Since the Wichita City Council passed a resolution authorizing the formation of the Southfork tax increment financing district, the affected county (Sedgwick) and school district (Wichita) have an opportunity to veto the district’s formation. They don’t have to take action to approve the district — only silent assent is required. But they can take action, as Sedgwick County did in January, to cancel the formation of the district.
At Tuesday’s commission staff meeting, commission chair Tim Norton along with commissioners Dave Unruh and Jim Skelton didn’t believe a public hearing was necessary the matter should not be placed on the agenda. That would mean the county gave its silent consent to the district’s formation.
But after learning of that action, myself and at least two others contacted the county manager’s office and asked to be placed on the public agenda portion of the meeting, where citizens may address any topic.
Whether we would be allowed to speak was touch-and-go. County policy is that speakers must “provide your request in writing to the Sedgwick County Manager’s Office at least nine days prior to the meeting date.” The emphasis is in the original. (I wonder if email counts as writing?)
(That lengthy nine day lead time is a problem in itself. I believe that good public policy requires that the lead time be at least one day less than the period between meetings of the body, which is case of this commission, is normally seven days.)
But late Tuesday someone at the courthouse had a change of heart or mind, and now there will be a public hearing on Wednesday May 9th on this matter. Strictly speaking, it’s not a public hearing, but the item will be on the agenda, and it’s anticipated that chairman Norton will allow the public to address the commissioners on this issue.
I can understand (but not approve of) the motives of the three commissioners who approve of this district not wanting to hear members of the public speak against this item and their policies. Especially when the public has shown their skepticism on these matters, an example being the vote turning down an incentive for the Wichita Ambassador Hotel. In that election, voters repudiated the big-spending, big-government programs of the liberal Republicans on the Wichita City Council. If citizens could vote on the formation of this TIF ddistrict, commissioners Skelton and Unruh might find themselves in the same situation.
The government planning process started in south-central Kansas will likely be captured by special interest groups that see ways to benefit from the plan. The public choice school of economics and political science has taught us how special interest groups seek favors from government at enormous costs to society, and we will see this at play again over the next few years.
This week the Sedgwick County Commission voted to participate in a HUD Sustainable Communities Regional Planning Grant. While some justified their votes in favor of the plan because “it’s only a plan,” once the planning process begins, special interests plot how to benefit themselves at the expense of the general public. Then once the plan is formed, it’s nearly impossible to revise it, no matter how evident the need.
An example of how much reverence is given to government plans comes right from the U.S. Supreme Court in the decision Kelo v. New London, in which the Court decided that government could use the power of eminent domain to take one person’s property and transfer it to someone else for the purposes of economic development. In his opinion for the Court, Justice Stevens cited the plan: “The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” Here we see the importance of the plan and due reverence given to it.
Stevens followed up, giving even more weight to the plan: “To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.”
To Stevens, the fact that the plan was comprehensive was a factor in favor of its upholding. The sustainable communities plan, likewise, is nothing but comprehensive, as described by county manager Bill Buchanan in a letter to commissioners: “[the plan will] consist of multi-jurisdictional planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic prosperity, social equity, energy use and climate change, and public health and environmental impact.”
That pretty much covers it all. When you’re charged with promoting economic prosperity, defending earth against climate change, and promoting public health, there is no limit to the types of laws you might consider.
But these plans are rarely by and for the public. Almost always the government planning process is taken over and captured by special interests. We see this in public schools, where the planning and campaigning for new facilities is taken over by architectural and construction firms that see school building as a way to profit. It does not matter to them whether the schools are needed.
Our highway planning is hijacked by construction firms that stand to benefit, whether or not new roads are actually needed.
Our planning process for downtown Wichita is run by special interest groups that believe that downtown has a special moral imperative, and another group that sees downtown as just another way to profit at taxpayer expense. Both believe that taxpayers across Wichita, Kansas, and even the entire country must pay to implement their vision. As shown in Kansas and Wichita need pay-to-play laws the special interests that benefit from public spending on downtown make heavy political campaign contributions to nearly all members of the Wichita City Council. They don’t have a political ideology. They contribute only because they know council members will be voting to give them money.
In Wichita’s last school bond election, 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms and others who directly stand to benefit from new school construction, no matter whether schools are actually needed. The firm of Schaefer Johnson Cox Frey Architecture led the way in making these contributions. It’s not surprising that this firm was awarded a no-bid contract for plan management services for the bond issue valued at $3.7 million. This firm will undoubtedly earn millions more for those projects on which it serves as architect.
The special interest groups that benefit from highway construction: They formed a group called Economic Lifelines. It says it was formed to “provide the grassroots support for Comprehensive Transportation Programs in Kansas.” Its motto is “Stimulating economic vitality through leadership in infrastructure development.”
A look at the membership role, however, lets us know whose economic roots are being stimulated. Membership is stocked with names like AFL-CIO, Foley Equipment Company, Heavy Constructors Association of Greater Kansas City, Kansas Aggregate & Concrete Associations, Kansas Asphalt Pavement Association, Kansas Contractors Association, Kansas Society of Professional Engineers, and PCA South Central Cement Promotion Association. Groups and companies like these have an economic interest in building more roads and highways, whether or not the state actually needs them.
The planners themselves are a special interest group, too. They need jobs. Like most government bureaucrats, they “profit” from increasing their power and influence, and by expansion of their budgets and staffs. So when Sedgwick County Commissioner Jim Skelton asks a professional planner questions about the desirability of planning, what answer does he think he will get? It’s not that the planners are not honest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.
