Tag Archives: Kansas Watchdog

SEC orders Kansas to stop doing what it did under Sebelius and Parkinson

The Securities and Exchange Commission found that Kansas mislead bond investors. It ordered the state to implement reforms, which it has.

Kansas Capitol
Kansas Capitol
According to a press release from the Securities and Exchange Commission, the State of Kansas “failed to disclose that the state’s pension system was significantly underfunded, and the unfunded pension liability created a repayment risk for investors in those bonds.”

This refers to a series of eight debt, or bond, issues in 2009 and 2010. Collectively they were worth $273 million. The SEC press release explains:

According to the SEC’s order against Kansas, the series of bond offerings were issued through the Kansas Development Finance Authority (KDFA) on behalf of the state and its agencies. According to one study at the time, the Kansas Public Employees Retirement System (KPERS) was the second-most underfunded statewide public pension system in the nation. In the offering documents for the bonds, however, Kansas did not disclose the existence of the significant unfunded liability in KPERS. Nor did the documents describe the effect of such an unfunded liability on the risk of non-appropriation of debt service payments by the Kansas state legislature. The SEC’s investigation found that the failure to disclose this material information resulted from insufficient procedures and poor communications between the KDFA and the Kansas Department of Administration, which provided the KDFA with the information to include in the offering materials.

“Kansas failed to adequately disclose its multi-billion-dollar pension liability in bond offering documents, leaving investors with an incomplete picture of the state’s finances and its ability to repay the bonds amid competing strains on the state budget,” said LeeAnn Ghazil Gaunt, chief of the SEC Enforcement Division’s Municipal Securities and Public Pensions Unit. “In determining the settlement, the Commission considered Kansas’s significant remedial actions to mitigate these issues as well as the cooperation of state officials with SEC staff during the investigation.”

In other words, Kansas had a grossly underfunded state pension system, and did not adequately disclose that to potential purchasers of new state debt. The full text of the order gives more detail as to how Kansas was an outlier among the states, not only in the magnitude of its problem, but in its lack of disclosure:

Kansas’s practice of not disclosing the underfunded status of KPERS became increasingly inconsistent with the practice of most states issuing municipal securities, which generally provided disclosure in their CAFRs or the body of their Official Statements regarding the financial health of their pension funds. By 2008, with the exception of Kansas, the overwhelming majority of the Official Statements for state-level bond issuances at a minimum disclosed the UAAL or funded ratios of the associated state-level pension plans, particularly if those plans were significantly underfunded.

Here’s what this means to public policy:

First, the Kansas Public Employee Retirement System (KPERS) was in terrible financial condition, compared to other states.

Second, Kansas did not adequately disclose that to potential investors, according to the SEC.

Third, reforms have been implement to the satisfaction of the SEC.

Kansas Department of Administration logoFourth, the SEC was quite critical of the Kansas Department of Administration, or KDA.

Fifth, the head of KDA at the time was Duane Goossen. On his blog his biography contains: “[Goossen] was appointed by Sebelius in 2004 to concurrently serve as Secretary of the Kansas Department of Administration, the agency that manages state facilities, accounting, information services and employee programs.”

Although retired from state government, Goossen maintained a role in public affairs as former Vice President for Fiscal and Health Policy at Kansas Health Institute, and now authors a blog concerning issues related to the Kansas budget.

More reporting on this matter from Kansas Watchdog is at SEC charges Kansas with fraud for Parkinson-era omissions.

In Kansas, tax giveaways for job creation found ineffective

Kansas-Watchdog-Logo-3-Mark-512From Kansas Watchdog.

Study: State tax giveaways to big business don’t really bring jobs

By Travis Perry, Kansas Watchdog

BIG SUBSIDIES: Kansas has forked over millions in tax breaks since 2009, but new research says it has been ineffective at accomplishing its main goal: Creating new jobs.

OSAWATOMIE, Kan. — By the time theMcQueeny Group signed up for tax breaks through Kansas’ primary economic development engine, vice president Rod Slump said the business was already looking to make a move.

Tax breaks provided through Promoting Employment Across Kansas were just icing on the cake.

Like numerous other firms who have relocated to Kansas to take advantage of PEAK benefits, Overland Park-based McQueeny Group has been handed thousands in tax breaks for creating new jobs — more than $160,000 since 2011, according to the Kansas Department of Commerce.

The state contends McQueeny’s relocation from the Crossroads near downtown Kansas City, Mo., has brought 15 jobs to Kansas, though Slump said only two or three were new to the company after the move.

PEAK allows an employer to retain 95 percent of the payroll tax for creating jobs that pay at or above the county median wage, with the goal of spurring new hiring. In the last two years alone, the program has granted more than $28 million in tax breaks, according to annual reports prepared by the state.

But Slump told Kansas Watchdog all PEAK did was help make the relocation decision easier.

“It’s hard for us to tie creation of jobs to that, as much as it was a business opportunity,” Slump said.

New research suggests McQueeny Group is the rule, not the exception.

“It looks like there’s no evidence that PEAK incentives work in the sense of job creation any way we cut this,” said Nathan Jensen, associate professor of political science at Washington University in St. Louis, who compared data between numerous companies to see if the tax breaks had any real-world effect. “Doing this over and over again, you kind of come up with the same result.”

Prof. Nathan Jensen

Jensen presented the findings in his working paper, “Evaluating Firms-Specific Location Incentives,” during a conference April 17 at Kansas City’s Ewing Marion Kauffman Foundation.

Through statistical research, Jensen discovered that PEAK tax breaks had little to no effect on whether a company created new jobs.

“They’re just incentivizing firms that are already going to expand and relocate,” Jensen said, noting that issues with incentives are hardly restricted to the Sunflower State. “Most of the data is that about two-thirds to three-fourths of firms that get an incentive, globally, were basically getting an incentive to do what they were going to do anyway.”

Jensen compared companies of similar size and industry, examining the job creation figures from 2006 and onward; PEAK was signed into law in 2009. For each of the 72 PEAK firms examined, Jensen matched them with five comparable firms in Kansas that didn’t receive PEAK tax breaks.

Then he did it again.

Jensen said what he found was incredibly unsurprising.

Not only is there no statistical link between PEAK benefits and job creation, Jensen also wrote the “PEAK program is disproportionately used to attract investment from across the (Missouri) border.”

Despite noting that PEAK played a minimal role in Mcqueeny Group’s job creation, Slump disagreed it doesn’t help fuel new jobs, contending the tax breaks free up funds for additional hiring.

While Jensen’s findings are damning enough, he said more information is still needed to see whether PEAK is worth the massive taxpayer support it has received since its inception. Information such as when a firm applied for PEAK benefits and when tax breaks were awarded, as well as tracking which firms were rejected from the program, would go a long way toward determining the value of PEAK, Jensen noted.

More than anything, Jensen would just like to see a little transparency.

“It’s the sort of thing I think should just be on a website,” he said.

Currently, the Kansas Department of Commerce only makes PEAK data available through an open records request. Darla Price, PEAK program director, told Kansas Watchdog she couldn’t say why the information wasn’t posted online; decisions like that aren’t made at her level, she said.

Dan Lara, deputy secretary for public affairs for the state commerce department, said the agency is considering allowing greater levels of transparency regarding the PEAK program, but has yet to make an actual decision.

The Docking Institute of Public Affairs at Fort Hays State University all but confirmed the ineffectiveness of the program after surveying PEAK firms last year. Respondents admitted that 75 percent of new hires would have happened whether or not they received the tax breaks. However, the report justifies the massive program by simply stating that, hey, jobs are jobs.

“(A)ll of the new employees hired by PEAK firms relocating to Kansas represent additional jobs for the State, regardless of whether they would have been hired without the PEAK Program,” the Docking report stated.

Contact Travis Perry at travis@kansaswatchdog.org, or follow him on Twitter at @muckraker62. Like Watchdog.org? Click HERE to get breaking news alerts in your state!

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.

Could lower open records fees threaten Kansans’ safety?

business-records-file-foldersTravis Perry of Kansas Watchdog reports that governmental agencies fear that fulfilling records requests will cost too much and eliminate a necessary revenue stream. But there are solutions that may not be under consideration. For example, instead of supplying accident reports singly as they are requested, law enforcement agencies could simply make all such reports available. I can hear the objections, such as it will cost too much for each agency to maintain a website for the purposes of making reports available. But each agency doesn’t have to establish and maintain a website. The state (or someone else) could easily and inexpensively establish a website for the purpose of distributing such documents. Or, this sounds like a good project for the trade associations that officials join, and for which taxpayers pay membership dues and fees.

Lobbyist says lower open records fees could threaten Kansans’ safety

By , March 19, 2014

COST CONSCIOUS: Opponents of a bill targeted at reducing the cost of acquiring public documents say it will eliminate a necessary revenue stream for many Kansas government entities.

By Travis Perry | Kansas Watchdog

TOPEKA, Kan. — According to Kansas law enforcement lobbyist Ed Klumpp, too much government transparency could be a bad thing.

Firing a verbal warning shot Wednesday morning against legislation sponsored by Pittsburg Republican Sen. Jacob La Turner, Klumpp said Senate Bill 10, which would lower the cost of accessing government documents in the Sunflower State, has the potential to dramatically affect public safety.

In contention is a provision within La Turner’s bill that would require public entities to provide free of charge either the first hour of staff time or 25 copies, whichever comes first, to individuals requesting public documents.

Klumpp suggested that preventing law enforcement agencies from charging for the most commonly requested documents, such as accident reports, would eliminate a key source of revenue to avoid diverting resources from elsewhere.

“It’ll be fewer dollars to buy police equipment, fewer dollars to put into investigations,” Klumpp told members of the House Federal and State Affairs committee.

LaTurner called the assumption utterly ridiculous, and stated that document retrieval fees have been a veritable cash cow for public entities for years.

“They’ll say anything to hold onto their funding sources, no matter how unfair,” LaTurner said.

The 90 minutes of testimony offered to House lawmakers in the Old Supreme Court Room took on an adversarial flair, with media and private citizens facing off against county and local government officials.

Doug Anstaett, executive director of the Kansas Press Association, said he has seen time and again how public entities have used excessive fees to effectively close off public documents.

“If a private citizen cannot afford the record, it’s a closed record,” Anstaett said.

In that same vein, Albert Rukwaro, a journalist and Topeka resident formerly of Kenya, cautioned state lawmakers by pointing to widespread issues in his country of origin.

“One of the leading causes of runaway corruption in government and lack of accountability is when citizens don’t have access to information in the government sector,” Rukwaro said. “America’s democracy and transparency are a beacon of light to the world. Please don’t dim it.”

Elected officials from cash-strapped Kansas counties argue it’s a matter of fiscal feasibility.

Anna Morgan-Stanley, register of deeds for Jewell County, said the vast majority of requests she receives would fall under reduced fee requirements laid out in LaTurner’s bill. Last year, Stanley said she collected just over $2,000 in document retrieval fees, and that for Jewell County it’s about survival.

“When we are unable to recoup the costs of the copies and the staff time we’re providing them, that puts a burden on our already financially burdened general fund,” Stanley told lawmakers.

Republic County register of deeds Peggy Frint echoed similar sentiments. While proponents suggested the reduced cost measures would encourage governments to make more information available online, Frint said she simply doesn’t have the funds to accomplish such a feat.

“I realize that $1,200 in copy fees for a county is not much, but it’s better than nothing, and we need all the help we can get to put into our general fund,” Frint said.

Opponents stated that capping costs for individuals would simply impose the fees on the broader public.

“Somebody is going to pay. These costs don’t just go away,” Klumpp said. “Either it’s the people requesting the copy or the taxpayers across the community.”

Committee chair Rep. Steve Brunk, R-Wichita, closed the meeting by musing how it’s not too different from distributing the cost of public infrastructure.

“I understand there are certain roads in my city that I will never drive on, but my tax dollars will go to repair those roads,” Brunk said.

Senate Bill 10 was approved by the Kansas Senate 33-7 on Feb. 27. In addition to providing some open records free of charge, LaTurner’s bill would also limit the hourly fee a government could charge for various services, such as legal review by an attorney at no more than $60 per hour. See more details here.

Contact Travis Perry at travis@kansaswatchdog.org, or follow him on Twitter at @muckraker62. Like Watchdog.org? Click HERE to get breaking news alerts in YOUR state!

Kansas school finance lawsuit reaction

apple-chalkboard-booksFollowing is news coverage and reaction to the Kansas school finance lawsuit Luke Gannon, et al v. State of Kansas.

Press release from Kansas Supreme Court
The court declared certain school funding laws fail to provide equity in public education as required by the Kansas Constitution and returned the case to Shawnee County District Court to enforce the court’s holdings. The court further ordered the three-judge panel that presided over the trial of the case to reconsider whether school funding laws provide adequacy in public education — as also required by the constitution. … The court set a July 1, 2014, deadline to give the Legislature an opportunity to provide for equitable funding for public education. If by then the Legislature fully funds capital outlay state aid and supplemental general state aid as contemplated by present statutes, i.e., without withholding or prorating payments, the panel will not be required to take additional action on those issues. But if the Legislature takes no action by July 1, 2014, or otherwise fails to eliminate the inequity, the panel must take appropriate action to ensure the inequities are cured.

The full opinion

Court Orders Kansas Legislature to Spend More on Schools New York Times
Kansas’s highest court ruled on Friday that funding disparities between school districts violated the state’s Constitution and ordered the Legislature to bridge the gap, setting the stage for a messy budget battle in the capital this year. … Most of the attention in the case, Gannon v. Kansas, had been focused on the trial court’s order to raise base aid per student to $4,492, a 17 percent increase over the current level, to provide an adequate education for all Kansas students. On Friday, the Supreme Court held that the district court had not applied the proper standard to determine what constituted an adequate funding level and asked the lower court to re-examine that issue. “Regardless of the source or amount of funding, total spending is not the touchstone for adequacy in education” under the State Constitution, the decision read.

Kansas must heed court’s call for fairer school funding Kansas City Star.
The Kansas Supreme Court’s school finance ruling Friday cast a bright light on the Legislature’s willful failure to meet its funding obligations to poorer school districts and their students. The state’s duty to promote equity in public education is well established. A previous court ruling ordered legislators to provide payments to districts with low tax bases to help lessen the gap between them and districts that can more easily raise money through property taxes. But in 2010 the Legislature cut off equalization money meant to help poorer districts with capital needs. A year later, lawmakers even amended a statute to excuse themselves from providing money for that purpose through 2017. They also reduced and prorated supplemental payments to help less wealthy districts meet day-to-day needs.

Court declares Kansas’ school funding levels unconstitutional Los Angeles Times
The Kansas Supreme Court has ruled that the state’s current levels of school funding are unconstitutional, and ordered the Legislature to provide for “equitable funding for education” by July 1. The long-anticipated ruling was a victory for education advocates in the state, but it may be a short-lived one as the Legislature has vowed to defy court orders on the subject. … According to an analysis by the Center on Budget and Policy Priorities, Kansas is spending 16.5% less per student, or $950 per pupil, on education in 2014 than it did in 2008.

Kansas Supreme Court finds inequities in school funding, sends case back to trial court Wichita Eagle
The Kansas Supreme Court found some unfairness — but not necessarily too few dollars — in the state’s funding of schools and sent a mammoth school-finance case back to a lower court for further action. The court found disparities between districts to be unconstitutional and set a July 1 deadline for lawmakers to address that. But it stopped short of saying the state is putting too few dollars in the pot, leaving that issue for another day. … Both school advocates and Republican lawmakers declared partial victory in the wake of the ruling in the lawsuit brought by the Wichita school district and others against the state. But they offered strikingly different interpretations of the decision.

Kansas Supreme Court on school finance: A summary of the ruling Lawrence Journal-World

Court decision gives little clarity on adequacy of K-12 funding Topeka Capital-Journal
Plaintiffs and interested third parties articulated different interpretations of Friday’s school finance ruling, with some saying it is a call for more K-12 funds and conservative groups saying there is no rush.

KS Supreme Court: Legislators made ‘unconstitutional’ school funding choices Kansas Watchdog
In a long-awaited decision, the Kansas Supreme Court on Friday ruled that state lawmakers created “unconstitutional” and “unreasonable wealth-based disparities” by withholding certain state aid payments to public schools. … While the Supreme Court unanimously upheld a lower court decision regarding the state’s failure to equitably disburse capital outlay and supplemental general payments to Sunflower State schools, it stopped short of issuing a decree for specific funding to meet the Legislature’s constitutional requirement to provide an “adequate” education.

Governor Sam Brownback and legislative leadership outline opportunity for progress following Kansas Supreme Court Ruling on Education Funding (full press release)
Today Governor Sam Brownback, joined by Attorney General Derek Schmidt, Senate President Susan Wagle and House Speaker Ray Merrick and other legislators responded to the Kansas Supreme Court ruling on the Gannon vs Kansas case. “We have an opportunity for progress,” Governor Brownback said. “My commitment is to work with legislative leadership to address the allocation issue identified by the court. We will fix this.” The court has set out steps for the legislature to end the lawsuit by July 1, 2014. It affirms the Constitutional requirement for education to be “adequate” and “equitable.” “Our task is to come to resolution on capital outlay funding and local option budgets before July 1,” said Senate President Wagle. “We now have some clarity as we work toward resolution of issues that began years ago under prior administrations.”

Davis comments on Gannon ruling
The court today made it clear that the state has not met its obligation to fund Kansas schools in equitable way. It is time to set it right and fund our classrooms.

Kansas Policy Institute
Statement from Dave Trabert, the president of Kansas Policy Institute, in response to Gannon v. State of Kansas:
“We’re encouraged that the Court ruled that total spending cannot be used to measure adequacy. This is especially important because spending is currently based on deliberately-inflated numbers in the old Augenblick & Myers report. To this day, no one knows what it costs for schools to achieve required outcomes while also making efficient use of taxpayer money. “The next step in helping each student succeed while acting responsibly with taxpayer money is to model a K-12 Finance Commission on the KPERS Study Commission. The Legislature and Governor Brownback should determine what schools need to achieve required outcomes while organized and operating in a cost-effective manner, including appropriate equity measures, and fund schools accordingly.”

Americans for Prosperity-Kansas
The Kansas chapter of the grassroots group Americans for Prosperity released the following statement in response to the Kansas Supreme Court’s school finance decision handed down today:
“For years, those demanding more education spending have ignored anything other than the base state aid per pupil which is only part of overall education funding,” said AFP-Kansas State Director Jeff Glendening. “We are pleased that the Supreme Court has specifically directed that ‘funds from all available resources, including grants and federal assistance, should be considered,’ and that ‘total spending is not the touchstone for adequacy.’
“In light of the Court’s ruling that ‘adequacy’ of education is determined by student outcomes rather than spending, and adopted standards similar to those adopted by the legislature in 2005, now is the time to consider how we are spending education dollars.
“Kansans are spending more than an average of $12,700 per student, and K-12 education currently makes up more than half of our state budget. Despite that, less than 60 percent of education dollars actually make it into the classroom. To meet the educational standards set out by the Legislature and Supreme Court, and give every Kansas child the opportunity they deserve, we must do better.
“We know that the discussion of school finance is not over, and will continue to play out in the courts as the Supreme Court sent the issue of ‘adequacy’ back to the District Court. It’s our hope that the lower court will carefully look at student outcomes and local spending decisions, rather than automatically demanding more state spending, and recognize its role in the constitutionally-defined separation of powers.”

Kansas National Education Association
We are disappointed that today’s announcement by the Kansas State Supreme Court prolongs a resolution of the school finance issue. It didn’t deal directly with the current critical need in Kansas public schools. Together, the citizens of Kansas made sacrifices at a time when the state and national economy were in crisis. During that time Kansans came together and dealt with staggering cuts to education, believing the promise of full restoration to public school funding once the state economy had rebounded.

Kansas Supreme Court rules in school finance case Kansas Health Institute
Kansas’ top court today released its long-awaited decision in the school finance case and while the ruling settled little for now, both sides in the litigation said they found things to like about it.

Attorney General Derek Schmidt, whose office defended the state in Gannon v. State of Kansas, said he didn’t believe the mixed decision would necessarily require the Legislature to spend more on K-12 schools, though that would be one option for making the state’s school finance formula constitutional again. … But representatives of the school districts that took to court claiming state aid dollars have been unequal and inadequate said they felt confident they would win the remainder of their points at retrial and that the Legislature would need to authorize an added $129 million in K-12 spending by July 1 to meet the standards spelled out in the unanimous decision. “We are not concerned about this. All of our proof at trial was presented using the correct standard that the court now directs to be used,” at retrial, said John Robb an attorney for the four public school districts that sued the state.

Kansas Supreme Court issues ruling on school finance Wichita Public Schools
The Kansas Supreme Court issued its ruling on the school finance lawsuit on March 7. It upholds the concept that the legislature must adequately fund schools in Kansas and that the funding must be distributed equitably. It requires the Kansas Legislature to fund capital outlay and Local Option Budget equalization by July 1, 2014. That means immediate increases in some state funding for education. … “Overall, we think this is a great ruling for Wichita and Kansas kids,” said Lynn Rogers, BOE member. “It upholds the concept that the State of Kansas is responsible for adequately and equitably funding our students’ education.” Rogers said that the lawsuit is for all Kansas students and that they deserve a quality education regardless of where they live in the state. “The education we provide is the foundation for our workforce and the future of Kansas,” said Superintendent John Allison. “If we don’t give our students a quality education now, we will pay for it in the future.”

Kansas legislative documents

Kansas Capitol

As the Kansas Legislature begins its 2014 session today, citizens who want to keep track of the happenings have these resources available.

Video and audio

The Kansas Legislature doesn’t broadcast or archive video of its proceedings except in rare instances of committee hearings. Travis Perry of Kansas Watchdog reports on this issue in Camera shy: KS legislators sidestep transparency and Eye in the sky: Kansas legislative leader won’t require streaming video.

Both the House and Senate broadcast audio of their proceedings. But you must listen live, as the broadcasts are not made available to the public in any other way. It would be exceedingly simple to make these past broadcasts available to the public. It could be done at no cost on YouTube, and at little cost at other sites specifically tailored to host audio. As a side benefit, at YouTube the recordings would be transcribed by machine, giving a rough transcript of the proceedings. (I use the adjective “rough,” as if you have viewed these transcripts, they vary widely in accuracy. But they still have value.)

