda Holman just can’t grasp the importance of limited government and economic freedom to prosperity. Instead, she prefers what some call “nuanced” politicians, who can be pressured by newspapers to vote for big-government boondoggles: “Incumbent Commissioner Dave Unruh and Wichita City Council member Jim Skelton already have proved to be thoughtful leaders; the same cannot be said of Richard Ranzau, whose tea party tendencies could put important county priorities at risk.” The victories of Ranzau — there were two, one in the primary over an Establishment Republican and again in the general election over a Democrat in a Democratic district — were gained the old-fashioned way: by meeting voters and letting them know what he stands for. And he was not bashful in his message of limited government. Both times, voters responded. The Wichita Eagle ought to take notice.

Future of Sedgwick County Commission. Yesterday’s defeat of incumbent Gwen Welshimer by Jim Skelton replaces a commissioner committed to low taxes and spending with someone with a less convincing record. While Skelton has sometimes voted against TIF districts — he and Paul Gray voted against the $10.3 million Exchange Place TIF district, although they were okay with it at $9.3 million — he firmly believes it is his duty — as city council member and as future county commissioner — to direct the economic development of the region.

Future of Wichita City Council. Skelton’s move to the county commission means there will be another new face on the council be fore long. Already the spring elections will bring two new faces, as members Sue Schlapp and Paul Gray will be leaving the council due to term limits. Now Skelton will be replaced, either by city council appointment or election next spring, depending on the timing of Skelton’s resignation. That’s a total of three new members. Mayor Carl Brewer and Vice Mayor Jeff Longwell must run for relection in the spring if they want to stay on the council. Brewer has already announced his intent to run.

Commission criticized as “gutless.” Because Wichita real estate developer Rob Snyder wasn’t granted some $400,000 in taxpayer subsidy because of the action of the Sedgwick County Commission, he criticized the commission as “gutless,” according to Wichita Eagle reporting. When testifying before the Wichita City Council as to the need for his developer welfare, Snyder whined about how that earmarks are now unpopular with the American public and not available to finance his proposed Save-A-Lot grocery store. An earmark — that is to say, a grant of money paid for by U.S. taxpayers — was used as a large part of the financing for the other Save-A-Lot in Wichita at 13th and Grove.

Kahn to substitute at Pachyderm. A scheduling change means Wichita State University political science professor Mel Kahn will be the presenter at this Friday’s (November 4) meeting of the Wichita Pachyderm Club. The always-interesting and entertaining Kahn will speak on the topic “Do Political Attacks Help or Harm our Republic?” This seems like a timely topic given the recent general and primary elections. The public is welcome at Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

Kansas and Wichita quick takes: Saturday October 9, 2010

This Week in Kansas: Tomorrow on KAKE Television‘s “This Week in Kansas” Kansas Policy Institute President Dave Trabert will be a guest speaking about economic development in Kansas. This is an important topic as Kansas is in “whack-a-mole” mode as we — case by case — defend our industry from poaching by other states. This Week in Kansas airs at 9:00 am on KAKE channel 10. The Winfield Daily Courier has other notes on this upcoming episode.

Sue Schlapp: Wichita Eagle Opinion Line Extra today: “At a past Wichita City Council meeting, council member Sue Schlapp got on her soapbox about needing less government in our lives. Then last week she turned around and voted for the community improvement district tax for the Broadview Hotel. Is this talking out of both sides of her mouth?” I’m glad someone other than I has noticed this.

Dave Unruh campaign billboardDave Unruh campaign billboard

Unruh’s record on taxes: A reader sent in this photograph of a Dave Unruh billboard supporting his run for reelection to the Sedgwick County Commission, noting the irony of the “Lower Taxes” message. The reader may have been referring to Unruh’s support of a solid waste management fee (a tax by another name), his vote in August 2006 to increase the county mill levy, and his enthusiastic support of the tax for the downtown arena, now known as the Intrust Bank Arena. The vote for a tax increase in 2006 was in part to build the National Center for Aviation Training, said to be necessary to keep Wichita aviation companies in Wichita. Nonetheless, Cessna, Bombardier Learjet, and recently Hawker Beechcraft have found it necessary to shake down the state and local government for even more corporate welfare. Still, I don’t recommend voting for Unruh’s opponent Betty Arnold, who recently wondered where was the government stimulus for USD 259, the Wichita public school district, on which board she serves. Evidently Arnold doesn’t realize that nearly every dollar the Wichita schools spend is government money.