And we have evidence that planners watch out for themselves. It is not disputed that this planning grant benefits Regional Economic Area Partnership (REAP). Sedgwick County Commissioner Richard Ranzau says that John Schlegel, Wichita’s Director of Planning, told him that “acceptance of this grant will take REAP to another level, because right now they are struggling, and this will help plot the course for REAP.” He said that REAP, which is housed at the Hugo Wall School of Public Affairs at Wichita State University, needs to expand its role and authority in order to give it “something to do.”
We see that REAP is another special interest group seeking to benefit itself. In this case, our best hope is that REAP engages in merely make-work, that the plan it produces is put on a shelf and ignored, and that the only harm to us is the $1.5 million cost of the plan.
By the way, did you know that Sedgwick County Commissioner Dave Unruh, who voted in favor of the plan that benefits REAP, is a board member of REAP, and may become the next chairman? Special interest groups know how to play the political game, that’s for sure.
Republican commissioners Dave Unruh and Jim Skelton joined with Democrat Tim Norton to pass the measure. Below, Paul Soutar of Kansas Watchdog explains why this planning process is a bad idea.
Local Planning Initiative Has Federal Strings, UN Roots
The Sedgwick County Commission will decide Wednesday whether to give a consortium of South Central Kansas governments and organizations broad control over community planning funded by a federal grant and based on a United Nations agenda.
The Regional Economic Area Partnership (REAP) Consortium for Sustainable Communities seeks to implement a Regional Plan for Sustainable Development (RPSD) for South Central Kansas.
REAP’s application for a federal grant said the plan will “provide an overall vision and commitment for sustainable growth in South Central Kansas. The RSPD will provide goals, strategies, and action steps to support that vision. Specifically, that RPSD will create a regional integrated transportation, housing, air quality and water infrastructure plan that aligns federal resources and provides for sustainable development and resources (fiscal, human and capital) to support our economic centers.‘
Much of the language and goals of sustainable communities grants reflect the goals of the U.N.’s Agenda 21, a global environmental agenda for the 21st century revealed at the 1992 U.N. Conference on Environment and Development in Rio de Janeiro.
Agenda 21 is a comprehensive framework for global, national and local action aimed at improving environmental equality through massive changes in how resources are consumed and allocated.
According to Sustainable Development in the 21st century (SD21), a December 2011 UN review of implementation of Agenda 21, “Achieving greater equity requires a significant reduction in consumption by industrialized countries.”
“Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.” So starts today’s Wall Street Journal Review & Outlook editorial (subscription required), taking notice of the special election last week in Wichita.
The editorial page of the Wall Street Journal is one of the most prominent voices for free markets and limited government in America. Over and over Journal editors expose crony capitalism and corporate welfare schemes, and they waste few words in condemning these harmful practices.
The three Republican members of the Wichita City Council who consider themselves fiscal conservatives but nonetheless voted for the corporate welfare that voters rejected — Pete Meitzner (district 2, east Wichita), James Clendenin (district 3, southeast and south Wichita), and Jeff Longwell (district 5, west and northwest Wichita) — need to consider this a wake up call. These members, it should be noted, routinely vote in concert with the Democrats and liberals on the council.
For good measure, we should note that Sedgwick County Commission Republicans Dave Unruh and Jim Skelton routinely — but not always — vote for these crony capitalist measures.
Hopefully this election will convince Wichita’s political and bureaucratic leaders that our economic development policies are not working. Combined with the startling findings by a Tax Foundation and KMPG study that finds Kansas lags near the bottom of the states in tax costs to business, the need for reform of our spending and taxing practices couldn’t be more evident. It is now up to our leaders to find within themselves the capability to change — or we all shall suffer.
This morning the Sedgwick County Commission voted to select member Tim Norton of Haysville as chairman for the upcoming year. Norton, a Democrat, received the votes of two of the board’s four Republican members: Those of outgoing Chairman Dave Unruh and Jim Skelton.
It may be remarkable that a board with a four to one majority in one party elected a member of the minority party to serve as chair, or it may simply be a reflection of the actual ideological makeup of the board. Peterjohn and Ranzau consistently take stances and make votes that favor limited government and free markets, while Unruh and Skelton generally join with the politically-liberal Norton on most issues. The chairman is more than just a ceremonial position, as the chairman presides over commission meetings. On many agenda items, the commission is not obligated to hear testimony from citizens, although it must when there are items that have public hearings required by law. It was the practice of Kelly Parks and Peterjohn, when they served as chair, to allow anyone who appeared at meetings to speak. In his term as chair, Unruh was seen as less accommodating, although I think that anyone who really cared to was allowed to speak, sometimes with a gentle admonition to hurry along. It is unknown in what manner Norton will run the meetings while he is chair. A hint: He’s objected to the term “ObamaCare” as pejorative, so I wouldn’t use that word around the courthouse.
For Chairman Pro Tem, the commissioners selected Skelton. Ranzau’s name was placed into nomination by Peterjohn, and he received the same two votes as he did for chairman. The votes for Skelton by Norton and Unruh are surprising. Skelton’s recent behavior has been erratic, even bizarre at times. His recent appearance at the Wichita City Council (video here) brought laughter and guffaws from both the bench and the public. I got the sense, however, the people were laughing at Skelton, not with him.
