Tag Archives: Government spending

Wichita City Hall

Wichita develops plans to make up for past planning mistakes

On several issues, including street maintenance, water supply, and economic development, Wichita government and civic leaders have let our city fall behind. Now they ask for your support for future plans to correct these mistakes in past plans.

Wichita/Sedgwick County Community Investment Plan logo.

Wichita/Sedgwick County Community Investment Plan logo.

In February the City of Wichita held a workshop where the Community Investments Plan Steering Committee delivered a progress report to the city council. The amounts of money involved are large, and portions represent deferred maintenance. That is, the city has not been taking care of the assets that taxpayers have paid for. When Wichita city leaders ask for more taxes to pay for this lack of stewardship, citizens need to ask for better accountability than what they’ve received.

The time frame of this planning process is the period 2013 to 2035. Under the heading “Trends & Challenges” we find some troubling information. Wichita Mayor Carl Brewer hinted at the problem last year in his State of the City Address when he said the city would need to spend $2.1 billion over 30 years on maintenance and replacement of water and sewer systems. The city’s performance measure report also told us that our pavement condition index has been deteriorating, and is projected to continue to decline.

So if we’ve been paying attention, it should not have been a surprise to read this in the presentation: “Decades of under-investment in infrastructure maintenance … 38% of Wichita’s infrastructure is in ‘deficient/fair’ condition.”

The cost to remedy this lack of maintenance is substantial. The document says that on an annual basis, Wichita needs to spend $180 million on infrastructure depreciation/replacement costs. Currently the city spends $78 million on this, the presentation indicates.

The “cost to bring existing deficient infrastructure up to standards” is given as an additional $45 to $55 million per year.

This is a lot of money. To place these numbers in context, here are some figures that help illustrate Wichita city finances:

Property tax collected in 2013: $105 million
Budgeted 2014 expenditures for fire department: $44 million
Budgeted 2014 expenditures for police department: $79 million

The amounts by which the city is deficient in maintaining its assets is staggering, compared to other expenses the city has. The size of the deficiency overwhelms possible sources of new revenue. A one cent per dollar increase in sales tax would not cover the deficiencies in maintaining our current assets. Then, remember the things Wichita wants to increase spending on — a new library, economic development, expanded public transit, new convention center, economic development, and perhaps other things.

The report lists three scenarios for future growth: Maintaining current trends, constrained suburban growth, and suburban and infill growth mix. Whenever we see words like “constrained” we need to be cautious. We need to be on guard. The Wichita Eagle reported this: “In the city’s recently completed series of 102 public meetings, citizens were clear, City Manager Robert Layton said: Redevelop the core. We’ve had enough suburban growth for awhile.”

It’s unclear how closely the findings from the public meetings reflects actual citizen preference. Cynics believe that these meetings are run in a way that produces a predetermined outcome aligned with what city officials want to hear. At any rate, when you ask people about their preferences, but there is no corresponding commitment to act on their proclaimed preferences, we have to wonder how genuine and reliable the results are.

There is a very reliable way to find out what people really want, however. Just let them do it. If people want to live downtown on in an inner city neighborhood, fine. If they want suburban-style living, that’s fine too. Well, it should be fine. But reading between the lines of city documents you get the impression that city planners don’t think people should live in suburban-style settings.

Community input

The survey that Wichita used has its own problems. Here’s an example of a question respondents were asked to agree or disagree with: “Local government, the school district, community organizations and the business community should work together to create an investment climate that is attractive to business.”

The meaning of an attractive investment climate means different things to different people. Some people want an investment climate where property rights are respected, where government refrains from meddling in the economy and transferring one person’s property to another. An environment free from cronyism, in other words. But the Wichita way is, unfortunately, cronyism, where government takes an active role in managing economic development. We in Wichita never know when our local government will take from us to give to politically-favored cronies, or when city hall will set up and subsidize a competitor to your business.

Wichita flights compared to the nation.

Wichita flights compared to the nation.

Sometimes the questions are misleading. A question relating to the subsidy program at the Wichita airport read “I’m willing to pay increased taxes or fees to support investment … that uses public dollars to reduce the cost and increase the number of commercial flights at Mid-Continent Airport.”

This is an example of a question which has a false premise. Since the subsidy programs have been in place, the number of flights from the Wichita airport has declined, not increased as the question would lead readers to believe. See Wichita flight options decrease, despite subsidies and Wichita airfare subsidy: The negative effects.

Leadership of city officials

On these and other issues, the Wichita Eagle quoted mayor Brewer: “We’ve put them off for too long. We didn’t want the challenges. We didn’t want the tax bills. But now, to maintain our quality of life, we’ve got to catch up.”

It’s almost as if the mayor is speaking as a bystander. But he’s been mayor for nearly seven years, and was on the city council before that time. During that time, he and other city leaders have boasted of not increasing property taxes. While the property tax rate has been (fairly) stable, property tax revenue has increased due to development of new property and rising assessment values. Still, of this, the city has a huge backlog of deferred maintenance. The way to interpret this is that the city has really been engaging in deficit spending under Brewer’s leadership. We didn’t spend what was needed to maintain our assets, and now the mayor tells us we need to increase spending to make up for this.

The economist Milton Friedman told us that it’s more important to look at government spending rather than the level of taxation. That’s because spending must eventually be paid for, either through current taxes or future taxation. The federal government generate deficits and can pay for spending through creating inflation. Fortunately, cities and states can’t do that.

But, as we’ve seen, cities like Wichita can incur costs without paying for them. This is a form of deficit spending. By deferring maintenance of our infrastructure, the city has pushed spending to future years. The report released in February gives an idea of the magnitude of this deferred spending: It’s huge.

This form of deficit spending is “off the books” and doesn’t appear in city financial statements. But it’s real, as the mayor now admits. The threat to our freedom to live where we want is real, too. We must be watchful and diligent.

Economic Outlook Ranking for Kansas and selected states.

Rich States, Poor States for 2014 released

In the 2014 edition of Rich States, Poor States, Utah continues its streak at the top of Economic Outlook Ranking, meaning that the state is poised for growth and prosperity. Kansas continues with middle-of-the-pack performance rankings, and fell in the forward-looking forecast.

Rich States, Poor States is produced by American Legislative Exchange Council. The authors are economist Dr. Arthur B. Laffer, former Wall Street Journal senior economics writer (now Heritage Foundation Chief Economist) Stephen Moore, and Jonathan Williams, director of the ALEC Center for State Fiscal Reform.

Rich States, Poor States computes two measures for each state. The first is the Economic Performance Ranking, described as “a backward-looking measure based on a state’s performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration, and Non-Farm Payroll Employment — all of which are highly influenced by state policy.” The process looks at the past ten years.

Looking forward, there is the Economic Outlook Ranking, “a forecast based on a state’s current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less — especially on income transfer programs, and states that tax less — particularly on productive activities such as working or investing — experience higher growth rates than states that tax and spend more.”

For economic performance this year, Kansas is thirty-second. That’s up three spots from last year.

In this year’s compilation for economic outlook, Kansas ranks fifteenth. That’s down four spots from last year.

Kansas compared to other states

Economic Outlook Ranking for Kansas and selected states.

Economic Outlook Ranking for Kansas and selected states.

A nearby chart shows the Economic Outlook Ranking for Kansas and some nearby states, shown as a trend over time. The jump of Kansas in 2013 is evident, as is the fall of Missouri.

Why Kansas fell

Kansas fell four spots in the Economic Outlook Ranking from 2013 t0 2014. To investigate why, I gathered data for Kansas from 2013 and present it along with the 2014 values. There are three areas that may account for the difference, One value, “Top Marginal Corporate Income Tax Rate,” did not change from 2013 to 2014, remaining at 7.00%. But the ranking for Kansas fell from 24 to 26, meaning that other states improved in this measure.

Economic Outlook Ranking components for Kansas, 2013 and 2014 compared.

Economic Outlook Ranking components for Kansas, 2013 and 2014 compared.

For “Personal Income Tax Progressivity (change in tax liability per $1,000 of Income)” Kansas fell two positions in rank.

In “Sales Tax Burden” Kansas also fell two spots in rank. The burden is calculated proportional to personal income. The most recent data for these measures is for 2011, so this does not include the sales tax rate change that took place on July 1, 2013.

Kansas improved three rank positions for “Debt Service as a Share of Tax Revenue.” This data is from 2011.

Important conclusions

According to the authors of the report, there are three main conclusions to be drawn from this research:

States with lower taxes and fiscally responsible policies experience far more economic growth, job creation, and domestic in-migration than their high-tax, big government counterparts.

States are looking to become more competitive and embrace the policies that have been proven to lead to economic prosperity. Last year, 17 states substantially cut taxes, with Indiana, North Carolina, and Michigan leading the charge to vastly improve their overall economic outlooks.

California, Illinois, and New York — once economic powerhouses — continue their long slides into deeper economic malaise. While levels of economic output for these states remain high, rates of economic growth are falling behind states like Texas, North Carolina, and Utah.

How valuable is the ranking?

Correlation of ALEC-Laffer state policy ranks and state economic performance

Correlation of ALEC-Laffer state policy ranks and state economic performance

After the 2012 rankings were computed. ALEC looked retrospectively at rankings compared to actual performance. The nearby chart shows the correlation of ALEC-Laffer state policy ranks and state economic performance. In its discussion, ALEC concluded:

There is a distinctly positive relationship between the Rich States, Poor States’ economic outlook rankings and current and subsequent state economic health.

The formal correlation is not perfect (i.e., it is not equal to 100 percent) because there are other factors that affect a state’s economic prospects. All economists would concede this obvious point. However, the ALEC-Laffer rankings alone have a 25 to 40 percent correlation with state performance rankings. This is a very high percentage for a single variable considering the multiplicity of idiosyncratic factors that affect growth in each state — resource endowments, access to transportation, ports and other marketplaces, etc.

Kansas Flint Hills

Kansas values, applied to schools

A Kansas public policy advocacy group makes an emotional pitch to petition signers, but signers should first be aware of actual facts.

To drum up support for its positions, Kansas Values Institute has started on online petition urging Kansas Governor Sam Brownback to veto HB 2506. Here’s the pitch made to potential petition signers:

“Governor Brownback has had four years to make schools a priority, but all he has to show for it is classrooms that are over crowded, parents paying rising school fees, and his signature achievement: the largest cut to classrooms in the history of Kansas. The Supreme Court’s ruling gave the Governor a chance to correct his course.”

Now, the governor has not necessarily been a friend of education, if by that we mean Kansas schoolchildren and parents. His lack of advocacy for school choice programs stands out from the progress that other Republican governors have made in their states. See The Year of School Choice and 2013: Yet Another ‘Year of School Choice.’

Kansas school spending, per student, from state, local, and federal sources, adjusted for inflation.

Kansas school spending, per student, from state, local, and federal sources, adjusted for inflation.

But we ought to hold public discourse like this to a certain standard, and the pitch made by Kansas Values Institute deserves examination.

Kansas school spending, per student, adjusted for inflation. While base state aid per pupil has declined, state and total spending has remained steady after declining during the recession.

Kansas school spending, per student, adjusted for inflation. While base state aid per pupil has declined, state and total spending has remained steady after declining during the recession.

With regard to school funding, cuts were made by Brownback’s predecessors. Since he became governor, funding is pretty level, on a per student basis adjusted for inflation. It’s true that base state aid per pupil has declined due to the cuts made by governors before Brownback. But state and total funding has been steady since then.

Nonetheless, some people insist on using base state aid as the measure of school spending. They make this argument even though total Kansas state spending per pupil the past year was $6,984, or 1.82 times base state aid of $3,838. Adding local and federal sources, spending was $12,781 per student, or 3.33 times base state aid.

Ratios of school spending to base state aid.

Ratios of school spending to base state aid.

Further, as can be seen in the nearby chart, there has been a steady increase in the ratios of state and total school spending to base state aid.

This is important, as the Kansas Supreme Court issued some instructions in the recent Gannon decision when it remanded part the case to the lower court. The Court said all funding sources are to be considered: “In the panel’s assessment, funds from all available resources, including grants and federal assistance, should be considered.” This will certainly test the faith in courts that school spending boosters have proclaimed.

So the claims of the present governor being responsible for “the largest cut to classrooms in the history of Kansas” is false.

Then, what about “classrooms that are over crowded”? Kansas State Department of Education has data on this topic, sort of. KSDE provides the number of employees in school districts and the number of students. I obtained and analyzed this data. I found that the situation is not the same in every school district. But considering the entire state, two trends emerge. For the past two years, the number of teachers employed in Kansas public schools has risen. Correspondingly, the pupil-teacher ratio has fallen.

Kansas school employment ratios

The trend for certified employees is a year behind that of teachers, but for the last year, the number of certified employees has risen, and the ratio of these employees to pupils has fallen.

There’s also a video explaining these statistics. Click here to view it at YouTube. Others have noticed discrepancies in school job claims. See Kansas school employment: Mainstream media notices.

In its pitch, Kansas Values Institute complain that class sizes in Kansas schools are rising. The data that we have, which is the ratio of teachers to pupils, is not the same statistic as class size. They measure different things. But if Kansas schools, considered as a whole, have rising teacher and certified employment levels and the pupil to teacher ratio is decreasing, and at the same time class sizes are increasing — we have to wonder about the management of schools. What are schools doing with these new employees?

As far as I know, no one tracks school district fees across the state. I’d welcome learning of such data.

But regarding data we do have, we see that Kansas Values Institute is either not paying attention, or simply doesn’t care about truthfulness.

I’ve created interactive visualizations that let you examine the employment levels and ratios in Kansas school districts. Click here for the visualization of employment levels. Click here for the visualization of ratios (pupil-teacher and pupil-certified employee). Data is from Kansas State Department of Education. Visualization created by myself using Tableau Public.

business-records-file-folders

Kansas not good on spending visibility

For more about this issue, see Open Records in Kansas.

The results are in, and the news isn’t good: Kansas continues to plummet in state spending transparency rankings, and it barely squeaked by with a grade of D-minus, according to a report by the U.S. Public Interest Research Group.