Arnold’s website missing: By the way, Google can’t find a website supporting Betty Arnold’s campaign, which says a lot right there.

Goyle and Pompeo: Tomorrow Kansas fourth Congressional district candidates Democrat Raj Goyle and Republican Mike Pompeo debate at Congregation Emanu-El at 7011 E. Central in Wichita. State of the State KS reports: “The debate will be moderated by KAKE-TV’s Tim Brown from This Week In Kansas and will focus on both local economic, political and foreign policy issues facing the U.S. The debate is free and begins at 10:40 am. A brunch will be served before the debate for $7.” It appears that Reform party candidate Susan Ducey and Libertarian Shawn Smith will not appear. The two minor party candidates made credible appearances on a recent KWCH televised forum.

Goyle video, polls: Speaking of Goyle, video of Goyle endorsing presidential candidate Barack Obama in Texas has surfaced. And, more bad polls for Goyle.

Sedgwick County Commission candidates to appear

On Friday October 1, 2010 at the Wichita Pachyderm Club, Republican candidates for the Sedgwick County Commission will speak. The candidates that will appear are:

Dave Unruh, District 1
Richard Ranzau, District 4
Jim Skelton, District 5

All are welcome to attend Wichita 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). You may park in the garage (enter west side of Broadway between Douglas and First Streets) and use the sky walk to enter the Bank of America building. The Petroleum Club will stamp your parking ticket and the fee will be $1.00. Or, there is usually some metered and free street parking nearby.

Wichita Pachyderm speaker lineup set

The Wichita Pachyderm Club has released its lineup of speakers for the upcoming month. Everyone is welcome to attend Wichita Pachyderm Club meetings. The club meets on Friday at noon at the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway (north side of Douglas between Topeka and Broadway). The cost for the meetings is $10, which includes a buffet lunch.

For more information, contact President John Stevens at at enersigns@sbcglobal.net or Vice President John Todd at john@johntodd.net.

September 10, 2010
Honorable Eric F. Melgren, U.S. District Judge in the District of Kansas.

September 17, 2010
A panel discussion, “How you can become involved in the process of defending liberty between now and the November 6th general election?”

Panelists:
Susan Estes, citizen activist
Lynda Tyler, founder of Kansans for Liberty
Craig Gabel, local conservative activist
Fourth panelist to be determined

September 24, 2010
South Central Kansas Republican Candidates for the Kansas House of Representatives:
John Stevens, District 86
Leslie Osterman, District 97
James Clendenin, District 98
Joseph Scapa, District 87

October 1, 2010
Republican Candidates for the Sedgwick County Commission:
Dave Unruh, District 1
Richard Ranzau, District 4
Jim Skelton, District 5

October 8, 2010
South Central Kansas Republican Candidates for the Kansas House of Representatives:
Benny Boman, District 95
James Woomack, District 92
Dan Heflin, District 84
Jim Howell, District 82

Sedgwick County Commissioner disputes Wichita Eagle headline on audit

This week controversy arose surrounding a request by two Sedgwick County Commissioners for more information from the county’s auditor, Allen, Gibbs & Houlik, L.C., a public accounting firm.

The financial issue concerns the way that EMS employee pay is budgeted and its impact on the county’s budget. Commission chair Karl Peterjohn and Commissioner Kelly Parks asked questions of the county’s auditor on this matter, exercising what Peterjohn describes as due diligence. But the issue has grown to become political.