Unruh’s selection for 2011 Chairman’s award
Chairman Unruh selected Visioneering Wichita as the recipient of the annual Chairman’s award. This organization is in favor of government intervention into the economy — and people’s lives — on a large and increasing scale. Most of the items on its legislative agenda involve more government spending. While Visioneering — its chair Jon Rolph, anyway — denies advocating for increased taxes, Milton Friedman has taught us that it is the level of spending that is the true measure of the size of government. The size of that Visioneering seeks to expand.
The discussion at yesterday’s Wichita City Council meeting provided an opportunity for citizens to discover the difference in the thinking of the political class and those who value limited government and capitalism.
At issue was Mid-Continent Instruments, Inc., which asked the city for a forgivable loan of $10,000. It received the same last week from Sedgwick County. According to city documents, the State of Kansas through its Department of Commerce is also contributing $503,055 in forgivable loans, sales tax exemptions, training grants, and tax credits.
At the city council meeting Clinton Coen, a young man who ran for city council earlier this year, spoke against this measure, which he called corporate welfare.
In response to Coen, Council Member James Clendenin (district 3, south and southeast Wichita) asked if we should ignore companies that want to do business here, or should we allow them to leave? Implicit in the question is that the threat dangled by Mid-Continent is real: that unless the city gives them $10,000, they will expand somewhere else. How citizens and council members feel about this issue largely depends on their perceived genuineness of this threat.
When Coen recommended that the city cut spending, Clendenin said “I can guarantee you, from what I have seen, this city government has cut a tremendous amount of spending.” When pressed by Coen for examples of cuts, he demurred. Clendenin also said that the $10,000 is needed to show the city’s commitment to the company.
Perhaps coming to the rescue of her younger and less experienced colleague, Council Member Janet Miller asked City Manager Bob Layton how much has been cut from the budget, and he replied “we’ve cut over $20 million in the general fund over three years.”
In saying that, Layton is using the language and mind-set of bureaucrats and politicians. In this world, it’s a cut if spending does not rise as fast as planned or hoped for. As you can see from the accompanying chart, Wichita general fund spending has not been cut in recent years. It has risen in each of the last three years, and plans are for it to keep rising.
This illustrates a divide between the thinking of the political class and regular people. Blurring the distinction between plans and reality lets politicians and bureaucrats present a fiscally responsible image — they cut the budget, after all — and increase spending at the same time. It’s a message that misinforms citizens about the important facts.
Miller also praised the return on investment the city receives for its spending on economic development, citing Wichita State University Center for Economic Development and Business Research and the cost-benefit calculations it performs. These calculations take the cost of providing the incentives and compare it to the returns the city and other governmental entities receive.
What is rarely mentioned, and what I think most people would be surprised to learn, is that the “returns” used in these calculations is manifested in the form of increased tax revenue. It’s not like in the private sector, where business firms attempt to increase their sales and profits by providing a product or service that people willingly buy. No, the city increases its revenue (we can’t call it profit) by collecting more taxes.
It’s another difference between the political class and everyone else: The political class craves tax revenue.
Aside from this, the cost-benefit calculations for the city don’t include the entire cost. The cost doesn’t include the county’s contribution, the majority of which comes from residents of its largest city, which is Wichita. Then, there’s the half-million in subsidy from the state, with a large portion of that paid for by the people of Wichita.
But even if you believe these calculations, there’s the problem of right-sizing the investment. If an investment of $10,000 has such glowing returns — last week Sedgwick County Commissioner Jim Skelton called the decision a “no-brainer” — why can’t we invest more? If we really believe this investment is good, we should wonder why the city council and county commission are so timid.
Since the applicant company is located in his district, Council Member Pete Meitzner (district 2, east Wichita), praised the company and the state’s incentives, and made a motion to approve the forgivable loan. All council members except Michael O’Donnell (district 4, south and southwest Wichita) voted yes.
Going forward
While the political class praises these subsidies and the companies that apply for them, not many are willing to confront the reality of the system we’re creating. Some, like O’Donnell and Sedgwick County Commissioner Richard Ranzau, have recognized that when government is seen as eager to grant these subsidies, it prompts other companies to apply. The lure of a subsidy may cause them to arrange their business affairs so as to conform — or appear to conform — to the guidelines government has for its various subsidy programs. Companies may do this without regard to underlying economic wisdom.
We also need to recognize that besides simple greed for public money, businesses have another reason to apply for these subsidies: If a publicly-traded company doesn’t seek them, its shareholders would wonder why the company didn’t exercise its fiduciary duty to do so. But this just perpetuates the system, and so increasing amounts of economic development fall under the direction of government programs.
While most people see this rise in corporate welfare as harmful — I call it a moral hazard — the political class is pleased with this arrangement. As Meitzner said in making his motion, he was proud that Wichita “won out” over the other city Mid-Continent Instruments considered moving to.
Another harmful effect of these actions is to create a reputation for having an uncompetitive business environment. Not only must businesses of all types pay for the cost of these subsidies, some face direct competition by a government-subsidized competitor. This is the situation Wichita-area hotels face as a result of the city granting millions in subsidy to a hotel developer to build a Fairfield Inn downtown.
Even those not in direct competition face increased costs as they attempt to hire labor, buy supplies, and seek access to capital in competition with government-subsidized firms. Could this uneven competitive landscape be a factor that business firms consider in deciding where to locate and invest?
We can expect to see more government intervention in economic development and more corporate welfare. Former council member Sue Schlapp in April took a job with the Kansas Department of Commerce. Her job title is “senior constituent liaison,” which I think can be better described as “customer service agent for the corporate welfare state.” Her office is in Wichita city hall.