Kansas Capitol

Kansas Policy Institute at work

Kansas CapitolA letter in the Wichita Eagle accused Kansas Policy Institute of the “destruction of K-12 education.” Following is part of the comment KPI president Dave Trabert wrote in response to the letter. It’s a good recap of what KPI has done the past few years. I’m left to wonder how anyone who cares about Kansas schoolchildren could be opposed to the work KPI has done.

We are showing citizens and legislators the facts about student achievement. Contrary to claims of nation-leading achievement, Kansas students scores on the National Assessment of Educational Progress and ACT are just about average. Overall averages are distorted by demographic differences but scores for each student cohort (White, Low Income, etc.) are actually about average across the nation.

We are showing citizens and legislators that the achievement gaps for low income students in Kansas are large and growing. Even [Kansas Education Commissioner] Diane DeBacker had to agree with that statement in front of the House and Senate Education Committees.

We proved that Kansas State Department of Education and the State Board of Education reduced performance standards to some of the lowest in the nation (according to the US Dept. of Ed.).

We are giving people the truth about school spending and showing that very large spending increases did very little to improve achievement.

We are showing people that school spending continues to set records, even though districts are not even spending all of the money they are given to run schools.

chalkboard-portion-800

In Kansas, base state aid is only a small part of spending

chalkboard-portion-800Considering only base state aid per pupil leads to an incomplete understanding of school spending in Kansas. The Gannon school finance decision reinforces this.

Much of the discussion surrounding school funding in Kansas has centered around base state aid per pupil. It’s the starting point for the Kansas school finance formula, and therefore an important number.

Ratios of school spending to base state aid.

Ratios of school spending to base state aid.

Base state aid per pupil has fallen in recent years. Because of this, public school spending advocates claim that spending has been cut. But that’s not the case. As shown in the nearby chart, there has been a steady increase in measures of school spending when compared to base state aid.

Considering Kansas state spending only, the ratio of state spending to base state aid was 1.10 in 1998. By 2013 that ratio had risen to 1.82, an increase of 65 percent for the ratio.

For total spending, the ratio rose from 1.86 to 3.33 over the same period, an increase of 79 percent.

What’s important to realize is that the nature of Kansas school funding has changed in a way that makes base state aid per pupil less important as a measure of school spending. Research from Kansas Policy Institute has shown that while base state aid per pupil has not grown, total state spending on schools has grown. Two reasons are rising spending on KPERS pension contributions and aid to schools for bond construction projects. The largest factor is rapid growth in the spending produced by the school finance formula’s various weightings.

A chart is available from KPI at Simple Comparisons of Base State Aid are Deceptive.

school-chalk-178345

After Gannon, will Kansas public school spending boosters still love courts and constitutions?

Will Kansas Progressives’ expressed love for courts and constitutions hold up in light of the school finance decision?

In January Paul Davis, a prominent Kansas Democrat and candidate for governor, tweeted “With the school ruling due any day now, will Brownback comply w/the court order or try & rewrite the KS constitution?” These words were followed by a link to Davis’ website that copies an article from the New York Times. (That article has its own host of problems, explained in New York Times on Kansas schools, again and More about the New York Times on Kansas school finance.)

paul-davis-tweet-comply-court-2014-01-12This mantra — that the Kansas Constitution requires the legislature to spend more on public schools — has been the drumbeat of Kansas Progressives. Their reverence for and deference to the Kansas Constitution is curious in light of their opinion of the United States Constitution.

The Kansas Supreme Court’s decision in Gannon v. Kansas contains something that Kansas Progressives support: A ruling that Kansas schools are not funded equitably. It’s thought by many that $129 million in extra spending is needed to fix the discrepancy.

But the Supreme Court stopped there, sending the issue of adequate funding back to the lower court along with a few instructions. It’s these instructions that will test Kansas Progressives’ belief in the wisdom of courts and their reverence for the Kansas Constitution.

Kansas public school spending supporters — that right there gives away their main motivation — want more school spending. Whatever distortions of facts they make, well, it’s all for the kids, don’t you know?

So right away the public school spending supporters want to deflect attention away from the performance of Kansas schools. Spending is easier to talk about, and the facts about Kansas school performance is not nearly as pretty as the education establishment wants you to believe. Two things to know: When evaluated in the light of the demographic differences between Kansas and other states, the performance advantage of Kansas largely disappears (see Kansas school test scores must be evaluated considering demographics. Further, Kansas has weak standards for its schools, and further weakened them not long ago (see Why are Kansas school standards so low?).

Kansas Judicial Center

Kansas Judicial Center

The Court had something to say about this in its opinion: “Regardless of the source or amount of funding, total spending is not the touchstone for adequacy in education required by Article 6 of the Kansas Constitution.” So perhaps we will see a court consider the results of Kansas schools rather than just the inputs.

Then, when we consider spending, the public school spending establishment performs a slight of hand, directing attention to only a portion of spending on schools: base state aid per pupil. That measure of spending has declined. But it’s a narrow measure. In the last school year base state aid per pupil was $3,838. That’s the figure often used as the level of school spending. But in that year total Kansas state spending per pupil $6,984, or 1.82 times base state aid.

Adding local and federal sources, spending was $12,781 per student, or 3.33 times base state aid.

This is important, as the Court issued some instructions in its remanding of the case to the lower court. All funding sources are to be considered: “In the panel’s assessment, funds from all available resources, including grants and federal assistance, should be considered.”

Also, the public school spending establishment has argued that spending on teacher retirement shouldn’t be included in school spending. It doesn’t make it into the classroom, they say. (One wonders if teachers would continue to work if schools did not provide a retirement program.) But the Court has a different opinion: “Moreover, state monies invested in the Kansas Public Employees Retirement System (KPERS) may also be a valid consideration because a stable retirement system is a factor in attracting and retaining quality educators — a key to providing an adequate education.”

The Court gave the public school spending establishment a little hope for relief. Often that establishment says that a multitude of rules and regulations prevent funds from being spent in the way they want. The Court said these restrictions may be considered: “The panel may consider the restrictions on the use of these federal, pension, and other funds and determine that even with the influx of these additional monies the school districts are unable to use them in the manner necessary to provide adequacy under Article 6. But regardless of the source or amount of funding, total spending is not the touchstone for adequacy.”

There again the Court issued the instruction regarding spending as a measure of an adequate education.

Kansas wind turbines

Rural Kansans’ billion-dollar subsidy of wind farms

From Kansas Policy Institute.

Rural Kansans’ Billion-Dollar Subsidy of Wind Farms

By Dave Trabert

Kansas wind turbinesNo, I’m not talking about any federal tax subsidies or mandates to buy high-cost wind energy that have forced higher taxes and electricity prices on every citizen. This billion-dollar gift comes in the form of local property tax exemptions. In some ways, this handout is even more insidious because the cost is borne by a relatively small number of Kansas homeowners and employers in the rural counties where wind farms exist.

Under current law, renewable energy producers enjoy a lifetime exemption from property taxes in Kansas. I testified last week in support of SB 435 to limit their property tax exemption to ten years.  As shown on an attachment to my testimony, the Kansas Legislative Research Department says there is a $108.4 million annual difference between the small fees paid in lieu of taxes and the taxes that would be due if taxed at the regular rates within each county. So technically, the legislation would only “limit” the property tax gift to $1.1 billion over ten years on existing wind farms; more tax gifts would still be done on new wind farms and other renewable energy facilities.

And while renewable energy producers were basically getting a free ride, property taxes on everyone else where going through the roof!

Giving property tax exemptions to private companies, regardless of the rationale, only increases everyone else’s property tax. Local government spending is not curtailed to absorb the exemption; cities and counties just raise taxes on everyone else. We encouraged the Legislature to also require that local mill rates be reduced proportionately if these property tax gifts are limited to ten years so that the new revenue from renewable energy producers’ property tax is used to reduce the burden on everyone else. (You should have seen the stink-eye this produced from the tax-and-spend crowd.)

Predictably, wind farm lobbyists lined up to protest that this legislation would increase their property taxes and send a bad message to the wind industry. Even local governments are opposed to taking away the exemption — after all, they can get their money from everyone else and take credit for bringing jobs and investment to their communities. They refuse to acknowledge that any economic benefit enjoyed by the green energy industry (and their own political benefit) comes out of the pockets of everyone else.

P.S. Remember this billion-dollar gift the next time you’re angered by cronyism in Washington, DC. Bad players in Washington often learn their craft at the state level; fending off bad policy at the state level has many long term benefits.

Photograph by the U.S. Census Bureau, Public Information Office (PIO).

State financial data, an interactive presentation

Photograph by the U.S. Census Bureau, Public Information Office (PIO).

Photograph by the U.S. Census Bureau, Public Information Office (PIO).

The United States Census Bureau collects data from the states about their finances. I’ve gathered selected financial statistics and made them available in an interactive visualization.

Because states vary so widely in population, I’ve presented the data as per-person figures. That presents its own challenges. For example, each state has only one governor, no matter how large or small its population. Therefore, the cost of having a governor can be spread among a very large number of people in California, but across a much smaller number of people in Wyoming.

Using the visualization: Sorting and selecting.

Using the visualization: Sorting and selecting.

In the visualization you may chose which states to display. Also, by clicking on row titles you can sort the states by the values in that row. This lets you see which states collect a lot of tax, or do a lot of spending.

Use the visualization below, or click here to open it in a new window, which may work best. Data is from United States Census Bureau, 2012 Annual Survey of State Government Finances.

Wichita City Budget Cover, 1960

During Sunshine Week, here are a few things Wichita could do

Wichita City Budget Cover, 1960The City of Wichita says it values open and transparent government, but the city could improve several areas of providing information and records to citizens.

The City of Wichita is proud to be an open and transparent governmental agency, its officials say. Wichita Mayor Carl Brewer often speaks in favor of government transparency. For example, in his State of the City address for 2011, he listed as an important goal for the city this: “And we must provide transparency in all that we do.” When the city received an award for transparency in 2013, a city news release quoted Wichita City Manager Robert Layton:

“The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”

Attitude

Despite the proclamations of the mayor and manager, the city needs a change of attitude towards government transparency. Here’s perhaps the most glaring example of how the city goes out of its way to conduct public business in secret.

Citizen watchdogs need access to records and data. The City of Wichita, however, has created several not-for-profit organizations that are controlled by the city and largely funded by tax money. The three I am concerned with are the Wichita Downtown Development Corporation, Go Wichita Convention and Visitors Bureau, and Greater Wichita Economic Development Coalition. Each of these agencies refuses to comply with the Kansas Open Records Act, using the reasoning that they are not “public agencies” as defined in the Kansas law that’s designed to provide citizen access to records.

The city backs this interpretation. When legislation was introduced to bring these agencies under the umbrella of the Kansas Open Records Act, cities — including Wichita — protested vigorously, and the legislation went nowhere. Now, just this week the City of Wichita added a new tax to hotel bills that may generate $3 million per year for the convention and visitors bureau to spend. Unless the city changes its attitude towards citizens’ right to know, this money will be spent in secret.

Another example of the City of Wichita’s attitude towards citizens and open government took place at a Kansas Legislature committee hearing last year. I had asked for email to or from a certain official for a certain period of time. The response from the city was that my request would encompass some 19,000 email messages, and the city denied the request as too burdensome. Fair enough.

But the city’s lobbyist told legislators that my request for 19,000 emails was an example of abuse of the Kansas Open Records Act, and cited it as evidence as to why reform was not needed. But I did not request 19,000 email messages. I made a request for messages meeting a certain criteria, and I had no way of knowing in advance how many email messages this would entail. The City of Wichita denied this request as burdensome, so there was either no cost or very little cost for the city. No harm, no foul.

But the City of Wichita used this incident and a similar incident involving the Kansas Policy Institute as reasons that the Kansas Open Records Act needs no reform. This illustrates a problem with the attitude of Wichita city government towards citizens’ right to know.

This attitude may be noticed by the citizenry at large. Survey respondents were asked to rate “the job Wichita does at welcoming citizen involvement.” The results are shown in the nearby chart created from data in the most recent version of the Wichita Performance Measure Report. The numbers are the percent of respondents giving “excellent” or “good” as their response to the question.

Citizens rate “the job Wichita does at welcoming citizen involvement."

Citizens rate “the job Wichita does at welcoming citizen involvement.”

The report says this performance is “much below” a benchmark set by the National Research Center National Citizen Survey.

Website

An important way governments can communicate with their subjects is through their websites. Wichita moved to a new website early in 2013. With the launching of the new City of Wichita website, the city has actually taken a step backwards in providing information to citizens.

From the former version of the City of Wichita website, showing budgets available for many years.

From the former version of the City of Wichita website, showing budgets available for many years.

Here’s an example. The old city website had budgets going back a long way, back to the budget for 1960 — 1961. The oldest budget I can find on the present website is for 2006.

Looking for minutes of important boards such as the Metropolitan Area Planning Commission, we find similar results. On the old website, minutes of MAPC were available back to 1999. The new version of the website seems to have minutes back to only 2012.

Also, something that had been very useful is missing, and hasn’t been replaced: MyWichita.

mywichita_logo

As described here, MyWichita was a useful service. By using it, you could receive by email notices of new press releases, city council agendas and minutes, district advisory board agenda and minutes, agendas and minutes of other boards, and other items. Using MyWichita was much easier than having to check multiple sections of the city’s website looking for newly-released agendas, minutes, etc.

This email reminder service was very valuable. It’s a basic customer service feature of many commercial and governmental websites. But MyWichita didn’t survive the conversion to the new website, and there’s nothing that replaces its function. When I asked about this missing functionality, the city said it was working on a replacement that should be available in a month or two. It’s been almost a year since I asked.

Spending data

Many governmental agencies post their checkbooks on their websites. Sedgwick County does, and also the Wichita school district. Not so the City of Wichita.

Wichita spending data.

Wichita spending data.

Even after asking for checkbook spending data, Wichita can supply data of only limited utility. What was supplied to me was data in pdf form, and as images, not text. It would be difficult and beyond the capability of most citizens to translate the data to useful format. Even if someone translated the reports to computer-readable format, I don’t think it would be very useful. This is a serious defect in the city’s transparency efforts.