In a Wichita Eagle news story, the county’s chief financial officer said he expected to receive a bill from the auditor for about $900 as a result of what the Eagle characterized as an audit. As this was initiated without a vote by the entire commission, some members are “irked,” according to the news article.

Peterjohn says that the questions he asked are “within the normal scope of the contract between Sedgwick County and AGH” and that there should be no charge for answering these questions. He also notes that the auditing firm works for the commissioners specifically.

There is disagreement as to the scope of the financial irregularity. In an email message, Peterjohn said that “[Commissioner Dave Unruh] does not believe that there is a financial problem here. I strongly disagree. The county will republish its budget because of this problem.”

Following is a letter Peterjohn wrote to the editor of the Wichita Eagle.

I am writing to demand a retraction from the Wichita Eagle’s July 14, 2010 headline, “Parks, Peterjohn order audit without vote.”

We did not order an audit and the article that Ms. Gruver wrote does not state that we did. We did discuss a $300,000 discrepancy that county staff had found in the EMS Department with the county’s outside auditor Mark Dick. Mr. Dick is operating under an existing contract that his accounting firm, Allen Gibbs & Houlik (AGH) has with Sedgwick County. This sizable financial discrepancy extended back to 2007.

The current contract that the county has with AGH goes back to 2008. AGH’s accounting work with the county goes back decades and well before 2007. The current contract requires AGH to perform outside auditing of the county’s books and related financial services. This specifically includes: “…require AGH plan and perform the audit to obtain reasonable, rather than absolute assurance about whether the financial statements are free of material misstatement whether caused by error, fraudulent financial reporting or misappropriation of assets.”

The unexpected and negative financial revelation about this $300,000 discrepancy led me to want to know if AGH would be changing their letter concerning the county’s financial reporting for last year or any previous years going back to 2007. I was also concerned that problems in one county department might extend to other departments as well as revising any of the previous audit letters issued by AGH in the past. This is especially necessary since we are beginning to work on our 2011 budget and my questions to Mr. Dick reflected these concerns on this subject.

This is the appropriate and proper form of due diligence that is needed to be asked by any elected official who has the responsibility for the expenditure of taxpayers’ funds. My inquiry as well as Commissioner Parks may have led AGH to take action under the terms of this contract relating to county finances and record keeping.

I asked questions. So did Commissioner Parks. Commissioners ask questions all the time without having to meet and cast votes. In the 18 months that I have been a commissioner, Mr. Dick and AGH have presented the results of their annual audit to the commission. At that time Mr. Dick has said that the auditors work for the commissioners and are ready to answer any financial and audit related questions we have under this contract.

If there are financial discrepancies in a county department, this needs to be identified and corrected. A lack of proper and appropriate financial controls can impact the county’s bond rating and I believe that by asking my questions, along with Commissioner Parks’, for Mr. Dick were appropriate and were the due diligence that needed to be performed.

Mr. Dick responded to our inquiry since he was not aware of this $300,000 discrepancy until we told him. Mr. Dick looked into this matter under the terms of the AGH-Sedgwick County contract. Mr. Dick then issued a letter to all of the commissioners informing us of what he had found. Commissioner Unruh then expressed his opinion about this inquiry at the commissioner staff meeting last Tuesday.

If county records are flawed, there are provisions to cover this within the contract. These provisions include, “… establishing and maintaining effective internal control over financial reporting and safeguarding assets, and for informing us of all significant deficiencies in the design or operation of such controls of which it has knowledge,” is a county responsibility. In addition the county is also responsible for, “… for adjusting the financial statements to correct material misstatements,” and “… properly recording transactions in the records.”

My intent in asking questions is to make sure that taxpayers’ funds are being spent appropriately and proper records are being kept. Let me add that in many cases in this country public officials, both appointed and elected, have lost their jobs for financial discrepancies a good deal smaller than $300,000 or improper financial variances that are a lot less than 4 years in length. This variance will require the county to re-publish its budget.