Increasingly we see politicians and bureaucrats making decisions based on incorrect and misleading information, such as claiming that the city’s general fund budget has been cut when spending has increased. Sometimes they are fed incorrect information, as in the case of a presentation at Sedgwick County Commission that bordered on fraudulent.
Sometimes, I think, officeholders just don’t care. It’s easiest to go along with the flow and not raise ripples. They participate in groundbreakings and get their photograph in the newspaper and on television that way. Which brings up an important question: why do none of our city’s mainstream media outlets report on these matters?
Wichita petitions. At yesterday’s meeting of the Wichita City Council, the invocation featured a Bible verse that contained the phrase “Petitions, prayers, intercession, and thanksgiving be offered for those in authority.” I don’t think the speaker was aware of the irony, since petitions were delivered to city hall just the day before. These petitions seek to overturn an action of the city council, and city leaders are not pleased that citizens took to the streets to gather signatures in opposition to the council’s action.
Petitions being contested. Speaking of petitions, the developers of the Ambassador Hotel are calling those who signed the petition and asking them to rescind their signature. The signers are being read a script that claims a study by Wichita State University indicates that 978 jobs will be created by the project. At the time the hotel developers persuaded the Wichita City Council and other governmental units to grant them over $15 million in taxpayer subsidy, they claimed the project would create 100 to 120 jobs. More reporting by Bill Wilson of the Wichita Eagle at Clash over hotel incentives heating up. … Work started and continues on the hotel even though the subsidy targeted by the petition is in doubt, so it appears the hotel will open — and jobs be created — no matter what happens to the petition.
AFP statement on peitition. “Activists with Americans for Prosperity and many other local organizations are firmly engaged in the public process, acting on our right to ask for a public vote on how our city doles out tax dollars to private interests,” said Susan Estes, AFP-Kansas grassroots coordinator and Wichita resident. “Certainly the opposition in this matter is acting on its right to fight our efforts. “However, from what we have heard from some of the recipients of recent phone calls, the actions of our opposition seem desperate, insulting and even intimidating to some. We find it interesting that an entity so concerned about receiving public incentives is so against allowing the public to vote on one portion of the approved incentive package. Great lengths are being taken — and at great expense — to prevent Wichitans from voting, even going so far as to have individuals from Colorado calling petition signers to sway their opinion about a Wichita issue.” … “The signature gathering process has simply been about one thing: providing the people of Wichita an opportunity to express support or opposition to this type of public tax policy. A campaign would allow both proponents and opponents to share their message with the people of Wichita. We believe his would be a healthy debate for our community. One that is needed, one that we hoped would be embraced by all. We are not afraid of this public debate, but apparently some are.”
Smart Taxpayers Exposing Waste. An initiative of the American Beverage Association is exposing ways in which government is spending money to run attack ads on the beverage industry. The claim is that $230 million of federal stimulus money has been spent in this way. The Facebook page, located at Smart Taxpayers Exposing Waste (STEW), holds many examples.
Planning grant to be topic of meeting. On Monday December 12th Americans for Prosperity Foundation will feature Sedgwick County Commission Member Richard Ranzau speaking on the topic “The $1.5 million dollar Regional Economic Area Partnership (REAP) HUD Sustainable Development Planning Grant: Economic Development or Economic Destruction?” Some background on this item may be found at Sedgwick County considers a planning grant. This free event is from 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.
Kansas history writer to speak. This Friday (December 9th) the Wichita Pachyderm Club features Beccy Tanner, Kansas history writer and reporter for The Wichita Eagle, speaking on “The Kansas Sesquicentennial (150th) Anniversary.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On December 16: Kansas Senator Garrett Love. The youthful legislator, just completing his first year in office, will be speaking on “Young people in politics.” … On December 23 there will be no meeting. The status of the December 30th meeting is undetermined at this time. … On January 6: David Kensinger, Chief of Staff to Kansas Governor Sam Brownback. … On January 13: Speaker of the Kansas House of Representatives Mike O’Neal, speaking on “The untold school finance story.” … On January 20: Sedgwick County Commissioner Karl Peterjohn.
Wichita trip to Ghana.KAKE Television reports that Wichita Mayor Carl Brewer believes the recent trip to Africa by him and others may result in sales of beef and airplanes. I wonder, though: don’t marketers of beef and airplanes know about Africa already? And who has the greater motive to sell, not to mention knowledge about the products that might meet African customers’ needs: sales reps for these companies, or politicians? … The most telling indication that this trip is more junket than anything else is that Brewer and Vice Mayor Lavonta Williams (district 1, northeast and east Wichita) paid for their own airfare. If this trip was truly good for the city, the city should pay all expenses for those who go, just as companies pay legitimate travel expenses for their employees.
Register of Deeds returns funds. At this week’s meeting of the Sedgwick County CommissionRegister of Deeds Bill Meek returned $200,000 in unspent funds from his office. These unspent funds may be used by other county offices for “equipment or technological services relating to the land or property records filed or maintained by Sedgwick County,” according to the resolution passed by commissioners.
Transaction fee, or interest? At the same commission meeting, there was discussion on the topic of the county charging extra fees for paying money to the county using credit cards. During the discussion, Commissioner Jim Skelton speculated that, depending on the card you have, there will be “$50 to $250 or more on interest” each month. The commissioner may not have heard that if you pay the entire statement balance each month, there won’t be any interest charges.