Legal notices

Kansas law requires that local government agencies publish legal notices for a variety of topics. Presently these are published in the Wichita Eagle at great cost to taxpayers. These notices could also be published on the city’s website, where they could be searched and archived. This would increase the usability of these documents at very little cost to the city.

Publish requests

When governmental agencies like the City of Wichita fulfill records requests, they could also publish the records on their websites. Most of the time the records are supplied electronically, so this is an additional simple (and low cost) step that would leverage the value of the city’s effort.

Leveraging our lobbyists

What do lobbyists, including taxpayer-funded lobbyists, do in Topeka? One thing they do is testify before committees, in both verbal and written form. Another thing they do is to prepare reports for the clients, advising them on upcoming legislation, analyzing how it affects them, and what the prospects for the bill might be. They also meet with legislators and their clients, which are your elected officials.

Here’s a proposal that will help citizens make best use of their taxpayer-funded lobbyists:

I see nothing in the Kansas Open Records Act that allows local governmental units in Kansas to refuse to disclose these documents: testimony, reports by lobbyists to their government clients, and the lobbyists’ calendars (or billing records for contract lobbyists). Instead of making citizens ask for these records, possibly paying fees to obtain what they’re already paying for, why don’t local governments post these documents immediately on their websites?

Citizens could then benefit from the activities of the lobbyists they’re paying for. They could learn more about legislation as it works its way through the process. Citizens could judge whether the positions taken by the government lobbyists they’re paying for are aligned with their policy preferences.

If the actions taken by taxpayer-funded lobbyists are truly in the public interest, you’d think that cities, counties, and school boards would already be making this information easily available. In any case, there should be no resistance to starting this program.

Kansas wind turbines

Special interests defend wind subsidies at taxpayer cost

man-digging-coinsThe spurious arguments made in support of the wind production tax credit shows just how difficult it is to replace cronyism with economic freedom. From October, 2012.

We often see criticism of politicians for sensing “which way the wind blows,” that is, shifting their policies to pander to the prevailing interests of important special interest groups. The associated negative connotation is that politicians do this without regard to whether these policies are wise and beneficial for everyone.

So when a Member of Congress takes a position that is literally going against the wind in the home district and state, we ought to take notice. Someone has some strong convictions.

This is the case with U.S. Representative Mike Pompeo, a Republican representing the Kansas fourth district (Wichita metropolitan area and surrounding counties.)

The issue is the production tax credit (PTC) paid to wind power companies. For each kilowatt-hour of electricity produced, the United States government pays 2.2 cents. Wind power advocates contend the PTC is necessary for wind to compete with other forms of electricity generation. Without the PTC, it is said that no new wind farms would be built.

Kansas wind turbinesThe PTC is an important issue in Kansas not only because of the many wind farms located there, but also because of wind power equipment manufacturers that have located in Kansas. An example is Siemens. That company, lured by millions in local incentives, built a plant in Hutchinson. Employment was around 400. But now the PTC is set to expire on December 31, and it’s uncertain whether Congress will extend the program. As a result, Siemens has laid off employees. Soon only 152 will be at work in Hutchinson, and similar reductions in employment have happened at other Siemens wind power equipment plants.

Rep. Pompeo is opposed to all tax credits for energy production, and has authored legislation to eliminate them. As the wind PTC is the largest energy tax credit program, Pompeo and others have written extensively of the market distortions and resultant economic harm caused by the PTC. A recent example is Puff, the Magic Drag on the Economy: Time to let the pernicious production tax credit for wind power blow away, which appeared in the Wall Street Journal.

The special interests that benefit from the PTC are striking back. An example comes from Dave Kerr, who as former president of the Hutchinson/Reno County Chamber of Commerce played a role in luring Siemens to Hutchinson. Kerr’s recent op-ed in the Hutchinson News is notable not only for its several attempts to deflect attention away from the true nature of the PTC, but for its personal attacks on Pompeo.

There’s no doubt that the Hutchinson economy was dealt a setback with the announcement of layoffs at the Siemens plant that manufactures wind power equipment. Considered in a vacuum, these jobs were good for Hutchinson. But we shouldn’t make our nation’s policy in a vacuum, that is, bowing to the needs of special interest groups — sensing “which way the wind blows.” When considering everything and everyone, the PTC paid to producers of power generated from wind is a bad policy. We ought to respect Pompeo for taking a principled stand on this issue, instead of pandering to the folks back home.

Kerr is right about one claim made in his op-ed: The PTC for wind power is not quite like the Solyndra debacle. Solyndra received a loan from the Federal Financing Bank, part of the Treasury Department. Had Solyndra been successful as a company, it would likely have paid back the government loan. This is not to say that these loans are a good thing, but there was the possibility that the money would have been repaid.

But with the PTC, taxpayers spend with nothing to show in return except for expensive electricity. And spend taxpayers do.

Kerr, in an attempt to distinguish the PTC from wasteful government spending programs, writes the PTC is “actually an income tax credit.” The use of the adverb “actually” is supposed to alert readers that they’re about to be told the truth. But truth is not forthcoming from Kerr — there’s no difference. Tax credits are government spending. They have the same economic effect as “regular” government spending. To the company that receives them, they can be used — just like cash — to pay their tax bill. Or, the company can sell them to others for cash, although usually at a discounted value.

From government’s perspective, tax credits reduce revenue by the amount of credits issued. Instead of receiving tax payments in cash, government receives payments in the form of tax credits — which are slips of paper it created at no cost and which have no value to government. Created, by the way, outside the usual appropriations process. That’s the beauty of tax credits for big-government spenders: Once the program is created, money is spent without the burden of passing legislation.

If we needed any more evidence that PTC payments are just like cash grants: As part of Obama’s ARRA stimulus bill, for tax years 2009 and 2010, there was in effect a temporary option to take the federal PTC as a cash grant. The paper PTC, ITC, or Cash Grant? An Analysis of the Choice Facing Renewable Power Projects in the United States explains.

Astonishingly, the wind PTC is so valuable that wind power companies actually pay customers to take their electricity. It’s called “negative pricing,” as explained in Negative Electricity Prices and the Production Tax Credit:

As a matter of both economics and public policy, no government production tax subsidy should ever be so large that it creates an incentive for a business to actually pay customers to take its product. Yet, the federal Production Tax Credit (“PTC”) for wind generation is doing just that with increasing frequency in electricity markets across the United States. In some “wind-rich” regions of the country, wind producers are paying grid operators to take their generation during periods of surplus supply. But wind producers more than make up the cost of the “negative price” payment, because they receive a $22/MWH federal production tax credit for every MWH generated.

In western Texas since 2008, wind power generators paid the electrical grid to take their electricity ten percent of the hours of each day.

Once we recognize that tax credits are the same as government spending, we can see the error in Kerr’s argument that if the PTC is ended, it is the same as “a tax increase on utilities, which, because they are regulated, will pass on to consumers.” Well, government passes along the cost of the PTC to taxpayers, illustrating that there really is no free lunch.

Kerr attacks Pompeo for failing to “crusade” against two subsidies that some oil companies receive: Intangible Drilling Costs and the Percentage Depletion Allowance. These programs are deductions, not credits. They do provide an economic benefit to the oil companies that can use them (“big oil” can’t use percentage depletion at all), but not to the extent that tax credits do.

Regarding these deductions, last year Pompeo introduced H. Res 267, titled “Expressing the sense of the House of Representatives that the United States should end all subsidies aimed at specific energy technologies or fuels.”

In the resolution, Pompeo recognized the difference between deductions and credits, the latter, as we’ve seen, being direct subsidies: “Whereas deductions and cost-recovery mechanisms available to all energy sectors are different than credits, loans and grants, and are therefore not taxpayer subsidies; [and] Whereas a deduction of costs and cost recovery with respect to timing is not a subsidy.”

Part of what the resolution calls for is to “begin tax simplification and reform by eliminating energy tax credits and deductions and reducing income tax rates.”

Kerr wants to deflect attention away from the cost and harm of the PTC. Haranguing Pompeo for failing to attack percentage depletion and IDC with the same fervor as tax credits is only an attempt to muddy the waters so we can’t see what’s happening right in front of us. It’s not, as Kerr alleges, “playing Clintonesque games of semantics with us.” As we’ve seen, Pompeo has called for the end of these two tax deductions.

If we want to criticize anyone for inconsistency, try this: Kerr criticizes Pompeo for ignoring the oil and gas deductions, “which creates a glut in natural gas that drives down the price to the lowest levels in a decade.” These low energy prices should be a blessing to our economy. Kerr, however, demands taxpayers pay to subsidize expensive wind power so that it can compete with inexpensive gas. In the end, the benefit of inexpensive gas is canceled. Who benefits from that, except for the wind power industry? The oil and gas targeted deductions also create market distortions, and therefore should be eliminated. But at least they work to reduce prices, not increase them.

By the way, Pompeo has been busy with legislation targeted at ending other harmful subsidies: H.R. 3090: EDA Elimination Act of 2011, H.R. 3994: Grant Return for Deficit Reduction Act, H.R. 3308: Energy Freedom and Economic Prosperity Act, and the above-mentioned resolution.

I did notice, however, that Pompeo hasn’t called for the end to the mohair subsidy. Will Kerr attack him for this oversight?

Finally, Kerr invokes the usual argument of government spenders: Cut the budget somewhere else. That’s what everyone says.

Creating entire industries that exist only by being propped up by government subsidy means that we all pay more to support special interest groups. A prosperous future is best built by relying on free enterprise and free markets in energy, not on programs motivated by the wants of politicians and special interests. Kerr’s attacks on Pompeo illustrate how difficult it is to replace cronyism with economic freedom.

WichitaLiberty.TV.19

WichitaLiberty.TV: Wichita’s missing water, beyond politics and special interests

In this episode of WichitaLiberty.TV: The people of Wichita have told officials that water is an important issue. What has the city done in this regard? Then, Wichita Mayor Brewer Carl says it’s time to put politics and special interests aside. Is our political leadership capable of this? Episode 34, broadcast March 9, 2014. View below, or click here to view at YouTube.

Kansas Judicial Center

We can predict the loser in the Kansas school lawsuit

The Kansas Supreme Court will hand down the school finance decision Friday.

The Kansas Supreme Court will hand down the school finance decision Friday.

No matter which side wins the Kansas school finance lawsuit, we already know who loses: Kansas schoolchildren. The last time schools won a suit, the state lowered its standards for schools.

Talking about school spending is easy, even though most Kansas public school spending advocates refuse to acknowledge the totality of spending. (Or if they acknowledge the total level, they may make excuses for the spending not being effective.) Advocating for more spending is easy. It’s easy because the Kansas Constitution says the state must spend on schools. Parents want more spending, and so do teachers, public employee unions, and children. It’s easy to support more spending on schools because anyone who doesn’t is demonized as anti-child, anti-education, and even anti-human.

But the focus on school spending lets the Kansas public school establishment off the hook too easily. Any and all shortcomings of Kansas schools can be blamed on inadequate funding. That’s what the establishment does.

The focus on school spending also keeps attention away from some unfortunate and unpleasant facts about Kansas schools that the establishment would rather not talk about. Kansas needs to confront these facts for the sake of Kansas schoolchildren. If the court orders more spending and the legislature complies, not much is likely to improve, but the public school establishment will say everything that’s wrong has been fixed.

The focus on spending

First, citizens are generally misinformed on Kansas school spending. In surveys, most people usually guess that schools spend less than half of the correct amount. It’s a problem not only in Kansas; it’s a nationwide issue.

Then, there is a tenuous connection between increased school spending and better student outcomes. Many studies point out the rapid rise in school spending over the decades, but test scores are flat.

Even liberal think tanks realize the school class size is not an important factor.

Even liberal think tanks realize the school class size is not an important factor.

Public school spending advocates say that increased spending will allow smaller class sizes. But class size reduction is very expensive and produces only marginal benefits compared to other strategies. The Center for American Progress — normally in favor of anything that increases government spending — wrote this in its 2011 report The False Promise of Class-Size Reduction

The evidence on class size indicates that smaller classes can, in some circumstances, improve student achievement if implemented in a focused way. But CSR [class size reduction] policies generally take exactly the opposite approach by pursuing across-the-board reductions in class size at the state or federal level. These large-scale, untargeted policies are also extremely expensive and represent wasted opportunities to make smarter educational investments. Large-scale CSR policies clearly fail any cost-benefit test because they entail steep costs and produce benefits that are modest at best.

The CAP report tells readers what does work to improve student outcomes:

Researchers agree that teacher quality is the single most important in-school determinant of how much students learn. Stanford economist Eric A. Hanushek has estimated that replacing the worst 5 percent to 8 percent of teachers with average teachers would dramatically boost achievement in the United States.

KNEA: There are no bad teachers.

KNEA: There are no bad teachers.

But Kansas ranks low in policies regarding teacher quality. The current lawsuit doesn’t address issues like teacher quality or other specific reforms that will actually help Kansas schoolchildren. By the way, the Kansas National Education Association (KNEA) believes there are no bad teachers.

What Kansas did after the last lawsuit

Consider what Kansas did the last time schools won a lawsuit: The state lowered its school standards. Simply put, Kansas didn’t have rigorous standards for its schools, and it lowered them after the last court decision.

national-center-education-statistics-state-mapping-naep

The National Center for Education Statistics produces a report titled Mapping State Proficiency Standards Onto the NAEP Scales. (NCES is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations, and is located within the U.S. Department of Education and the Institute of Education Sciences.)

The mapping project establishes a relationship between the tests each state gives to assess its students and the National Assessment of Education Progress, a test that is the same in all states. The conclusion of NCES is that Kansas school standards are relatively low, compared to other states. This video explains. (View below, or click here to view in HD at YouTube.)

For Kansas, here are some key findings. First, NCES asks this question: “How do Kansas’s NAEP scale equivalent scores of reading standards for proficient performance at grades 4 and 8 in 2009 compare with those estimated for 2005 and 2007?”

For Kansas, the two answers are this (emphasis added):

“Although no substantive changes in the reading assessments from 2007 to 2009 were indicated by the state, the NAEP scale equivalent of both its grade 4 and grade 8 standards decreased.

