In this excerpt from WichitaLiberty.TV: Leaders in Wichita often liken government decision making to running a business, but there are important differences. That Wichita’s leaders in both government and business do not understand this is problematic. View below, or click here to view at YouTube. For more on this, see In Wichita, no differentiation between business and government.
Following, Sedgwick County Commissioner Karl Peterjohn explains something that the county could do to boost economic growth that doesn’t require government intervention, doesn’t need fleets of bureaucrats, reduces cronyism and corruption, increases economic freedom, respects property rights, reduces the power of government to control its subjects, and doesn’t give politicians opportunities to inflate their egos and boost their electoral prospects by being photographed at ground-breaking and ribbon-cutting ceremonies taking credit for spending your money on something you don’t want and which does not work to create jobs and prosperity. For these reasons — especially the latter — this won’t be popular with the political class.
I’ve gathered data from the property tax study that Peterjohn mentions and presented data specific to Wichita at Wichita property taxes compared. A version of this commentary appeared in the Wichtia Eagle.
Let’s create something special and unique
By Karl Peterjohn
This community as well as our country is still in an economic crisis. Our community needs a boost, or a comparative growth advantage. Creating a one (1) cent city sales tax in Wichita won’t create economic growth.
In fact, raising taxes would put our community on the same path trail blazed by many other communities across our country. That is the path to fiscal perdition: Detroit.
This community can create a special and unique comparative advantage by eliminating one of the major disadvantages that this state in general, and Wichita and Sedgwick County face: high property taxes. The high property tax problem for Wichita was once again identified in a national study by the Lincoln Institute on Land Policy and the Minnesota Center for Fiscal Excellence’s, “50 State Property Tax Comparison Study,” issued in March. In this study it identified the fact that Wichita’s property tax on commercial property was 38% above the national average.
High taxes mean less economic growth. This is particularly true for property taxes.
The unique and special approach this community needs is instead of raising the sales tax to expand city spending, the focus should be on eliminating the county’s property tax. Currently the county imposes a 29.3 mill property tax county wide. This mill levy could be eliminated with about a 1.5 cent increase in the sales tax on a revenue neutral basis.
This type of property tax competitiveness would be beneficial on several levels. First, it would provide a unique selling proposition to help attract business to this county and Wichita.
Eliminating the county property tax would provide benefits to all property taxpayers and not just a select few getting special subsidies contained within the city’s sales tax hike plan. Eliminating the county’s property taxes would reduce most county taxpayers’ property tax bills by roughly 25 percent.
Let’s move away from the subsidy model whose odious examples include the failed Solyndra national subsidy boondoggle.
Instead of dangling subsides, which everyone else in the eco-devo game is doing, let’s try a unique incentive: Sedgwick County just eliminated its property tax! We should try this because it can work.
In 1995 Kansas eliminated its state unemployment tax because the fund had developed a large cash balance. This five year tax moratorium created a unique economic advantage for Kansas business. Within a couple of years, the Kansas economy enjoyed a substantial surge in economic growth. Kansas became a leader enjoying some of the fastest economic growth between 1997 to 1999. Eventually, the unemployment fund’s cash balance shrank. By 1999 the unemployment tax was restored. This unique tax advantage was eliminated.
As a county commissioner I am focused on creating a special advantage for everyone in Sedgwick County. Eliminating the county’s property tax is an idea whose time has come.
In this episode of WichitaLiberty Radio: Former United States Representative Todd Tiahrt spoke to the Wichita Pachyderm Club on Friday May 16. Tiahrt is the current Republican National Committeeman for Kansas. He is said to be considering running for the position in Congress that he previously held, and which is presently held by Mike Pompeo. Tiahrt was introduced to the Pachyderm Club members and guests by Sedgwick County Commissioner Karl Peterjohn.
Leaders in Wichita often liken government decision making to running a business, but there are important differences.
As Wichita considers the future of its economy, a larger role for government is contemplated. The views of the people leading the effort to expand government management of the local economy are important to explore. Consider Greater Wichita Economic Development Coalition Chairman Gary Schmitt, who is also an executive at Intrust Bank. Following is an excerpt from the minutes of the May 22, 2013 meeting of the Board of Sedgwick County Commissioners. The topic was a forgivable loan to Starwood Hotels and Resorts Worldwide Inc. These loans are equivalent to a cash grant, as long as conditions are met. At the time of this meeting Schmitt was vice chair of GWEDC.
This discourse shows the value of elected officials like Karl Peterjohn, and also Richard Ranzau, as he too contributed to the understanding of this matter. When Michael O’Donnell served on the Wichita City Council, he also contributed in this way.