This is a cut? In Republicans Take an Ax to Government, David Boaz writes: “Sort of. Two million dollars. Two million dollars. That’s what the Washington Post sees as ‘shrinking government.’ I’m guessing the Post doesn’t often run a story when a governor does something that “expands government” by $2 million. But Virginia has a reputation for fiscal conservatism. Maybe $2 million is actually a big chunk of the state’s budget. Let’s check the numbers. As it turns out, this week the National Governors Association and the National Association of State Budget Officers put out a report on state finances, and it showed that Virginia’s general fund spending is up 7.1 percent in 2012. And according to Virginia’s own budget, that’s an increase of $1.1 billion in FY2012. That’s not the whole budget, by the way. In addition to the $16 billion in General Fund spending, Virginia will also spend $23 billion in FY2012. ”
Tax incentives questioned. In a commentary in Site Selection Magazine, Daniel Levine lays out the case that tax incentives that states use to lure or keep jobs are harmful, and the practice should end. In Incentives and the Interstate Competition for Jobs he writes: “Despite overwhelming evidence that state and local tax incentives are having little to no positive effect on promoting real economic growth anywhere in the country, states continue to up the ante with richer and richer incentive programs. … there are real questions as to whether the interstate competition for jobs is a wise use of anyone’s tax dollars and, if not, then what can be done to at least slow down this zero sum game?” As a solution, Levine proposes that the Internal Revenue Service classify some types of incentives as taxable income to the recipient, which would reduce the value and the attractiveness of the offer. Levine also correctly classifies tax credits — like the historical preservation tax credits in Kansas — as spending programs in disguise: “Similarly, when a ‘tax credit’ can be sold or transferred if unutilized it ceases to have a meaningful connection to state tax liability. Instead, in such circumstances the award of tax credit is merely a delivery mechanism for state subsidy.” In the end, the problem — when recognized as such — always lies with the other guy: “Most state policy makers welcome an opportunity to offer large cash incentives to out-of-state companies considering a move to their state but fume with indignation when a neighboring state uses the same techniques against them.”
Golden geese on the move. Thomas Sowell: “The latest published data from the 2010 census show how people are moving from place to place within the United States. In general, people are voting with their feet against places where the liberal, welfare-state policies favored by the intelligentsia are most deeply entrenched.” Sowell notes that blacks, especially those young and educated, are moving to the South and suburbs. “Among blacks who moved, the proportions who were in their prime — from 20 to 40 years of age — were greater than in the black population at large, and college degrees were more common among them than in the black population at large. In short, with blacks, as with other racial or ethnic groups, those with better prospects are leaving the states that are repelling their most productive citizens in general with liberal policies.” Detroit, he writes is “the most striking example of a once-thriving city ruined by years of liberal social policies.” Finally, a lesson for all states, including Kansas: “Treating businesses and affluent people as prey, rather than assets, often pays off politically in the short run — and elections are held in the short run. Killing the goose that lays the golden egg is a viable political strategy.” (Mass Migration Of America’s Golden Geese.) The migration statistics concerning Kansas are not favorable, although some are trending in a better direction.
Rep. Hedke, author of new book, to speak. This Friday (December 2nd) the Wichita Pachyderm Club features Kansas Representative Dennis Hedke speaking on “Energy and environmental policy.” Hedke is the author of the just-published book The Audacity of Freedom, described as an “unequivocal challenge to the Socialist-Marxist-Communist principles being pushed upon freedom loving Americans by entities and individuals both within and outside the United States.” In his forward to the book, Speaker of the Kansas House of Representatives Mike O’Neal writes: “Dennis Hedke’s The Audacity of Freedom is a timely and welcome “from the heart” wake-up call for those who value freedom and America. Unapologetically, Hedke does not mince words in describing the combination of crises that threaten our country. His irrefutable and precise recitation of compelling facts and refreshingly candid faith and patriotism are infectious. He exhorts us not to stand by and suffer any longer the fools who have been insulting our collective intelligence and bringing us dangerously close to a socialistic irrelevance in the world. His book, in short, is important.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On December 9: Beccy Tanner, Kansas history writer and reporter for The Wichita Eagle, speaking on “The Kansas Sesquicentennial (150th) Anniversary.” … On December 16: David Kensinger, Chief of Staff to Kansas Governor Sam Brownback. … On December 23 there will be no meeting. The status of the December 30th meeting is undetermined at this time. … On January 6: Kansas Senator Garrett Love. … On January 13: Speaker of the Kansas House of Representatives Mike O’Neal, speaking on “The untold school finance story.” … on January 20: Sedgwick County Commissioner Karl Peterjohn.
Economic freedom in America: The decline, and what it means. “The U.S.’s gains in economic freedom made over 20 years have been completely erased in just nine.” Furthermore, our economic freedom is still dropping, to the point where we now rank below Canada. The result is slow growth in the private sector economy and persistent high unemployment. This is perhaps the most important takeaway from a short new video from Economic Freedom Project, which is a project of the Charles Koch Institute. The video explains that faster growth in government spending causes slower growth in the private economy. This in turn has lead to the persistent high unemployment that we are experiencing today. … To view the video at the Economic Freedom Project site, click on Episode Two: Economic Freedom in America Today. Or, click on the YouTube video below.
Whether one agrees with the effectiveness and wisdom of government involvement in local economic development, there’s one thing that’s certain: facts and understanding are in short supply.