Broadcasting video of House and Senate proceedings would be a large step that would probably have a large cost. But archiving the audio and making it available provides nearly all the benefit of video, and at very little additional cost.


Kansas Legislative Research Department (KLRD) has many documents that are useful in understanding state government and the legislature. This agency’s home page is Kansas Legislative Research Department. Of particular interest:

Kansas Legislative Briefing Book. This book’s audience is legislators, but anyone can benefit. The book has a chapter for major areas of state policy and legislation, giving history, background, and explanations of law. In some years the entire collection of material has been made available as a single pdf file, but not so this year. Contact information for the legislative analysts is made available in each chapter. The most recent version can be found on the Reports and Publications page. So far a version for 2014 is not available. (Update: The 2014 version is here.)

Kansas Fiscal Facts. This book, in 124 pages (for 2011), provides “basic budgetary facts” to those without budgetary experience. It provides an overview of the budget, and then more information for each of the six branches of Kansas state government. There is a glossary and contact information for the fiscal analysts responsible for different areas of the budget. This document is updated each year. The most recent version can be found on the Reports and Publications page.

Legislative Procedure in Kansas. This book of 236 pages holds the rules and explanations of how the Kansas Legislature works. It was last revised in November 2006, but the subject that is the content of this book changes slowly over the years. The direct link is Legislative Procedure in Kansas, November 2006.

How a Bill Becomes Law. This is a one-page diagram of the legislative steps involved in passing laws. The direct link is How a Bill Becomes Law.

Summary of Legislation. This document is created each year, and is invaluable in remembering what laws were passed each year. From its introduction: “This publication includes summaries of the legislation enacted by the 2011 Legislature. Not summarized are bills of a limited, local, technical, clarifying, or repealing nature, and bills that were vetoed (sustained).” 204 pages for 2011. The most recent version can be found on the Reports and Publications page.

Legislative Highlights. This is a more compact version of the Summary of Legislation, providing the essentials of the legislative session in 12 pages for 2011. The most recent version can be found on the Reports and Publications page.

Kansas Tax Facts. This book provides information on state and local taxes in Kansas. The most recent version can be found on the Revenue and Tax page.

Kansas Statutes. The laws of our state. The current statutes can be found at the Revisor of Statutes page.

Kansas Register. From the Kansas Secretary of State: “The Kansas Register is the official state newspaper. This publication provides a wide range of information such as proposed and adopted administrative regulations, new state laws, bond sales and redemptions, notice of open meetings, state contracts offered for bid, attorney general opinions, and many other public notices.” The Register is published each week, and may be found at Kansas Register.

Kansas trails surrounding states in economic freedom

Kansas trails surrounding states in economic freedom

By , Kansas Watchdog

AVERAGE: In a recent study of economic freedom in North America, Kansas ranked in the middle of the pack nationwide, but trails most surrounding states.

OSAWATOMIE, Kan. — The Sunflower State scored middle of the pack in a recent study of economic freedom in North America, and while policy analysts sayKansas is trending in the right direction, the state still has some ground to cover.

Breaking down the data released last month by the Canada-based Fraser Institute, an independent, nonpartisan research and educational organization, Dave Trabert, president of the conservative Kansas Policy Institute, said the state’s black eye is starkly presented in the numbers.

“In terms of what Kansas needs to do to improve, it’s pretty clear, you start from the bottom,” Trabert said. “The biggest thing it can do is deal with the fact that we have a lot more government in Kansas than we need, and this is just one of the latest (studies) to point that out.”

The Fraser report looked at things such as how much the government contributes to the overall state economy and workforce, levels of tax revenue, minimum wage laws and labor union density, among other factors.

Kansas ranked in the second-highest quartile in terms of economic freedom based on data collected from 2011. While that’s encouraging, the fact loses some of its luster when you consider that the only surrounding state to rank lower was Missouri Oklahoma ranked 17th out of all states, compared to Kansas’ 23rd place ranking. Nebraska and Colorado joined Delaware, Texas, Nevada, Wyoming, South Dakota, Georgia, Utah and Illinois to be named the 10 “most free” states.

Trabert said based on a review of census data provided by the Bureau of Labor Statistics, Kansas saw a 21.5 percent increase in population between 1980 and 2011, while at that same time local government employment has increased 62.7 percent.

Dave Trabert, Kansas Policy Institute

“It’s kind of across the board,” he said. “Kansas, the structure itself, we have a lot more government than most states.”

Only looking at cities, counties and townships, Trabert said, nationwide the average is about 8,066 residents per government. In Kansas, that figure is significantly lower, clocking in at around 1,445 state residents per government — and that’s not even counting school districts or numerous other, smaller government entities. Kansas’ figures are five times the national average.

While the study knocks Kansas for its 2011 tax rates, Gov. Sam Brownback’s tax plan signed into law the following year, which decreases income tax rates, will likely improve the state’s placement in future studies.

Still, the rankings of surrounding states give Trabert cause for concern.

“People have been voting with their feet for a long time, and that’s going to continue to happen,” he told Kansas Watchdog.

It’s a trend that was revealed in even greater clarity last year, when an analysis of IRS and U.S. Census Bureau data revealed that Texas, Florida, Colorado and other low-tax states were veritable magnets for cash exiting Kansas.

“It all comes down to how much you spend,” Trabert said. “The more government you have, the more government spends, the more you have to tax people.”

The least free states, according to the Fraser Institute study, are Vermont, New Mexico, West Virginia, Mississippi, Maine, Kentucky, Montana, Arkansas, Hawaii and Rhode Island.

Related: Texas, Florida are top destinations for Kansas cash

Contact Travis Perry at travis@kansaswatchdog.org, or follow him on Twitter at@muckraker62. Like Watchdog.org? Click HERE to get breaking news alerts in YOUR state!

2013 year in review: Top 10 stories from the Sunflower State

2013 year in review: Top 10 stories from the Sunflower State

By Travis Perry, Kansas Watchdog

OSAWATOMIE, Kan. — It’s over, done, finalized, finito. With the final days and hours of 2013 ticking to a close, we figured it’s a good time for reflection on what the last 12 months have brought the Sunflower State.

So, without further delay, Kansas Watchdog presents its Top 10 stories of 2013.

Strip Club

1. Wayward welfare dollars

An in-depth investigation into howKansans spend hundreds of thousands of dollars in government welfare money came to a shocking conclusion: a striking number of transactions appear to be going toward anything but the basic necessities. From casinos and liquor stores to smoke shops and even strip clubs, Kansas Watchdog uncovered more than $43,000 in transactions at shady ATM locations around the state. To make matters worse, all this only took place over a three-month period.

Read It:
Kansans spent welfare cash on strippers, smokes and sour mash

Video camera

2. Camera-shy state lawmakers

Fun fact: Did you know the Kansas Capitol is capable of broadcasting live video online of some of the Legislature’s most important committee meetings? Don’t beat yourself up over it. A striking number of lawmakers don’t know, either. It’s the end result of years of apathy that has led the state to be one of only 11 nationwide that do not stream some form of live video. If some kid in the middle of nowhere can attract global eyeballs with nothing more than a camera phone, what’s keeping the Kansas Legislature off the air?

Read it:
Camera shy: Kansas legislators sidestep transparency
Eye in the sky: Kansas legislative leader won’t require streaming video

3. Judicial selection gymnastics

Here’s a shocking revelation: politics sway candidate commentaries, and Kansas is no exception. Gov. Sam Brownback’s pick for the Kansas Court of Appeals is a prime example of this, after the situation prompted his Democratic gubernatorial challenger to switch sides on his stance to oppose the new nominee. And how could we forget that, in their rush to criticize the conservative governor, Kansas Democrats conveniently forgot thatKathleen Sebelius did almost the exact same thing only a few years earlier.

Read it:
Democratic leader flip-flops on Kansas judicial nominee
Partisan politics fuel Kansas Democrat’s change of heart
Kansas Democrats use double standard on judicial nomination criticism

4. Follow the money

And as long as we’re on the topic of judicial nominees, how about we turn the spotlight on a few other critics of Brownback’s decision? Namely theLeague of Women Voters and Justice At Stake, both of which claim to be nonpartisan organizations while simultaneously accepting large sums of cash from George Soros’ liberal nonprofits, the Tides Foundation and Open Society Institute.

Read it:
Soros bankrolls ‘nonpartisan’ critics of Kansas governor
‘Nonpartisan’ critic says Soros cash hasn’t caused political bias

5. Fiscal follies

Ever wonder just how much work goes into calculating the cost of a legislative proposal? Not that much, apparently. While state agencies claim they don’t pad their figures, government critics charge them with doing just that, and a close inspection of a few cost estimates only bolsters the case. Should it cost $17,000 for the state to put online a spreadsheet of data it already has? What about $20,000 for a program agency officials say could have been absorbed in-house? Yea, we thought so too.

Read it:
Fiscal follies: Kansas cost estimates draw criticism

money jail

6. Your money, behind bars

How much should Kansas spend to lock up individuals whose only crime is drug related? While lawmakers are struggling to figure out what that figure should be, the reality is that Kansas drops about $42 million annually to keep these men and women in prison. To make matters worse, state law enforcement statistics suggest it’s overwhelmingly because of Kansas continues to wage war against marijuana.

Read it:
Kansas spends millions to keep non-violent drug offenders behind bars

7. Raking-in the dough

Remember the media flurry surrounding the implosion of Hostess, one of America’s most iconic snack food manufacturers? Well here’s something you probably missed. According to the government, former employees were knocked out due to foreign trade pressure, and for that deserve extra benefits above and beyond standard unemployment insurance. But everything uncovered by Kansas Watchdog seems to point to the contrary. Curious? So were we.

Read it:
Former Hostess workers land sweet deal, taxpayers foot bill
Did foreign trade really cause Hostess’ demise?
Couch fire

8. Couch crackdown

If you’re looking for the nuttiest story of the year, look no further. The City ofLawrence, Kansas’ liberal bastion, only months ago brought us the headache-inducing mandate that city residents are not, in fact, capable of policing their own safety. Rather, officials passed a ban on front porch couches, despite the fact that local and nationwide statistics suggest it’s less of an issue than advocates would have folks believe.

Read it:
Kansas community cracks down on couches
Islam Display

9. Islamic fervor

Wichita-area school came under fire earlier this year after students and parents were greeted on the first day of school with a large display outlining the five pillars of the Islamic faith. The matter prompted emotions of all scope and size, and landed the school squarely in the national spotlight.

Read it:
Kansas lawmaker ‘appalled’ by Islamic display in school

10. Counting for attendance

The legislative session is a busy time for any elected official, but some are less (or more) busy than others, it seems. After Kansas lawmakers headed for home in June, Kansas Watchdog took an in-depth peek at how they faired in the preceding months, and what we found was jaw-dropping. In all, seven members of the House of Representatives had missed more votes than all other members of the House combined.

Read it:

Handful of Kansas lawmakers outpace all others for missed votes

Contact Travis Perry at travis@kansaswatchdog.org, or follow him on Twitter at@muckraker62. Like Watchdog.org? Click HERE to get breaking news alerts in YOUR state!

Study: Kansas premiums to spike following Obamacare rollout

From Kansas Watchdog.

Study: Kansas premiums to spike following Obamacare rollout


ON THE RISE: A new report from the Heritage Foundation says Obamacare premiums are significantly higher in Kansas compared to average rates before the rollout of the new health care law.

By Travis Perry, Kansas Watchdog

OSAWATOMIE — Good news: Kansas landed in the top 10 in a recent study conducted by the conservative Heritage Foundation! Bad news: It’s for massive insurance premium hikes because ofObamacare.

Kinda puts a damper on things, huh?

As I said, before dashing your optimism with harsh reality, Kansas is among the top 10 states to possibly see the largest premium increases following the rollout of the federal health care exchange, according to a recent report from Heritage’s Center for Data Analysis. In a nutshell, the report states Obamacare health premiums available to Kansans will be higher than existing policies.

According to the Heritage report, the average premium for a 27-year-old Sunflower State resident will rise from $87.40 to $200.14, a massive 129 percent bump. This gives Kansas the unfortunate privilege of boasting the sixth-highest increase for young people nationwide.

The news gets slightly better for other groups, but not by much. Average premiums for a 50-year-old adult could increase from $198 to $341.08 (72.3 percent increase), while a family of four may see an increase from $553.92 to $676.05 (22 percent increase).

“Many families and individuals will face this reality as they apply for coverage, and the implications of experiencing sticker shock are important to consider if enough people choose not to sign up for coverage for various reasons,” policy analyst Drew Gonshorowski wrote in the Oct. 16 report.

The massive increase in premiums for young people should be especially concerning, as they’re the one group Obamacare can’t afford to do without. The successful implementation of the Affordable Care Act depends heavily on the young and healthy signing up to help pay for the elderly and infirm.

It’s important to note the Heritage study compares premium prices straight-up, not including government subsidies designed to decrease the cost to low-income individuals and families.

“This analysis represents the change in unsubsidized rate levels,” Gonshorowski wrote. “The purpose of this research is to provide further details on the changing premium levels across the country.”

Source Report: How Will You Fare in the Obamacare Exchanges?

Contact Travis Perry at travis@kansaswatchdog.org, or follow him on Twitter at@muckraker62.

Money flows to Kansas elections

Kansas Watchdog, in its article Tracking the PACs — big money flowing into crucial Senate contests, lays out the action of political action committees seeking to influence Kansas voters in the August primary election.

The issue of third-party money involvement has been a concern to many, with Democrats and moderate Republicans railing against “special interest” money, frequently referring to the Kansas Chamber of Commerce and Americans for Prosperity. The claim is that these organizations are attempting to buy an election.

Thanks to Earl Glynn’s reporting in Kansas Watchdog, we see that both sides have PACs that funnel money to, or advocate in favor of, candidates. In the case of moderate Republicans, we see that the Senate Leadership Committee PAC has received contributions from special interest groups, and then funneled that money in favor of moderate Republicans. Senate President Steve Morris controls this PAC.

A large contributor to Morris’ PAC is Kansas National Education Association (KNEA), the teachers union. This is a special interest groups that advocates for the interests of teachers, not students and taxpayers.

Another contributor is Kansas Contractors PAC. Its job is to get the state to spend as much as possible on roads and highways, without regard to whether these are needed or wanted.

Casino money makes its way to the PAC, too. The existing casinos in Kansas would like to see competition prohibited.

There are more special interest groups contributing in favor of moderate candidates, including labor unions, perhaps the most highly specialized interest group of all.

Contrast these special interests with groups like Americans for Prosperity. I have supported AFP for many years because AFP promotes economic freedom, which is good for everyone, not just for certain groups. While the Kansas Chamber is more focused on business, a thriving business climate in Kansas is good for everyone — consumers, workers, taxpayers, and government coffers. We don’t have this now in Kansas. Instead, we have low private sector job creation at the expense of government jobs.

Some are concerned about the influence of PAC spending, and also that of third parties that spend in favor of, or in opposition to, candidates. These are independent expenditures. They’re not supposed to be coordinated with the candidate or campaigns. Some of the most misleading and harshly negative ads come from these groups, instead of from the candidates’ campaigns.

This level of separation allows candidates to disavow or distance themselves from these ads. A solution is to allow larger donations to be made directly to the candidates. In this way, the campaign is responsible for the advertisements and can’t shift blame to someone else.

Kansas and Wichita quick takes: Thursday May 17, 2012

Watchdog reporter at Pachyderm. This Friday (May 18th) the Wichita Pachyderm Club features Paul Soutar, Reporter for Kansas Watchdog, speaking on “The evolution of journalism and how the new media empowers citizens.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … The club has an exceptional lineup of future speakers as follows: On May 25th: Ron Estes, State Treasurer of Kansas, speaking on “A report from the Kansas Treasurer.” … On June 1st: Gary Oborny, Chairman/CEO Occidental Management and Real Estate Development, CCIM Designated member of the Storm Water Advisory Board to the City of Wichita, speaking on “What is the economic impact of EPA mandates on storm water quality in Wichita?”

Kansas senators vote for cronyism. Veronique de Rugy explains the harm of the Export-Import Bank of the United States in Why Would Anyone be Against the Export-Import Bank? “First, the Ex-Im Bank is nothing more than corporate welfare. This is an agency that is in the business of subsidizing private companies with taxpayer dollars. … An excellent paper by Cato Institute’s trade analyst Sallie James exposes just how unseemly, inefficient, and irrelevant the Export-Import Bank is. As James explains, the Bank not only picks winners and losers by guaranteeing the loans of private companies, but it also introduces unfair competition for all the U.S. firms that do not benefit from such special treatment.” The bill is H.R. 2072: Export-Import Bank Reauthorization Act of 2012. Both Kansas senators Jerry Moran and Pat Roberts voted for this bill. So did U.S. Representative Kevin Yoder of the Kansas third district. But Representatives Tim Huelskamp, Lynn Jenkins, and Mike Pompeo voted against it.

Koch = big oil? Politico: “The Koch brothers have an unlikely ally in the war of words with their liberal adversaries: the nation’s journalistic fact-checkers. Both The Washington Post’s Fact Checker blog and the nonpartisan site FactCheck.org have dinged critics of David and Charles Koch in recent weeks for referring to the billionaire brothers as Big Oil. Why? Because Koch Industries’ business interests extend well beyond the company’s involvement in petroleum refining and other oil-based operations. And while no corporate midget, the company isn’t anywhere near as big as true oil giants like ExxonMobil. ‘So even if all of Koch Industries’ revenues came from its refining business — which they do not — they would still be a fraction of the revenues of the companies that actually represent ‘Big Oil,” the FactCheck.org critique read.” More at Fact-checkers and Kochs’ ‘Big Oil’. Another example of how facts don’t get in the way of Koch critics. Or try For New York Times, facts about Kochs don’t matter.

Economic freedom. Why does the political left criticize Charles and David Koch? In the following video from last year, Koch Industries CEO and board chairman Charles G. Koch explains the principles of economic freedom, something that he and David Koch have worked to advance for many years. These principles, according to Koch, include private property rights, impartial rule of law, free trade, sound money which reduces boom and bust cycles, and a small and limited government. These principles are good for everyone, I should add, including those currently at the bottom of the economic ladder.

We aren’t Greece … yet. “Once again, Greece finds the international community questioning its ability to pay its debts. Default and an exit from the Euro Zone (or countries which share the Euro as a common currency) threatens on the horizon. Here in the U.S., we face high debts and have a lowered credit rating due to Washington’s inability to agree on deficit reduction. Just how alike are our two nations?” An infographic from Bankrupting America explains.

Bankrupting America

Kansas and Wichita quick takes: Wednesday May 2, 2012

When government pays, government controls. Although most liberals would not admit this, it sometimes slips through: When government is paying for our health care, government then feels it must control our behavior. The Wichita Eagle’s Rhonda Holman provides an example of this, when she wrote in a blog post about Kansas relaxing its smoking ban: “Especially with Medicaid costs swallowing up the state budget, lawmakers should be discouraging smoking, not accommodating more of it.”

The moral case for capitalism. “Two main charges are typically marshaled against capitalism: it generates inequality by allowing some to become wealthier than others; and it threatens social solidarity by allowing individuals some priority over their communities. … Capitalism does allow — and perhaps even requires — inequality. Because people’s talents, skills, values, desires, and preferences vary and because of sheer luck, some people will be able to generate more wealth in a free-enterprise system than others will; inequality will result. But it is not clear that we should worry about that. … If you could solve only one social ill — either inequality or poverty — which would it be? Or suppose that the only way to address poverty would be to allow inequality: Would you allow it? … More by James R. Otteson in An Audacious Promise: The Moral Case for Capitalism at the Manhattan Institute.

Moran to address Pachyderms. This Friday (May 4th) the Wichita Pachyderm Club features United States Senator Jerry Moran speaking on “A legislative update.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … The club has an exceptional lineup of future speakers as follows: On May 11th: Gary Oborny, Chairman/CEO Occidental Management and Real Estate Development, CCIM Designated member of the Storm Water Advisory Board to the City of Wichita, speaking on “What is the economic impact of EPA mandates on storm water quality in Wichita?” … On May 18th: Paul Soutar, Reporter for Kansas Watchdog, speaking on “The evolution of journalism and how the new media empowers citizens.” … On May 25th: Ron Estes, State Treasurer of Kansas, speaking on “A report from the Kansas Treasurer.”

Funding pet projects without earmarks. Wonderful! While this plan still relies on government to some degree, it is largely voluntary, which is the direction we need to steer things. “There is a creative workaround that allows funds to flow to those prized pet projects: a commemorative coin bill.” Read more at Heritage Action for America.

Harm of taxes. In introducing the new edition of Rich States, Poor States, authors Arthur Laffer and Stephen Moore explain the importance of low taxes. “Barack Obama is asking Americans to gamble that the U.S. economy can be taxed into prosperity. That’s the message of his campaign for the Buffett Rule, which raises income-tax rates on millionaires to a minimum of 30%, and for the expiration of the Bush tax cuts. He wants to raise the highest income tax rate by 20%, double the rate on capital gains, add a new 3.8% tax on all capital earnings, and nearly triple the dividend tax rate. All this will enhance “economic efficiency,” insists a White House economic report. As for those who disagree, says President Obama, they’re just pushing “the same version of trickle-down economics tried for much of the last century. … But prosperity sure didn’t trickle down.” Mr. Obama needs a refresher course on the 1920s, 1960s, 1980s and even the 1990s, when government spending and taxes fell and employment and incomes grew rapidly.” More in the Wall Street Journal at Laffer and Moore: A 50-State Tax Lesson for the President: Over the past decade, states without an income levy have seen much higher growth than the national average. Which state will be next to abolish theirs?