Also: “Kansas made substantive changes to its reading grade 8 assessment between 2005 and 2009, and the NAEP scale equivalent of its grade 8 standards decreased.

In other words, NCES judged that Kansas weakened its standards for reading performance.

A similar question was considered for math: “How do Kansas’s NAEP scale equivalent scores of mathematics standards for proficient performance at grades 4 and 8 in 2009 compare with those estimated for 2005 and 2007?”

For Kansas, the two answers are this (emphasis added):

“Although no substantive changes in the mathematics assessments from 2007 to 2009 were indicated by the state, the NAEP scale equivalent of its grade 8 standards decreased (the NAEP scale equivalent of its grade 4 standards did not change).”

Also: “Kansas made substantive changes to its mathematics grade 4 assessment between 2005 and 2009, but the NAEP scale equivalent of its grade 4 standards did not change.”

For mathematics, NCES judges that some standards were weakened, and some did not change.

In its summary of Kansas reading standards, NCES concluded: “In both grades, Kansas state assessment results showed more positive changes in achievement than NAEP results.” For mathematics, the summary reads: “In grade 4, Kansas state assessment results showed a change in achievement that is not different from that based on NAEP results. In grade 8, state assessment results showed a more positive change.”

In other words: In three of four instances, Kansas is claiming positive student achievement that isn’t apparent on national tests.

Following are two examples of charts from the NCES study where Kansas school standards rank compared to other states. Click on them for larger versions.

Kansas Grade 4 Reading Standards

Kansas Grade 4 Math Standards 01

Water faucet

Where’s Wichita’s water?

Water faucet

As part of the Community Investments Plan process, citizens have told the City of Wichita they’re concerned about future water supply.

Through both the mailed survey and direct feedback obtained in citizen forums, creating a reliable source of water was the top priority, according to city documents released this week.

Those who have been paying attention might be surprised that there is a water crisis, and that citizens are concerned. That’s because when Bob Knight was mayor, he was told that Wichita had sufficient water for the next 50 years. That was about ten years ago.

More recently, the city prepared a document last March titled Wichita Area Future Water Supply: A Model Program for Other Municipalities. It touts an expensive investment that is part of a “plan to ensure that Wichita has the water it needs through the year 2050 and beyond.”

The project boasted of is the City of Wichita Aquifer Storage and Recovery Program or ASR. Its cost, so far for Phases I and II, is $247 million. Two more phases are contemplated.

City of Wichita Aquifer Storage and Recovery Program schematic diagram.

City of Wichita Aquifer Storage and Recovery Program schematic diagram.

Reading the document, published just last spring, one might be led to believe that everything is fine, water-wise: “In 1993 the Wichita City Council adopted an Integrated Local Water Supply Plan that identified cost effective water resources that would be adequate to meet Wichita’s water supply needs through the year 2050.”

But this month the Wichita Eagle reported “Wichita’s $240 million aquifer storage and recovery program — promoted to taxpayers in the early 1990s as a way to supply the city with water for 50 years — could soon be relegated to serving as a bit player in the city’s long-term water future.”

Later in the same article, the newspaper reported “The ASR project has been plagued by problems, city officials said, including equipment failures and a significant drought that idled the project because of low water levels in the Little Arkansas River.”

Despite this investment on nearly one-quarter billion dollars, and despite the plan’s boasts, Wichitans have been threatened with huge fines for excessive water usage. The Wichita City Council forced citizens to spend up to $1 million so that other people may install low-water usage appliances, and city decorative fountains were dry for a time in an effort to save water. Fortunately, not all the potential rebates were claimed.

What went wrong? Where’s Wichita’s water?

Last summer there was severe drought for a time, and it was easy to attribute Wichita’s water problems to that lack of rain. But that’s not the message we’re getting now.

It appears that the plans the city made for a future water supply were not adequate, and the spending to implement the plan has been, largely, wasted.

Wichita/Sedgwick County Community Investment Plan logo.

Wichita planning documents hold sobering numbers

Wichita/Sedgwick County Community Investment Plan logo.

Wichita/Sedgwick County Community Investment Plan logo.

This week the City of Wichita held a workshop where the Community Investments Plan Steering Committee delivered a progress report to the city council. The documents hold information that ought to make Wichitans think, and think hard. The amounts of money involved are large, and portions represent deferred maintenance. That is, the city has not been taking care of the assets that taxpayers have paid for.

The time frame of this planning process is the period 2013 to 2035. Under the heading “Trends & Challenges” we find some troubling information. Wichita Mayor Carl Brewer hinted at the problem last year in his State of the City Address when he said the city would need to spend $2.1 billion over 30 years on maintenance and replacement of water and sewer systems. The city’s performance measure report also told us that our pavement condition index has been deteriorating, and is projected to continue to decline.

So if we’ve been paying attention, it should not have been a surprise to read this in the presentation: “Decades of under-investment in infrastructure maintenance … 38% of Wichita’s infrastructure is in ‘deficient/fair’ condition.”

The cost to remedy this lack of maintenance is substantial. The document says that on an annual basis, Wichita needs to spend $180 million on infrastructure depreciation/replacement costs. Currently the city spends $78 million on this, the presentation indicates.

The “cost to bring existing deficient infrastructure up to standards” is given as an additional $45 to $55 million per year.

This is a lot of money. To place these numbers in context, here are some figures that help illustrate Wichita city finances:

Property tax collected in 2013: $105 million
Budgeted 2014 expenditures for fire department: $44 million
Budgeted 2014 expenditures for police department: $79 million

It’s thought that an additional one cent per dollar city sales tax would generate around $80 million per year.

The amounts by which the city is deficient in maintaining its assets is staggering, compared to other expenses the city has. The size of the deficiency overwhelms possible sources of new revenue. A one cent per dollar increase in sales tax would not cover the deficiencies in maintaining our current assets. Then, remember the things Wichita wants to increase spending on — a new library, economic development, expanded public transit, new convention center, economic development, and perhaps other things.

The report lists three scenarios for future growth: Maintaining current trends, constrained suburban growth, and suburban and infill growth mix. Whenever we see words like “constrained” we need to be cautious. We need to be on guard. The Wichita Eagle reported this: “In the city’s recently completed series of 102 public meetings, citizens were clear, City Manager Robert Layton said: Redevelop the core. We’ve had enough suburban growth for awhile.”

It’s unclear how closely the findings from the public meetings reflects actual citizen preference. Cynics believe that these meetings are run in a way that produces a predetermined outcome aligned with what city officials want to hear. At any rate, when you ask people about their preferences, but there is no corresponding commitment to act on their proclaimed preferences, we have to wonder how genuine and reliable the results are.

There is a very reliable way to find out what people really want, however. Just let them do it. If people want to live downtown on in an inner city neighborhood, fine. If they want suburban-style living, that’s fine too. Well, it should be fine. But reading between the lines of city documents you get the impression that city planners don’t think people should live in suburban-style settings.

Sometimes we don’t have to read between the lines. Sometimes the attitude of planners is explicit. In 2010 the city — actually the Wichita Downtown Development Corporation — employed Goody Clancy, a Boston-based planning firm, to help plan the revitalization of downtown Wichita. In the article Goody Clancy market findings presented to Wichita audience I reported on some of what the planners said. For example, David Dixon, the Goody Clancy principal for this project, told how that in the future, Wichitans will be able to “enjoy the kind of social and cultural richness” that is found only at the core. “Have dinner someplace, pass a cool shop, go to a great national music act at the arena, and then go to a bar, and if we’re lucky, stumble home.”

This idea that only downtown people are socially and culturally rich is an elitist attitude that we ought to reject. By the way, when I presented to the Wichita City Council on this topic, I noted that no council members, except for possibly one, lived in neighborhoods that might be described as in “the core.”

Other speakers from Goody Clancy revealed a condescending attitude towards those who hold values different from this group of planners. One presenter said “Outside of Manhattan and Chicago, the traditional family household generally looks for a single family detached house with yard, where they think their kids might play, and they never do.”

This, again, is an elitist attitude. No, it’s worse than that. It’s condescending. It reveals that the professional planning class thinks that the ordinary people of Wichita can’t decide for themselves what they really want. Somehow, people are duped into buying homes that don’t really meet their needs, and they’re not smart enough to realize that. That is the attitude of the professional planning class. It’s an elitism that Wichitans ought to reject.

The planning process

The planners tells us that the process is based on data. “Data-driven” is a term they use. But when we look under the covers at the data, we realize that we need to be very skeptical of claims.

Returning to the Goody Clancy plan for downtown Wichita, the principal planner used Walk Score in a presentation delivered in Wichita. Walk Score is purported to represent a measure of walkability of a location in a city. Walkability is a key design element of the master plan Goody Clancy has developed for downtown Wichita.

Walk Score is not a project of Goody Clancy, as far as I know, and Dixon is not responsible for the accuracy or reliability of the Walk Score website. But he presented it and relied on it as an example of the data-driven approach that Goody Clancy takes.

Walk Score data for downtown Wichita, as presented by planning firm Goody Clancy. Click image for a larger version.

Walk Score data for downtown Wichita, as presented by planning firm Goody Clancy. Click image for a larger version.

The score for 525 E. Douglas, the block the Eaton Hotel and Wichita Downtown Development Corporation is located in and mentioned by Dixon as a walkable area, scored 91, which means it is a “walker’s paradise,” according to the Walk Score website.

But here’s where we can start to see just how bad the data used to develop these scores is. For a grocery store — an important component of walkability — the website indicates indicates a grocery store just 0.19 miles away. It’s “Pepsi Bottling Group,” located on Broadway between Douglas and First Streets. Those familiar with the area know there is no grocery store there, only office buildings. The claim of a grocery store here is false.

There were other claimed amenities where the data is just as bad. But the chairman of the Wichita Downtown Development Corporation at that time said that Walk Score has been updated. I should no longer be concerned with the credibility of this data, he told me through a comment left on my website.

He was correct in one regard: Walk Score had been updated. For the same location the walk score was revised to 85%, which is considered “very walkable.” The “grocery store” is no longer the Pepsi Bottling Group. It’s now “Market Place,” whose address is given as 155 N. Market St # 220.

Someone strolling by that location would notice that address, 155 N. Market number 220, is the management office for an office building whose name is Market Place.

Still no grocery store. Nothing even resembling a grocery store.

I looked this week at the Walk Score website. It’s been updated and redesigned. Now for the same block in the heart of downtown Wichita the walk score is 74, which is “very walkable,” according to the site. In a narrative explanation, the site says this: “The closest grocery stores are Ray Sales Co, Market Place and The Hot Spot Detox Shop.”

Ray Sales Co., in the shadow of Intrust Bank Arena.

Ray Sales Co., in the shadow of Intrust Bank Arena.

I don’t know if you’ve been to Ray Sales, but it’s a tiny store with a very limited product selection. It’s not the type of place that will attract people to downtown Wichita. We know that because officials say a grocery store is one of downtown’s most pressing needs, despite the existence of Ray Sales.

Market Place is listed again as evidence of a grocery store in downtown Wichita. Remember, Market Place is the name of an office building located on Market Street. It’s not a grocery store.

The third location listed as a grocery store is a shop that sells kits to help people pass drug tests. It’s nothing like a grocery store.

Again, David Dixon and Goody Clancy did not create the Walk Score data. But they presented it to Wichitans as an example of the data-driven, market-oriented approach to planning that they use. Dixon cited Walk Score data as the basis for higher real estate values based on the walkability of the area and its surrounding amenities. But anyone who relies on the evidence Dixon and Goody Clancy presented would surely get burnt unless they investigated the area on their own.

Keep in mind that the presentation of this Walk Score data was made after Goody Clancy staff had spent considerable time in Wichita. That someone there could not immediately recognize how utterly bogus the data is: That should give us cause for concern that the entire planning process is based on similarly shoddy data and analysis.

Constraining growth

Returning to the city’s presentation: How does the city “constrain” suburban growth? By taking away the freedom for people to live where they want. Why would the city want do that? City leaders say that suburban development is expensive. It’s not sustainable. Suburban living depends on the personal automobile. And remember the attitude of the professional planners Wichita Downtown Development Corporation hired: People can’t be trusted to know what they really want for themselves.

Special taxes paid on a residential home.

Special taxes paid on a residential home.

If it really is more expensive to develop new suburban areas, the city should simply charge what it costs. To some extent this already happens. Anyone who builds a new home in a new area will pay for the residential street and other infrastructure through special taxes. If the city feels it needs to charge for building arterial streets to serve new suburban areas, it should do so. But the city should realize that people spending their own money to buy or rent a residence — this is the best indication of their true preferences. What people say in focus groups or on paper survey forms is nowhere near as reliable.

Community input

The survey that Wichita used has its own problems. Here’s an example of a question respondents were asked to agree or disagree with: “Local government, the school district, community organizations and the business community should work together to create an investment climate that is attractive to business.”

The meaning of an attractive investment climate means different things to different people. Some people want an investment climate where property rights are respected, where government refrains from meddling in the economy and transferring one person’s property to another. An environment free from cronyism, in other words. But the Wichita way is, unfortunately, cronyism, where government takes an active role in managing economic development. We in Wichita never know when our local government will take from us to give to politically-favored cronies, or when city hall will set up and subsidize a competitor to your business.

Wichita flights compared to the nation.

Wichita flights compared to the nation.

Sometimes the questions are misleading. A question relating to the subsidy program at the Wichita airport read “I’m willing to pay increased taxes or fees to support investment … that uses public dollars to reduce the cost and increase the number of commercial flights at Mid-Continent Airport.”

This is an example of a question which has a false premise. Since the subsidy programs have been in place, the number of flights from the Wichita airport has declined, not increased as the question would lead readers to believe. See Wichita flight options decrease, despite subsidies and Wichita airfare subsidy: The negative effects.

Leadership of city fathers

On these and other issues, the Wichita Eagle quoted mayor Brewer: “We’ve put them off for too long. We didn’t want the challenges. We didn’t want the tax bills. But now, to maintain our quality of life, we’ve got to catch up.”