An illustration of how confusing things can get was provided last Wednesday at a meeting of the Sedgwick County Commission. Aviation manufacturer Bombardier LearJet was seeking a small part of a larger incentive package from the county. The county was being asked to contribute $1 million, but the overall package Bombardier is seeking is worth $52.7 million. That’s the entire cost of the Wichita portion of the project.
A large part of the package Bombardier is seeking is based on the Promoting Employment Across Kansas (PEAK) program. Administered by the Kansas Department of Commerce, the program allows qualifying companies to retain 95 percent of the state income withholding taxes their employees pay.
It’s a roundabout method of distributing corporate welfare that allows companies — and gullible or self-serving politicians — to pretend as though this program has no cost, or that companies are in fact investing their own money.
In the present case, Bombardier LearJet plans to obtain $27.0 million throuogh this program. It’s described in a company presentation as “Initial State of Kansas Bond Issuance.” They call it that because the State of Kansas will issue bonds that LearJet will buy. That makes it seem that Bombardier LearJet is actually contributing something of their own.
This misconception might be reinforced in a dialog between John Dieker, vice president of strategic projects for Bombardier Learjet, and Sedgwick County Commissioner Jim Skelton. Skelton was perhaps trying to counter my testimony earlier in the meeting. I had wondered if Bombardier LearJet was contributing even one dollar of their own funds to the project.
Skelton asked Dieker “Where is this money coming from?”
Dieker replied “We have the incentives we got from the state at $27 million. We have the interest that throws off since corporate bought the bonds, that’s corporate money that’s going back into the project, so that’s $6 million.
Skelton asked “So the corporation did buy the bonds?”
The answer was “Yes, corporation bought the bonds.”
Skelton concluded: “Well that’s your … I would consider that your money, sir.”
Dieker didn’t dispute Skelton’s conclusion. He should have.
Here’s how this financing works, in this case: The state issues $27 million in bonds and sells them to Bombardier Learjet. At this moment, LearJet holds bonds (both an asset and a liability) worth $27 million. The state’s balance sheet hasn’t changed.
Going forward is where Bombardier LearJet benefits. In the normal course of affairs, the bonds would be repaid out of the company’s cash flow. But under the PEAK program, the bonds are repaid by its employees, through the tax withheld on their paychecks.
The benefit to LearJet is that it has to pay these taxes, but it manages to be the exclusive beneficiary. Normally these taxes go to fund the operations of Kansas state government. But under the PEAK program, these tax payments go right back to Learjet and are used to pay off the liability of the bonds. The tax payments never benefit the state, as do tax payments from almost all other companies in Kansas. (Bombardier is not the only company benefiting from PEAK.)
Bombardier is even counting the interest on these bonds as part of their capital contribution to the project. The interest, however, is also being paid by employee withholding taxes, at no cost to the company.
So did Bombardier LearJet contribute $27 million of its own money, as Skelton claims? When the entire economic transaction is considered, the answer is absolutely not.
If you’re not convinced by this argument, simply ask: why would Bombardier LearJet engage in such a transaction if it didn’t benefit them?
Schemes like this call into question one of the the fundamental principles of taxation: that the proceeds be used to fund the operations of government, not to enrich one particular person or company. But continually, chasing economic development dreams, states and local government concoct schemes like PEAK — and others like tax increment financing (TIF) districts, Community Improvement Districts (CIDs), rebates of hotel guest taxes, revenue bonds of various forms, and other monstrosities — that turn over a public function to benefit private interests.
Today: Occupy Wall Street; Johnson Controls; Save-A-Lot store opens; Teacher pay; Ranzau, Skelton to speak; Making economics come alive; Economics in two minutes.
The Wichita City Council and city hall bureaucrats have shown that they are willing to follow the letter of the law, but following the spirit and substance of the law, especially regarding public hearings and citizen involvement, remains a challenge for the city.
Sedgwick County’s consideration of a federal planning grant raised a host of issues, including buying in to the Obama Administration agenda and the roles and relationships of federal and local governments.
Yesterday’s meeting of the Wichita City Council revealed a council — except for one member — totally captured by special interests, to the point where the council, aided by city staff, used a narrow legal interpretation in order to circumvent a statutorily required public hearing process.
Tuesday’s Wichita City Council meeting will provide an opportunity for the mayor, council members, and city hall staff to let Wichitans know if our city is governed by the rule of law and proper respect for it, or if these values will be discarded for the convenience of one person and his business partners.
Discussion at a Wichita City Council meeting provided an opportunity for citizens to discover the difference in the thinking of the political class and those who value limited government and capitalism.
A decision by the Sedgwick County Commission to grant a forgivable loan of $48,000 to The Golf Warehouse is yet another example of local government relying on corporate welfare as economic development, and exposes how little deliberation is given to making these decisions.
Before January, none of the four men serving on the Wichita City Council had completed a college degree. The three women serving on the council set a better example, with all three holding college degrees.
Today: This week at Wichita City Council; last meeting for two commissioners; legislators to hear from citizens; state GOP chief to speak in Wichita; repeal of sales tax; net neutrality advances; Wichita noticed in Boston.
As government, both national and local, increases its intervention in markets and more decisions are made by politicians and bureaucrats rather than markets, wealth is lost.
Today: Elections, Dave Unruh, Jim Skelton, Gwen Welshimer, Republican Party, Wichita Pachyderm Club, Paul Gray, Jeff Longwell, Rhonda Holman, Sue Schlapp, Carl Brewer.