I believed that the questions I asked were within the normal scope of the contract between Sedgwick County and AGH. The headline that Commissioner Parks and myself ordered an audit outside the boundaries of this contract without a required vote is odious and false.

In Sedgwick County, is there slack time?

As reported in the Wichita Eagle, the Sedgwick County Commission decided to reimburse the county for time its employees spent working on arena-related matters. The money will come from the sales tax that was collected to build the Intrust Bank Arena in downtown Wichita. The amount of money the commission decided to transfer is $1.6 million, although according to the Eagle, the total cost could reach $2.6 million.

Here’s something of concern to me in the story: “But he [Sedgwick County chief financial officer Chris Chronis] pushed for the money to remain in the arena and pavilions’ operating and maintenance reserve fund, which last month had just less than $14 million, because taking money out of the fund would drain it four years earlier than expected — in 2024.”

Evidently the county has financial projections for the arena all the way out to 2018, and possibly beyond. That is a very long time into the future, and any projections about the performance of the arena over this period would be based on assumptions that can’t be estimated with anything approaching certainty.

Projections with this precision made about events so far in the future surrounded by so much uncertainty remind me of the saying that economists use a decimal point to show they have a sense of humor.

Back to the present: Commissioner Dave Unruh told the Eagle that the county did not hire any new staff to perform work that has an estimated value of $2.6 million. My question is this: Is this evidence that there was $2.6 million of slack time in county employee’s schedules? How were they able to get this vast amount of work accomplished? Perhaps after the arena work that has occupied $2.6 million of staff time is complete, we could hire out this staff to earn revenue for the county, as it seems they will have time on their hands.

Regarding the contention that voters in 2004 were promised that no property tax money would be used on the arena, Unruh was quoted by the Eagle as saying: “I do think that we made a very strong commitment that all the sales tax money would be used for the arena and pavilions.”

It seems that now Sedgwick County voters have a new concern: When politicians make a promise, do we have to ask them if this is a regular commitment or a very strong commitment? Or are there other types of commitments that we don’t know about?

Peterjohn presses taxpayer protection platform through Sedgwick County Commission

At today’s meeting of the Sedgwick County Commission, commissioners revised the county’s 2010 legislative platform, adding important and groundbreaking taxpayer protection to the platform. The split vote lets voters know without a doubt where commissioners stand on taxpayer protection issues.

The legislative platform is Sedgwick County’s “wish list” for the legislature. The items in the platform are not laws, but instead indicate the desires of the county commission.

Commissioner Karl Peterjohn proposed new language to add to the legislative platform: “All local sales tax increases must be approved by voters under Kansas law. All property tax increases that raise the mill levy should also be required to receive voter approval.”

Kansas has no such provision, and this is a defect, Peterjohn said. Kansas is one of the few states that have property taxes at the city, county, school district, and state levels. Most states did away with state-wide property taxes in the 1930s, he said, but Kansas did not.

Peterjohn made a motion that this language be included in the legislative platform, and Chairman Kelly Parks seconded.

Peterjohn noted that three of the four states surrounding Kansas have such limitations.

Commissioner Tim Norton asked a question that revealed that cities have more authority than counties to raise sales tax. He said this is an issue of equity, of rebalancing the ways that counties can fund their government. “Counties don’t have the ability to have more tools in their toolbox other than just property tax. … We’re very restricted.” He added that he doesn’t like the idea of artificial ceilings being placed on the county.

Commissioner Dave Unruh agreed with Norton, saying local officials are elected to carry out the responsibility of making responsible budget decisions. A limitation from the state makes no sense, he said.

Norton made the point that the state can place a lid on the ability of counties to raise funds through taxation, and may still place mandates on what counties must do. This compresses the decisions that the commission gets to make, and goes against representative government.

Peterjohn’s motion passed three to two, with Commissioner Gwen Welshimer and Parks joining Peterjohn in the majority, with Unruh and Norton in the minority.