It’s almost as if the mayor is speaking as a bystander. But he’s been mayor for nearly seven years, and was on the city council before that time. During that time, he and other city leaders have boasted of not increasing property taxes. While the property tax rate has been stable, property tax revenue has increased due to development of new property and rising assessment values. In spite of this, the city has a huge backlog of deferred maintenance. The way to interpret this is that the city has really been engaging in deficit spending under Brewer’s leadership. We didn’t spend what was needed to maintain our assets, and now the mayor tells us we need to increase spending to make up for this.

The economist Milton Friedman told us that it’s more important to look at government spending rather than the level of taxation. That’s because spending must eventually be paid for, either through current taxes or future taxation. The federal government generate deficits and can pay for spending through creating inflation. Fortunately, cities and states can’t do that.

But, as we’ve seen, cities like Wichita can incur costs without paying for them. This is a form of deficit spending. By deferring maintenance of our infrastructure, the city has pushed spending to future years. The report released this week gives an idea of the magnitude of this deferred spending: It’s huge.

This form of deficit spending is “off the books” and doesn’t appear in city financial statements. But it’s real, as the mayor now admits. The threat to our freedom to live where we want is real, too. We must be watchful and diligent.

chart-rising-audience

Economic freedom, the key to improving lives

chart-rising-audience

Economic freedom, in countries where it is allowed to thrive, leads to better lives for people as measured in a variety of ways. This is true for everyone, especially for poor people.

This is the message presented in a short video based on the work of the Economic Freedom of the World report, which is a project of Canada’s Fraser Institute. Four years ago Robert Lawson, one of the authors of the Economic Freedom of the World report, lectured in Wichita on this topic. The current video is made possible by the Charles G. Koch Charitable Foundation.

One of the findings highlighted in the presentation is that while the average income in free countries is much higher than that in the least-free countries, the ratio is even higher for the poorest people in these countries. This is consistent with the findings that economic freedom is good for everyone, and even more so for those with low incomes.

Civil rights, a clean environment, long life expectancy, low levels of corruption, less infant mortality, less child labor, and lower unemployment are all associated with greater levels of economic freedom.

What are the components or properties of economic freedom? The presentation lists these:

  • Property rights are protected under an impartial rule of law.
  • People are free to trade with others, both within and outside the country.
  • There is a sound national currency, so that peoples’ money keeps its value.
  • Government stays small, relative to the size of the economy.

Over the last eleven years, the United States’ ranking has fallen relative to other countries, and the presentation says our position is expected to keep falling. The question is asked: “Will our quality of life fall with it?”

Economic freedom is not necessarily the platform of any single political party. It should be noted that for about eight of the past twelve years — a period in which our economic freedom has been falling — there was a Republican president, sometimes with a Republican Congress. The size of government rose. In 2005 the Cato Institute studied the numbers and found that “All presidents presided over net increases in spending overall, though some were bigger spenders than others. As it turns out, George W. Bush is one of the biggest spenders of them all. In fact, he is an even bigger spender than Lyndon B. Johnson in terms of discretionary spending.” This was before the spending on the prescription drug program had started.

Critics of economic freedom

The defining of what economic freedom means is important. Sometimes you’ll see people write things like “Bernie Madoff was only exercising his personal economic freedom while he ran his investment firm.” Madoff, we now know, was a thief. He stole his clients’ money. That’s contrary to property rights, and therefore contrary to economic freedom.

Or, you’ll see people say if you don’t like government, go to Somalia. That country, one of the poorest in the world — but not the poorest — is used as an example of how bad anarchy is as a form of government. The evidence is, however, that Somalia’s former government was so bad that things improved after the fall of that government. See Peter T. Leeson, Better Off Stateless: Somalia Before and After Government Collapse and History of Somalia (1991–2006).

You’ll also encounter people who argue that some countries are poor because they have no natural resources. But there are many countries with few natural resources that have economic freedom and a high standard of living. Most countries that are poor are that way because they are run by corrupt governments that have no respect for economic freedom, and follow policies that stifle it.

Some will argue that economic freedom means the freedom to pollute the environment. But it is in wealthy countries that the environment is respected. Poor countries, where people are struggling just to find food for each day, don’t have the time or wealth to be concerned about the environment.

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Voice for Liberty Radio: Mike Pompeo

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In this episode of WichitaLiberty Radio: U.S. Representative Mike Pompeo of Kansas spoke at a meeting of the Wichita Pachyderm Club. Some of the topics and questions Pompeo answered included:

The size of the defense budget, the threats to our nation, and the importance of the National Security Agency in keeping the country safe. He addressed privacy concerns.

What about tension between the Speaker of the House and tea party and conservatives?

What’s wrong the the just-passed farm bill, and how did it pass?

Attitudes towards and respect for Congress and the President.

The arrest of a suspect in an attack on the Wichita Airport.

The presentation started with a video of Rep. Pompeo questioning Health and Human Services Secretary Kathleen Sebelius.

This recording contains Pompeo’s prepared remarks in full and selected responses to questions at the Wichita Pachyderm Club on February 7, 2014.

Shownotes

Mike Pompeo Congressional office.
Campaign website: pompeoforcongress.com
Twitter at @RepMikePompeo
Wichita Pachyderm Club

Kansas Capitol

Kansas school finance lawsuit deflects from issues that could help schoolchildren

Kansas Capitol

Regardless of which side wins the Kansas school finance lawsuit, we know who loses: Kansas schoolchildren.

Talking about school spending is easy, even though most Kansas public school spending advocates refuse to acknowledge the totality of spending. (Or if they acknowledge the total level, they may make excuses for the spending not being effective.) Advocating for more spending is easy. It’s easy because the Kansas Constitution says the state must spend on schools. Parents want more spending, and so do teachers, public employee unions, and children. It’s easy to want more spending on schools because anyone who doesn’t is demonized as anti-child, anti-education, and even anti-human.

But the focus on school spending lets the Kansas public school establishment off the hook too easily. Any and all shortcomings of Kansas schools can be blamed on inadequate funding, and that’s what happens.

The focus on school spending also keeps attention away from some unfortunate and unpleasant facts about Kansas schools that the establishment would rather not talk about. Kansas needs to confront these facts for the sake of Kansas schoolchildren. If the court orders more spending and the legislature complies, not much is likely to improve, but the public school establishment will say everything that’s wrong has been fixed.

The focus on spending

First, citizens are generally misinformed on Kansas school spending. In surveys, most people usually guess that schools spend less than half of the correct amount. It’s a problem not only in Kansas; it’s a nationwide issue.

Then, there is a tenuous connection between increased school spending and better student outcomes. Many studies point out the rapid rise in school spending over the decades, but test scores are flat.

center-american-progress-false-promise-class-size-reduction

Public school spending advocates say that increased spending will allow smaller class sizes. But class size reduction is very expensive and produces only marginal benefits compared to other strategies. The Center for American Progress — normally in favor of anything that increases government spending — wrote this in its 2011 report The False Promise of Class-Size Reduction

The evidence on class size indicates that smaller classes can, in some circumstances, improve student achievement if implemented in a focused way. But CSR [class size reduction] policies generally take exactly the opposite approach by pursuing across-the-board reductions in class size at the state or federal level. These large-scale, untargeted policies are also extremely expensive and represent wasted opportunities to make smarter educational investments. Large-scale CSR policies clearly fail any cost-benefit test because they entail steep costs and produce benefits that are modest at best.

The CAP report tells readers what does work to improve student outcomes:

Researchers agree that teacher quality is the single most important in-school determinant of how much students learn. Stanford economist Eric Hanushek has estimated that replacing the worst 5 percent to 8 percent of teachers with average teachers would dramatically boost achievement in the United States.

But Kansas ranks low in policies regarding teacher quality. The current lawsuit doesn’t address issues like teacher quality or other specific reforms that will actually help Kansas schoolchildren.

What Kansas did after the last lawsuit

Consider what Kansas did the last time schools won a lawsuit: The state lowered its school standards. Simply put, Kansas didn’t have rigorous standards for its schools, and it lowered them after the last court decision.

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The National Center for Education Statistics produces a report titled Mapping State Proficiency Standards Onto the NAEP Scales. (NCES is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations, and is located within the U.S. Department of Education and the Institute of Education Sciences.)

The mapping project establishes a relationship between the tests each state gives to assess its students and the National Assessment of Education Progress, a test that is the same in all states. The conclusion of NCES is that Kansas school standards are relatively low, compared to other states. This video explains. (View below, or click here to view in HD at YouTube.)

For Kansas, here are some key findings. First, NCES asks this question: “How do Kansas’s NAEP scale equivalent scores of reading standards for proficient performance at grades 4 and 8 in 2009 compare with those estimated for 2005 and 2007?”

For Kansas, the two answers are this (emphasis added):

“Although no substantive changes in the reading assessments from 2007 to 2009 were indicated by the state, the NAEP scale equivalent of both its grade 4 and grade 8 standards decreased.

Also: “Kansas made substantive changes to its reading grade 8 assessment between 2005 and 2009, and the NAEP scale equivalent of its grade 8 standards decreased.

In other words, NCES judged that Kansas weakened its standards for reading performance.

A similar question was considered for math: “How do Kansas’s NAEP scale equivalent scores of mathematics standards for proficient performance at grades 4 and 8 in 2009 compare with those estimated for 2005 and 2007?”

For Kansas, the two answers are this (emphasis added):

“Although no substantive changes in the mathematics assessments from 2007 to 2009 were indicated by the state, the NAEP scale equivalent of its grade 8 standards decreased (the NAEP scale equivalent of its grade 4 standards did not change).”

Also: “Kansas made substantive changes to its mathematics grade 4 assessment between 2005 and 2009, but the NAEP scale equivalent of its grade 4 standards did not change.”

For mathematics, NCES judges that some standards were weakened, and some did not change.

In its summary of Kansas reading standards, NCES concluded: “In both grades, Kansas state assessment results showed more positive changes in achievement than NAEP results.” For mathematics, the summary reads: “In grade 4, Kansas state assessment results showed a change in achievement that is not different from that based on NAEP results. In grade 8, state assessment results showed a more positive change.”

In other words: In three of four instances, Kansas is claiming positive student achievement that isn’t apparent on national tests.

Following are two examples of charts from the NCES study where Kansas school standards rank compared to other states. Click on them for larger versions.

Kansas Grade 4 Reading Standards

Kansas Grade 4 Math Standards 01

What is the import of the farm bill to Kansas?

Wheat combine on farm

Correcting the Wichita Eagle’s facts will place the importance of the farm bill to Kansas in proper perspective.

In criticizing five of the six members of the Kansas congressional delegation for voting against the farm bill, Rhonda Holman of the Wichita Eagle editorialized this: “Five of the six members of the Kansas delegation just voted against a farm bill — a stunning abdication of leadership in a state in which agriculture is 25 percent of the economy.” (Eagle editorial: AWOL on farm bill, Wednesday, February 5, 2014)

The Eagle editorialist didn’t specify what she meant by “percent of the economy” or where she got these figures. But the most common measure of the size of an economy is gross domestic product (GDP), and it’s easy to find.

Data from the Bureau of Economic Analysis (part of the U.S. Department of Commerce) for 2012 tells us that the category “Agriculture, forestry, fishing, and hunting” contributed $5,428 million towards the total Kansas GDP of $138,953 million. That means agriculture contributed 3.9 percent to Kansas GDP. The Eagle based its argument on a value of 25 percent, a value that’s 6.4 times the actual value.

If you included the category “Food and beverage and tobacco product manufacturing” you’d add a few additional percentage points. But you’d still have a number that is just a fraction of what the Eagle editorial board believes to be the contribution of agriculture to the Kansas economy.

Now that you have the facts that the Wichita Eagle doesn’t have, how important do you think is the farm bill to Kansas?

Besides this, the Eagle praised former U.S. Senator Bob Dole for his “effort to bind rural and urban interests in agricultural policy by including food stamps in the nation’s safety net for farmers.” In political science this is called logrolling. It’s one of the reasons why government continues to grow faster than our willingness to pay for it. I think the Wichita Eagle likes that.

It’s for things like this that Dan Mitchell created the “Bob Dole Award” for Misguided Conservatives. It’s for those who fit this description:

“If you say something about fiscal policy and a statist can respond by saying “I agree, so let’s raise taxes,” then you’ve made the mistake of focusing on red ink rather than the real problem of too much government spending.”

Mitchell explains the naming of the award:

Naming the award after Bob Dole also is appropriate since he was never a sincere advocate of limited government. The Kansas lawmaker was a career politician who said in his farewell speech that his three greatest achievements were a) creating the food stamp program, b) increasing payroll taxes, and c) imposing the Americans with Disabilities Act (no wonder I wanted Clinton to win in 1996).

For all of these reasons, and more, no real conservative should want to win an award linked to Bob Dole.

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What type of watchdog are you?

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To help citizens become government watchdogs, the Franklin Center for Government and Public Integrity is providing a new resource. It’s the Watchdog Quiz, and it will help you discover what type of role you will want to fill as a government watchdog.

The quiz takes just a few moments to complete, and answering the questions will help you discover all the things that citizens can do to be involved in government, especially at the local level. My Watchdog type is “Content Creator.” What is yours?

Click here to take the quiz.

Following is some material from Watchful Citizens Follow Founders’ Vision For America.

“The salvation of the state is watchfulness in the citizen.”

This quote inscribed on the state capitol building in Lincoln, Nebraska, has become our North Star here at Watchdog Wire. We believe that citizens can contribute to better and more efficient local government by staying involved in their communities and speaking up when something doesn’t add up.

But what does it mean to be “watchful?”

The answer is different for everyone, and has changed throughout American history. For Thomas Paine and Ben Franklin, staying watchful came in the form of pamphlets and newspaper columns. Later, being watchful was entrusted to elected representatives in Congress. Now, technology has made it easier than ever for citizens to stay informed and hold government accountable.

The medium used is ever-changing but the sentiment of keeping watch remains the same — to ensure the blessing of liberty to ourselves and our posterity.

So where do you fit into the American story? How do you keep watch on government and its expanding role in our lives? Take the Watchdog Quiz to find out.

Continue reading at Watchful Citizens Follow Founders’ Vision For America.