Here’s what Schmitt told the commissioners, based on the meeting minutes: “I know at the bank where I work, if we had a $1 invested and get a return of over $2.40, we would consider that a very good investment in the future.”
Shortly after that he said “Very similar what we do at the bank when we negotiate loan amounts or rates. So it is very much a business decision to try to figure out how to bring 900 jobs to our community without overspending or over committing.”
The problem is that when the bank Schmitt works for makes a loan, there are several forces in play that are not present in government. Perhaps the most obvious is that a bank loans money and expects to be repaid. In the case of the forgivable loan the commission was considering, the goal is that the loan is not repaid. These loans, remember, are a grant of cash, subject to a few conditions. If the recipient company is required to repay the loan, it is because it did not meet conditions such as job count or capital investment. In these circumstances, the company is probably not performing well economically, and therefore may not be able to repay the loan.
Another example of how a bank is different from government is that at a bank, both parties enter the loan transaction voluntarily. The bank’s shareholders and depositors are voluntary participants. Perhaps not explicitly for each loan, but if I do not like the policies or loans my bank has made, I can easily move my shares and deposits to another bank. But for these government loans, I personally have appeared several times before governmental bodies asking that the loan not be made. I did not consent. And changing government is much more difficult than changing banks.
Another difference between Schmitt’s bank and government is that bank’s goal is to earn a profit. Government doesn’t calculate profit. It is not able to, and when it tries, it efforts fall short. For one thing, government conscripts its capital. It faces no market test as to whether it is making good investments. It doesn’t have to compete with other institutions for capital, as a private bank does. Ludwig von Mises taught us that government can’t calculate profit and loss, the essential measure that lets us know if a business is making efficient use of resources. Thomas DiLorenzo elaborated, writing: “There is no such thing as real accounting in government, of course, since there are no profit-and-loss statements, only budgets. Consequently, there is no way of ever knowing, in an accounting sense, whether government is adding value or destroying it.”
An example of this lack of accounting for capital comes from the same governmental body making this forgivable loan. In Intrust Bank Arena depreciation expense is important, even today, I explain that proper attention given to the depreciation expense of Intrust Bank Arena in downtown Wichita would recognize and account for the sacrifices of the people of Sedgwick County and its visitors to pay for the arena. But the county doesn’t do that, at least not in its most visible annual reporting of the arena’s financial results.
Governments locally do have a measure of what they consider to be “profit.” It’s the benefit-cost ratio calculated by the Center for Economic Development and Business Research (CEDBR) at Wichita State University. This is the source of the “$1 invested and get a return of over $2.40″ that Schmitt referenced. But the “benefits” that go into this calculation are quite different from the profits that business firms attempt to earn. Most importantly, the benefits that government claims are not really benefits. Instead, they’re in the form of additional tax revenue paid to government. This is very different from the profits companies earn in voluntary market transactions.
Government usually claims that in order to get these “benefits,” the incentives must be paid. But often the new economic activity (expansion, etc.) would have happened anyway without the incentives. There is much evidence that economic development incentives rank low on the list of factors businesses consider when making investments. A related observation is that if the relatively small investment government makes in incentives is solely or even partially responsible for such wonderful outcomes in terms of jobs, why doesn’t government do this more often? If the Sedgwick County Board of Commissioners has such power to create economic growth, why is anyone unemployed?
Those, like Gary Schmitt, who are preparing to lead Wichita’s efforts in stimulating its economy believe that government should take on a larger role. We need to make sure that these leaders understand the fundamental differences between government and business, and how government can — and can’t — help business grow.
Following is an excerpt from the meeting minutes:
Chairman Skelton said, “Okay, thank you. Anybody else who wishes to speak today? Please state your name and address for the record.”
Mr. Gary Schmitt, (address redacted to respect privacy) greeted the Commissioners and said, “I work at Intrust Bank and I am the Vice-Chair of GWEDC. Thank you for the opportunity to speak to you today. I want to thank all of you also for just saving the county $700,000 by refinancing the bond issue. I think that was a great move. I think that’s exactly what we need to do to help support our county.
Mr. Schmitt said, “Also want to say I think Starwood coming to Wichita with 900 jobs in the very near future is a big win for Wichita, for Sedgwick County and our community. And I just want to encourage you to support the $200,000 investment. I know at the bank where I work, if we had a $1 invested and get a return of over $2.40, we would consider that a very good investment in the future. And I think having 900 people employed in basically starter jobs, or jobs to fill the gap in their financial needs for their families is very important also. So thank you very much for the opportunity to speak. I encourage you to support positive vote on this.”