After the meeting, Peterjohn said this platform language represents a major change in the county’s position, a reversal of the county’s historic position on property tax policy. This action is also at odds with the Kansas Association of Counties. It’s a major change, he said.

“Traditionally the local government lobby has been in lockstep opposition to any requirement that property tax hikes get voter approval. Sedgwick County’s shift today is extremely significant for the second-most populous county in the state, the county that contains the largest city in the state, to support voter approval for any increase in property taxes.”

Analysis

Requiring voter approval of tax increases was one the “Five Reasons to Back Karl Peterjohn” that Peterjohn used in his successful campaign for the county commission last year. His action today represents a move towards fulfilling that pledge.

It’s important to remember what the commission passed was simply their desire — and a split decision at that — for the legislature to pass a law requiring voter approval of tax increases. Whether the legislature acts on this request is anyone’s guess. For such a law to have any chance, it will take a determined advocate to press for it. The commission’s action today created no such advocate. As it stands now, the county will not have a lobbyist in Topeka next year, as the budget passed in August provided no funding for a lobbyist.

Officeholders who are in favor of more government spending are generally opposed to giving voters the right approve or refuse tax rate increases, for the simple reason that voters often refuse to approve the tax hikes. Often the argument is given that the elections that are now necessary are expensive, and there may be emergencies that require the rapid raising of funds. There may be small amounts of validity in these arguments. But tax revenues, through the natural forces of economic growth and rising property tax appraisals, rise on their own without any help from officeholders. Anything that restrains the growth of tax rates, which is what today’s proposal does, is welcome relief as a restraint on the runaway growth of government.

Betty Arnold’s Sedgwick County Commission race: running uphill

Last week Betty Arnold, a member of the board of USD 259, the Wichita public school district, declared her intent to be a candidate for the Sedgwick County Commission. She’ll be running for the spot currently held by Republican Dave Unruh, who has already filed for re-election.

Arnold, a Democrat, faces an uphill battle, based on registration figures. In this district, my analysis of a recent voter file shows voter registration runs 29% Democratic, 45% Republican, and 26% unaffiliated. (The remainder are Libertarian and Reform party registrants.)

Considering recent voters — I defined this as those who voted in an election in 2008 — the numbers are worse for Arnold. In this case, 30% are Democratic, 21% are unaffiliated, and the Republican number jumps to 49%.

It’s hard to figure out what Arnold could do to persuade Republican voters to support her. Her vote for a property tax increase, her recommendation that voters approve an expensive and unneeded bond issue, and her anti-school choice stance are not positions that will appeal to conservatives and those who value freedom and liberty, be they Republican, unaffiliated, or of any other party.

If the only Republican candidate (incumbent Dave Unruh) consistently took conservative positions, Arnold might have a case to make to moderate Republicans. But Unruh’s vote for a tax increase, his support for the downtown arena tax, and his support of TIF districts and other taxpayer giveaways such as the AirTran subsidy place him firmly in the moderate Republican camp — making it difficult for Arnold to peel off potentially left-leaning Republicans or unaffiliated voters.

Top off this with the likelihood that next year could be a big year for Republicans locally and nationwide, and Arnold starts off way behind.

It’s still possible that Unruh may face a challenge in the Republican primary. Efforts have been made to recruit a candidate, and there is one well-known conservative Republican thought to be looking at the race. Last year’s take-down of moderate Republican commissioner Tom Winters in the August primary by Karl Peterjohn will be very difficult to replicate, as Unruh has shown signs that he has been preparing for the campaign.

Sedgwick County solid waste fee criticized

Today’s Wichita Eagle column by Rhonda Holman is a two-fer. Two issues for the price of one column, and two issues she’s wrong on. The first issue is explained in Wichita water economics.

She criticizes Commissioner Karl Peterjohn and Board Chairman Kelly Parks for the opposition of a solid waste management fee that would add a relatively small amount to property tax bills.

(When writing about Peterjohn, do I need to disclose that he and I are friends, and that I helped manage his campaign last year? I’d feel more compelled to do so if Holman would start writing editorials using her entire name.)