Role of prices. Prices convey information more accurately and efficiently than any centralized organization — such a government. It provides a, well, automatic mechanism for adjusting to the changes in the world, changes which happen every day, and even every minute. Sometimes we may not like the information that price signals are sending, but they represent the truth. Daniel J. Smith of Troy University explains in this video from LearnLiberty.org, a project of the Institute for Humane Studies: “Why are prices important? Prof. Daniel J. Smith of Troy University describes the role that prices play in generating, gathering, and transmitting information throughout the economy. Information about the supply and demand of different goods are dispersed among different buyers and sellers in an economy. Nobody has to know all this dispersed information; individuals only need to know the relative prices. Based on the simple information contained in a price, people adjust their behavior to account for conditions in supply and demand, even if they are unaware of that information.”

Federal, United Nations planning imported to Wichita

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

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

Local Planning Initiative Has Federal Strings, UN Roots

by Paul Soutar, Kansas Watchdog

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

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

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

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

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

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

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

Occupy Koch Town protestors ignore facts

Below, Paul Soutar of Kansas Watchdog provides more evidence that the campaign against Wichita-based Koch Industries regarding their alleged involvement in the Keystone XL pipeline is not based on facts. Besides this article, U.S. Representative Mike Pompeo of Wichita has also written on this issue in The Democrats continue unjustified attacks on taxpayers and job creators.

Another inconvenient fact is that if the Canadian oil is not sold to the U.S., it will be sold to and consumed in China. If we are concerned about greenhouse gas emissions leading to climate change, it should be noted that it doesn’t matter where the greenhouse gases are produced. The effect is worldwide. But as we know, the radical environmental movement cares nothing for facts in their war on capitalism and human progress.

Facts Refute Environmentalist Claims About Keystone XL Pipeline

By Paul Soutar. Originally published at Kansas Watchdog.

Protesters are gathering on the Wichita State University campus this weekend for a Sierra Club-sponsored Occupy Koch Town protest against the Keystone XL oil pipeline and Koch Industries, Inc. Koch and its subsidiaries are involved in a wide array of manufacturing, trading and investments including petroleum refining and distribution.

Many Keystone XL opponents have focused on Koch, claiming its Flint Hills Resources Canada subsidiary’s status as an intervener in the regulatory approval process in Canada proves Koch is a party to the pipeline project. Keystone XL would carry petroleum from Canadian oil sands to the U.S. Gulf coast.

In a Jan. 25 House Energy and Commerce Committee hearing, California U.S. Rep. Henry Waxman, D-District 30, demanded that the Koch brothers, Charles and David, or a representative of Koch Industries appear before the committee to explain their involvement in the pipeline.

Philip Ellender, president of Koch Cos. Public Sector, which encompasses legal, communication, community relations and government relations, responded to Waxman on a Koch Industries website:

Koch has consistently and repeatedly stated (including here, here, here, and here) that we have no financial interest whatsoever in the Keystone pipeline. In addition, this fact has been verified by TransCanada’s CEO here.

Russ Girling, CEO of TransCanada, owner and builder of the Keystone pipelines, addressed criticism of the pipeline and supposed collusion with the Koch brothers in a Nov. 1 conference call to discuss TransCanada’s earnings. “I can tell you that Koch (Industries Inc.) isn’t a shipper and I’ve never met the Koch brothers before.”A March 2010 document from Canada’s National Energy Board (NEB) approving the pipeline does not mention Koch or its subsidiary, Flint Hills Resources Canada, on any of its 168 pages.

The report does note that on June 16, 2009, TransCanada Corporation became the sole owner of the Keystone Pipeline System, acquiring ConocoPhillips’ interest in the pipeline.

A map of the existing Keystone and planned Keystone XL pipelines shows that Koch’s two refineries in the 48 contiguous states at Pine Bend, Minn., and Corpus Christi, Texas, are not on or near the pipeline routes. Koch also has a refinery in North Pole, Alaska.

Koch does have substantial interests in Canadian oil though, including the thick oil sands mined in Alberta. Those interests are precisely why Flint Hills Resources Canada requested intervener status in the pipeline approval process in 2009.

Flint Hills’ application to Canada’s National Energy Board for intervener status said, “Flint Hills Resources Canada LP is among Canada’s largest crude oil purchasers, shippers and exporters, coordinating supply for its refinery in Pine Bend, Minnesota. Consequently, Flint Hills has a direct and substantial interest in the application.”

Critics have claimed that statement is a smoking gun proving Koch is a party to the pipeline or will benefit from its construction.

Greg Stringham, Canadian Association of Petroleum Producers (CAPP) vice president of markets and oil sands, told KansasWatchdog, “Their intervention itself is not a trigger that says aha, they have a commercial interest or are a shipper on this pipeline.”

The US Legal, Inc. definitions website says an intervener is, “A party who does not have a substantial and direct interest but has clearly ascertainable interests and perspectives essential to a judicial determination and whose standing has been granted by the court for all or a portion of the proceedings.”

US Legal, Inc. provides free legal information, legal forms and help with finding an attorney for the stated purpose of breaking down barriers to legal information.

Stringham said anyone — business, organization or individual — can be an intervener in NEB regulatory proceedings as long as they can show some potential impact, good or bad, from the proposed action. “Then they make a decision whether they’re going to actively engage through evidence and cross examination or whether they’re just there for interest, to get materials and monitor the situation.”

Market interest

Like Koch, Stringham said CAPP is an intervener in the pipeline approval process, because the pipeline will have a direct impact on the Canadian oil market. Stringham said:

The fact that it’s an intervention for interest does not mean that there is a financial ownership or shipping interest. It’s really to make sure that they understand what’s going on in the process and that they have some connection to the project that can be either positive and beneficiary or potentially negative to them. That’s why I believe Koch has intervened in this process.

The Canadian pipeline company Enbridge, Inc.; Marathon Oil Corp. and Britain’s oil giant BP are also among the 29 interveners in the pipeline application. So is the environmental activist organization Sierra Club.

Keystone XL would compete with the Enbridge pipeline that carries the thick bitumen oil from Hardisty, Alberta, for delivery to Koch’s Pine Bend, Minn., refinery. If supplies prove insufficient for both pipelines, Stringham said, Koch could be at a competitive disadvantage since it is not a shipper on the Keystone pipelines.

The National Energy Board’s approval document noted:

Keystone XL shippers have indicated that they are seeking competitive alternatives, and by providing access to a new market, Keystone XL would be expanding shipper choice. The Board places considerable weight on the fact that Keystone XL shippers have made a market decision to enter into long-term shipping arrangements negotiated through a transparent competitive process. New pipelines connecting producing regions with consuming regions change market dynamics in ways that cannot easily be predicted.

Political motivation

On Feb.10, 2011 Reuters published an Inside Climate News article that started the Koch-Keystone explosion. The third paragraph put a political spin on the Koch claims.

What’s been left out of the ferocious debate over the pipeline, however, is the prospect that if President Obama allows a permit for the Keystone XL to be granted, he would be handing a big victory and great financial opportunity to Charles and David Koch, his bitterest political enemies and among the most powerful opponents of his clean economy agenda.

Former U.S. Solicitor General Theodore Olsen, in a Wall Street Journal op-ed, highlighted the political dimension of attacks on the Kochs and recent attempts to compel their testimony before Congress.

When Joseph McCarthy engaged in comparable bullying, oppression and slander from his powerful position in the Senate, he was censured by his colleagues and died in disgrace. “McCarthyism,” defined by Webster’s as the “use of unfair investigative and accusatory methods to suppress opposition,” will forever be synonymous with un-Americanism.

In this country, we regard the use of official power to oppress or intimidate private citizens as a despicable abuse of authority and entirely alien to our system of a government of laws. The architects of our Constitution meticulously erected a system of separated powers, and checks and balances, precisely in order to inhibit the exercise of tyrannical power by governmental officials.

Market and environmental realities

Canada produces about 2.7 million barrels of oil per day with about 1.6 million going to the United States. “About a million of that comes from the oil sands,” Stringham said. “All of that moves through the existing pipeline systems.”

Two Kansas refineries, the Holly Frontier refinery in El Dorado and National Cooperative Refinery Association’s facility in McPherson, refine Canadian oil, including from oil sands, delivered over existing pipelines.

With or without the Keystone XL, oil from Canada’s oil sands will continue to go to markets, according to Stringham. “We have been investigating a number of alternatives. Keystone XL clearly is the most direct route to get to the gulf coast and that’s why the market really spoke up and said this is what we want,” he said.

In a 2010 op-ed in the National Journal, Charles T. Drevna, president of American Fuel & Petrochemical Manufacturers, presciently said, “Canada’s leaders have made clear that if the U.S. won’t buy their oil, they won’t abandon development of their oil sands. Instead, they have said they will ship Canadian oil across the Pacific to China and other Asian nations. That will result in America having to import more oil from other countries. Sending Canadian oil to Asia would actually increase global greenhouse gas emissions, according to a 2010 study by Barr Engineering.”

The Barr study, Low Carbon Fuel Standard “Crude Shuffle” Greenhouse Gas Impacts Analysis (pdf), concluded that transporting oil to Asia for refining would mean not just a lost opportunity for the U.S., but increased greenhouse gas emissions because of transportation by ship instead of by pipeline and less stringent refinery emission standards.

TransCanada has said it will continue to seek approval of the Keystone XL and work is proceeding on alternatives to Keystone XL, Stringham said. “There are other pipeline routes being investigated by Enbridge and BP and a number of others as well to move this oil,” he said.

He said Canada’s oil market is looking at diverse opportunities beyond the United States. “We are looking to the West Coast, which could move it on to tankers. We looked at Asia, it is one of the options, but once it gets to the West Coast, it can also move to the California market,” he said.

Stringham said a proposal for Enbridge to build a pipeline carrying oil to the West Coast has more than 4,000 interveners.

Occupy Koch Town promotional materials say they’ll also protest against the Kansas Policy Institute. KPI helped launch KansasWatchdog.org in 2009 but is no longer affiliated with this site.

Kansas committee asks if KBA audit did enough to expose problems

By Bob Weeks, Special to KansasWatchdog.org

Members of the joint Commerce and Economic Development Committees expressed concern that a forensic audit of the Kansas Bioscience Authority was not broad enough and that deliberate deletion of data from a KBA computer left questions unanswered.

On Wedesday James Snyder, managing partner for BKD’s Forensics and Valuation Services, told the committee that while his firm was hired and paid by KBA, Kansas Governor Sam Brownback’s administration was heavily involved. Secretary of Agriculture Dale Rodman served as the main contact for the Brownback Administration, although Caleb Stegall, the governor’s chief lawyer, and Steve Anderson, the Budget Director, also participated.

Snyder told the committee the audit process was designed to avoid a situation where after the final report was released, people would ask why certain facts were not considered or covered. “This process was specifically designed to avoid that, and it worked pretty well,” he said.

The Kansas Legislature created the KBA in 2004 and gave it $581 million to bring bioscience research and jobs to Kansas. KBA has been under fire for expenses and salaries paid to top executives and for giving grants to fund projects out of state.

Any disputes about the report’s contents were ironed out by January, but on Sunday, the day before the report was to be released, Rodman raised a difference of opinion over a possible conflict of interest involving former KBA board member Angela Kreps. Snyder characterized this as the only difference of opinion, and that it was a narrow and minor one.

Committee chair, Sen. Susan Wagle, a Wichita Republican, recognized that BKD’s position was “difficult,” as the firm was hired and paid by KBA, but it was also in frequent communication with the Brownback Administration. Snyder said the administration was involved in an oversight role, and also in defining the scope of the audit.

Senator Ty Masterson, an Andover Republican, expressed concern over possible deletion of computer files and that BKD could only “dive into that which you had, that you were provided.” BKD’s timeline of the audit showed that KBA leadership was apprised of an audit on March 10th, 2011. The next day CEO Tom Thornton accessed a computer hard drive on KBA’s network. The drive was accessible to only four people and held personnel records and confidential company information.

BKD was hired on April 11th, a fact Masterson said he found “fascinating” because KBA used a 30-day rolling backup scheme that would not have retained files deleted on or before March 10. The time lag from March 11th to April 11th means that if information was deleted from the J-Drive, it was not available to the BKD audit team.

The timing of this is “highly suspect,” Masterson said.

Snyder said the audit team had access to much information and that BKD received everything they asked for, but Masterson pointed out that we don’t know what might have been missing. Thornton’s personal laptop computer was erased or “wiped” days after the audit was called for in a way that made it impossible for the computer forensic team to recover the deleted data.

Snyder said that the committee should have high confidence in the audit’s findings and that the number of people and computers the team had access to was in many cases “extraordinary.” He also said that core KBA business records had integrity and there was no reason to suspect these systems had been compromised.

Masterson quoted from page 133 of the audit report: “Our analysis found 301 payments without a contract, including 102 payments that violated KBA’s Contract Policy. The total contract cost involved totaled $1,219,271.81 in payments without a contract, including $571,828.20 in payments which violated Contract Policy.”

Masterson noted that there’s no indication anything was technically illegal, but that the purview of the committee went beyond that. “Why do we put policies in place? It’s so that we can show best practice, best stewardship. You have shown over 300 violations of policy … I don’t know how we can paint this in the light that this is instilling confidence, and that it is clearing the air.”

Masterson also said that the best case seems to be that there was unethical management combined with inadequate oversight. He said there is the possibility of a coordinated cover up of behavior that could potentially be illegal.

Snyder answered that over time they observed “increasing sophistication” of board participation and compliance with procedures and that there had also been changes initiated by the board that offered protection.

Wagle said she received faxes from KBA employees expressing concern that the Senate Commerce Committee received altered documents. “It became very apparent that we could not rely on the information we were receiving,” she said. She asked Snyder if it was possible that documents were altered or erased so BKD did not see them.

Snyder said that although one expense report was altered, there was no indication of a “systematic issue” of alterations or erasures.

Wagle and Snyder disagreed over the extent of BKD’s contact with Wagle contending that it did not constitute an “interview” as claimed in the audit report.

Democratic Senator Tom Holland asked Snyder two questions relating to whether KBA has business policies and procedures in place to effectively run the organization, and has KBA consistently followed these? Snyder answered yes, with very few exceptions. “We found a very high level of compliance.”

Republican Senator Chris Steineger of Kansas City asked a series of questions regarding the mission of the KBA, which is, according to KBA “advancing Kansas’ leadership in bioscience” as well as creating investment and jobs in Kansas. Steineger expressed concern that much of KBA’s funding is spent on overhead, such as lawyers, architects, office buildings, travel, and dining.

Steineger distributed a series of calculations based on KBA data in the audit that he said reveals that KBA made $265 million in commitments resulting in 1,347 jobs for a cost of $196,808 per job created.

Steineger showed that removing the largest company from the mix — Quintiles, which created 1,000 jobs for a KBA contribution of $3.5 million — the remaining jobs cost more than $750,000 each.

Senator Jeff Longbine, an Emporia Republican, mentioned that there had been criticism of the KBA for insider activities among board members, conflicts of interest, cronyism, and fraud and asked Snyder if these accusations were true. Snyder said these generalized accusations were not true, although there was one instance where there was “some technical violation of a conflict of interest rule.” He said that KBA is not “fraught with fraud or self-dealing.”

The audit report also noted that KBA made regular use of executive sessions not open to the public and that, “No notes or recordings are made of Executive Sessions. This is a common business practice. Therefore, information discussed in Executive Session was not available for BKD’s review and could not be considered with regard to the findings of this report.”

In response to another question, Snyder said that no changes were recommended to the Kansas Economic Growth Act, the legislation that created the KBA. There were some recommendations to KBA board policies and procedures.

Wagle also noted that conflict of interest rules don’t really resolve conflicts. Generally, if KBA board members disclose that they have a conflict of interest — such as a company they have financial ties to getting a grant — they can refrain from voting to satisfy the rules. “To me, I don’t know if it’s okay with the people of Kansas,” Wagle said.

The joint hearing will continue tomorrow with a presentation from Rodman.

This article originally appeared on Kansas Watchdog.

Kansas and Wichita quick takes: Friday December 30, 2011

Year in review, Wichita Liberty-style. Here it is: A selection of stories that appeared on Voice for Liberty in 2011. Was it a good or bad year for the causes of economic freedom, individual liberty, limited government, free markets, and civil society?

Patriots New Years Eve. Larry Halloran of Wichita — South Central KS 912 Group is sponsoring for the second time a “Patriots New Years Eve”: Taking time to relax in the company of Patriots as we dedicate ourselves to the important work ahead in 2012. This event is New Year’s Eve from 6:00 pm to 11:00 pm at the Hawthorn Suites located at 2405 N. Ridge Road, Wichita, KS 67205, telephone (316) 729-5700. The potluck dinner starts just after 6:00 pm, followed by guest speaker Bob Weeks at 8:00 pm. This is a family-friendly event, and no alcohol is served or allowed. Despite that, I still plan to attend. RSVP to LarryHalloran@aol.com.

Legislators to hear from citizens. The South-Central Kansas Legislative Delegation will be taking public comments Tuesday January 3rd at 7:00 pm in the Jury Room of the Sedgwick County Courthouse, 525 N. Main in Wichita. (Use the north entrance to the courthouse). This is your opportunity to let local legislators know your wishes on issues that will be considered during the 2012 legislative session. In the past, each person wishing to talk has been limited to between three and five minutes depending on the number of people wishing to speak. There is usually the requirement to sign up as you enter if you want to speak.

California’s redevelopment nightmare to end. In Kansas, they’re called tax increment financing districts, and in California, they’re about to end. A press release from the Institute of Justice notes: “In a landmark victory for private property owners in the Golden State, the California Supreme Court today upheld a statute abolishing the nearly 400 redevelopment agencies across the state. The court also struck down a law that would have allowed these agencies to buy their way back into existence. The final outcome of the case is that, in 2012, California’s decades-long redevelopment nightmare will finally come to an end. California redevelopment agencies have been some of the worst abusers of eminent domain for decades, violating the private property rights of tens of thousands of home, business, church and farm owners.” Besides eminent domain abuse, the high cost of the redevelopment agencies was a factor, with 12 percent of California property taxes being diverted to what are know as TIF districts in Kansas. … The City of Wichita still views tax increment financing as a wise investment, with one such district authorized for creation this month.

Growth will heal nation’s economy. From Kansas Watchdog: While most economists are predicting something between a long, slow recovery and the impossibility of repairing an economy buried in debt, entrepreneur Louis Woodhill believes the U.S. can come roaring back in just one or two years — with the right actions. “We probably need 25 million new jobs to get to full employment from here,” he said. “But basically it could be done in a year or two at the outside if you did everything right.” His recovery formula focuses on growing the gross domestic product. “If Vince Lombardy had been an economist instead of a football coach, he would have said economic growth is not the most important thing, it’s the only thing,” Woodhill said. … The full story is at Louis Woodhill: Prescription for Growth Will Heal Nation’s Economy.

Assumptions about capitalism. Burton W. Folsom in The Myth of the Robber Barons: “This shallow conclusion dovetails with another set of assumptions: First, that the free market, with its economic uncertainty, competitive stress, and constant potential for failure, needs the steadying hand of government regulation; second, that businessmen tend to be unscrupulous, reflecting the classic cliché image of the ‘robber baron,’ eager to seize any opportunity to steal from the public; and third, that because government can mobilize a wide array of forces across the political and business landscape, government programs therefore can move the economy more effectively than can the varied and often conflicting efforts of private enterprise. But the closer we look at public-sector economic initiatives, the more difficult it becomes to defend government as a wellspring of progress. Indeed, an honest examination of our economic history — going back long before the twentieth century — reveals that, more often than not, when government programs and individual enterprise have gone head to head, the private sector has achieved more progress at less cost with greater benefit to consumers and the economy at large.” … Folsom goes on to give examples from the history of steamships, railroads, and the steel and oil industries that show how our true economic history has been distorted. Concluding, he writes: “Time and again, experience has shown that while private enterprise, carried on in an environment of open competition, delivers the best products and services at the best price, government intervention stifles initiative, subsidizes inefficiency, and raises costs. But if we have difficulty learning from history, it is often because our true economic history is largely hidden from us. We would be hard pressed to find anything about Vanderbilt’s success or Collins’s government-backed failure in the steamship business by examining the conventional history textbooks or taking a history course at most colleges or universities. The information simply isn’t included.” … Folsom’s book on this topic is The Myth of the Robber Barons: A New Look at the Rise of Big Business in America.

Resources on Austrian economics. The prolific and best-selling author Thomas E. Woods, Jr. has compiled a very useful collection of resources regarding Austrian economics. In an essay by Lew Rockwell that Woods refers to, we can learn the essence of the Austrian way: “It is not a field within economics, but an alternative way of looking at the entire science. Whereas other schools rely primarily on idealized mathematical models of the economy, and suggest ways the government can make the world conform, Austrian theory is more realistic and thus more socially scientific. Austrians view economics as a tool for understanding how people both cooperate and compete in the process of meeting needs, allocating resources, and discovering ways of building a prosperous social order. Austrians view entrepreneurship as a critical force in economic development, private property as essential to an efficient use of resources, and government intervention in the market process as always and everywhere destructive.” Concluding his essay, Rockwell wrote: “The future of Austrian economics is bright, which bodes well for the future of liberty itself. For if we are to reverse the trends of statism in this century, and reestablish a free market, the intellectual foundation must be the Austrian School.” … Woods’ collection is at Learn Austrian Economics.

Cato University. One of the highlights of my year was attending Cato University, a summer seminar on political economy. Besides attending many very informative lectures and meeting lovers of liberty from across the world, I became aware of several brilliant Cato scholars and executives whom I had not paid much attention to. One in particular is Tom G. Palmer, who is Senior Fellow and Director of Cato University, besides holding the position of Vice President for International Programs at Atlas Economic Research Foundation. He delivered many of our lectures and is the author of Realizing Freedom: Libertarian Theory, History, and Practice. An important chapter from this book is Twenty Myths about Markets. In this video he discusses being effective in bringing about change.