Yesterday’s meeting of the Wichita City Council featured a lengthy public hearing for a proposed west-side entertainment development known as Bowllagio. Bowllagio is planned to have a bowling and entertainment center, a boutique hotel, and a restaurant owned by a celebrity television chef.
At today’s meeting of the Wichita City Council, discussion by council members and their vote may signal a change in the city’s stance toward economic development incentives.
Last Friday a selection committee selected one company from four finalists to lead the planning effort for the revitalization of downtown Wichita. If some city leaders had their way, citizens of Wichita wouldn’t be able to see this document until after the city council makes a decision to follow — or not — the recommendation of the selection committee. But thanks to city manager Robert Layton’s decision, this document is now available for all to read. (Thanks also go to council member Jim Skelton, for his unsuccessful effort to release the documents.)
At Tuesday’s meeting of the Wichita City Council, I asked a question about council member Janet Miller and her travel and got a bigger response — from the mayor, the Wichita Eagle, and the public — than I expected. Some issues are still unresolved, however.
The result of yesterday’s elections in Wichita is an endorsement for the status quo. For those interested in liberty, free markets, and education in Wichita, the election was a total disaster.
Randy Roebuck, in a presentation at the Wichita city council workshop, promoted the idea of a “digital oasis” in Wichita. It would be a place where people can go to get free help with technologies such as cell phones and computers
In the Wichita city council meeting on December 2, 2008, council member Jim Skelton questioned Allen Bell, Wichita’s director of urban development, about developers the city is considering working with on a TIF district. Specifically, Skelton asked if there was anything in the backgound of the developers that the council should be concerned about. Bell referred specifically to Grant Gaudreau, naming him as the “principal developer.” He said that the matters in Gaudreau’s past had been “resolved,” and had “no bearing” on this project.
Five years ago, the City of Wichita granted Big Dog Motorcycles industrial revenue bonds (IRB). The benefit of these bonds is that the company escapes paying property tax (and often sales tax) on the property purchased with the proceeds from the bonds. At the December 2, 2008 meeting of the Wichita City Council, the council [...]
The officials involved — council members Jeff Longwell and Lavonta Williams, who negotiated the addition of the parking with county commissioners; Allen Bell, who is Wichita’s director of urban development; and Mayor Carl Brewer — need to answer to the citizens of Wichita as to why this important business was conducted in this haphazard manner that disrespects citizen involvement.
At yesterday’s meeting of the Wichita City Council, council member Jim Skelton expressed his frustration with last-minute additions to the plan for the Center City South Redevelopment tax increment financing (TIF) District, commonly known as the downtown Wichita arena TIF district. The problem is two-fold: First, when plans change at the last minute, there is [...]
At today’s Wichita City Council meeting, Councilmember Jim Skelton revealed that the plan for the downtown Wichita arena TIF district had changed. A provision for up to $10 million in parking was added. I had looked at the agenda report less than 24 hours before the start of the meeting. The plan for parking spending [...]
From John Todd. Testimony I presented before the Wichita City Council on July 1, 2008 in opposition to the proposed Old Town Warren Theater LLC loan. The question before the council today relates to the proper role of government. I believe the role of government is that of acting as a non-partial judge from the [...]
A system of absolute respect for private property rights is the best way to handle smoking, as it is with all issues. The owners of bars and restaurants have, and should continue to have, the absolute right to permit or deny smoking on their property.
Americans for Prosperity Kansas supports limited government and responsible tax and budget policies that force state government to live within its means. Click here to learn more.
The Kansas Economic Freedom Index identifies Kansas legislators who vote in favor of economic freedom — and those who don’t.
Featured thoughts
Government is essentially the negation of liberty. — Ludwig von Mises
It is the responsibility of the patriot to protect his country from its government. — Thomas Paine
It does not take a majority to prevail, but an irate, tireless minority keen to set brushfires of freedom in the minds of men. — Samuel Adams
You do not know, and will never know, who the Remnant are, nor where they are, nor how many of them there are, nor what they are doing or will do. Two things you know, and no more: first, that they exist; second, that they will find you. — Albert Jay Nock
A major source of objection to a free economy is precisely that ... it gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself. — Milton Friedman
As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power. — F.A. Hayek
The kind of rules we should have are the kind that we'd make if our worst enemy were in charge. — Walter E. Williams
Your principle has placed these words above the entrance of the legislative chamber: “whosoever acquires any influence here can obtain his share of legal plunder.” And what has been the result? All classes have flung themselves upon the doors of the chamber crying: “A share of the plunder for me, for me!” — Frederic Bastiat
This was all before politicians gave us the idea that the things we could not afford individually we could somehow afford collectively through the magic of government. — Thomas Sowell
While the short-run prospects for liberty at home and abroad may seem dim, the proper attitude for the Libertarian to take is that of unquenchable long-run optimism. — Murray N. Rothbard
Barbra Streisand told Diane Sawyer that we're in a global warming crisis, and we can expect more and more intense storms, droughts and dust bowls. But before they act, weather experts say they're still waiting to hear from Celine Dion. — Jay Leno
The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise. — Milton Friedman
Increasingly, it seems that the biggest difference between conservatives and liberals is that the conservatives know government is force. But that doesn't stop them from using it. — John Stossel
One of the annoying things about believing in free will and individual responsibility is the difficulty of finding somebody to blame your problems on. And when you do find somebody, it's remarkable how often his picture turns up on your driver's license. — P.J. O'Rourke
Late one night in Washington, D.C. a mugger wearing a ski mask jumped into the path of a well-dressed man and stuck a gun in his ribs. "Give me your money!" he demanded. Indignant, the affluent man replied, "You can't do this. I'm a United States Congressman!" "In that case," replied the robber, "give me my money!" — Related by Walter Block