Holman pokes fun at Peterjohn and Parks for “operating on anti-tax autopilot” and at Peterjohn specifically for fulfilling a campaign pledge.

Anti-tax ought to be the first instinct of politicians. To me, that’s axiomatic and not a basis for criticism. There are always plenty of people in government like Commissioner Dave Unruh who are nuanced enough to recognize — as Holman reports — “with an admirable lack of exasperation: ‘It’s 69 cents.’”

The problem is that little amounts here and there add up to real money. I think that’s something like the argument Wichita City Council members used in rejecting a $2.00 per month increase in water and sewer bills. Holman supported that action.

Then, keeping a campaign pledge — what a novel concept! How refreshing!

We should also look at the public policy aspects of this waste management fee. One of the things it was used for is to fund a Christmas tree recycling program. Here’s a few questions: Is it wise economics to fund recycling projects? Specifically, if natural Christmas trees as such an environmental nuisance that they must be recycled, shouldn’t people who buy them pay for their recycling? Perhaps through a tax — wait, let’s call it a “surcharge” or a “pre-paid environmental mitigation fee” — levied at the corner tree lot?

Here are comments left to this post that were lost and then reconstructed:

Wichitatator: What is Rhonda Holman’s legal name? Why doesn’t she use it when she signs her editorials? The Eagle should not have mystery editorial writers without fully disclosing this salient fact.

Ms. “Holman” could be married to an attorney who is suing the state over school finance or some other public issue. Ms. “Holman” is a public person who wants to enjoy the perks of her editorial position in influencing public policy in this community without assuming the responsibility of publicly disclosing her name.

For an editorial board that regularly fulminates about “full disclosure” this is an odd position to take. The Eagle regularly criticizes folks who do not fully disclose a lot more than their names in their paper.

LonnythePlumber: What is her entire name? You imply mystery and wrong motivation if revealed.

Hartman Arena ribbon cutting today

Today was the ribbon cutting ceremony for Hartman Arena in Park City, just north of Wichita. This privately-owned arena should provide some competition to the Intrust Bank Arena in downtown Wichita.

Note the wind turbine to the right (north) of the building.

Normally the announcement of a facility like this would be welcomed by government officials. That wasn’t the case two years ago when this arena was announced. At that time Sedgwick County Commissioner Dave Unruh said he would prefer that this arena not be built. Assistant Sedgwick County Manager Ron Holt said “overall, it would not be in the best interest of the community.”

See Government vs. Private Investment and the Downtown Wichita Arena.

Hartman Arena 2009-03-25 27

Hartman Arena 2009-03-25 07

Sedgwick County Commission fails citizens

At yesterday’s meeting of the Sedgwick County Commission, Commissioners Tom Winters, Tim Norton, and Dave Unruh failed to take an opportunity to stand up for good government.

By ratifying the City of Wichita’s defective public hearing, notice is given that it’s open season on citizens. Their concerns are shoved aside. Commissioners say they were constrained by a very narrow range of action permitted by law. The reasons they voted against this TIF district in August are still there, though present in smaller measure.

The problem is that these politicians want something so badly that they’re willing to overlook major problems in procedures that are designed to give citizens a voice. Newspaper editorial writers aren’t helping. They’re usually at the forefront of “good government” efforts. But not the Wichita Eagle’s Rhonda Holman, who wrote this in today’s lead editorial: “Yes, as some argue, the city should have done a better job of allowing public input on the arena TIF district. The late changes to the Dec. 2 City Council agenda left the public and at least one council member unfamiliar with the plan to add $10 million for future parking needs, arming critics and fueling public distrust of local government generally.” But, she’ll go along with this action anyway.

Nothing that this TIF district can build is as important as destroying citizen confidence and procedures designed to give them a voice.

Thank you to Commissioners Gwen Welshimer and Kelly Parks for voting for the interests of citizens instead of those of Wichita’s political entrepreneurs.