Kansas and Wichita quick takes: Monday December 19, 2011

Boeing tanker and Wichita. News reports from this morning’s press conference held by U.S. Representative Mike Pompeo of Wichita indicate that Boeing will not use Wichita as the finishing plant for work on the new air refueling tanker project. It was thought that this work would require 7,500 jobs in Wichita. Political and union leaders speak of holding Boeing accountable to what they believe was a promise Boeing made to Wichita, but I don’t know how they can do that. … Pompeo’s press release states: “… the work will be done in Washington state. Until very recently, it had been my expectation based on representations made to all Kansans, personally to me and my office, and to the United States Air Force, that Boeing would create 7,500 aviation jobs in our great state should Boeing prevail in the tanker bid. We now know that Boeing intends to walk away from that promise, which severely jeopardizes the future of the over 2000 aviation jobs currently held by Boeing employees in Kansas. … Boeing fought a long and fierce battle to build the KC-46A Tanker and secured the largest defense contract in the history of the world. Over a decade Boeing won, then lost and then once again emerged victorious over its competitor EADS. Kansas aviation workers were at the very core of Boeing’s effort that entire time. During that competition, Boeing stressed — both publicly and in its formal final bid proposal submitted to the United States Air Force — that its Wichita, Kansas facility would be critical to building the next generation tanker. For years, Kansas’ elected political leadership worked diligently to secure a contract award for Boeing. In short, Kansas workers and Kansas political leaders were central to the Air Force’s decision to select Boeing over EADS. To remove Kansas from the tanker project not only violates a public trust, but it creates risk to taxpayers and to our fighting forces. … I urge the company’s leaders to do all that they can to honor the Boeing name and to take all steps available to do right by the hard-working, talented people who build the world’s greatest airplanes here in Kansas.”

Wichita school dress code. The Wichita Eagle reports on a new dress code for teachers at USD 259, the Wichita public school district: “Mark Jolliffe, principal at Wilbur Middle School and president of the local administrators group, said the guidelines are intended to ‘enhance our professional position, and model for our students, staff and community’ the importance of professional dress.” Teachers continually complain that they are, in fact, professionals, but are not treated as such. I wonder: What does it say when you have to be told how to dress at work? What the community ought to be worried about is a school district that spends time on issues like this while students continue to receive a substandard education. … Furthermore, the mode of dress of schoolteachers ought to be something that parents decide through a market-based selection process. Those parents who believe that their children are best served by schools where the teachers dress nicely (and perhaps the students are in uniform) could choose schools like this, if we had school choice. Also, parents who believe their children would thrive in a more casual environment could select schools with this characteristic, but again, only if we had school choice.

Kansas legislator briefing book. A very useful publication produced by Kansas Legislative Research Department is now available in a 2012 edition. Its target is legislators, but anyone who is interested in understanding state government will find the 2012 Legislator Briefing Book useful. The section on education, for example, has an explanation of the Kansas school funding formula, complete with descriptions and values for the weightings that determine how much state funding districts receive.

Velvet Revolution voice has died. “Vaclav Havel, the playwright who led the Velvet Revolution that ended communism in Czechoslovakia, has died at 75. … Vaclav Havel helped Czechoslovakia make the transition from one of the most repressive Communist regimes to one of the most successful post-Communist countries.” More from David Boaz at Vaclav Havel, RIP.

Open records in Wichita. “The Wichita City Council approved a $2 million payment to the city’s convention and visitors’ bureau, GO Wichita, despite objections to the lack of transparency in how GO Wichita handles taxpayer money. The Kansas Open Records Act requires that entities receiving public money be subject to the law’s transparency provisions, but one of these provisions states that if such an organization files an annual financial statement, it has complied with the law. At issue is whether a one- or two-page financial report listing total revenues and expenditures can substitute for public access to more detailed records regarding specific expenditures of public funds.” More from Paul Sourtar of Kansas Watchdog at City of Wichita Spends $2 million, Rebuffs Citizen’s Transparency Request.

Cellulosic ethanol. The Wall Street Journal notes the debacle of cellulosic ethanol production and government involvement. This is ethanol produced from “wood chips and stalks or switch grass,” said President George W. Bush in 2006, also stating that “Our goal is to make this new kind of ethanol practical and competitive within six years.” So what has happened? “When these mandates were established, no companies produced commercially viable cellulosic fuel. But the dream was: If you mandate and subsidize it, someone will build it. Guess what? Nobody has. Despite the taxpayer enticements, this year cellulosic fuel production won’t be 250 million or even 25 million gallons. Last year the Environmental Protection Agency, which has the authority to revise the mandates, quietly reduced the 2011 requirement by 243.4 million gallons to a mere 6.6 million. Some critics suggest that even much of that 6.6 million isn’t true cellulosic fuel.” … the Journal cites a recent report by National Academy of Sciences that states “currently, no commercially viable biorefineries exist for converting cellulosic biomass to fuel.” The $132.4 million loan guarantee for a cellulosic plant near Hugoton in southwest Kansas is noted. (More about that at Kansas and its own Solyndra.) … Concluding, the Journal writes: “To recap: Congress subsidized a product that didn’t exist, mandated its purchase though it still didn’t exist, is punishing oil companies for not buying the product that doesn’t exist, and is now doubling down on the subsidies in the hope that someday it might exist. We’d call this the march of folly, but that’s unfair to fools.” See The Cellulosic Ethanol Debacle.

Overcriminilization. A new paper from Paul Larkin of of Heritage Foundation reports on the difficulties facing legislative solutions to the problem of overcriminilization. The abstract of the paper Overcriminalization: The Legislative Side of the Problem reads: “The past 75 years in America have witnessed an avalanche of new criminal laws, the result of which is a problem known as “overcriminalization.” This phenomenon is likely to lead to a variety of problems for a public trying to comply with the law in good faith. While many of these issues have already been discussed, one problem created by the overcriminalization of American life has not been given the same prominence as others: the fact that overcriminalization is a cause for (and a symptom of) some of the collective action problems that beset Congress today. Indeed, Congress, for a variety of reasons discussed in this paper, is unlikely to serve as a brake on new, unwarranted criminal laws, let alone to jettison broad readings of those laws by the courts. Therefore, the key to curbing overcriminalization is the American public: It is the people who, if made aware of the legislative issues that enable overcriminalization, could begin to head off such laws before the momentum for their passage becomes overwhelming.” … The conclusion to the report emphasizes the role of the people: “The legislative dynamic is not likely to serve as a brake on new, unwarranted criminal laws, let alone to jettison broad readings of those laws by the courts. The public needs to head off such laws before the momentum for their passage becomes overwhelming. And that can happen only if the public is aware of the legislative side of this problem.”

No Wichita Pachyderm. This week and next week (December 23rd and 30th) the Wichita Pachyderm club will not meet due to the holidays. Upcoming speakers: On January 6th: David Kensinger, Chief of Staff to Kansas Governor Sam Brownback. … On January 13th: Speaker of the Kansas House of Representatives Mike O’Neal, speaking on “The untold school finance story.” … On January 20th: Sedgwick County Commissioner Karl Peterjohn.

Stevens, Pachyderm President, honored. At last week’s meeting of the Wichita Pachyderm Club, President John Stevens received the “Tough Tusk Award.” In presenting the award, club Vice President John Todd remarked: “Once in awhile a local leader comes along who deserves recognition. From time to time The Wichita Pachyderm Club recognizes these special people. Today it is my pleasure to recognize one of our own who deserves special recognition. The Wichita Pachyderm Club awards committee would like to recognize our club President John Stevens as the recipient of our club’s ‘Tough Tusk Award’ as sponsored by the National Federation of Pachyderm Clubs. … He is a retired business owner who now spends his time volunteering with SCORE counseling small business owners and entrepreneurs. John also works as a community activist through his participation in city and neighborhood organizations. He is a past Wichita Park Board Commissioner and serves on boards and committees for Wichita Independent Neighborhoods. … In 2008 John was elected the precinct committeeman for the 101st precinct in Wichita. He has worked as a volunteer in local campaigns and has run as the Republican candidate for the 86th Kansas House of Representatives seat, concerned that Republican values, attitudes, and principles are not being represented in the 86th District. He continues to work toward having a Republican in the 86th House seat. … John has served as President of the Wichita Pachyderm Club for the past three years. Through the Pachyderm Club he is able to facilitate educating citizens about our government, our leaders and the Republican Party. … John says he is addicted to progress, and I can tell you that he works tirelessly for the betterment of The Wichita Pachyderm Club.” … I will add: Thank you, John Stevens, for a job well done.

Occupiers and crony capitalism. “They’re rightfully angry at what’s happening in the United States today. But unfortunately they have confused capitalism and crony capitalism, and they’ve misdiagnosed the cause of their frustration.” That’s Chris Coyne of George Mason University speaking of the Occupy Wall Street protesters. He explains in more detail in the following short video. This video is from LearnLiberty.org, a project of Institute for Humane Studies, and many other informative videos are available.

Kansas and Wichita quick takes: Monday October 31, 2011

Wichita City Council. The Wichita City Council this week considers two items of interest. Spirit AeroSystems will ask for $15 million in IRBs. Spirit will purchase the bonds itself. It will receive a property tax exemption for ten years and exemption from sales tax. No dollar amount is given for the value of the exemptions. … Then, Southfork Investment LLC, a group headed by Jay Maxwell, is asking for the formation of a new tax increment financing (TIF) district. This item, if the council approves, will set December 6 as the date for a public hearing. The vote to form the district would be taken then. … According to city documents, the project is near 47th Street South and I-135. It is planned for 50 acres and one million square feet of retail, hotel, restaurants and office space. For comparison, Towne East Square has slightly less than 1.2 million square feet of space. There will be a medical park on an additional 22 acres. … It appears that all the TIF financing will be pay-as-you go, which is a recent revision to the Kansas TIF law. No bonds would be sold. Instead, the increment in property tax would be refunded to the developer as it is paid. There’s also a joining of TIF and special assessments, where TIF revenue will be used to pay special assessment taxes. … Only a simply majority vote is needed to form the TIF district after the December 6 public hearing. There will have to be redevelopment plans approved after that, and those require a two-thirds majority. Sedgwick County and USD 259, the Wichita public school district each may pass ordinances objecting to the formation of the district. Sedgwick County did that regarding the Save-A-Lot TIF last year, and that project went ahead, despite the claims of the developer that TIF was necessary. USD 259 Superintendent John Allison has recently stated that the school district would not be participating in the formation of TIF districts in the future, as they lose revenue. This will be the first test of that. In 2008 John Todd and I testified that the district should not agree to the formation of a TIF district because of the lost revenue. Officials assured us that the Kansas school finance formula held them harmless, and it didn’t matter if a TIF district was formed. … There will also be a community improvement district (CID) with an additional sales tax of one cent per dollar. … As always, the agenda packet is available at Wichita city council agendas.

Crony capitalism. The Occupy Wall Street protests, as well as the group that protested against Koch Industries on Saturday, seem to be opposed to capitalism. Their efforts would be better directed against business specifically, or crony capitalism in particular. There’s a huge difference. Capitalism is a system of absolute respect for property rights and free exchange in free markets. As Tom G. Palmer wrote in his introduction to the recently-published book The Morality of Capitalism, “Indeed, capitalism rests on a rejection of the ethics of loot and grab.” … As for free markets and enterprise Milton Friedman explained that business is not always in favor: “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.” Even one liberal New York Times columnist realizes this, as did Nicholas D. Kristof when he recently wrote “But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.” Kristof goes on to explain that capitalism means the freedom to fail as well as succeed: “Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.” … While most want more regulation on Wall Street and banks, I think that it’s impossible for government to write effective regulations. Instead, markets — if allowed to work — provide the most effective regulation: if you fail, you fail. It’s as simple as that. But George W. Bush gave a bailout, and Barack Obama has followed along. The Dodd-Frank banking regulations, for example, make “too big to fail” an explicit policy.

Kansas pensions. Do we know the true magnitude of Kansas’ unfunded pension problem? Do we want to know? Perhaps not, writes Paul Soutar at Kansas Watchdog: “Even though taxpayers in the rest of America eventually may find out what public pensions really cost them, Kansas school accounting practices and the way school retirement is funded may let school districts avoid reporting the true cost of district employee pensions. Some estimates show the unfunded actuarial liability of the Kansas Public Employees Retirement System will more than double from its current official $8.3 billion based on optimistic assumptions to more than $20 billion using the more realistic calculations.” The full story is School Districts May Get to Dodge Accounting Rules on Pensions . … State Budget Solutions, in a recent report (Report reveals aggregate state debt exceeds $4 trillion) made similar findings, writing that our unfunded pension liability is $21.8 billion, well over twice as high as the numbers used by most official sources. The difference: “The AEI figures estimate how large public pension liabilities would be if states used private sector market-valuation methods.” In other words, the real world.

Global economics to be discussed in Wichita. This week’s meeting (November 4th) of the Wichita Pachyderm Club features Chris Spencer, Vice President, Regional Sales Manager Oppenheimer Funds, speaking on “Goliath vs Goliath — The global battle of economic superpowers.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club Upcoming speakers: On November 11th: Sedgwick County Commission Members Richard Ranzau and Jim Skelton, speaking on “What its like to be a new member of the Sedgwick County Board of County commissioners?” … On November 18th: Delores Craig-Moreland, Ph.D., Wichita State University, speaking on “Systemic reasons why our country has one of the highest jail and prison incarceration rates in the world? Are all criminals created equal?” … On November 25th there will be no meeting.

Progress, or not. Today’s Wichita Eagle carries a letter that laments the jobs lost due to self-serve checkout lanes, online bill payment, online banking, and online reservation services. Concluding, the letter asks readers to “consider how many jobs could be saved if all of us stopped demanding immediate service or answers.” This reminded me of a recent column by Donald J. Boudreaux, commenting on similar remarks by U.S. Rep. Barbara Lee (D-CA). He wrote: “Fred Barnes reports in the Weekly Standard that you refuse to use computerized checkout lanes at supermarkets (“Boneheaded Economics,” Oct. 24). As you — who are described on your website as ‘progressive’ — explain, ‘I refuse to do that. I know that’s a job or two or three that’s gone.’ Overlooking the fact that you overlook the lower prices on groceries made possible by this labor-saving technology, I’ve some questions for you: Do you also avoid using computerized (‘automatic’) elevators, riding only in those few that still use manual elevator operators? Do you steer clear of newer automobiles equipped with technologies that enable them to go for 100,000 miles before needing a tune-up? I’m sure I can find for you, say, a 1972 Chevy Vega that will oblige you to employ countless mechanics. Do you shun tubeless steel-belted radial tires on your car — you know, the kind that go flat far less often than do old-fashioned tires? No telling how many tire-repairing jobs have been destroyed by modern technology-infused tires. Do you and your family refuse flu shots in order to increase your chances of requiring the services of nurses and M.D.s — and, if the economy gets lucky and you and yours get seriously ill, also of hospital orderlies and administrators? Someone as aware as you are of the full ramifications of your consumption choices surely takes account of the ill effects that flu shots have on the jobs of health-care providers. You must, indeed, be distressed as you observe the appalling amount of labor-saving technologies in use throughout our economy. It is, alas, a disturbing trend that has been around for quite some time — since, really, the invention of the spear which destroyed the jobs of some hunters.”

Business and politics. We often hear that government should be run like a business. But the two institutions are entirely different, explains Burton Folsom: “The differences between business and politics, however, is where our focus needs to be. In business, you hire people with your profits to make and sell your product. With those jobs, your employees earn money, spend money, and thereby create other jobs by their demand for houses, cars, iPhones, and household products. Wealth expands, new entrepreneurs get new ideas for products to make, and, if society is free, it becomes prosperous. In politics, you do hire people to run your campaigns and your administration once you’re in office; you do sometimes dole out jobs to build highways, snoop on business, or run the IRS. But almost all of those jobs require other people’s money (i.e. tax dollars) to continue. They take money out of the economy. For example, the jobs created by the Justice Department to check on the trading practices of corporations, the jobs created by the agriculture department to interact with farmers, or the thousands of jobs created to bring trillions of tax dollars each year to Washington are all jobs that take wealth out of the private sector. Looked at this way, the jobs created in business are the productive jobs, the ones that create wealth and give us the thousands of choices we enjoy in breakfast cereal, cars, clothes, and houses. By contrast, each job created in the political class subtracts a job that could be continued or created in the private sector.” … More at The Difference between Business and Politics.

Kansas and Wichita quick takes: Monday October 17, 2011

Government job creation. Reason editor Matt Welch introduces the magazine’s November issue, which contains articles on free-market job creation. After citing the litany of failures, he concludes: “Such persistence in the face of repeated failure suggests that some powerful myths continue to hold sway among politicians and many of the people they represent. Among the most stubborn of these is the notion that passing a bill to fix a problem is the same as actually fixing the problem. This assumption — which reaches its illogical conclusion during times of national panic, when do-something busybodies like Michael Bloomberg will say that it doesn’t matter what Washington does, it just needs to do something — is oblivious to the law of unintended consequences, to the reality of corporatist lobbying, and to the limitations of government power.” … Then having done something, government is oblivious to what it has actually done: “A curious flip side to the myth of government omnipotence is near-complete incuriosity about government side effects. That is, people remain convinced that the state can and should look a problem squarely in the eye and fix it, but they are rarely moved by daily examples of the harm caused by earlier fixes.”

Wichita City Council. Tomorrow the Wichita City Council considers these items: The city will consider revisions the ordinances governing municipal court bondsmen. The agenda packet reports “Currently, six departments are involved in the licensing and oversight of bail bondsmen.” The goal, says the city, is a more efficient process. … Johnson Controls asks the city for a forgivable loan of $42,500. It is proposed that Sedgwick County do the same. The State of Kansas is contributing $1,168,000 through various programs. Worldwide, Johnson Controls has 137,000 employees, sales of $39,080,000,000, and profits of $1,540,000,000. Yet, corporate welfare is still required, it seems. … As always, the agenda packet is available at Wichita city council agendas.

Kansas tax plans. “In the coming months, Brownback and state legislators are expected to deal with at least three major proposals to change Kansas’ tax structure.” More from Kansas Reporter at Competing tax plans head for Kansas Legislature .

Repealer on tour. “Government regulation is costing businesses valuable time and opportunities and denying state and local government millions in tax revenue from business activity and development, according to business leaders speaking at the ‘Drowning in Regulation’ tour stop in Wichita Wednesday.” The event was part of the Office of the Repealer seeking input from Kansans. More, including video, from Kansas Watchdog at Legislators Hear Examples of Businesses Drowning in Regulations. The Repealer (Dennis Taylor, Secretary of Kansas Department of Administration) will make a public appearance in Wichita on Tuesday, November 1st at 11:30 am, in the Wichita Public Library Patio Room (223 S. Main).

Sowell: And then what will happen? Last week I quoted at length from a book by Thomas Sowell (Applied economics: thinking beyond stage one) where he writes about “thinking beyond stage one.” Later that day the great economist was interviewed by Sean Hannity, and he told the same story. Video is at Thomas Sowell on ‘Hannity’.

Zuckerman on Obama. James Freeman of the Wall Street Journal interviews Mortimer Zuckerman, who is a Democrat and an Obama voter. He has been openly critical of President Barack Obama and his leadership, and that again is expressed in this article. Zuckerman told of the real unemployment numbers: “Mr. Zuckerman says that when you also consider the labor-force participation rate and the so-called ‘birth-death series’ that measures business starts and failures, the real U.S. unemployment rate is now 20%.” … Zuckerman is pessimistic about the Obama Administration, writes Freeman. An example: “At that time he supported Mr. Obama’s call for heavy spending on infrastructure. “But if you look at the make-up of the stimulus program,” says Mr. Zuckerman, ‘roughly half of it went to state and local municipalities, which is in effect to the municipal unions which are at the core of the Democratic Party.’ He adds that ‘the Republicans understood this’ and it diminished the chances for bipartisan legislating.”

The fall of California. “California has long been among America’s most extensive taxers and regulators of business. But it had assets that seemed to offset its economic disincentives: a sunny climate, a world-class public university system that produced a talented local work force, sturdy infrastructure that often made doing business easier, and a record of spawning innovative companies. No more. In surveys, executives regularly call California one of the country’s most toxic business environments, while the state has become an easy target for economic development officials from other states looking to lure firms away.” Reasons: “a suffocating regulatory climate,” “California taxes are high and hit employers and employees hard,” and “the state’s legal environment is a mess.” Complete article by Steve Malanga of the Manhattan Institute for Policy Research in the Wall Street Journal at How California Drives Away Jobs and Business: The Golden State continues to incubate cutting-edge companies in Silicon Valley, but then the successful firms expand elsewhere to avoid the state’s tax and other burdens.

Public Sector Inc. Speaking of the Manhattan Institute, its project PublicSectorInc is a great resource for learning more aboout the issues of public sector employment. Says the site: “PublicSectorInc.org is a one-stop-shop for the latest news, analysis and research about the issues facing the public sector and the American taxpayer. It provides a national forum to probe problems and develop solutions at the state and local level. With a critical focus on the urgent topics of pension reform, employee compensation, bargaining and retirement health benefits for public employees, PublicSectorInc.org is shaping the national debate unfolding in state capitals and city halls across America.” … An example article of value is Valuing Job Security as a Public Employee Benefit.

Markets and trade help all. James Otteson explains the motivations and concerns of Adam Smith, one of the earliest economists and author of The Wealth of Nations. In a short video, Otteson explains: “One of the main concerns is … how do we raise the estates of the least among us? He’s deeply concerned about the poor in society.” Continuing: “His investigation of centuries of data … shows that, empirically, the way to help people who are the least among us, the bottom rungs economically of society, is by allowing for commerce: free trade, free migration, limited government. To the extent that you can encourage those policies, their estates will be raised tremendously. … What he’s interested in is those people at the bottom, and his endorsement of markets and of trade is because he thinks they’ll help the people at the bottom, not because they’ll help the people who are already rich.” Over the centuries since Smith, we’ve learned many times that economic freedom is good for everyone, especially the poor. … The video is from LearnLiberty.org, a project of Institute for Humane Studies.