The libertarian creed, finally, offers the fulfillment of the best of the American past along with the promise of a far better future. Even more than conservatives, who are often attached to the monarchical traditions of a happily obsolete European past, libertarians are squarely in the great classical liberal tradition that built the United States and bestowed on us the American heritage of individual liberty, a peaceful foreign policy, minimal government, and a free-market economy. Libertarians are the only genuine current heirs of Jefferson, Paine, Jackson, and the abolitionists. — From "For A New Liberty: The Libertarian Manifesto" by Murray N. Rothbard
No matter how disastrously some policy has turned out, anyone who criticizes it can expect to hear: “But what would you replace it with?” When you put out a fire, what do you replace it with? — Thomas Sowell
Here’s Williams’ law: Whenever the profit incentive is missing, the probability that people’s wants can be safely ignored is the greatest. — Walter E. Williams
I would remind you that extremism in the defense of liberty is no vice. And let me remind you also that moderation in the pursuit of justice is no virtue. — Barry Goldwater
A society that puts equality — in the sense of equality of outcome — ahead of freedom will end up with neither equality nor freedom. The use of force to achieve equality will destroy freedom, and the force, introduced for good purposes, will end up in the hands of people who use it to promote their own interests. — Milton Friedman
When it becomes dominated by a collectivist creed, democracy will inevitably destroy itself. — F.A. Hayek
The most dangerous man, to any government, is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane and intolerable, and so, if he is romantic, he tries to change it. — H.L. Mencken
Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience. — C.S. Lewis
When the people find they can vote themselves money, that will herald the end of the republic. — Benjamin Franklin
What is euphemistically called government-corporate "partnership" is just government coercion, political favoritism, collectivist industrial policy, and old-fashioned federal boondoggles nicely wrapped up in a bright-colored ribbon. It doesn’t work. — Ronald Reagan
Those fighting for free enterprise and free competition do not defend the interests of those rich today. They want a free hand left to unknown men who will be the entrepreneurs of tomorrow. — Ludwig von Mises
The problem is big government. If whoever controls government can impose his way upon you, you have to fight constantly to prevent the control from being harmful. With small, limited government, it doesn’t much matter who controls it, because it can’t do you much harm. — Harry Browne
Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place. — Frederic Bastiat
It is indeed probable that more harm and misery have been caused by men determined to use coercion to stamp out a moral evil than by men intent on doing evil. — F.A. Hayek
Freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself ... Economic freedom is also an indispensable means toward the achievement of political freedom. — Milton Friedman
Be thankful we're not getting all the government we're paying for. — Will Rogers
The American people will never knowingly adopt socialism, but under the name of liberalism, they will adopt every fragment of the socialist program until one day America will be a socialist nation without ever knowing how it happened. — Norman Thomas
[The political system] tends to give undue political power to small groups that have highly concentrated interests; to give greater weight to obvious, direct and immediate effects of government action than to possibly more important but concealed, indirect and delayed effects; to set in motion a process that sacrifices the general interest to serve special interests rather than the other way around. There is, as it were, an invisible hand in politics that operates in precisely the opposite direction to Adam Smith's invisible hand. — Milton Friedman
I'd rather be governed by the first 2,000 names in the Boston telephone directory than by the faculty of Harvard. — William F. Buckley Jr.
Liberty is not a means to a political end. It is itself the highest political end. — Lord Acton
The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another. — Milton Friedman
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow citizens. — Adam Smith
Democracy is a pathetic belief in the collective wisdom of individual ignorance. — H.L. Mencken
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard. — Alan Greenspan, “Gold and Economic Freedom” [1966]
Fundamentally, there are only two ways of coordinating the economic activities of millions. One is central direction involving the use of coercion — the technique of the army and of the modern totalitarian state. The other is voluntary cooperation of individuals — the technique of the marketplace. — Milton Friedman
The compelling issue to both conservatives and liberals is not whether it is legitimate for government to confiscate one’s property to give to another, the debate is over the disposition of the pillage. — Walter Williams
In Germany, they came first for the Communists,
And I didn’t speak up because I wasn’t a Communist;
And then they came for the trade unionists,
And I didn’t speak up because I wasn’t a trade unionist;
And then they came for the Jews,
And I didn’t speak up because I wasn’t a Jew;
And then ... they came for me ...
And by that time there was no one left to speak up.
— Pastor Martin Niemöller
There is no virtue in compulsory government charity, and there is no virtue in advocating it. A politician who portrays himself as "caring" and "sensitive" because he wants to expand the government's charitable programs is merely saying that he's willing to try to do good with other people's money. Well, who isn't? And a voter who takes pride in supporting such programs is telling us that he'll do good with his own money — if a gun is held to his head. — P.J. O'Rourke
The difference between libertarianism and socialism is that libertarians will tolerate the existence of a socialist community, but socialists can't tolerate a libertarian community. — David Boaz
When the people fear their government, there is tyranny; when the government fears the people, there is liberty. — Thomas Jefferson
After all, only the imagination limits the kind of laws and restrictions that can be written in the name of saving the planet. — Walter E. Williams
One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary. — Ayn Rand
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick. ... It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary. — Adam Smith
Act only on that maxim through which you can at the same time will that it should become a universal law. — Immanuel Kant
When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it. — Frederic Bastiat