In Wichita, why do some pay taxes, and others don’t?

Wichita City Hall

A request by a luxury development in downtown Wichita raises issues, for example, why do we have to pay taxes?

Tomorrow the Wichita City Council considers yet another layer of business welfare for The Lux, a luxury real estate development in downtown Wichita. This project, despite having already received millions in assistance from taxpayers, is not economically viable, according to city documents.

Because the transaction contemplated tomorrow is shrouded in the mystery of Internal Revenue Bonds (IRBs), we can expect that the important aspects of this transaction will be under-reported. We’re likely to see headlines that The Lux is receiving $14,450,000 in IRBs. City council members may clumsily explain to citizens that the city is not lending this money, and that taxpayers are not on the hook if the bonds are not repaid. The city may tell us that a local bank will buy the bonds and that the Lux will issue a mortgage to protect the bank’s interest, as though that was a matter of public concern rather than a private business dealing.

The city’s documents, for all their words and effort spent in preparation, don’t state the amount of sales tax relief this project will receive. But the amount of the bonds contemplated is $14,450,000, so an upper estimate of the amount of sales tax forgone is that amount times the city’s sales tax rate, or $1,033,175.

The item on tomorrow’s agenda features another example of the city adapting to meet the needs of its cronies. The letter of intent originally called for a certain level of investment, but now that has been reduced:

The Letter of Intent approved by the City Council stated that “LUX Building, LLC has represented that it will make a total capital investment in the project of at least $24,000,000.” The projection was intended to be an estimate of the not-to-exceed project costs at that time and not a requirement of minimum capital investment. Since the actual total cost of the project will be closer to $20,000,000 the developer is requesting that the minimum investment requirement be waived.

It’s a small point, but big numbers like $24,000,000 are a “wow” factor to city council members and are cited and praised as evidence of the goodness of the city’s economic development incentives. But now: never mind.

Why do we tax?

TaxThere are a variety of theories of taxation, such as taxes being “dues” paid, or payment for services the city provides, or as the cost of a civilized society. In any case, we have to wonder why the owners of The Lux are being excused from paying perhaps one million dollars of these dues, or payment for government services it will consume, or it share of the cost of a civilized society.

Tale of two cash registers

Supporters will point to the cost/benefit ratios. These ratios are simply recognition that economic activity is good, and government taxes it. But unless the city, county, and state will each reduce their spending by the amount of sales tax forgiveness given to The Lux, other taxpayers have to pay.

It’s worth noting that the subsidy being granted to The Lux is in the form of sales tax exemption. Kansas taxes food at the same rate as everything else. This means that while the owners of The Lux are enjoying the privilege of saving perhaps one million dollars in sales tax, others — including poor people struggling to provide food for their families — are making up the sales tax that The Lux is not paying.

man-digging-coinsWhen other taxpayers have to bear the cost of incentives for the Lux and its owners, other spending and investment is reduced. While the spending on incentives is concentrated and easy to see — there will be groundbreaking and ribbon-cutting ceremonies to make sure we don’t miss it — the missing spending and investment is dispersed. That means the missing spending and investment is difficult to see. But it is every bit as real as this project.

In fact, this missing spending and investment is more valuable than government spending on this project. That’s because when people spend and invest on their own, they choose what is most important to them, not what is important to politicians and bureaucrats. This is a special problem in Wichita, where the mayor and city council members have a history of awarding over-priced no-bid contracts to their campaign contributors. (A separate item on tomorrow’s agenda will attempt to address that problem.)

Sometimes these subsidies are justified by the claim that renovating historic buildings like The Lux is more expensive than new construction. If that’s true, we have to recognize that investing in, or living in, a historic building is a lifestyle choice. The people who make these choices should pay themselves, just like we expect others to pay for the characteristics of the housing they choose. For example , building a home with granite kitchen counter tops and marble floors in the bathrooms is more expensive than a plainer home. These premium features are chosen voluntarily by the homeowner, and it is right and just that they alone should pay for them.

We should recognize historic buildings for what they are: a premium feature or amenity whose extra cost should be born solely by those who chose to own them or rent them. There’s no difference between these premium features and choosing to live in a historic building. Those who desire them choose them voluntarily, and should pay their full cost. Forcing everyone to subsidize this choice is wrong. It’s an example of a special interest gone wild. But in Wichita we call this economic development.

The nature of tax credits

The sales tax exemption is not the only form of taxpayer subsidy The Lux will receive. The historic preservation tax credits approved for this the project are worth millions. These credits are equal to grants of cash. They are a cost to government that taxpayers must bear.

hidden-hand-government-spending-title
The confusing nature of tax credits leads citizens to believe that they have no cost to the state or federal government. But tax credits are equivalent to government spending. By mixing spending programs with taxation, some are lead to believe that tax credits are not cash handouts. But not everyone falls for this seductive trap. In an article in Cato Institutes’s Regulation magazine, Edward D. Kleinbard explains:

Specialists term these synthetic government spending programs “tax expenditures.” Tax expenditures are really spending programs, not tax rollbacks, because the missing tax revenues must be financed by more taxes on somebody else. … Tax expenditures dissolve the boundaries between government revenues and government spending. They reduce both the coherence of the tax law and our ability to conceptualize the very size and activities of our government. (The Hidden Hand of Government Spending, Fall 2010)

The use of tax credits to pay for economic development incentives leads many to believe that what government is doing is not a direct subsidy or payment. In order to clear things up, perhaps we should require that government write checks instead of issuing credits.

Indeed, if government issued checks to real estate developers, citizens would look at things differently. They’d wonder why they’re subsidizing the construction of expensive apartments and condos. They’d be angry. Using a semi-mysterious mechanism like tax credits shrouds the true economic transaction taking place.

These expenditures of tax money — being issued as credits rather than appropriations — go through a different process than most expenditures of taxpayer money. Recently some have started to use the word “tax appropriations” to describe tax credits. These expenditures don’t go through the normal legislative process as do most appropriations.

It’s time to recognize these historic preservation tax credits as payments to a special interest group. Unfortunately, as with most special interest groups, the group receiving the payment — tax credits in this case — has an extreme interest in the matter. They benefit greatly. But to the rest of the populace — well, does it really matter to them? John Stossel explains the problem like this:

The Public Choice school of economics calls this the problem of concentrated benefits and dispersed costs. Individual members of relatively small interest groups stand to gain huge rewards when they lobby for government favors, but each taxpayer will pay only a tiny portion of the cost of any particular program, making opposition pointless.

That’s the situation we face with the historic preservation tax credits. A few real estate developers will enrich themselves at taxpayer expense. Well-to-do renters will get a better deal. To everyone else, it’s just another way that government nickels and dimes us to death.

What’s the matter with Wichita?

We have to wonder why so many projects in downtown Wichita require massive doses of taxpayer subsidy. Here’s what city documents tell us:

The Office of Urban Development has reviewed the economic (gap) analysis of the project and determined a financial need for incentives exists based on the current market. The project lender, Intrust Bank, has advised that the bank cannot increase the loan amount, leaving a gap in funding sources that is filled by the City’s facade program.

When the city is willing to fill in financing gaps, you can be sure that gaps will be created.

Here’s an idea: Instead of handing out economic development incentives on a piecemeal basis, let’s try to fix what prevents projects like The Lux from moving forward on its own. If, in fact, the obstacles are real, and don’t exist only in the imagination of those seeking to finance their projects on the backs of Wichita taxpayers.

Voice for Liberty Radio: Tim Huelskamp

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In this episode of WichitaLiberty Radio: United States Representative Tim Huelskamp recently spoke to the Wichita Pachyderm Club.

Congressman Huelskamp was born near and raised on the family farm in Fowler, Kansas. He earned a Ph.D. in Political Science with a specialization in agriculture policy from The American University in Washington, D.C. He was first elected to the Kansas Senate in 1996, and then re-elected three times. In 2010 when Jerry Moran stepped down to run for the United States Senate, Huelskamp ran for the United States House of Representatives for the first district. That’s commonly called the “Big First” district, not because of its population, but because of its large land area. Some of the principle cities in the first district are Liberal, Garden City, Dodge City, Hays, Salina, Hutchinson, Emporia, and Manhattan. Congressman Huelskamp appears frequently on national news media as an advocate for conservative causes, and he recently appeared on WichitaLiberty.TV, which you can find here. He and his wife Angela are the parents of four children.

This is podcast episode number 7, released on January 26, 2014. Here is a portion of United States Representative Tim Huelskamp at the Wichita Pachyderm Club on January 24, 2014.

Shownotes

Congressman Tim Huelskamp
Tim Huelskamp for Congress campaign site
Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets

WichitaLiberty.TV.09

WichitaLiberty.TV January 26, 2014

In this episode of WichitaLiberty.TV: The City of Wichita’s performance report holds a forecast for increasing debt in Wichita. Then, the government sector in Kansas has grown faster than the private sector. What does this mean? Finally: What can the story of “Bootleggers and Baptists” teach us about regulation? Episode 29, broadcast January 26, 2014. View below, or click here to view at YouTube.

Wichita debt levels projected to rise

Delano Clock Tower, Wichita

According to the most recent edition of Wichita’s Performance Measure Report, the city’s debt levels are projected to rise, based on two measures.

One measure, named “Outstanding Net General Obligation Debt as a Percentage of Assessed Value,” will nearly triple in value from a recent low. In 2011 this measure was 1.25 percent. In 2015 the target value is 3.59 percent. The nearby chart shows this graphically (click for a larger version.)

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Describing this measure, the city document explains “The level of outstanding debt as a percentage of assessed valuation is based on currently anticipated debt needs of the 2011-2020 Adopted Capital Improvement Program. The percentage is expected to increase as additional debt financing projects are implemented.”

In “Factors impacting outcomes,” the city explains “Slow assessed valuation growth coupled with increasing debt will lead to an increase in this measure.”

wichita-debt-percentage-debt-services-fund-taxes-2014-01

Another measure is “Outstanding General Obligation Debt Service as a Percentage of Debt Service Fund Taxes Levied.” This measure is projected to rise to over twice its recent low value of 30 percent in 2009 to 64 percent in 2015.

The performance report describes this measure: “This is a measure of flexibility; if the percentage is lower, there are more future opportunities to initiate projects paid for with bonds.”

The document also explains: “In the past, the City of Wichita’s borrowing needs have been lower because more projects were paid for with cash, rather than bonds.” Additionally, “Anticipated debt issuances will increase, based on programmed CIP improvements.”

Kansas government grows faster than private sector

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In Kansas, government has grown faster than the private sector. Milton Friedman explains why it’s best to leave spending in the private sector.

For gross domestic product in Kansas attributable to government, growth was 106.0 percent from 1997 to 2012. For the private sector, growth was 86.5 percent.

The nearby chart (click for a larger version) shows Kansas (highlighted in blue) against the other states and regions. (If you’d like to use the interactive visualization of state GDP data, you may click here to open it in a new window.)

kansas-gross-domestic-product-government-private-2014-01Considering the government sector, Kansas did well, compared to other states. Considering the private sector, Kansas is average.

The green highlighted line is Michigan. That state stands out from all others for its poor economic growth. Jennifer Granholm was governor of Michigan from 2003 to 2011, and Kansas Democrats have announced that she is the speaker for their annual Washington Days celebration. It’s difficult to see what Kansas can learn from Michigan regarding economic growth.

Government spending

Is it good for government to grow faster than the private economy? Government depends on the private sector for its funding. Without private sector activity, there are no taxes to collect.

But the real problem is the nature of government spending. A quote from Milton Friedman explains: “Nobody spends other people’s money as carefully as he spends his own.”

In an excerpt from Free to Choose: A Personal Statement, Friedman and his wife Rose explain the problems when people spend other people’s money, which is the nature of government spending.

A simple classification of spending shows why that process leads to undesirable results. When you spend, you may spend your own money or someone else’s; and you may spend for the benefit of yourself or someone else. Combining these two pairs of alternatives gives four possibilities summarized in the following simple table:

friedman-spending-categories-2013-07

Category I in the table refers to your spending your own money on yourself. You shop in a supermarket, for example. You clearly have a strong incentive both to economize and to get as much value as you can for each dollar you do spend.

Category II refers to your spending your own money on someone else. You shop for Christmas or birthday presents. You have the same incentive to economize as in Category I but not the same incentive to get full value for your money, at least as judged by the tastes of the recipient. …

Category III refers to your spending someone else’s money on yourself — lunching on an expense account, for instance. You have no strong incentive to keep down the cost of the lunch, but you do have a strong incentive to get your money’s worth.

Category IV refers to your spending someone else’s money on still another person. You are paying for someone else’s lunch out of an expense account. You have little incentive either to economize or to try to get your guest the lunch that he will value most highly. However, if you are having lunch with him, so that the lunch is a mixture of Category III and Category IV, you do have a strong incentive to satisfy your own tastes at the sacrifice of his, if necessary.

All welfare programs fall into either Category III — for example, Social Security which involves cash payments that the recipient is free to spend as he may wish; or Category IV — for example, public housing; except that even Category IV programs share one feature of Category III, namely, that the bureaucrats administering the program partake of the lunch; and all Category III programs have bureaucrats among their recipients.

In our opinion these characteristics of welfare spending are the main source of their defects.

Legislators vote to spend someone else’s money. The voters who elect the legislators are in one sense voting to spend their own money on themselves, but not in the direct sense of Category I spending. The connection between the taxes any individual pays and the spending he votes for is exceedingly loose. In practice, voters, like legislators, are inclined to regard someone else as paying for the programs the legislator votes for directly and the voter votes for indirectly. Bureaucrats who administer the programs are also spending someone else’s money. Little wonder that the amount spent explodes.

The bureaucrats spend someone else’s money on someone else. Only human kindness, not the much stronger and more dependable spur of self-interest, assures that they will spend the money in the way most beneficial to the recipients. Hence the wastefulness and ineffectiveness of the spending.

But that is not all. The lure of getting someone else’s money is strong. Many, including the bureaucrats administering the programs, will try to get it for themselves rather than have it go to someone else. The temptation to engage in corruption, to cheat, is strong and will not always be resisted or frustrated. People who resist the temptation to cheat will use legitimate means to direct the money to themselves. They will lobby for legislation favorable to themselves, for rules from which they can benefit. The bureaucrats administering the programs will press for better pay and perquisites for themselves — an outcome that larger programs will facilitate.