Kansas and Wichita quick takes: Thursday October 13, 2011

Wichita city leaders too cozy with developers? Yesterday I participated in a KAKE Television news story where I explained the need for pay-to-play laws in Wichita and Kansas. These laws generally restrict officeholders from participating in votes or activities that would enrich their campaign contributors. In the story I said “What I, and some of my political allies object to, is what is happening in plain sight: In that there is a relatively small group of people — and their spouses and people who work at their companies — who regularly contribute to a wide variety of city council members, both political liberals and political conservatives, because they know that they are going to be coming to the city council and asking for taxpayer money.” Officeholders and the developers who contribute deny there is a connection between contributions and votes. Curiously, these developers generally don’t make contributions to school board members, county commissioners, state legislators, or federal representatives. Actually, it’s not so curious: It’s primarily the Wichita City Council that is able to vote to give them money. I would say the contributors are acting rationally. … If there is no connection between contributions and votes or consideration, there should be no problem in getting the council to agree to some form of pay-to-pay law for Wichita. An example is a charter provision of the city of Santa Ana, in Orange County, California, which states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.” … KAKE correspondent Deb Farris reported that Wichita Mayor Carl Brewer doesn’t look at the list of campaign contributors. I wonder: does he send thank you letters to his contributors? … Video and story at Wichita City Leaders Too Cozy With Developers?

Obama economic strategy questioned. This year’s Nobel prize in economics went to Thomas J. Sargent of New York University and Stanford University’s Hoover Institution, and Christopher A. Sims of Princeton University. In its reporting, the Wall Street Journal explained (A Nobel for Non-Keynesians: People’s expectations about government policy make it difficult for officials to affect the economy in the ways they intend to): “The Swedish economists announcing the award emphasized, correctly, the importance of Messrs. Sargent’s and Sims’s thinking about the role people’s expectations play in economic decision making and the larger economy. But what they failed to mention is that their work has also offered empirical evidence that the school of thought known as Keynesian economics — which believes that government can turn a flagging economy around with the right combination of fiscal ‘stimulus’ (generally government spending) and monetary policy — is fallible.” In further explanation, the Journal writes: “One of Mr. Sargent’s key early contributions, along with University of Minnesota economist Neil Wallace, was the idea that people’s expectations about government fiscal and monetary policy make it difficult for government officials to affect the economy in the ways they intend to. If, for example, people get used to the Federal Reserve increasing the money supply when unemployment rises, they will expect higher inflation and will adjust their wage demands higher also. The result: The lower unemployment rate that the Fed was trying to achieve with looser monetary policy won’t happen. This conclusion was at odds with the Keynesian model, which dominated economic thinking from the late 1930s to the early 1970s. The Keynesian model posited a stable trade-off between inflation and unemployment.” The 1970s however, saw stagflation — both high unemployment and high inflation at the same time, a danger that some feel will grip us in the near future. Keynesianism, of course, is the basis of the economic policy of President Barack Obama and the reason why the economy has not recovered. … While these economists worked on national economies, does the theory of rational expectations apply to state and local governments, meaning that it is very difficult for local government officials to micro-manage their economies through intervention? I think so.

Public vs. private. One of the curious statements in Rhonda Holman’s Sunday Wichita Eagle editorial (Say ‘no’ to naysayers, October 9, 2011) was where she wrote of the “crowds increasingly assembling downtown for concerts and events.” Curious because not long ago she begrudgingly realized the cool down at the Intrust Bank Arena, writing: “Intrust Bank Arena’s strong performance during its inaugural year of 2010 couldn’t last. And it didn’t.” (Make case for arena, August 19, 2100 Wichita Eagle) I don’t know if these two editorials are at odds with each other. … I have noticed one downtown Wichita venue that seems to have a lot of concerts, that being the Orpheum Theater. That venue doesn’t suffer from government genesis and ownership as does the arena, although the arena’s management is in the hands of the private sector. As part of its restoration the Orpheum may qualify for historic preservation tax credits, a government spending program that I oppose. That subsidy, if obtained, is quite small compared to the total taxpayer funding of the arena.

Kansas tax policy. Several news outlets have reported on how hard Kansas state officials are working on crafting a new state tax policy. That worries me. The best tax policy is one that is simple and fair to all. The more tax policy is worked on, the more likely it is to contain measures designed to manage the behavior of people and business firms. This would be a continuation of the conceit that the state can manage economic growth, and contrary to the concepts of economic dynamism for Kansas, where fertile ground is created for all companies.

Petition drive is on. Last Friday citizen activists started the petition drive to give the people of Wichita a chance to vote on crony capitalism or free markets. See Our Downtown Wichita (motto: “Limited government and free markets in Downtown Wichita benefit everyone. Centralized planning and crony capitalism benefit only a few.”) for more information.

Kansas education scores mixed. From Kansas Reporter: “Kansas students’ performance on reading and math proficiency improved for the 11th consecutive year, according to Kansas State Department of Education’s latest State Report Card for schools released Tuesday. Some 87.6 percent of the students tested turned in scores in the top three of five performance levels for reading and 84.7 percent achieved similar scores in math. But two other performance yardsticks show different results. Statewide Kansas test scores on ACT college entrance exams, which are averaging 22 points out of a perfect 36, have been flat for the past five years. … Most Kansas statewide reading, writing and math scores on the National Assessment of Educational Progress, or NAEP, tests have changed little since 2000, according to the U.S. Education Department, which counts the test results as the broadest national measure of how school systems compare state by state. ‘Fourth-grade math tests have improved significantly, but that’s about it,; said Arnold Goldstein, program director for the federal Education Department’s National Center for Education Statistics.” Complete story on Kansas Reporter at Kansas education scores proved mixed picture of schools’ success.

‘Federalists’ author to appear in Wichita. On October 25th Kansas Family Policy Council is hosting an event in Wichita featuring Joshua Charles, a recent KU graduate who has teamed up with Glenn Beck to write the book The Original Argument: The Federalists Case for the Constitution Adapted for the 21st Century. The book debuted at the top of the New York Times Bestseller List in July. … KFPC says “The event will be at Central Christian Church (2900 North Rock Road in Wichita) on Tuesday October 25th at 7:00 pm. Doors will open at 6:30 pm. This is a free event and dessert will be provided for attendees.” RSVP is requested to 316-993-3900 or contact@kansasfpc.com.

Kansas gas wells appraisals. Some Kansas counties use different methods of gas well valuation for tax purposes, writes Paul Soutar in Kansas Watchdog: “The method used to appraise the tax value of gas wells in Stevens County is ‘not correct or appropriate’ according to a report commissioned for Stevens County and released at their latest meeting. The method is or has been used for at least nine years, possibly since the early 1990s, in nine Southwest Kansas counties covering much of the Hugoton gas field, the ninth highest producing field in the U.S. in 2010.” … The complete investigate report is at Report Says Gas Well Appraisal Method ‘Not Correct or Appropriate’.

Lieutenant Governor in Wichita. This week’s meeting (October 14th) of the Wichita Pachyderm Club features Lieutenant Governor Jeff Colyer, M.D. speaking on “An update on the Brownback Administration’s ‘Roadmap for Kansas’ — Medicaid Reform” … Upcoming speakers: On October 21st: N. Trip Shawver, Attorney/Mediator, on “The magic of mediation, its uses and benefits.” … On October 28th: U.S. Representative Tim Huelskamp, who is in his first term representing the Kansas first district, speaking on “Spending battles in Washington, D.C.” … On November 4th: Chris Spencer, Vice President, Regional Sales Manager Oppenheimer Funds, speaking on “Goliath vs Goliath — The global battle of economic superpowers.” … On November 11th: Sedgwick County Commission Members Richard Ranzau and James Skelton, speaking on “What its like to be a new member of the Sedgwick County Board of County commissioners?” … On November 18th: Delores Craig-Moreland, Ph.D., Wichita State University, speaking on “Systemic reasons why our country has one of the highest jail and prison incarceration rates in the world? Are all criminals created equal?”

Urban renewal. “The goal was to replace chaotic old neighborhoods with planned communities.” Planned by government, that is, with all the negatives that accompany. The fascinating video from Reason.tv is titled The Tragedy of Urban Renewal: The destruction and survival of a New York City neighborhood. Its introduction reads: “In 1949, President Harry Truman signed the Housing Act, which gave federal, state, and local governments unprecedented power to shape residential life. One of the Housing Act’s main initiatives — “urban renewal” — destroyed about 2,000 communities in the 1950s and ’60s and forced more than 300,000 families from their homes. Overall, about half of urban renewal’s victims were black, a reality that led to James Baldwin’s famous quip that “urban renewal means Negro removal. … The city sold the land for a token sum to a group of well-connected Democratic pols to build a middle-class housing development. Then came the often repeated bulldoze-and-abandon phenomenon: With little financial skin in the game, the developers let the demolished land sit vacant for years.”

Kansas and Wichita quick takes: Friday September 23, 2011

Downtown Wichita site launched. As part of an effort to provide information about the Douglas Place project, a proposed renovation of a downtown Wichita office building into a hotel, a group of concerned citizens has created a website. The site is named Our Downtown Wichita, and it’s located at dtwichita.com.

Keystone pipeline hearing, bus trip. On Monday the United States Department of State will hold hearings in Topeka concerning a proposed petroleum pipeline. Says Americans for Prosperity: “Our great country has an opportunity to complete a project that would provide billions of dollars in economic activity, create thousands of high-paying manufacturing and construction jobs, and at the same time take a significant step toward providing for greater U.S. energy security and independence. … Because the project originates in Canada and would provide a pipeline extension to the Gulf Coast, through Kansas, the project requires State Department approval. TransCanada owns the Keystone pipeline, which currently runs from Canada to Oklahoma. … It has finally received tentative approval from the Environmental Protection Agency and now sits before the State Department. The State Department is holding a hearing in Topeka on Monday, September 26th from noon to 3:30pm and 4:00pm to 8:00pm at the Kansas ExpoCentre, located at the corner of Topeka Blvd. and 17th Street South.” … To help citizens attend this unusual hearing, AFP has organized a free bus trip from Wichita. The bus will load from 7:30 am to 8:00 am at the Lawrence Dumont Stadium Parking Lot. It will return to Wichita around 7:00 pm. Lunch is provided. 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.

Health care reform. “Lt. Governor Jeff Colyer spent nearly two hours with the Legislature’s Joint Committee on Health Policy Oversight Monday explaining the imperative and complexity of solving problems with government health care he likened to a Rubik’s Cube. The challenge of the 1974 puzzle and the current Medicaid and health care debate is finding a way to align multiple facets of each side without upsetting another side.” More from Kansas Watchdog at Public Health Care System Reform a Governmental Rubik’s Cube .

Pompeo defends against Obama’s attack on aviation. “Rep. Mike Pompeo (KS-04) spoke on the floor of the U.S. House of Representatives in defense of the general aviation community, which is so important to job sustainability and job growth in South Central Kansas.” Video from C-Span is at Pompeo House speech on aviation.

Wichita corporate welfare opposed. This week the Wichita City Council granted another forgivable loan. Thank you to John Todd for appearing and offering testimony opposing the loan. In his remarks, Todd said: “Over the past few months, I have watched a majority of this council fall into the trap of trying to buy customer business with free-money economic development schemes out of the public treasury. This program might work if the public treasury held unlimited funds and the public gifts were offered to every business owner on an equal basis. … In 1887 President Grover Cleveland vetoed a bill that would have given $10,000 for seed to farmers in drought-stricken Texas saying something to the effect that he could not be a party to taking money out of the treasury to benefit one group of people at the expense of another group, no matter how worthy the cause, stating that it is the responsibility of citizens to support the government and not the responsibility of government to support the people. Cleveland further issued a challenge for private charitable giving for the farmers. A number of newspapers adopted the relief campaign and in the end Americans voluntarily donated not $10,000 but $100,000 to the afflicted farmers. I would suggest a similar publicly driven voluntary relief campaign in lieu of the forgivable loan you are considering today to see if there is public sentiment to charitably fund this local economic development project.” … I’ve been told what the target company really needs is relief from a regulatory trap.

The trap of job creation. Today on C-SPAN’s Washington Journal program, Rhone Resch of the Solar Energy Industries Association appeared. He promoted solar energy as great for creating jobs, telling viewers that solar energy creates more jobs per megawatt than any other form of power generation. This illustrates the trap that politicians and those who benefit from government subsidy usually fall into: that more jobs is a good thing. Wouldn’t it be much better if we could generate all the electricity we wanted using fewer jobs? Then these surplus employees could be put to work on something else — or simply enjoy leisure. … A few years ago an editorial written by a labor union official appeared in Kansas, praising the job-creating power of wind energy. In response, I wrote “After all, if we view our energy policy as a jobs creation program, why not build wind turbines and haul them to western Kansas without the use of machinery? Think of the jobs that would create.” … In a video produced by the Cato Institute, Caleb Brown explains the problems with relying on government and its spending for jobs: “Politicians and entrepreneurs face different problems. Entrepreneurs care about creating wealth, both for their customers and themselves. This means getting more output with fewer inputs. Politicians often care more about maximizing inputs like labor, even when that job creation could make all of us materially worse off. It would be easy for the president and Congress to create new jobs: They could simply ban the use of computers, farm machinery, or any other labor-saving device. But that would clearly raise prices … It’s hard to see how that improves anyone’s standard of living.”

Kansas and Wichita quick takes: Monday August 15, 2011

Kansas economic development welfare promoted. An email from the Kansas Department of Commerce Business Development department informs us that “Kansas continues to add to its incentive tool box making it an even more competitive state for business.” A link in the email leads to a list of incentives, which include (and I don’t think this is a comprehensive list): Site location assistance; customized incentive proposals (including coordinating with local officials on local development incentives); Promoting Employment Across Kansas (PEAK), which allows companies to retain up to 95 percent of the state withholding taxes their employees pay; wind and solar bonds, paid off from the payroll withholding tax of the new jobs; Kansas Economic Opportunity Initiatives Fund, providing zero percent interest forgivable loans (if the loan is forgivable, why does it carry interest, I wonder); industrial revenue bonds which allow companies to escape paying property and sales taxes; community development block grants; partnership fund; Kansas Bioscience Authority; Investments in Major Projects and Comprehensive Training (IMPACT), Kansas Industrial Training (KIT), and Kansas Industrial Retraining (KIR), which pay for the employee training needs of companies; enterprise zone program; High Performance Incentive Program (HPIP); machinery and equipment property tax exemption; property tax abatements; sales tax exemptions; and machinery and equipment expensing deduction. … Missing from this list is the formation of the Job Creation Program Fund, which is a slush fund under control of the governor and Department of Commerce. And as the email message promoted, some of these programs have been expanded due to action of the recent Legislature. … There are perhaps one or two of these measures that conform to free market and economic freedom principles. The remainder amount to the state taking an “active investor” role in economic development, as explained in Embracing Dynamism: The Next Phase in Kansas Economic Development Policy by Dr. Art Hall, and reported on in Kansas economic growth policy should embrace dynamism. … Looking forward: Kansas officials — starting at the top with Kansas Governor Sam Brownback — want to reduce or eliminate the Kansas income tax in order to make the state more competitive for business. Will we then be able to eliminate all these incentives and the bureaucrats who promote and administer them?

‘Birth of Freedom’ screening. Tonight (Monday August 15th) the film The Birth of Freedom will be shown for free in Wichita. The film is a product of the Acton Institute, whose mission statement describes the institute as “[promoting] a free and virtuous society characterized by individual liberty and sustained by religious principles.” This free event is Monday 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. The event’s sponsor is Americans for Prosperity, Kansas. 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. … I’ve been told by those who have viewed the film that it is a very moving presentation.

Kansas Republicans meet. At its summer meeting in Wichita, the Kansas Republican Party establishment warmed up to tea party and grassroots ideas and concepts, according to reporting by Paul Soutar at Kansas Watchdog. As an example, delegates approved a resolution rejecting all aspects of Obamacare (a tea party agenda), instead of an alternative resolution by GOP Chair Amanda Adkins, who represents the establishment Republicans in Kansas. … Earlier reporting by Soutar (Ideology, Political Reality Split State GOP on Health Care ) illustrated the division between the establishment and the tea party and grassroots wings of the party over health care, particularly the early innovator grant that Kansas recently rejected.

Wichita City Council. The Wichita City Council in its Tuesday meeting will consider these items: Repair or removal of two unsafe structures and a conditional use permit for a nightclub which the Metropolitan Area Planning Commission rejected. The council will consider final approval of an ordinance regulating seasonal haunted house attractions, even though the need for this seems nonexistent. … The council also considers a letter of intent for Hospital Facilities Improvement and Refunding Revenue Bonds to benefit Via Christi Health System, Inc. These bond are similar to industrial revenue bonds. In each case, the city is not the lender, and it does not guarantee the creditworthiness of the bonds. In the case of IRBs, the benefit is that the borrow generally escapes paying property taxes, and also perhaps sales taxes too. But as a non-profit entity, Via Christi would not pay these taxes. … The council will receive a quarterly financial report for the quarter ending in June. … As always, the agenda packet is available at Wichita city council agendas.

Kansas values to be topic of speech. This Friday’s meeting (August 19th) of the Wichita Pachyderm Club features Jay M. Price, Ph.D., Associate Professor and Director of the public history program at Wichita State University, speaking on “Clashes of Values in Kansas History.” His recent Wichita Eagle op-ed was Kansas a stage for “values showdowns.” In that column, he wrote “The most visceral conflicts in our society arise when deeply held values are at odds. Time and again, Kansas has been a visible stage for such ‘values showdowns.'” The column closed with: “Picking just one value, such as freedom or liberty or private property, without the desire for a law-abiding society that embraces civil rights for all can lead to very unpleasant consequences, and vice versa. However, if we struggle with these ideals, the result can be akin to a suspension bridge that functions precisely because there are numerous forces put in opposition to one another, resulting in a strong, stable structure.” … The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club … Upcoming speakers: On August 26, Kansas State Representatives Jim Howell and Joseph Scapa speaking on “Our freshmen year in the Kansas Legislature.” … On September 2 the Petroleum Club is closed for the holiday, so there will be no meeting. … On September 9, Mark Masterson, Director, Sedgwick County Department of Corrections, on the topic “Juvenile Justice System in Sedgwick County.” Following, from 2:00 pm to 3:00 pm, Pachyderm Club members and guests are invited to tour the Sedgwick County Juvenile Detention Center located at 700 South Hydraulic, Wichita, Kansas. … On September 16, Merrill Eisenhower Atwater, great grandson of President Dwight D. Eisenhower, will present a program with the topic to be determined. … On September 23, Dave Trabert, President of Kansas Policy Institute, speaking on the topic Why Not Kansas,” an initiative to provide information about school choice. … On September 30, U.S. Representative Mike Pompeo of Wichita on “An update from Washington.”

Libertarianism explained. Dr. Stephen Davies of the Institute for Humane Studies explains in this short video message the basic ideas behind libertarian political philosophy: “[Libertarians] also argue that human beings are ultimately autonomous, self-defined, choosing individuals. And the kind of social order which is most conducive to the widest and most diverse range of human flourishing is one in which the role and power of government is kept to the minimum. Now this does not mean, however, that they need support a particular moral code or anything like that. It’s perfectly possible for someone who is a traditional Christian, someone who is a complete atheist, to both be libertarian in the way I’ve just described.” He listed policy issues that libertarians support, if they are being consistent: Free markets, free trade, free movement of people, free speech, constitutional and limited government, and opposition to coercive paternalism. But, for some policy positions, the libertarian position is not as clear and there can be disagreement. Foreign policy and abortion were mentioned as two such areas. Davies also addresses the accusation that libertarianism is an irrelevant political creed. … This video is from LearnLiberty.org, a project of Institute for Humane Studies, and many other informative videos are available.

Kansas budget director on budget, fiscal reform

By Paul Soutar, Kansas Watchdog.

WICHITA — Budget Director Steven J. Anderson outlined how he and his boss, Gov. Sam Brownback, would like to improve the fiscal affairs and economic recovery in Kansas. But Anderson admitted the effort isn’t likely to win him many friends.

His presentation to the Wichita Pachyderm Club Friday included much for fiscal conservatives to like, including efforts to reduced state spending, lower income tax rates and make state government more efficient. But some planned initiatives probably won’t sit too well with a portion of the Republican base.

Anderson said he thinks the Fair Tax, a proposal that relies on a sales or consumption tax and eliminates virtually all other taxes and exemptions, would not work politically. “From a strictly numbers perspective it’s very viable,” he said.

“When you talk about the Fair Tax you gore about everybody. Twenty percent of the GDP in this country is non-profits. Do we really want to take the charitable deduction away from your churches?” One audience member said yes as Anderson continued. “I think the hue and cry becomes really high and pitchfork and torch sales go up all over town when you talk fair or flat tax.”

Anderson also said he prefers to keep the 19 percent sales tax increase, from 5.3 to 6.3 cents on the dollar) enacted by the 2010 Legislature. “That isn’t wildly popular among some members of my party,” Anderson said. Repealing the tax increase was high on the priority list for many freshmen legislators.

Anderson would use the extra sales tax revenue to offset reductions in income tax rates. “I believe income tax is an economic inhibitor and sales tax is a measure of economic activity.”

Senate Bill 1, which would cap state spending and use sales tax revenue to reduce income tax rates, passed the House and is likely to get another shot in the Senate next year. Opponents of SB1 argue that sales taxes place a greater burden on the poor who spend a higher percentage of their income on necessities.

Recent experience shows that improving the state’s fiscal health and competitiveness will not be as simple as cutting one tax and increasing another.

In August 2009 QuikTrip demolished a store in Kansas then built a new one on the same property just a few feet to the east so the store, cash registers, and gasoline tanks are on the other side of the state line in Kansas City, Mo. The company said it pays lower taxes, has a better regulatory environment and has more customers who save money on gasoline taxes, sales taxes and cigarette taxes. Kansas loses an estimated $1.4 million in tax revenue each year because of the move.

Anderson said by keeping the state’s income tax rates where they are and cutting the state sales tax back to 5.3 percent the state would get more gas stations, but if the state has no income tax it would be more likely to lure businesses just as Texas and other states with no income tax have done. “I’d rather have the corporate headquarters.”

Anderson said he advised Brownback to focus on the state’s customers in addressing fiscal reform. “We all know that a business doesn’t survive if it can’t keep its customers. What has happened in Kansas in the last decade? If you’ve seen the latest census you know. Our customers, our citizens, have voted with their feet and left the state. I am probably an example of that. I had greater opportunity moving to Oklahoma.”

Anderson, a Kansas native and graduate of Fort Hays State University, has an accounting practice in Edmond and worked for Oklahoma Gov. Frank Keating from 1999 to 2002 in the Office of State Finance. He moved back to Kansas to work with Brownback.

“When the state thinks they can raise taxes and outwit business they make a bad mistake,” Anderson said. “Business knows how to deal with that. They either leave the state or they adjust their operations.”

Brownback wrote the foreword to “Rich States, Poor States,” an annual evaluation of economic competitiveness among the states published by the American Legislative Exchange Council (ALEC). “When you read it you will understand where we are going to go. He is very plain that we intend to cut income taxes and we intend to cut them a lot.”

One of Brownback’s early initiatives was creation of Rural Opportunity Zones (ROZ). The program offers individuals income tax exemptions for up to five years and up to $15,000 in student loan forgiveness for moving into one of 50 rural counties.

“Part of the reason why we did that was to show those that were on the fence that if you will move to what they consider the hinterlands — of course, being from Western Kansas, I don’t consider it that — for zero income tax, they certainly will jump across the Missouri border into Kansas. It’s been a real success so far and we aren’t a month into it yet.”

Anderson’s presentation addressed complaints that Brownback’s team is doing too much or too little.

Newly elected fiscal conservatives and their supporters have said Brownback didn’t move fast enough on reforms during the 2011 Legislative session. Anderson said Brownback’s team is continuing to explore data that was not available during the transition and is finding additional opportunities for reforms he expects to be unveiled soon.

Anderson also said reforms must not be stalled by projections of economic improvement based on improving income tax revenue. He said about $100 million in recent income tax revenue is from capital gains tax paid by filers who chose to sell investments now rather than after a feared federal capital gains tax increase.

As of publication time, the Kansas Department of Revenue has not replied to a KansasWatchdog request that they verify or deny Anderson’s claim.

“We actually are running behind on every revenue source,” Anderson said. “I think that should trouble us when we look down to Oklahoma who just cut taxes again. They just put $219 million in their rainy day fund. I think the proof is in the pudding. Cutting taxes works.”

Video of Anderson’s presentation is available on Kansas Watchdog TV at Kansas Budget Director Steve Anderson Part 1, part 2, and questions and answers.

Kansas and Wichita quick takes: Wednesday July 20, 2011

Kansas budget director to be in Wichita. This Friday’s meeting (July 22) of the Wichita Pachyderm Club features Steve Anderson, Director of the Budget for Kansas. The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On July 29, Dennis Taylor, Secretary, Kansas Department of Administration and “The Repealer” on “An Overview of the Office of the Repealer.” … On August 5, the three newest members of the Wichita City Council will appear: Pete Meitzner (district 2, east Wichita), James Clendenin (district 3, south and southeast Wichita), and Michael O’Donnell (district 4, south and southwest Wichita). Their topic will be “What it’s like to be a new member of the Wichita City Council?” … On August 12 Kansas Representative Marc Rhoades, Chair of the Kansas House of Representatives Committee on Appropriations, will speak on “The impact of the freshman legislators on the 2011 House budgetary process.” … On August 19, Jay M. Price, Ph.D., Associate Professor and Director of the public history program at Wichita State University, speaking on “Clashes of Values in Kansas History.” His recent Wichita Eagle op-ed was Kansas a stage for “values showdowns.” … On August 26, Kansas State Representatives Jim Howell and Joseph Scapa speaking on “Our freshmen year in the Kansas Legislature.” … On September 2 the Petroleum Club is closed for the holiday, so there will be no meeting. … On September 9, Mark Masterson, Director, Sedgwick County Department of Corrections, on the topic “Juvenile Justice System in Sedgwick County.” Following, from 2:00 pm to 3:00 pm, Pachyderm Club members and guests are invited to tour the Sedgwick County Juvenile Detention Center located at 700 South Hydraulic, Wichita, Kansas. … On September 16, Merrill Eisenhower Atwater, great grandson of President Dwight D. Eisenhower, will present a program with the topic to be determined. … On September 23, Dave Trabert, President of Kansas Policy Institute, speaking on the topic Why Not Kansas,” an initiative to provide information about school choice. … On September 30, U.S. Representative Mike Pompeo of Wichita on “An update from Washington.”

All Kansans voted for “Cut, Cap, and Balance.” From Americans for Prosperity, Kansas: “Americans for Prosperity Kansas applauds Representatives Lynn Jenkins, Tim Huelskamp, Kevin Yoder, and Mike Pompeo for standing up to solve America’s debt crisis by voting ‘Yes’ on H.R. 2560, the Cut, Cap and Balance Act. The Cut, Cap, Balance Act directly addresses the nation’s staggering $14.3 trillion debt by immediately cutting spending, capping the federal budget and sending a strong balanced budget amendment to the states for ratification. … ‘Runaway spending has buried the United States Government in debt, causing us to hit our statutory ceiling at $14.3 trillion,’ said James Valvo, Americans for Prosperity Director of Government Affairs. ‘It is time for Washington to rein it its out-of-control spending and implement real spending reforms. The Cut, Cap, Balance Act provides necessary fiscal restraint that would get America back on the path to prosperity.’ … ‘Families and businesses alike in Kansas are tightening their belts and making tough choices to make ends meet, while Washington has continued to spend with no end in sight as if there are no limits,’ said Derrick Sontag, Americans For Prosperity Kansas State Director. ‘I thank the Kansas Representatives for safeguarding the future of America and demanding Washington tighten its belt.'”

Foreclosed homes: the maps. We hear about the large number of foreclosed homes, but until you see them on a map, it’s sometimes difficult to comprehend the scope of the problem. For a tour of satellite photographs with indications of foreclosed homes, click on Satellite view of U.S. Foreclosures.

Kansas certificates of indebtedness. Kansas Watchdog: “Without the state’s most recent internal borrowing, a $600 million certificate of indebtedness (COI) issued June 30, the state general fund (SGF) would have been out of money on July 5, just five days into the new fiscal year, and wouldn’t have a positive balance again until June 21, 2012.” Reporter Paul Soutar goes on to explain how these certificates — a loan to the state to be repaid with funds collected later in the fiscal year — are commonly used year after year. But this is just the start of the state’s problems, writes Soutar: “That’s just the tip of an off-balance iceberg according to the Institute for Truth in Accounting, an advocate for more open and honest accounting for government finance. If all financial obligations, including promised pension payments and health care benefits for retirees, are added up the Kansas state budget was actually $5.2 billion out of balance by FY2011 according to Truth in Accounting.” State accounting practices mask the true magnitude of the problem, too: “Accountants familiar with government and private accounting standards told KansasWatchdog the practice is called double counting and would not be allowed in a private business because it represents a fraud intended to deceive whoever reads the financial report. The double counting approved by the Legislature and Sebelius in 2003 continues in Kansas.” … The full article, well worth reading and understanding, is Certificates of Indebtedness Symptom of Bad Budget Choices.

Why more regulation is not the answer. Brad Raple of the adverse possessor explains: “Many people associate pure free-market capitalism with a complete lack of regulation. This is not the case. Regulation is the primary reason free-market capitalism works so well. But in a capitalist system, the regulations are market-based instead of based on politically motivated bureaucrats telling people what they can and can’t do. … Bailouts, government guarantees, subsidies, and all other methods of socializing private risk undermine the regulation imposed by free-market forces. … The FDIC is even a huge example of moral hazard. For example, people pay practically no attention to the financial condition or solvency of their banks. After all, why would they? They’re FDIC insured! In other words, no one cares if their deposits are in a bank that is over-leveraged because if it fails, the FDIC will bail out the depositors. Without the FDIC, people might pay a little more attention to the financial condition of their banks. Banks would probably compete based on financial security, as opposed to free toasters, interest rates, and how quickly they can rubber stamp a home equity loan to finance a boat.” … More at Why more regulation is not the answer.

Myths of the Great Depression. “Historian Stephen Davies names three persistent myths about the Great Depression. Myth #1: Herbert Hoover was a laissez-faire president, and it was his lack of action that lead to an economic collapse. Davies argues that in fact, Hoover was a very interventionist president, and it was his intervening in the economy that made matters worse. Myth #2: The New Deal ended the Great Depression. Davies argues that the New Deal actually made matters worse. In other countries, the Great Depression ended much sooner and more quickly than it did in the United States. Myth #3: World War II ended the Great Depression. Davies explains that military production is not real wealth; wars destroy wealth, they do not create wealth. In fact, examination of the historical data reveals that the U.S. economy did not really start to recover until after WWII was over.” This video is from LearnLiberty.org, a project of Institute for Humane Studies, and many other informative videos are available.

Kansas and Wichita quick takes: Sunday July 10, 2011

Wichita city council. This week the Wichita City Council considers these major items of interest: Capps Manufacturing, Inc. seeks to avoid paying property tax on an expansion of its plant. Under the city’s Economic Development Exemption (EDX) Program, the company, according to city documents, is eligible to avoid paying 80 percent of the property tax on the expansion for a period of ten years. The documents state: “Based on the 2010 mill levy, the estimated taxable value of exempted property for the first full year is approximately $38,387.” I believe this is incorrect; that figure is the amount of property tax that would be paid on the value of the property. If the council approves, Capps will be forgiven 80 percent of that tax — nearly $31,000 per year.

Bombardier Learjet seeks issuance of $2,564,275 in Industrial Revenue Bonds. The benefit to the company is that the property purchased with bond proceeds is exempt from property taxes, which is estimated by the city to be worth $76,966 per year in taxes that Bombardier won’t be required to pay. Also, property purchased with bond proceeds isn’t subject to the sales tax. If all the items being purchased are taxable, this means Bombardier could escape paying $187,192 in sales tax. Under the IRB program, the city is not the lender and does not guarantee that bonds will be repaid.

There will be a public hearing for a facade improvement program loan for a building at 1525 E. Douglas to house GLMV Architecture. This action will loan $500,000 for the purposes of sprucing up the outside of the building, with that amount, plus interest, to be paid back in the form of special assessments collected with the regular property tax. It’s similar to the special assessment financing used in new housing developments, but here applied to existing structures. Interestingly, the city documents proclaim a “gap,” meaning that “applicants show a financial need for public assistance in order to complete the project, based on the owner’s ability to finance the project and assuming a market-based return on investment.” In other words, private financing was not available, so the city steps in, and we have another example of the city investing in money-losing projects. Although it is likely the city will be paid back, the program also includes a $30,000 grant for this project. That, of course, is a gift from Wichita taxpayers made by the city council, and will not be paid back. In addition to assistance from Wichita and its taxpayers, GLMV also benefits from state and federal taxpayers, too. Its application for historic preservation tax credits has been approved. Under the state program, GLMV is eligible for tax credits of 25 percent of the $2 million cost of the project, so Kansas taxpayers will be giving this company $500,000.

The council will be asked to receive and file the city manager’s budget. … As always, the agenda packet is available at Wichita city council agendas.

Kansas news media criticized. Kansas University political science professor Burdett Loomis takes a look at Kansas news media, particularly its coverage of the Brownback administration, and finds it lacking. In his listing of Kansas news media, Loomis misses a few outlets, namely Kansas Watchdog and Kansas Reporter. This is in contrast to his characterization of Dome on the Range as a “serious attempt.” This is laughable. Dome on the Range, written anonymously, exists primarily to poke fun at conservatives, many times for reasons that have little to do with serious issues of public policy. After several posts in March, DOTR had no posts in May, and one each in June and July. This, combined with anonymity — meaning the author is not willing to be accountable — doesn’t qualify as serious. But DOTR meshes well with Loomis’ personal politics, and Kansas Watchdog and Reporter are sponsored by conservative groups. … Loomis is correct in his assessment of the Kansas Health Institute as a valuable resource for reporting. … The op-ed is at Insight Kansas: Covering Kansas Conservatism.

The revolving door. Between government and lobbying, that is. Latest example: The Lawrence Journal-World through the Associated Press reports that Michael White, Chief of Staff for Kansas Senate President Steve Morris, is becoming a lobbyist for ITC Great Plains, an electric transmission company. The article says that White will oversee the company’s lobbying in Kansas and Oklahoma.

Kansas and Wichita quick takes: Thursday May 19, 2011

Kansas growth clusters. H. Edward Flentje, Professor at the Hugo Wall School of Urban and Public Affairs at Wichita State University: “For starters, the Brownback economic plan sends a mixed message; it argues against state policies that target incentives to the lucky few but then proceeds to target individuals moving to ‘rural opportunity zones’ for special income-tax breaks and payoffs of student loans.” The hope of the governor is that counties that have been losing population can be revived. But Flentje tells of the difficulties these rural counties face: “Rural Kansas relies much more heavily on state and federal assistance, and the cost of delivering essential public services to sparsely populated areas is substantially higher. Brownback’s preferred counties will be hammered disproportionately by his reductions in school finance and social services, and the limited amenities available in these areas will be further diminished by his cuts in public broadcasting and the arts, among other programs.” … The nostalgia for the glory days of small-town Kansas may not be in our best interests. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, which has influenced Governor Brownback’s economic policy, Dr. Art Hall wrote that productivity, which should be our ultimate goal, is related to population density: “Productivity growth is the ultimate goal of economic development. Productivity growth — the volume and value of output per worker — drives the growth of wages and wealth. Productivity growth results from a risky trial and error process on the front lines of individual businesses, which is why Kansas economic development strategy should focus on embracing dynamism — a focus virtually indistinguishable from widespread business investment and risk-taking. Productivity growth tends to happen in geographic areas characterized by density. This pattern shows up in Kansas. The dense population centers demonstrate superior productivity growth.”

Obamacare waivers go to Pelosi district. From Daily Caller: “Of the 204 new Obamacare waivers President Barack Obama’s administration approved in April, 38 are for fancy eateries, hip nightclubs and decadent hotels in House Minority Leader Nancy Pelosi’s Northern California district. … Pelosi’s district secured almost 20 percent of the latest issuance of waivers nationwide, and the companies that won them didn’t have much in common with companies throughout the rest of the country that have received Obamacare waivers.”

SRS chief to speak in Wichita. This Friday (May 20) the Wichita Pachyderm Club features Robert Siedlecki, who is Secretary of Kansas Social and Rehabilitation Services (SRS). His topic will be “The SRS and Initiatives.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On May 27, Todd Tiahrt, Former 4th District Congressman, on the topic “Outsourcing our National Security — How the Pentagon is Working Against Us.”

Kansas welfare money gets around. From NBC Action News: “At a time when the number of people relying on public assistance continues to grow, millions of dollars worth of Missouri and Kansas welfare money is being spent all over the country, including states like California and Florida, and even as far away as Hawaii and Alaska.” Kansas funds were withdrawn from ATM machines on and near the Las Vegas gambling district, and there were “back-to-back withdrawals totaling $363 at a Disney World gift shop.” Kansas Watchdog’s Earl Glynn contributed to the NBC story, and offers his own reporting at Kansas out-of-state Electronic Benefit Transfer payments .

Kansas Bioscience Authority contract. Kansas Watchdog: “Tom Thornton’s contract as president of the Kansas Bioscience Authority shows a total pay, bonus and benefit package potentially worth more than $463,200 for fiscal year 2010. That’s more than four times Governor Sam Brownback’s $99,636 salary and $63,200 more than President Barack Obama’s salary. Media reports pegged Thornton’s pay and bonus at about $365,000, but a copy of his contract obtained through multiple sources by KansasWatchdog shows several incentive opportunities and a full breakdown of benefits.” … Thornton resigned from his position in April under criticism from legislators, and the local district attorney is conducting an investigation into unspecified matters. The legislature passed a bill divorcing funding of a federal project in Kansas from the KBA, so that questions about the KBA’s activities don’t jeopardize this funding.

Medicare reform explained. A video from Center for Freedom and Prosperity Foundation features Dan Mitchell explaining the necessity for reform of Medicare, and how it should proceed. Reform of Medicare is necessary, and it can go one of two ways: “Obama’s bureaucrats decide whether you get care” or we can put seniors in charge of their care and let markets — not government — lead reform. A market-based solution, as advanced by Paul Ryan, would let seniors select their own insurance, paid for by a voucher from the government. “Programs like Medicare are akin to a all-you-can-eat restaurant with someone else picking up the tab.” That’s a recipe for disaster, says Mitchell. Competition through markets — capitalism, in other words — can provide an increasing array of services of all kinds at lower prices, including health care for all. But capitalism is not allowed to flourish in health care markets, especially for seniors. … The voucher program for seniors has been characterized by liberals as “killing Medicare.” The present system will kill itself, as even President Obama acknowledges. The end of Medicare is not the end of health care for seniors, contrary to the lies of liberals. The benefit of market competition for seniors’ health care business promises better outcomes. For Wichita, which is betting on economic development through industry using composites to create products such as replacement hip joints, it is essential that such surgeries remain affordable enough that they are commonplace. The future of Obamacare, which is rationing, is not favorable for these prospects.

Kansas and Wichita quick takes: Friday May 6, 2011

Wichita downtown sites draw little interest. Wichita Business Journal: “Interest from developers in eight city-owned “catalyst” sites in downtown Wichita was minimal — unexpectedly so. ‘I was a little bit surprised how light the response was,’ says Scott Knebel, downtown revitalization manager for the city of Wichita.” With the city soliciting informal proposals for eight sites, only two proposals were received.

KPERS. It appears that the Kansas Legislature will pass a pension “reform” bill that does not include a shift to a defined-contribution plan for new employees. Instead, the tough decisions that need to be made about the Kansas Public Employees Retirement System have been placed in the hands of a study committee. More information about the seriousness of the KPERS problem is at Economist: KPERS must undergo serious reform and KPERS problems must be confronted. Video is here, with two parts following.

More flexibility for school funds. Kansas Watchdog reports that Kansas schools will now have more flexibility to spend funds that are presently stashed away in various funds. Of interest in the article is a chart showing the growth in these fund balances. School spending advocates protest that these funds are needed to because revenue doesn’t arrvie at the same time bills do, which is true. But these fund balances have been growing, because schools have not been spending all the money they’ve been given. While this bill is a good idea, schools have always been able to tap into these funds by simply contributing less to them, thereby spending down the balances. But schools have not wanted to to do this.

Growth in Kansas spendingGrowth in Kansas spending. Click for a larger view.

Despite “cuts,” spending grows. For all the talk in Kansas of budget cuts, state spending still manages to grow year after year. Kansas Watchdog is again on top of this topic, noting “Each year various adjustments push state spending above the approved budget, but in 2010 that extra spending took a big jump that will require even more spending in the future.” Of particular interest is the chart showing spending rising every year.

Sandy Springs a model. Common Sense with Paul Jacob: “Local governments suffer from a big problem: bigness. Too often they expand their scope of services, and, in so doing, progressively fail to cover even the old, core set of services. You know, like fire and police and roads and such. The solution is obvious. Mimic Sandy Springs. This suburban community north of Atlanta, Georgia, had been ill-served by Fulton County. So a few years ago the area incorporated. And, to fend off all the problems associated with the ‘do-it-all-ourselves’ mentality, the city didn’t hire on a huge staff of civil servants. Instead, it contracted out the bulk of those services in chunks. Now, the roads get paved and the streets are cleaned and the waste is removed better as well as cheaper than ever. Reason Foundation, a think tank known for its privatization emphasis, has been on the story from the beginning. A 2005 appraisal predicted that the town would become a ‘model city.’ That prophecy seems to have been on the money, and a Reason TV video emphasizes this with the shocking fact that the town ‘has no long-term liabilities.’ As the rest of the nation’s cities, counties and states lurch into insolvency, Sandy Springs shows a way out.” … The City of Wichita has had success in outsourcing the mowing of parks. Currently, the city has several dozen pieces of commercial mowing equipment at auction.

States’ war for jobs. Bloomberg Businesweek: “State and local governments eager to recover some of the more than 8 million jobs lost during the recession are giving away $70 billion in annual subsidies to companies, according to calculations by Kenneth Thomas, a political scientist at the University of Missouri-St. Louis. States have long relied on fiscal incentives to lure businesses, or keep existing employers from decamping to other locales. Such largesse is coming under renewed scrutiny during this time of strapped budgets. State deficits could reach a combined $112 billion in the fiscal year starting July 1. ‘The tragic irony of it is that in order to pay for these things, they’re cutting other areas that really are the building blocks of jobs and economic growth,’ says Jon Shure, director of state fiscal strategies for the Washington-based Center on Budget and Policy Priorities. … With the national unemployment rate at 8.8 percent, the threat of a company pulling up stakes is enough to open states’ wallets. ‘States and communities are afraid to play chicken,’ says Jeff Finkle, who heads the International Economic Development Council. … Kansas has offered movie theater chain AMC Entertainment a generous incentives package to move away from Kansas City, Mo., The New York Times reported in April. Officials in Missouri are considering making a counteroffer. Neither the company nor state officials would comment. The bidding war helped prompt an Apr. 5 letter signed by 17 corporate executives asking the governors of the two states to quit offering inducements to lure businesses across state lines. ‘At a time of severe fiscal constraint the effect to the states is that one state loses tax revenue, while the other forgives it,’ the letter said. ‘The only real winner is the business who is ‘incentive shopping’ to reduce costs.'” … Governor Brownback’s economic development plan speaks of “A more uniform business tax policy that treats all businesses equally rather than the current set of rules and laws that give great benefit to a few (through heavily bureaucratic programs) and zero benefit to many.” It will be a while before we know if the state is able to stick to this plan.

Shale gas to be topic in Wichita. This Friday (may 6) the Wichita Pachyderm Club features Malcolm C. Harris, Sr., Ph.D., Professor of Finance, Division of Business and Information Technology, Friends University, speaking on the topic: “Shale gas: Our energy future?” Harris also blogs at Mammon Among Friends. … “Shale gas” refers to a relatively new method of extracting natural gas, as reported in the Wall Street Journal: “We’ve always known the potential of shale; we just didn’t have the technology to get to it at a low enough cost. Now new techniques have driven down the price tag — and set the stage for shale gas to become what will be the game-changing resource of the decade. I have been studying the energy markets for 30 years, and I am convinced that shale gas will revolutionize the industry — and change the world — in the coming decades. It will prevent the rise of any new cartels. It will alter geopolitics. And it will slow the transition to renewable energy.” … Critics like the Center for American Progress warn of the dangers: “The process, which involves injecting huge volumes of water mixed with sand and chemicals deep underground to fracture rock formations and release trapped gas, is becoming increasingly controversial, with concerns about possible contamination of underground drinking water supplies alongside revelations of surface water contamination by the wastewater that is a byproduct of drilling.”