The attempt by people to divert government expenditures to themselves has two consequences that may not be obvious. First, it explains why so many programs tend to benefit middle- and upper-income groups rather than the poor for whom they are supposedly intended. The poor tend to lack not only the skills valued in the market, but also the skills required to be successful in the political scramble for funds. Indeed, their disadvantage in the political market is likely to be greater than in the economic. Once well-meaning reformers who may have helped to get a welfare measure enacted have gone on to their next reform, the poor are left to fend for themselves and they will almost always he overpowered by the groups that have already demonstrated a greater capacity to take advantage of available opportunities.

The second consequence is that the net gain to the recipients of the transfer will be less than the total amount transferred. If $100 of somebody else’s money is up for grabs, it pays to spend up to $100 of your own money to get it. The costs incurred to lobby legislators and regulatory authorities, for contributions to political campaigns, and for myriad other items are a pure waste — harming the taxpayer who pays and benefiting no one. They must be subtracted from the gross transfer to get the net gain — and may, of course, at times exceed the gross transfer, leaving a net loss, not gain.

These consequences of subsidy seeking also help to explain the pressure for more and more spending, more and more programs. The initial measures fail to achieve the objectives of the well-meaning reformers who sponsored them. They conclude that not enough has been done and seek additional programs. They gain as allies both people who envision careers as bureaucrats administering the programs and people who believe that they can tap the money to be spent.

Category IV spending tends also to corrupt the people involved. All such programs put some people in a position to decide what is good for other people. The effect is to instill in the one group a feeling of almost God-like power; in the other, a feeling of childlike dependence. The capacity of the beneficiaries for independence, for making their own decisions, atrophies through disuse. In addition to the waste of money, in addition to the failure to achieve the intended objectives, the end result is to rot the moral fabric that holds a decent society together.

Another by-product of Category III or IV spending has the same effect. Voluntary gifts aside, you can spend someone else’s money only by taking it away as government does. The use of force is therefore at the very heart of the welfare state — a bad means that tends to corrupt the good ends. That is also the reason why the welfare state threatens our freedom so seriously.

Voice for Liberty Radio: Jeff Glendening, Americans for Prosperity

Voice for Liberty logo with microphone 150In this episode of WichitaLiberty Podcasts: The day after Kansas Governor Sam Brownback’s State of the State Address, I talk with Jeff Glendening at the Kansas Capitol. He’s Kansas State Director for Americans for Prosperity.

Prior to joining AFP in 2013, Jeff most recently was vice president of political affairs with the Kansas Chamber of Commerce, where he worked to expand the Chamber’s grassroots network, and to promote a pro-growth economic climate in Kansas. Aside from his work with the Kansas Chamber, Jeff has been involved in Kansas politics for a number of years, and has worked on the staffs of several members of legislative leadership, including Speaker of the House, House Majority Leader and Speaker Pro Tem. Jeff has also worked on gubernatorial, U.S. Senate and U.S. House campaigns.

This is podcast episode number 3, released on January 17, 2014.

Shownotes

Americans for Prosperity-Kansas
Americans for Prosperity, national site
Americans for Prosperity-Kansas statement on State of the State Address
State of the State address for 2014, by Sam Brownback
Response by House of Representatives Minority Leader Paul Davis

wichita-art-museum-01

Would you pay $48.62 to visit the art museum?

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The normal adult admission to the Wichita Art Museum is $7.00, but that isn’t anywhere near the cost of each visit.

According to most recent edition of Wichita’s Performance Measure Report, the cost per visitor for the Wichita Art Museum in 2012 was $48.62.

That’s a little higher than the three previous years, but much lower than 2009, when the city reported a cost of $59.00 per visitor.

As can be seen in the nearby table (click it for a larger version), other city cultural attractions registered costs per visitor that are much higher than their admission costs. The Mid America All Indian Center has a per-visitor cost of $11.37. For The Wichita Historical Museum it’s $36.59. Cowtown’s cost per visit is $15.94.

So while each person who visits the art museum may or may not be willing to pay $48.62 for admission, someone is paying that.

wichita-cost-per-visitor-cultural-facilities-2012

Kansas school efficiency on display

apple-wormWhen you hear that Kansas schools have “cut to the bone,” or are operating at maximum efficiency, or have nowhere else to cut, or there’s no need to audit school district efficiency, think of this.

When Kansas governmental agencies receive requests for records, they must respond to the requester within three business days. Most often this response does not contain the requested records. Instead, it’s either a statement of how much the records will cost, or a denial of the request.

Every agency I have dealt with — federal, state, city, county — has sent this response by email.

That is, except for USD 259, the Wichita public school district.

wichita-school-district-envelope-records-request-example

The Wichita public school district sends the response in the form of a printed letter, mailed using United States Postal Service Priority Mail at a cost of $5.05 for postage. That’s in addition to the cost of preparing a printed letter. This has happened to me several times.

Every governmental agency I have encountered, except for the Wichita Public School district, is content to use email to respond to records requests, at a very low cost.

Within a budget of over $600 million, five dollars isn’t much. Except: This pattern of wasting money on postage must be repeated many times each year.

So when you hear that Kansas schools are grossly underfunded, or that teachers have to spend their personal funds to buy classroom supplies, ask yourself this: “Why does the Wichita public school district spend $5.05 in postage to send something that everyone else sends by email?”

The war on poverty

For about 50 years we’ve been fighting a war on poverty. Initially, the poverty rate declined. But over the last four decades, the poverty rate has gone up and down, but is largely unchanged over this period. Spending on welfare programs, however, has continually risen, and rapidly in the past few years. The accompanying chart shows the poverty rate and welfare spending. The spending is per person in the U.S., adjusted for inflation, and doesn’t include spending on health care.

poverty-rate-welfare-spending-2013-12

For more on this topic, see:
The American Welfare State: How We Spend Nearly $1 Trillion a Year Fighting Poverty — and Fail (Cato Institute)
Examining the Means-tested Welfare State: 79 Programs and $927 Billion in Annual Spending (Heritage Foundation)
The Failure Of The War On Poverty (FreedomWorks)
Does Welfare Diminish Poverty? (Foundation for Economic Education)

WichitaLiberty.TV December 22, 2013

WichitaLiberty.TV.34In this episode of WichitaLiberty.TV: United States Representative Tim Huelskamp of Kansas appears to explain the recent budget bill, Obamacare, the government shutdown, the debt ceiling, government spending, and whether he is optimistic or pessimistic about the country’s future. Episode 25, broadcast December 22, 2013. View below, or click here to view at YouTube.

Rep. Huelskamp’s Congressional website is huelskamp.house.gov.

Kansans vote for and against Ryan-Murray budget

U.S. Representatives from Kansas split on voting for the budget bill produced by Rep. Paul Ryan and Sen. Patty Murray. Lynn Jenkins and Kevin Yoder voted in favor, while Mike Pompeo and Tim Huelskamp voted against the bill. It passed 332 to 94.

In a statement from his office, Pompeo said:

Washington — Congressman Mike Pompeo, R-Kansas, voted today against adopting a budget that would increase spending in 2014 and 2015 over the hard-fought Budget Control Act’s (BCA) limit.

“Despite opposition at the time, I supported the Budget Control Act because it was a compromise that represented the first real cut in discretionary spending in over a generation. While I agree Congress should replace cuts to national security with reforms of mandatory spending, we cannot abandon the progress we’ve already made in cutting spending. I greatly respect Chairman Ryan’s efforts to reach a bipartisan agreement to fix our spending problems, and agree with many of its provisions, including protecting doctors’ payments against needless reductions, ensuring hospitals are paid fairly in Medicare, and requiring federal employees to contribute more to their pension plans. But this new budget would stymie the progress we’ve made in reducing spending through sequestration. Kansans understand the need to budget fairly and live within our means. Washington must be held to the same standard.”

(@RepMikePompeo, pompeo.house.gov)

Huelskamp issued this statement:

“Just two years ago, Congress and the President made a promise to cut spending through the sequester. With this bill, they are abandoning this promise with a massive $63 billion in new deficit spending. So much for ‘if you like your spending cut, you can keep your spending cut.’ But no worries, after the 2022 election, a future Congress and President are certain to do what Washington refuses to do today. Sure.

In addition to this bipartisan agreement to raise spending for all sides and violating their own sequester, it would also assist Senator Harry Reid in passing tax increases through the Senate. It further also divides the House Republican Conference by abandoning our agreement reached in Williamsburg last January, rejects nearly all of the provisions passed by the House in three successive Ryan budgets, and does nothing to oppose ObamaCare.

Washington insiders are fond about saying, ‘this must be a good deal if I didn’t get everything I wanted.’ The real solution would be — the American people getting what they want.”

(@CongHuelskamp, huelskamp.house.gov)

Federal grants seen to increase future local spending

graph-1“Nothing is so permanent as a temporary government program.” — Nobel Laureate Milton Friedman

Is this true? Do federal grants cause state and/or local tax increases in the future after the government grant ends? Economists Russell S. Sobel and George R. Crowley have examined the evidence, and they find the answer is yes.

This paper is especially important as south-central Kansas starts a comprehensive planning process under a HUD Sustainable Communities Regional Planning Grant — a federal grant. Some officials have justified their votes in favor of the planning grant because the grant is “just for planning purposes.” It does not bind us to future actions that might raise taxes, they say. But this attitude is naive and dangerous.

The research paper is titled Do Intergovernmental Grants Create Ratchets in State and Local Taxes? Testing the Friedman-Sanford Hypothesis.

The difference between this research and most other is that Sobel and Crowley look at the impact of federal grants on state and local tax policy in future periods.

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 their research paper 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. Our results are consistent with Friedman’s quote regarding the permanence of temporary government programs started through grant funding, as well as South Carolina Governor Mark Sanford’s reasoning for trying to deny some federal stimulus monies for his state due to the future tax implications. 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.

So: Not only are we taxed to pay for the cost of funding federal and state grants, the units of government that receive grants are very likely to raise their own levels of taxation in response to the receipt of the grants. This is a cycle of ever-expanding government that needs to end, and right now.

An introduction to the paper is Do Intergovernmental Grants Create Ratchets in State and Local Taxes?.

Kansas school spending, sort of

A recent article in the Topeka Capital-Journal complained of the plight of schools in Kansas. Like much reporting we see regarding Kansas schools, the story is incomplete.

One district cited in particular was USD 348, Baldwin City Schools. The story contained “As state aid dwindled.” Let’s look at some actual numbers.

baldwin-city-school-spending-2013-11

A nearby chart shows the level of spending in this school district for some recent years. The chart holds per-pupil amounts, adjusted for inflation. As the reporter noted, state aid did dwindle. That was during the recent recession, and the federal government increased aid to Kansas schools those years. The result was that total spending barely changed. (Click on the charts for larger versions.)

2009 was the highest level of spending for this district at $11,848 per pupil (adjusted to 2013 dollars). Spending in 2013 was $11,796.

baldwin-city-school-employment-levels-2013-11Looking at levels of employment, we can see from the charts that the number of employees had been declining, but was stable or slightly higher for the most recent year. The ratios of these employees to students was rising, but fell the last year.

baldwin-city-school-employment-ratios-2013-11It’s often noted that some portion of recent school funding has been increased contributions to KPERS, the teacher retirement system. This funding doesn’t get “into the classroom,” whatever that means. The Baldwin school superintendent told the reporter “I can’t use KPERS to gas up our buses.” That’s true. But he can buy fuel with the money he doesn’t have to spend on teacher retirement benefits.

If the Topeka Capital-Journal wants to do some reporting that will help Kansans understand what is happening in their schools, I suggest starting with the decisions that Kansas school leaders made regarding standards. If the reporter would look at the most recent version of Mapping State Proficiency Standards Onto the NAEP Scales, a report produced by the National Center for Education Statistics, we could learn that at the time when Kansas was spending more on schools due to an order from the Kansas Supreme Court, the state lowered its already low standards for schools. I’ve made it easy: All you have to do is view the illustrative video I made at Why are Kansas school standards so low?

Spinning for fundraising, Kansas-style

Kansas liberals accuse Republicans of “spinning” statistics on school funding. Can we look at some actual numbers?

Candidate for Kansas Governor Paul Davis sent this fundraising email:

paul-davis-facebook-2013-11-20

This weekend another independent advocate for our schools called attention to Sam Brownback’s attempt to mislead Kansans about his real record on education. The fact is, Sam Brownback made the largest cut to our schools in Kansas history — leading to larger class sizes, school closings, and increased fees for parents.

But being the politician that he is, Sam Brownback is trying to spin his record. We won’t be fooled.

Kevin McWhorter of the Goddard School Board said it plainly, “State funding for education will continue to decline, and state officials will continue to twist the numbers to ask you to believe otherwise. Don’t fall for it. It’s just spin.”

Davis is referring to an op-ed in the Wichita Eagle written by a Goddard school board member. (Kevin R. McWhorter: Don’t fall for spin on school funding, November 17, 2013)

In his op-ed, McWhorter complains that present funding from the state is not as high as statute requires. He calls that a cut. He concludes that the “governor’s economic policy is a train wreck” and that “state funding for education will continue to decline.”

goddard-school-spending-2013-11

Nearby you may find charts of data for the Goddard school district. (Click for larger versions.) You may draw your own conclusions. Recall that Sam Brownback became governor in 2011. The charts are derived from visualizations of data obtained from the Kansas State Department of Education. You may click here to access the visualization for school spending. Information about school employment, including a video and interactive visualization is at Kansas school employment trends.

goddard-school-employment-2013-11

Charts for the entire state look similar: Employment going down, then rising. Ratios of employees to students improve correspondingly. This is not the case in every school district, however.

But not everyone believes the statistics. When the Kansas Republican Party posted a chart of statewide school employment on its Facebook page, someone remarked “Where do I find the facts supporting this graft [sic]? Where did the numbers come from? How are these more than 400 additional teachers and 500 certified employees being paid when school funding has been reduced?”