Economics in one lesson this Monday. On Monday (May 9), four videos based on Henry Hazlitt’s classic work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Curse of Machinery, Disbanding Troops & Bureaucrats, Who’s “Protected” by Tariffs?, and “Parity” Prices. The event is Monday (May 9) at 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. The event’s sponsor is Americans for Prosperity, Kansas. 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.

Voters favor cuts, not tax increases to balance budget. “A survey of Kansas voters conducted on behalf of the Kansas Chamber of Commerce found widespread support for cutting spending rather than raising taxes as the way to balance the Kansas budget. Support was also found for cutting state worker salaries, or reducing the number of state employees.” More at Kansas Chamber finds voters favor cuts, not tax increases to balance budget.

Here’s the Kansas data. “KansasOpenGov.org provides a repository of data about Kansas state and local governments, giving citizens the data they need to hold officials accountable.” More at Kansas OpenGov: Here’s the Kansas data.

Kansas and Wichita quick takes: Monday April 25, 2011

American exceptionalism. This Friday (April 29) the Wichita Pachyderm Club features Kenneth N. Ciboski, Ph.D, Associate Professor of Political Science at Wichita State University. He will speak on the topic “American Exceptionalism: How and Why Are We Different From Europe?” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On May 6, Dr. Malcolm C. Harris, Sr., Professor of Finance, Friends University on the topic “Shale gas: Our energy future?” On May 13, Craig Burns and Glenn Edwards of Security 1st Title Co. on the topic “Real Estate Transactions, Ownership, Title, and Tales From the Trenches.” On May 20, Rob Siedleckie, Secretary, Kansas Social Rehabilitation Services (SRS) on the topic “The SRS and Initiatives.” On May 27, Todd Tiahrt, Former 4th District Congressman on the topic “Outsourcing our National Security — How the Pentagon is Working Against Us”.

Wichita City Council this week. As this week is the fourth Tuesday of the month, the Wichita City Council considers only consent agenda items. This agenda has two acquisition of property by eminent domain, one for improvements to East 13th Street, and another for land involved in the aquifer recharge project in Harvey County. … There will also be council member appointments, and with three new council members on board, there could be a number of these. … A workshop will follow to present updates to the downtown Wichita public incentive policy. A Wichita Eagle story reported on this, but raised more confusion than answers. For example, the story reports the proposal will include “A private-to-public capital investment ration [sic] of 2-to-1.” This differs from the Goody Clancy plan for downtown Wichita, which calls for a five to one ratio.

The Great American Bailout. Tim Huelskamp, a new member of the United States Congress from the Kansas first district, warns of the seriousness of the problem the country faces with the budget and debt: “This past Monday, Standard & Poor’s (S&P) announced that it was cutting its outlook on the U.S. from “stable” to “negative,” increasing the likelihood of a potential downgrade of America’s credit rating. This should be a dire wake-up call to Washington that the time is now to address federal red ink. For all of America’s greatness, it is embarrassing that the United States may become a credit risk.” He details the rising amount of national debt, and also the increasing percentage that is held by foreign countries. … Soon we will be faced with the decision to raise our national debt limit. Huelskamp says the only way he could support increasing the ceiling is there is also a “serious and meaningful compromise that makes substantial and real cuts to the deficit and debt.” He also supports a balanced budget amendment to the Constitution.

“Not yours to give rally” in Topeka. Next Thursday (April 28) a coalition of groups is holding a rally at the Kansas Capitol building. The event starts at 10:00 am and lasts until 2:00 pm. The lineup of speakers and topics includes Rep. Charlotte O’Hara: “Federal control of the state through the state budget,” Larry Halloran (Wichita South Central 9-12 Group): “Government Charity, the Constitution and the Rule of Law,” Dave Trabert (Kansas Policy Institute): “Kansas Budget Policy and Spending Habits,” Rep. Kasha Kelley: “House Budget,” Richard D. Fry (Patriots Coalition ): “Govt. Lawlessness and Implementing Obama Care,”Angelo Mino (Born in Ecuador – MADE in America): “Reason to Become a New Born American,” Derrick Sontag (Americans for Prosperity): “History of a Growing Kansas Budget,” and Rep. Lance Kinzer: “Court of Appeals Legislation.” … AFP is sponsoring a free bus trip from Wichita for this event. The bus will leave Wichita at 7:00 am, and should be back by 6:00 pm. The bus trip is free but reservations are required. For more information on the bus trip 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 Bioscience Authority benefits from exemptions. The Kansas Bioscience Authority has benefited from exceptions to the Kansas Open Records Act written for its own benefit. Kansas Watchdog reports.

The presidency in liberal society. Eighteen months before the election, presidential politics consumes a lot of energy. Conservatives complain that President Obama is already in full campaign mode. Liberals poke fun at Republicans for, well, for a lot of reasons. But with a properly limited government, we should care very little who is our president. Lew Rockwell explains in this excerpt from a speech titled “An American Classical Liberalism”: Every four years, as the November presidential election draws near, I have the same daydream: that I don’t know or care who the president of the United States is. More importantly, I don’t need to know or care. I don’t have to vote or even pay attention to debates. I can ignore all campaign commercials. There are no high stakes for my family or my country. My liberty and property are so secure that, frankly, it doesn’t matter who wins. I don’t even need to know his name. In my daydream, the president is mostly a figurehead and a symbol, almost invisible to myself and my community. He has no public wealth at his disposal. He administers no regulatory departments. He cannot tax us, send our children into foreign wars, pass out welfare to the rich or the poor, appoint judges to take away our rights of self-government, control a central bank that inflates the money supply and brings on the business cycle, or change the laws willy-nilly according to the special interests he likes or seeks to punish. His job is simply to oversee a tiny government with virtually no power except to arbitrate disputes among the states, which are the primary governmental units. He is head of state, though never head of government. His position, in fact, is one of constant subordination to the office holders around him and the thousands of statesmen on the state and local level. He adheres to a strict rule of law and is always aware that anytime he transgresses by trying to expand his power, he will be impeached as a criminal.

Kansas and Wichita quick takes: Thursday April 14, 2011

Kansas State Board of Education vs. Walt Chappell. There is another development in the tenure of Walt Chappell, Kansas State Board of Education member. Chappell holds some opinions that differ from the rest of the board, or at least the majority of the board, and they don’t like Chappell expressing his opinions in newspaper columns, etc. The board would rather have a unified front, even if the position taken is incorrect. Of particular, the issue of the unspent Kansas school fund balances has been prominent. Kansas Watchdog reports on a recent meeting of the board where the issue of Chappell and his speech was an issue.

Protest on tax day. A message from Wichita State University Students for Liberty: “You are cordially invited to a tax protest on Friday, 15 April at 3:00 pm. It will be held on the southeast corner of 21st Street and Rock Road. I and several members of WSU Students for Liberty will be in attendance, and we welcome yours as well.” For more information see Wichita State University Students for Liberty.

Tax day tea party events. AFP Kansas has a list of tea party events at Kansas Tea Parties. Nothing in Wichita, though.

Steineger, Kansas senator, to address Pachyderms. This Friday (April 15) Kansas Senator Chris Steineger will speak to the members and guests of the Wichita Pachyderm Club on the topic “Using Business Principles to Restructure State and Local Government For Long-Term Efficiency.” Steineger, of Kansas City, has served in the Kansas Senate since 1997 and in December switched his affiliation from the Democratic to Republican party. Steineger has voted with Republicans on fiscal issues for many years. Explaining why he switched parties, he wrote “I am a fiscal hawk who believes Americans have been borrowing, spending, and living beyond their means for too long.” Steineger has spoken at events organized by Americans for Prosperity.

Trade protectionism makes us poorer. The president of a large labor union is urging President Obama to not implement pending free trade agreements. Should we have free trade with other countries, or not? Richard W. Rahn explains, starting with the complexity of even the most humble and simple of consumer goods — the pencil — as highlighted in yesterday’s article: “As simple as a pencil is, it contains materials from all over the world (special woods, paint, graphite, metal for the band and rubber for the eraser) and requires specialized machinery. How much would it cost you to make your own pencils or even grow your own food? Trade means lower costs and better products, and the more of it the better. Adam Smith explained that trade, by increasing the size of the market for any good or service, allows the efficiencies of mass production, thus lowering the cost and the ultimate price to consumers. … It is easy to see the loss of 200 jobs in a U.S. textile mill that produces men’s T-shirts, but it is not as obvious to see the benefit from the fact that everyone can buy T-shirts for $2 less when they come from China, even though the cotton in the shirts was most likely grown in the United States. Real U.S. disposable income is increased when we spend less to buy foreign-made products because we are spending less to get more — and that increase in real income means that U.S. consumers can spend much more on U.S.-made computer equipment, air travel or whatever. … The benefits of trade are not always easy to see or quickly understand, and so it is no surprise that so many commentators, politicians, labor leaders and others get it wrong.”

City government under control. From Reason.tv: “While cities across the country are cutting services, raising taxes and contemplating bankruptcy, something extraordinary is happening in a suburban community just north of Atlanta, Georgia. Since incorporating in 2005, Sandy Springs has improved its services, invested tens of millions of dollars in infrastructure and kept taxes flat. And get this: Sandy Springs has no long-term liabilities. This is the story of Sandy Springs, Georgia — the city that outsourced everything.” Click here for video.

Kansas and Wichita quick takes: Friday April 8, 2011

Kansas Meadowlark blog recast. Earl Glynn of Overland Park has reformed his Kansas Meadowlark site from a blog to a news site along the lines of the Drudge Report. Glynn’s full-time job is working for Kansas Watchdog.

Economics in one lesson next week. On Monday, four videos based on Henry Hazlitt’s class work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Lesson, The Broken Window, Public Works Means Taxes, and Credit Diverts Production. The event is Monday (April 11) at 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. The event’s sponsor is Americans for Prosperity, Kansas. 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.

Government shutdown guide. Americans for Limited Government reports on What happens if the government shuts down? :Well, nothing really, and the consequences of a shutdown are really rather mundane. The worst part of it all, Congress would still be working, oh, and all government museums and tourist sites will close.” Tourist sites closing: that’s the “Washington Monument Strategy,” where any threatened cuts to the National Park Service will first cause a closing of the Washington Monument. Instead of looking for the ways to save money with the least impact, agencies propose cuts with the most impact first. … The Washington Post has more, noting that only essential government employees would work during the shutdown. Which causes me to ask: Why do we have non-essential government employees?

Halve the deficit by doing nothing. Writes Ezra Klein: “Just let the Bush tax cuts expire in 2012, as they’re currently scheduled to do.” But this is not “doing nothing.” It’s government taxation at a higher level than present, which is far from nothing. It’s redirecting resources from the productive private sector to government, which almost always means less effective application of these resources. The Wichita Eagle editorial board approved enough of this that they mentioned it — favorably, I think — on their blog.

State debt worse than federal. While many are aware that the U.S. federal government is awash in debt and that any plan to forcefully deal with this problem is denounced by liberals, the states, collectively, are in worse shape. Washington Examiner explains: “House Budget Committee Chairman Paul Ryan of Wisconsin talked Tuesday about cutting federal spending by a staggering $6 trillion in the next decade and in the process eliminating the $14.3 trillion national debt. As incredible as these numbers are, all 50 states face perilous fiscal times as well, but they are less able to cope than the federal government. States can’t print money, as the federal government can, and they are far more limited in whom and how much they can tax. There is one common factor here, though: Washington and the state capitals are drowning in red ink largely because professional politicians promised excessive entitlement benefits without making provisions to pay for them. … These liabilities are coming due as the baby boomers begin to retire, which means entitlement reform — at the federal and state levels — is likely to be the defining political issue for the next decade.”

This Week in Kansas. On “This Week in Kansas” Chapman Rackaway, Kenneth N. Ciboski, and myself discuss local elections in Kansas, and then the Kansas Legislature. Tim Brown is the host. “This Week in Kansas” airs on KAKE TV 10 Sundays at 9:00 am in Wichita, and 11:30 am Saturdays on WIBW in Topeka.

There are a lot of government employees

Two recent articles — one national in scope, the other covering only Kansas — tell us why our budgets are so bloated and why the private sector is struggling to survive.

Kansas Watchdog reports “In February more than one in five non-farm employees in Kansas worked for government.” This is government all levels. Why is this a problem? Reporter Paul Soutar explains:

Malcolm Harris, a professor of finance at Friends University in Wichita, said the level of government employment is an indicator of a bigger problem, “It tells me that we’ve got a lot of our resources going into government.”

“Government spending squeezes resources that might be available for increasing productivity,” Harris said. “It makes us less competitive.”

Harris said Kansas and the U.S. need to be more competitive in order to increase exports and reduce our trade imbalance.

The second article in is the Wall Street Journal, penned by Stephen Moore. Titled We’ve Become a Nation of Takers, Not Makers: More Americans work for the government than in manufacturing, farming, fishing, forestry, mining and utilities combined, it starts off with a startling statistic: “Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.”

Later Moore highlights the decline of America’s manufacturing tradition at the expense of more government: “Even Michigan, at one time the auto capital of the world, and Pennsylvania, once the steel capital, have more government bureaucrats than people making things.”

Moore finds that since government has been hiring, and since rarely is anyone fired or laid off from a government job, many college graduates want to work for government: “Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles.”

Moore notes that productivity in government is measured differently than in the private sector: “But education is an industry where we measure performance backwards: We gauge school performance not by outputs, but by inputs. If quality falls, we say we didn’t pay teachers enough or we need smaller class sizes or newer schools. … The same is true of almost all other government services. Mass transit spends more and more every year and yet a much smaller share of Americans use trains and buses today than in past decades. One way that private companies spur productivity is by firing underperforming employees and rewarding excellence. In government employment, tenure for teachers and near lifetime employment for other civil servants shields workers from this basic system of reward and punishment. It is a system that breeds mediocrity, which is what we’ve gotten.”

Moore also uncovers a paradox of government employees: “Public employees maintain that they are underpaid relative to equally qualified private-sector workers, yet they are deathly afraid of competitive bidding for government services.”

Affordable Airfares audit embarrassing to Wichita

Last week’s release of a report produced by the Kansas Legislative Division of Post Audit is an embarrassment to City of Wichita elected officials and staff, the Kansas Regional Area Economic Partnership, and the Wichita State University Center for Economic Development and Business Research. The audit found that economic development claims of the Kansas Affordable Airfares program are significantly overstated. This program pays a subsidy to discount airlines providing service in Kansas, primarily Airtran Airways in Wichita.

The primary finding of the report is this: “Overall, the program appears to have had the desired effect. Since Wichita’s original affordable airfare program (FairFares) began in 2002, fares have decreased, while the number of passengers and the number of available flights have increased. However, the Regional Economic Area Partnership’s (REAP) annual reports on the program contain numerous inconsistencies and inaccuracies. Further, the economic impact of the program has been significantly overstated. Specifically, the estimated number of jobs created and the State’s return on investment were overstated because of key methodological errors and the use of some inaccurate data. We also found that overall accountability for the State funds is lacking.”

The audit may be read in its entirety at Affordable Airfares: Reviewing the Benefits Claimed As a Result of State Funding to Lower Airfare. A summary of highlights is here.

Several news stories provide additional coverage. See Wichita Eagle: Audit: Airfare subsidies’ impact was overstated, Topeka Capital-Journal: Audit: Wichita air subsidy questioned, and Kansas Watchdog: Analysts and Elected Officials Ignored Flaws in Air Subsidy Claims .

The airline subsidy program in Wichita has a long tradition of overreaching. In 2004, Troy Carlson, who was at the time chairman of Fair Fares, a group that sought to provide a guarantee of business and operating subsidy to a discount airline, wrote that a discount airline’s presence in Wichita had an annual economic impact of $4.8 billion for the state. His claims had their starting point in a WSU CEDBR study, although Carlson extended them in a way I’m sure the study’s authors hadn’t intended.

In 2005, Sam Williams, who had taken over the role of chairman of Fair Fares from Carlson, testified to the Wichita City Council that Wichita’s leadership in providing subsidies to airlines was just like the role Kansas played when it entered the Union in 1861.

Fortunately, these ridiculous claims fell by the wayside. Except gullible city council members and legislators believed them.

Future of targeted economic development subsidies

The big takeaway from the Affordable Airfares audit is that boosters of state-sponsored and funded economic development rely on figures that often vastly overstate the effect of the programs they’re promoting. Having made a large mistake like this, agencies like REAP and CEDBR need to be watched carefully.

More fundamentally, we need to question the role of targeted economic development subsidies in Kansas. The day after the Affordable Airfares audit was released, Governor Sam Brownback released his economic development plan for Kansas. This plan calls for an end to present practices, especially the heavy-handed methods cities like Wichita use. While the plan and the governor’s budget include continued funding for Affordable Airfares, this decision was made before the audit’s findings were released to the public.

There is an alternative method of funding the airline subsidy besides taxing everyone in the state, or City of Wichita for that matter. When government provides services that benefit everyone, such as police protection, most people agree that taxes to pay for these services should be broad-based. But we can precisely identify the people who benefit from cheap airfares: the people who buy tickets. Wichita could easily add a charge to tickets for this purpose. The mechanism is already in place.

The charge wouldn’t have to be very much, either. With 1,549,395 passengers in 2010, and with the Affordable Airfares program costing $6.67 million, the charge would need to be just $4.30 per passenger, or double that for a round trip ticket.

City and REAP officials will argue that low airfares benefit everyone. But as we’ve seen, these claims are overstated.

In Kansas, school reformers not wanted

Paul Soutar of Kansas Watchdog has found that some members of local school boards who ask for information face pushback and opposition as they try to exercise the type of oversight that many people want. Many people, that is, except those within the public school system. For them, board members are expected to be compliant and unquestioning.

Kansas Public School Governance: Reformers Need Not Apply

By Paul Soutar

An expert on school policy seems to have summed up what’s going on around the country, including right here in Kansas. “Even if by some miracle a dissenter can slip onto the board, there are tricks that the status quo uses to neutralize that person.”

Tim Blakenship liked using his math and science training to help out at the local high school. He also attended school board meetings and noticed that board members weren’t discussing large expenditures before voting their approval. What he saw motivated him to run for a seat on the USD232 De Soto Board of Education in 2007.

“The biggest thing I talked about during that campaign was the need to scrutinize administrative proposals and ask questions,” Blankenship said. “When I’d come to a board meeting and see that no questions were asked at all. They just voted to do it.”

Kansas Watchdog has heard similar concerns directly from other citizens and board members around the state and anecdotes reported second hand from others, but few board members have been willing to speak on the record about their concerns.

Continue reading at Kansas Public School Governance: Reformers Need Not Apply.

Kansas and Wichita quick takes: Tuesday January 18, 2011

Education reformer to speak in Kansas. Next week the Kansas Policy Institute hosts education reform expert Dr. Matthew Ladner at several events in Kansas. In Wichita, he will speak at a free breakfast event on Tuesday January 25th. Information on that event and those in Topeka and Overland Park can be found at Kansas Policy Institute Upcoming Events. Ladner, of the Goldwater Institute, will speak on the topic “Good to Great — Lessons for Kansas from Florida’s education revolution.” Florida has been at the forefront of education reform in recent years, according to a study by EducationNext. Kansas, on the other hand, ranks very low in studies that look at education reform among the states. An invitation to the Wichita event is here. RSVPs are requested by January 20th.

Wichita council candidate websites spotted. This is not a comprehensive list of candidates. Instead, these are city council candidates’ websites that have been noticed. District 2, currently held by Sue Schlapp, who may not run due to term limits: Steve Harris, Paul Savage, Charlie Stevens. … District 3, currently held by Roger Smith on an interim basis: Clinton Coen, James Clendenin…. District 4, currently held by Paul Gray, who may not run due to term limits: Joshua Blick, Michael O’Donnell. … District 5, currently held by Jeff Longwell: Jeff Longwell, Lynda Tyler.

Schools’ funding claims questioned. “Much of the increase in state spending for schools since 2005 has accumulated in cash reserve funds rather than being spent in classrooms, according to an analysis of unencumbered cash reserves held by districts.” The Kansas Watchdog story by Paul Soutar continues: “Carryover cash in accessible district funds has increased by $306 million since 2005, the year the Kansas Supreme Court’s Montoy decision went into effect. Cash in these funds grew to about $743 in 2010, up $187 million since 2008. The carryover, or unencumbered cash, is money appropriated in previous years but not spent and with no claims against it for unpaid bills or other obligations. The cash accumulates in more than 30 distinct funds.” … The balances in these funds rise when money is not spent as fast as it is put in. School districts argue that they need some fund balances — and they do — but the growing balances, year after year for most districts, undermines the claims of school spending advocates.

Kansas schools rated. “Kansas elementary and secondary schools rose one spot in a new national performance ranking, but are still below the U.S. average and many other states, the publishers of Education Week reported this week. The publication’s 15th annual ‘Quality Counts’ survey of how precollegiate schools are faring across the nation, ranks Kansas’ performance 37th in the nation, up one place from last year’s assessment, but still lower than the national average.” The Kansas reporter story mentions state school board member Walt Chappell and his concern that Kansas’ state-controlled student achievement scores — which show rapidly rising performance — may not be valid or reliable: “Even so, the Education Week rankings and others like them are important, said Walt Chappell, a state board of education member who in the past has expressed skepticism about claims of educational excellence that he believes don’t square with students’ college entrance exams or the state’s double digit high school dropout rates. At the very least, ‘here is another outside observer taking another look at our schools and telling us there is room for improvement,’ Chappell said.”

Insurance costs on the rise in Kansas. From Kansas Reporter: “Health insurance premiums have gone up 5 to 7 percent in Kansas because of the federal Patient Affordable Care Act, an underwriters’ group official told lawmakers Thursday.” Mandates for increased coverage are seen as a cause.