Sounds like someone’s been spun.

Government-funded arts, again

city-council-chambers-sign-small

With the Wichita City Council pondering the future of Century II, it’s time to take a look at the desirability of government-funded convention centers and arts.

Convention centers, as shown in Should Wichita expand its convention facilities?, are losers as far as providing economic benefit to the cities that build them. Government, too, ought to stay out of the funding and management of arts, if it respects its citizens.

Reading between the lines, it seems like the fate of Century II is sealed. I’d say its future is dim, as hinted at in this material from the agenda packet for Tuesday’s meeting of the city council:

Century II, a multi-purpose convention and performing arts venue was originally completed in 1969, with convention space added in 1985. Century II has served the community well and has provided a venue for a wide variety of events. The building is beginning to show signs of being outdated, as well as losing some of its functionality as a convention center due to the changing needs and requirements of convention clientele, causing the need for a planning and design study to determine current and future feasibility of possible renovations.

On Tuesday the council will consider spending up to $240,000 on what is described as “the initial phase of the design study.” We can anticipate that this contract will eventually cost much more.

Why does government feel it must provide arts to its citizens? The arguments that supporters of government-funded art use generally fall into two categories: That arts funding is good economics, and that since arts are good for life and culture, government must be involved.

The economic case for government art funding

Supporters of government art funding make the case that government-funded art is good for business and the economy. They have an impressive-looking study titled Arts & Economic Prosperity III: The Economic Impact of the Nonprofit Arts and Culture Industry in the State of Kansas, which makes the case that “communities that invest in the arts reap the additional benefit of jobs, economic growth, and a quality of life that positions those communities to compete in our 21st century creative economy.” Its single greatest defect is that it makes a simplistic and naive analysis of government spending.

As an example, the report concludes that the return on dollars spent on the arts is “a spectacular 7-to-1 return on investment that would even thrill Wall Street veterans.” It hardly merits mention that there aren’t legitimate investments that generate this type of return in any short time frame. If these returns were in fact true and valid, we should invest more — not less — in the arts. But as we shall see, these returns are not valid in any meaningful economic sense.

Where do these fabulous returns come from? Here’s a passage from the report that government art spending promoters rely on:

A theater company purchases a gallon of paint from the local hardware store for $20, generating the direct economic impact of the expenditure. The hardware store then uses a portion of the aforementioned $20 to pay the sales clerk’s salary; the sales clerk respends some of the money for groceries; the grocery store uses some of the money to pay its cashier; the cashier then spends some for the utility bill; and so on. The subsequent rounds of spending are the indirect economic impacts.

Thus, the initial expenditure by the theater company was followed by four additional rounds of spending (by the hardware store, sales clerk, grocery store, and the cashier). The effect of the theater company’s initial expenditure is the direct economic impact. The subsequent rounds of spending are all of the indirect impacts. The total impact is the sum of the direct and indirect impacts.

This is all true. But there’s a problem with this reasoning. It ignores the unseen effects of economic action. What the authors of this study fail to see is that anyone who buys a gallon of paint for any reason sets off the same chain of economic activity. There is no difference — except that a homeowner buying the paint is doing so voluntarily, while an arts organization using taxpayer-supplied money to buy the paint is using someone else’s money.

When the theater company spends $20 of taxpayer-provided money to buy paint: Where did that $20 come from? Isn’t it possible that a homeowner might have bought the same gallon of paint, but now is not able to because he must pay taxes to support the theater company? It’s easy to see the theater production with its taxpayer-funded painted set. It’s not easy to see the house that sits unpainted for a year to pay for the theater company’s paint. That is the seen and unseen.

The study also pumps up the return on government spending on arts by noting all the other spending that arts patrons do on things like dinner before and desert after arts events. But if people kept their own money instead of being taxed to support the arts, they would spend this money on other things, and those things might include restaurant meals, too. People would spend their money as they think best benefits them, not how someone else thinks they should.

This report — like most of its type that attempt to justify and promote government “investment” in someone’s pet program — focuses only on the benefits without considering secondary consequences or how these benefits are paid for. Henry Hazlitt, in his masterful book Economics in One Lesson explains:

While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

It is, as Hazlitt terms it, “the special pleading of selfish interests” that drive much of the desire for government spending on the arts. Government-funded arts advocates can promote their case with economic fallacies all they want, but in the end that’s what their case relies on: “the special pleading of selfish interests.”

Government art means, well, government art

Is anyone else offended, as I am, that government taxes us to provide for us the art that politicians, bureaucrats, and their sycophants think we should consume? What type of personality feels entitled to forcibly make these personal decisions for others?

Arts organizations need to survive on their own merits. They need to produce a product or service that satisfies their customers and patrons just as any other business or human endeavor must. This is especially true and important with something so personal as art. David Boaz, in his book The Politics of Freedom: Taking on The Left, The Right and Threats to Our Liberties writes this in a chapter titled “The Separation of Art and State”:

It is precisely because art has power, because it deals with basic human truths, that it must be kept separate from government. Government, as I noted earlier, involves the organization of coercion. In a free society coercion should be reserved only for such essential functions of government as protecting rights and punishing criminals. People should not be forced to contribute money to artistic endeavors that they may not approve, nor should artists be forced to trim their sails to meet government standards.

Government funding of anything involves government control. That insight, of course, is part of our folk wisdom: “He who pays the piper calls the tune.” “Who takes the king’s shilling sings the king’s song.”

IMG_1956

Government art. Is this not a sterling example of an oxymoron? Must government weasel its way into every aspect of our lives? And the fact that government arts funding means tax dollars taken through coercion — don’t the government arts promoters realize this? How better to crush the human spirit — the same spirit that the arts are meant to uplift and enrich.

The more important to our culture we believe the arts to be, the stronger the case for getting government out of its funding. The “leveraging” or “seed” effect of government money is why. In a statement opposing the elimination of the Kansas Arts Commission in 2011, executive director Llewellyn Crain explained that “The Kansas Arts Commission provides valuable seed money that leverages private funds …”

This “seed money” effect is precisely why government should not be funding arts. David Boaz explains:

Defenders of arts funding seem blithely unaware of this danger when they praise the role of the national endowments as an imprimatur or seal of approval on artists and arts groups. Jane Alexander says, “The Federal role is small but very vital. We are a stimulus for leveraging state, local and private money. We are a linchpin for the puzzle of arts funding, a remarkably efficient way of stimulating private money.” Drama critic Robert Brustein asks, “How could the [National Endowment for the Arts] be ‘privatized’ and still retain its purpose as a funding agency functioning as a stamp of approval for deserving art?” … I suggest that that is just the kind of power no government in a free society should have.

We give up a lot when we turn over this power to government bureaucrats and arts commission cronies.

Government arts funding means that artists and arts organizations are distanced from their customers. Instead of having to continuously meet the test of the market, they must please government bureaucrats and politicians to get their funding. Instead of producing what the great unwashed mass of people want, they produce what they think will get government funding.

Without government funding, organizations that provide culture and art will have to satisfy their customers by providing products that people really want. That is, products that people are willing to pay for themselves, not what people say they want when someone else is paying the bill. With government funding, these organizations don’t have to face the discipline of the market. They can largely ignore what their customers really want. They can provide what they think their customers want, or, as I suspect is the case, what they believe the people should want, if only we were as enlightened as the elitists that staff arts commissions.

Without the discipline of the market, arts organizations will never know how their customers truly value their product. The safety net of government funding allows them to escape this reality. We have seen this many times in Wichita and Sedgwick County, as organizations fail to generate enough revenue to cover their costs, only to be bailed out by the government. Other businesses learn very quickly what their customers really want — that is, what their customers are willing to pay for — or they go out of business. That’s the profit and loss system. It provides all the feedback we need to determine whether an organization is meeting its customers’ desires. The arts are no different.

Some say that without government support there wouldn’t be any arts or museums. They say that art shouldn’t be subject to the harsh discipline of markets. Personally, I believe there is little doubt that art improves our lives. If we had more art and music, I feel we would have a better state. But asking government commissions to judge how much art and which art we should have is not the way to provide it. Instead, let the people tell us, through the mechanism of markets, what art and culture they really want.

It might turn out that what people want is different than from what government arts commission members believe the people should want. Would that be a surprise? Not to me. In the name of the people, we should disband government arts councils and government funding and let people decide on their own — without government intervention — how to spend their personal arts budgets on what they really value.

(The material by David Boaz is from a speech which may be read here: The Separation of Art and State.)

Kansas school spending, by district

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There’s new data available from Kansas State Department of Education on school spending. I’ve gathered the data, adjusted it for the consumer price index, and now present it in this interactive visualization.

For each school district (and state totals) you can see the trend in each of the three sources of school funding (state, federal, and local) along with the total. A few observations:

State aid per pupil for 2013 ($6,984) is approximately the same as it was in 2006 ($6,941). (All figures are inflation-adjusted, per pupil.)

Total spending per pupil for 2013 ($12,781) is higher than it was in 2007 ($12,991).

You may use the visualization below, or click here to open it in a new window, which may work better.

Data is from KSDE; visualizations created by myself using Tableau Public.

Wichita school district checkbook updated

writing check

Data now available through September 2013.

USD 259, the Wichita public school district, makes its monthly checkbook register available. I’ve gathered the monthly spreadsheets for the last three fiscal years and made it available for analysis through Tableau Public.

wichita-school-checkbook-screen-example

The workbook (click here to open it in a new window) has a number of tabs, each showing the same data organized and summarized in a different way.

There are some caveats. First, not all school district spending is in this database. For each year, the total of the checks is in the neighborhood of $350 million, while the total spending for USD 259 is over $600 million. So there’s spending that isn’t included in this checkbook data.

Second, there are suppliers such as “Commerce Bank Visa BusinessCard.” Payments made to this supplier are over $7 million per year. These payments from the district’s checkbook undoubtedly pay a credit card bill, and this alone doesn’t let us know what the $7 million was spent on.

wichita-school-checkbook-data-quality-exampleThere are some data quality issues, as seen nearby.

USD 259 supplies this advice with this data: “The information you find may cause you to ask more questions. If so, the person to contact is Wichita Public School’s Controller, Barbara Phillips. She can be reached at (316) 973-4628, or at bphillips@usd259.net.”

Shortchanging Kansas schoolchildren, indeed

School blackboardThis month the New York Times published an editorial that advocates for more spending on Kansas public schools. While getting some facts wrong, the piece also overlooks the ways that Kansas schoolchildren are truly being shortchanged.

Here’s evidence supplied by the Times (Shortchanging Kansas Schoolchildren, October 13, 2013): “State spending on education has fallen an estimated 16.5 percent since 2008, including $500 million in cuts under the Brownback administration, resulting in teacher layoffs and larger class sizes.” (Governor Brownback has responded to the editorial; see Kansas Governor responds to the Times.)

The Times editorial board doesn’t say how it calculated the 16.5 percent decline in spending, but it’s likely that it used only base state aid per pupil, which is the starting point for the Kansas school finance formula. Much more spending is added to that. A nearby table holds spending figures for recent years, and a similar chart with inflation-adjusted figures may be found in Kansas school spending rises.

kansas-school-spending-2013-10-table-02

Perhaps the Times didn’t notice that at the time base state aid was falling, total state spending on schools rose. Base state aid per pupil, adjusted for inflation, is lower than it was during the previous decade. Total Kansas state spending on schools, however, has recovered to the same level as 2006, in inflation-adjusted dollars.

Total state aid per pupil this past school year was $6,984. Base state aid per pupil was $3,838. Total state spending, therefore, was 1.82 times base state aid. It’s important to consider the totality of spending and not just base state aid. It’s important because total spending is so much greater than base state aid. Also, total spending accounts for some of the difficulties and expenses that schools cite when asking for higher spending.

For example, advocates for higher school spending often point to non-English speaking students and at-risk students as being expensive to educate. In recognition of this, the Kansas school finance formula makes allowances for this. According to the Kansas Legislator Briefing Book for 2013, the weighting for “full-time equivalent enrollment in bilingual education programs” is 0.395. This means that for each such student a school district has, an additional 39.5 percent over base state aid is given to the district.

For at-risk pupils, the weighting is 0.456. At risk students, according to the briefing book, “are determined on the basis of at-risk factors determined by the school district board of education and not by virtue of eligibility for free meals.”

Taken together, bilingual students considered to be at-risk generate an additional 85.1 percent of base state aid to be sent to the district, per student.

Teachers and class sizes

The Times wrote that under Brownback, Kansas experienced “teacher layoffs and larger class sizes.” Figures from the Kansas State Department of Education tell a different story. Considering the entire state, two trends emerge. For the past two years, the number of teachers employed in Kansas public schools has risen. Correspondingly, the pupil-teacher ratio has fallen.

Kansas school employment

The trend for certified employees is a year behind that of teachers, but for the last year, the number of certified employees has risen, and the ratio to pupils has fallen. Pupil-teacher ratio is not the same as class size, but it’s the data we have.

Here’s the question we need to answer: If school districts have been able to hire more teachers and other certified employees, and if the student to teacher ratio is improving at the same time, but there are still high class sizes, what are school districts doing with these teachers and employees?

Kansas school employment ratios

By the way, the Times editorial writers might be interested in learning that the declines in school employment occurred during the administrations of Kathleen Sebelius and Mark Parkinson, Democrats both.

I’ve created interactive visualizations that let you examine the employment levels and ratios in Kansas school districts. Click here for the visualization of employment levels. Click here for the visualization of ratios (pupil-teacher and pupil-certified employee).

If the Times really wanted to help Kansas schoolchildren from being shortchanged, it might have noticed that at a time when Kansas was spending more on schools due to an order from the Kansas Supreme Court, the state weakened its already low standards for schools. This is the conclusion of the National Center for Education Statistics, based on the most recent version of Mapping State Proficiency Standards Onto the NAEP Scales. More about that can be found in Why are Kansas school standards so low?

Another thing the Times could have done to increase the public’s awareness of the performance of Kansas schools is to investigate why Kansas schools perform relatively well on national tests. I and others have done this; see Kansas school test scores, a hidden story and Kansas and Texas schools and low-income students.