Kansas and Wichita quick takes: Thursday January 6, 2011

State GOP chief to speak in Wichita. This Friday (January 7th) Amanda Adkins, who is Chair of the Kansas Republican Party, will speak at the Wichita Pachyderm Club. The topic is “Conservative Leadership Now — 2020: Building Long-term Political Infrastructure for the State of Kansas.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. Upcoming speakers include Bob Lamke, Director of the Sedgwick County Division of Public Safety on January 14th, and Ed Flentje, Professor at the Hugo Wall School of Urban and Public Affairs at Wichita State University, will be discussing a book he co-authored titled “Kansas Politics and Government” on January 21.

Kansas budget under more stress. The gap in the Kansas budget for fiscal year 2012 is now estimated at $550 million. In context, the general fund budget is around $6 billion, so the gap is about none percent of the budget. Fiscal year 2012 starts on July 1, 2011, and is the budget year the legislature will be working on when the session starts next week — although usually the real work on the budget is delayed until near the end of the session. It’s important to remember that the gap is the difference between projected revenues and desired or forecast spending. There’s nothing that says we have to spend what past plans call for.

Education and Medicaid spending protected. Governor-elect Brownback said this week that education and Medicaid will be protected from budget cuts. Furthermore, there will be no tax increase. But these two budget items are such a huge portion of Kansas spending, it’s difficult to see where the governor will find room to create a balanced budget.

Kansas school spending, constitutional issues discussed. Last Friday (New Years Eve) the Kansas 9.12 and Kansans for Liberty groups held an educational event and I made a presentation on Kansas school spending and ideas for reform. Video of my presentation is available at Vimeo. Other speakers included Larry Halloran on The Year Ahead, David Losey on states’ nullification rights, and Richard Fry on Article 3 Original Jurisdiction.

Low interest rates and saving. Thomas A. Page, President of Emprise Bank in Wichita, recently wrote a letter to the Wichita Eagle in which he explained how government intervention in the economy has negative — and surely unintended — consequences: “Much has been written about the efforts of various federal agencies, specifically the Federal Reserve, to maintain interest rates at unprecedented low levels. The most frequent argument for these rates is that they will cause consumers and businesses to borrow more money, which will stimulate the economy by increasing demand. It’s not working — for many reasons. What has been ignored is the impact on the economy of lowered incomes for America’s savers, particularly retirees. Their incomes have been devastated and, consequently, so has their purchasing power.”

Kansas and Wichita quick takes: Monday December 27, 2010

This week at Wichita City Council. This week, as is the usual practice for the fourth Tuesday of each month, the agenda for the Wichita City Council features only consent items. These consent items are thought — at least by someone — to be of routine and non-controversial nature, and the council votes on them in bulk as a single item, unless a council member wishes to “pull” an item for discussion and possibly a separate vote. One such consent item is “Payment for Settlement of Claim — Estate of Christopher Perkins.” As Brent Wistrom reports in the Wichita Eagle’s, Wichitopekington blog, “A police car en route to an emergency call smashed into a Saturn coup last December, killing the coup’s 30-year-old driver, Christopher Perkins. Perkins’ family filed a negligence claim, and, on Tuesday, Wichita City Council members will vote to settle the case for $300,000.” The agenda packet is at Wichita City Council, December 28, 2010. … Also, the city will vote whether to spend $400,000 for an analysis of nine aging fire stations and what repairs and upgrades they might require. Whatever work is found to be necessary would cost much more, presumably. The cost of the analysis is being paid for by borrowing money through general obligation bonds. … Usually these “fourth Tuesday” meetings are followed by a workshop, but as of this moment, no agenda is available. … The Sedgwick County Commission will not meet this week.

Kansas schools’ unspent funds. Perhaps this will be the year in which Kansas schools — along with other state agencies — will publicly confront the reality of their budgets and unspent funds. Kansas Watchdog takes a look on Truth Emerging on Unencumbered K-12 Education Funds .

Which Brownback will govern? The Lawrence Journal-World looks at the future of incoming Kansas Governor Sam Brownback and wonders how he will govern. Perhaps the most telling observation is that of Wichita State University professor H. Edward Flentje: “Then Brownback got elected to Congress as a budget-taming conservative, Flentje said. But the budget couldn’t be tamed, and Brownback morphed into the social conservative for which he is most well-known, or, as Flentje describes it, ‘wearing his faith in the public square.'” So now I’m wondering: Can this year’s Kansas budget be tamed? … On the role of national politics: “Kansas University political science professor Burdett Loomis said that although Brownback is known for his social conservative views, he may be moderated somewhat by national aspirations.”

Rapidly rising costs at Kansas Universities criticized. Tuition at our state’s two flagship universities — The University of Kansas and Kansas State University have risen much faster than inflation, writes John R. LaPlante, educational policy fellow the Kansas Policy Institute in a letter to the Topeka Capital-Journal. Rapidly rising administrative costs are one reason, he writes. But costs can be controlled: “Cutting administrative expenses isn’t just a nice thing to do, it is possible. Iowa State, Texas A&M and the University of Missouri actually reduced their administrative expenses. It should be no surprise that they had smaller tuition increases than every other university in the conference, save Texas Tech.”

States and their pension problems. George Will in the Washington Post writing on the problem with under-funded state employee pension plans: “The nation’s menu of crises caused by governmental malpractice may soon include states coming to Congress as mendicants, seeking relief from the consequences of their choices. Congress should forestall this by passing a bill with a bland title but explosive potential.” Will goes on to describe a bill in Congress that would mandate transaprency of just how bad the problem is: H.R. 6484: Public Employee Pension Transparency Act. … In Kansas, efforts to merely describe the severity of the problem result in attacks on the messenger. In Wichita, the head of Service Employees International Union Local (SEIU) 513 appeared before the board of USD 259, the Wichita public school district, in order to denounce the reports and what he claimed where the political motives behind it. See video at KPERS report sparks backlash from Wichita SEIU.

Airport security found lacking. From the ABC News report Gaping Holes in Airline Security: Loaded Gun Slips Past TSA Screeners: “But the TSA did miss [the loaded gun], and despite what most people believe about the painstaking effort to screen airline passengers and their luggage before they enter the terminal, it was not that unusual. Experts tell ABC News that every year since the September 11 terror attacks, federal agencies have conducted random, covert “red team tests,” where undercover agents try to see just how much they can get past security checks at major U.S. airports. And while the Department of Homeland Security closely guards the results as classified, those that have leaked in media reports have been shocking.”

Compact strategy against Obamacare outlined. From the Weekly Standard: “An issue of interest to two or more states can lead to a compact. It works this way: State legislatures approve a proposal, the states agree on the parts of mutual concern (such as buying insurance across state lines), then the compact is dispatched to Washington for ratification by Congress and the president (though the need for White House assent isn’t spelled out in the Constitution). Ratification turns the compact into federal law. However, there’s a bigger reason for forming a compact against Obamacare. By banding together, states would have far more political clout in Washington.”

Kansas and Wichita quick takes: Wednesday December 1, 2010

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.”

Yoder: No business as usual. Kansas Watchdog reports on a speech by newly-elected U.S. Congressman Kevin Yoder from the Kansas third district. Said Yoder: “Business as usual has to stop in Washington.” They always say this. Let’s hope Yoder and the other new representatives from Kansas mean it, and can resist the inevitable pressures. Remember the assessment of Trent Lott, a former Senate majority leader and now a powerful lobbyist, as reported in the Washington Examiner: “‘We don’t need a lot of Jim DeMint disciples,’ Lott told the Washington Post, referring to the conservative South Carolina senator who has been a gadfly for party leadership and a champion for upstart conservative candidates. ‘As soon as they get here, we need to co-opt them.'”

Kansas revenue outlook was mixed in November . From Kansas Reporter: “Kansas’ economy and the state government’s cash flow continued to struggle in November, preliminary tax revenue numbers indicated Tuesday. A Kansas Department of Revenue calculation of state tax receipts during November showed the state collected $384 million in taxes during the month, a whisker-thin $783,000, or 0.2 percent, less than forecasters calculated just three weeks ago, but nearly $30 million, or 8.5 percent more than in November, 2009.” The 8.5 percent growth from a year ago is partly from the increase in the state’s sales tax. “This suggests that actual retail sales activity, on which state officials are counting to hit future revenue targets, may be trailing year-earlier levels by about 2.4 percent.”

Teacher organization offers alternative to KNEA . “The Kansas Association of American Educators says it offers the benefits of a union membership, but doesn’t involve itself in partisan issues.” More at Kansas Reporter.

Kansas education officials may overstate student performance. Kansas schools claim rapidly rising test scores while other measures of student performance remain largely unchanged, even falling in some years. Kansas Watchdog reports: “There are nagging questions about the validity of claims based on state assessments and the tests are only one measure of the education system’s performance. Several national education watchdogs and the U.S. Department of Education have questioned the rigor of state tests, proficiency standards, graduation rates and graduates preparation for college and the workforce.” The story is Kansas Education Officials May Overstate Student Performance.

Kansas and Wichita quick takes: Friday November 12, 2010

Dilts drops campaign for city council. Jason Dilts has announced that he is ending his campaign for a position on the Wichita City Council. He had been running for the district 4 position currently held by Paul Gray, who is precluded from running again by the city’s term limit law. While Dilts’ politics are liberal and might have been expected to depart from those of the incumbent, Gray voted for nearly every spending measure that came before the council. … Dilts’ departure leaves this district without any publicly declared candidates. The filing deadline for city and school board elections is January 24, 2011. The primary election is March 1, and the general election is on April 5. These elections are non-partisan, meaning that candidates run without party identification, although everyone who cares knows who belongs to which party. In the primary, the top two vote-getters advance to the general election.

OTB: One-term Barack. Larry Sabato of the University of Virginia Center for Politics predicts a dim future for President Barack Obama and his chances for reelection. Sabato’s most recent “Crystal Ball” column starts off with “The wreckage of the Democratic Party is strewn just about everywhere. President Obama’s carefully constructed 2008 Electoral College breakthrough is now just broken, a long-ago memory of what might have been a lasting shift in partisan alignment.” After presenting the evidence, Sabato concludes: “There’s only one logical conclusion to be drawn: President Barack Obama is down for the count, will have an early lame duck presidency, and will be out of the White House in two years.”

Project Downtown: The Master Plan for Wichita. The “final draft” version of the plan for the revitalization of downtown Wichita is now available. Click on Project Downtown: The Master Plan for Wichita. Perhaps after the “final draft” comes the “first permanent version?” Next week the Metropolitan Area Planning Commission will hold a public hearing to consider adoption of the plan. The meeting is at 1:30 pm Thursday Nov. 18, in the tenth floor conference room at Wichita City Hall, 455 N. Main. This is an opportunity for the public to comment on this project. I’m thinking I’ll be there.

Wichita city hall garage closing. Letter to Wichita Eagle, in part: “The bureaucrats reserve for themselves convenient services, while those they are supposed to serve do without and are exposed to parking-meter violations and parking fines. Wichita government has a history of poor service to its citizens. Recent examples include the mismanagement of the Wichita water utility and resulting increases in our water bills, and the increased fees assessed to homeowners for home protection alarms. Yet we see good-old-boy deals on below-market rate loans and tax incentives to every project that comes before city officials, worthy or not.”

Some Kansas counties voted against judges. Last week’s elections in Kansas offered voters the opportunity to vote whether several Kansas Supreme Court and Kansas Court of Appeals justices should be retained in office. Voters decided to retain all by roughly a two-to-one margin. But some Kansas counties voted against retaining the judges. In particular, some western Kansas counties, Cherokee county in extreme southeastern Kansas, and Coffey county in east-central Kansas voted against the judges. A Kansas Watchdog story asked Fort Hays State University political science professor Chapman Rackaway for his analysis. He said “I think you’re seeing more an expression of a philosophy than a particular agenda against these particular justices.” He noted “A more libertarian streak runs strong in western Kansas, and along with that comes a philosophy of ‘throw the bums out.'” He also says that “I think if you ran a correlation of votes you’d find that the strongest Libertarian and Republican results would come from some of the counties you’ve pointed out. In the end, then, this is more about general change than it is a specific policy or judge.”

Health insurance profits. Watching liberal media so you don’t have to: Cenk Uygur, who appears on the liberal television network MSNBC, reported on the profits of health insurance companies. He said that health insurance companies earned $9.3 billion in profits for the first three months of the year, up 41 percent in the last year, adding “Do we really want to leave decisions about our health and our lives to a corporation whose sole purpose is to make money off of us? They get billions in profits by taking in more money from us than they pay out for our care. I’m not sure that makes a lot of sense.” First: citing a number like these profit figures without providing context means very little. Health insurance company profits — in terms of the industry’s size — have been low in recent years. Second: Have the insurance companies figured out how to the “game” the Obamacare plan? It wouldn’t be the first time large companies have co-opted government regulation for their own profit. Third: Do you — as does Uygur — trust the government to make decisions regarding your health care? The idea of a benevolent government paternally caring for our best interests is dangerous. Profit is a more reliable motive. The problem is that health insurance companies compete in a highly regulated market, where the profit motive is not fully able to express itself. Contrast the market for automobile insurance, where companies compete vigorously for business. In that industry, complaints of companies refusing to pay legitimate claims are rare. That’s because with auto insurance, consumers have a wide variety of companies to select from. That’s not the case with health insurance, where the choice for many people is made by their employer. Dissatisfied consumers have little ability to switch to another company.

KansasOpenGov.org revamped. The Kansas Policy Institute announces a major revision of its government transparency website KansasOpenGov.org. I’ll have a longer article about this website next week.

In Left’s attack on Koch Industries, facts sometimes don’t matter

Sometimes in politics hatred runs so deep that facts simply don’t matter.

We saw an example of this Wednesday in Overland Park, Kansas as a group of two “theatrical protesters” sought to inform attendees at an Americans for Prosperity rally about what they thought was the true nature of that organization.

Their argument, presented in a handout paid for by the Kansas Democratic Party and given to attendees, went like this:

First: “My friends at Americans for Prosperity can be a little shy — which is why they’ve outsourced the job of letting you know who they really are to me.”

This charge of outsourcing — made by two women theatrically dressed in sorcerer’s outfits: “out sourcerers,” get it? — is a common criticism of big business. Democrats often campaign on a pledge of eliminating tax breaks for American companies that outsource jobs overseas. Whether these jobs are created at the expense of American jobs is a matter of contention.

Then, the handout notes a fact that I think just about everyone knows by now and has never been hidden: “Americans for Prosperity was founded by billionaire CEO David Koch. [New York Times, 7/10/08]”

(Not to quibble too much here, but the New York Times article referenced describes David Koch’s position as “executive vice president and a board member of Koch Industries,” not CEO.)

Then comes the heart of the charge: that Koch Industries outsources American jobs to China: “One of Koch Industries’ key subsidiaries actually won an award for Outsourcing Excellence” after they shipped American jobs to China. [Freeborders Press Release, 6/1/06; http://www.invista.com/page_whois_shareholder_en.shtml]”

Earl Glynn of Kansas Watchdog looked into this matter and found out that the outsourcing took place before Koch Industries owned INVISTA, the company that did the outsourcing — and a small job it was at that. Below I quote at length from the article AFP Bus Stop in Overland Park Greeted by “Out-Sourcerers”. There’s video of the theatrical protestors in the Kansas Watchdiogarticle:

The “Out Sourcerers” also complained about the out sourcing of jobs by Koch Industries in their handout:

One of Koch Industries’ key subsidiaries actually won an award for “Outsourcing Excellence”; after they shipped American jobs to China. [Freeborders Press Release, 6/1/06; http://www.invista.com/page_whois_shareholder_en.shtml]

Google cache shows this online article from June 2006 about this “Outsourcing Excellence Award.” The description of the project for this award was “an interactive online sales platform for textile mills to market fabrics directly to garment vendors, brands and retailers anywhere in the world.”

Freeborders used its strategy of onshore project management in both Europe and the US, coupled with offshore development at its Shenzhen, China facilities to complete the project three weeks ahead of schedule. The new platform was launched in the US, Europe and Asia Pacific and over 700 brand and retail companies, registered in the first five weeks. The platform ultimately connected 600 textile manufacturers in 40 countries to over 1,000 brands and retailers worldwide.

An online article Lessons Learned From This Year’s Awards from Aug. 2006 describes the “outsourcing” that was used to “meet impossible deadlines” over an 8 week period to win the award:

INVISTA then hired Freeborders, a supplier that agreed to meet the demanding deadline by putting together teams in the US, Europe, and China who literally worked around the clock. With eight weeks left, the buyer asked Freeborders if it could deliver the library three weeks early so it could demonstrate the program at a trade show in Miami. And Freeborders did.

How many permanent jobs could have been involved in meeting “impossible deadlines” over an 8 week period?

But that’s not the whole story either:

  • In 2001, three years before INVISTA was acquired by Koch Industries, INVISTA’s former owner outsourced an IT project to a global consulting firm. Fewer than 20 of the consulting firm’s employees worked on the project. It was completed in 2001.
  • Five years later, that 2001 IT project was given an “outsourcing award” (in an award category titled “Best European collaboration” given that the project was initiated out of a European office of INVISTA’s former owner).

A DuPont press release from Nov. 2003 explained the sale of INVISTA by DuPont to subsidiaries of Koch. At that time INVISTA had 18,000 employees at 50 global manufacturing sites. The press release does not mention if any of the DuPont resources were in Wichita or Kansas.

The Out Sourcerers’ claims about Koch Industries outsourcing jobs from Wichita or Kansas is about politics, not jobs in Wichita or Kansas.

Koch Industries has 70,000 employees in 60 countries. The majority of the employees — more than 50,000 — are employed in North America with about 2,200 employees in Wichita.

Kansas judicial retention election attracts attention

Kansas Watchdog’s Earl Glynn reports on the fund-raising and politics surrounding Kansas Supreme Court Justice Carol A. Beier and the retention election she faces this year. Normally these judicial retention elections are not newsworthy, although perhaps they should be. This year’s retention election for Justice Beier, however, is attracting attention.

What’s interesting to me is the state’s legal establishment rallying around a justice that it had an outsized role in selecting. Kansas University law professor Stephen J. Ware was researched and written extensively on how the method of judicial selection in Kansas concentrates power in the hands of the state’s lawyers: “Kansas is extreme — no other state gives the bar as much power.” See Kansas is at the undemocratic extreme in judicial selection for more about Ware’s work on this topic.

Questions about new 527 PACs, $25,000 loan unanswered. Groups support Supreme Justice Beier?

A political battle may be brewing over the retention of certain members of the Kansas Supreme Court in the November general election, and especially the retention of Justice Carol Beier.

Two Wichita-based political action committees formed in recent months, but directors and donors are unwilling to answer questions, including one about a loan. One group spent nearly $25,000 more than it raised.

Based on the political history of the donors and the vendors, the new PACs appear to be a response to the “Fire Beier” campaign announced in January by Kansans for Life.

Continue reading at Questions about new 527 PACs, $25,000 loan unanswered. Groups support Supreme Justice Beier?

Kansas schools have used funds to increase spending

Although revenue to Kansas school districts has declined, schools have been able to increase spending by using fund balances. These fund balances have been the subject of controversy, with school spending advocates insisting that they can’t be used in the way that we now see they have been used.

The controversy over school spending has been played out in the pages of the Wichita Eagle, both on the editorial page and in advertisements placed by public interest groups.

The group that has placed most of the ads, the Kansas Policy Institute, was mentioned, although not by name, in an Eagle op-ed written by several Wichita-area school superintendents.

The op-ed states: “This group’s goal is to cast doubt on school funding.” We’ve found, however, that there is plenty of doubt and misinformation about Kansas school funding. A recent poll that KPI commissioned found that very few Kansas residents are well informed about school funding and spending.

School spending advocates have every motivation to keep the public from learning the facts, as the KPI poll found that when Kansans are presented with the truth about school spending, very few are willing to personally pay more taxes for increased spending on schools.

As to the controversy over fund balances, a Kansas Watchdog story (Schools Districts Tap Cash Reserves to Increase Spending ) gives more details. (Kansas Watchdog is a project of the Kansas Policy Institute.)

I spoke with KPI president Dave Trabert about the recent figures released by the Kansas State Department of Education. He said there are several things that Kansans should learn from these figures, the first being that there is good news in these results. Schools have been able to increase spending despite losses in revenue.

Trabert said that the challenge that schools may have is to find a way to offset half of the loss of federal stimulus funds. In the case of USD 259, the Wichita public school district, that figure is $9.7 million. The recent report from KSDE states that the Wichita district will end the current school year with $14.5 million in its contingency reserve fund.

Trabert said that the contingency fund provides the funding needed to keep spending at current levels. There is no need to cut anything, including employees. (The Wichita school district recently announced plans to cut 117 employees.)

While there may be increased costs in some areas that can’t be avoided, districts have options. A bill introduced in the Kansas Legislature would give districts additional flexibility in using fund balances that are not available presently. The bill is HB 2748.

Even without this bill, Trabert said that school districts can “spend down” fund balances simply by not adding as much to the various funds that school districts have been adding. That’s the other piece of good news: school districts have been spending down the funds that they claim can’t be used.

By using fund balances, schools in Kansas were able to increase spending by an estimated $320 million in the current school year. Revenue to Kansas school districts declined by about $50 million, but $370 in fund balances were used to boost total spending by $320 million. Trabert verified these figures with Kansas Deputy Education Commissioner Dale Dennis.

School districts in Kansas also complain that the state is often tardy in making its payments to them. Legislation has been introduced that would require the state to pay on time. The state has the money, Trabert said, noting that if the state truly did not have the funds, we would see plummeting bond ratings for the state. But the state’s policy, as stated in the 2009 Comprehensive Annual Financial Report is “As a cash flow management policy, the State seeks to avoid borrowing from its own idle funds to meet expenditure obligations of the State General Fund.”

So the money is there, but the state makes a deliberate decision to not pay school districts on time.

There is still money in funds that can be used for the upcoming school year. Schools should be able to meet their funding needs without asking the state to increase taxes.