Chairman Skelton said, “Commissioner Peterjohn.”
Commissioner Peterjohn said, “Mr. Schmidt, I thank you for coming down and speaking today and your efforts on behalf of GWEDC. One of the things I struggle with these issues when they come before the Commission is what is the, how do we come up with an optimum number? I mean, why is $200,000 the right figure for the county’s contribution. And also, I mean, other than the fact that the city approved a similar amount yesterday, and when this comes to us and the calculations are coming from a, I think, a basic input and output model that fluctuates, depending on what assumptions you feed into it, I struggle with, you know, how do we determine, when you get a proposal at the bank, somebody comes in and says, hey, I would like to borrow x number of dollars for this project, we expect a net present value or rate of return of so much, and based on a loan cost of a certain interest rate, we get those very specific calculations. Can you provide any insight, in terms of why $200,000 is the optimal number for this forgivable loan over 5 years, and help me out on that point?”
Mr. Schmitt said, “I’ll try. GWEDC basically is a cooperation between businesses, business community leaders and also the city and the county government. We sort of have all the players at the table. And it’s very similar to what we do at the bank, when somebody comes in and asks for a proposal, we have to understand what our capacity is, what our expectations are, and we analyze all that. By using WSU calculate return on investment, that’s similar to what we do at the bank to calculate our return on investment. Now, I’m sure Starwood would be very excited if we said we will give you $2 million instead of $200,000, but we negotiated a number that we thought was acceptable to Starwood and also us.
“Very similar what we do at the bank when we negotiate loan amounts or rates. So it is very much a business decision to try to figure out how to bring 900 jobs to our community without overspending or over committing. So, Mr. Peterjohn, I think we’ve tried to do everything we can to bring the best deal to the community we possibly can.”
Commissioner Peterjohn said, “Well then help me out, in terms of the point that was raised over, we’ve got a forgivable loan for five years, but the calculation, in terms of return and so on are over 10 years. So basically our clawback provisions don’t exist from year 6 through 10.”
Mr. Schmitt said, “Well…”
Commissioner Peterjohn said, “And then you’ve got that disparity.”
Mr. Schmitt said, “You know, the other interesting thing is they have a 15 year lease out there on the building. So our expectation is they will be a minimum of 15 years. So do we do it on 5, 10, or 15 years. So, I understand your question. I don’t know the answer to that.”
Commissioner Peterjohn said, “Okay. Thank you for coming down and providing…” Mr. Schmitt said, “You are welcome. Thank you.”
In this episode of WichitaLiberty.TV: A Kansas college professor claims that college costs are rising only a tad faster than inflation. We’ll take a look at the actual numbers. Then, this week Wichita Mayor Carl Brewer delivered the annual State of the City address. A few things deserve comment. Episode 30, broadcast February 2, 2014. View below, or click here to view at YouTube.
Wichita Mayor Carl Brewer delivered the annual State of the City address. He said a few things that deserve discussion.
This week Wichita Mayor Carl Brewer delivered his annual State of the City address. We expect a certain amount of bragging and over-the-top community pride, things like “Wichita is the BEST place to work and raise a family!” That’s good, to a point. Because if we take these boasts seriously, and if they are not based on factual information, then we have a problem. We may believe that everything is fine in Wichita. But if the actual state of the city is otherwise, we may take unwise action that ultimately is harmful.
(While the city took prominent measures to promote the mayor’s speech, so far the text has not been made available on the city’s website. But you may click here to read it.)
Here’s an example, and perhaps the most important. The mayor said “Our community partnerships have helped us overcome the challenges of the great recession — which brought layoffs to many sectors of our economy.” But the problem is that we haven’t overcome the recession.
If we take a look at job growth in Wichita over the last two decades, we see Wichita performing very poorly. That’s not only on an absolute basis, but relative to our self-chosen peer cities. The relative part is important, because the recession was nation-wide. All cities suffered. Note that there are a few cities over which Wichita ranked higher: Springfield, Illinois, and Wichita Falls, Texas. These cities are relevant because we recently hired people from these cities to lead our economic development efforts.
I’ve shown data like this to the city council. I don’t think they believed me. I can understand their reluctance, as it’s not easy to admit things like this. Few like to admit failure. But that doesn’t excuse a reluctance to face facts. I also believe that some council members think that city hall critics take joy in presenting these figures. At least for me, that’s not true. I realize that these statistics tell a story of human hardship. So for those who don’t believe or trust my research, here’s a chart prepared by the Wichita Metro Chamber of Commerce for a presentation to its leadership committee. It uses a different time frame and a slightly different set of peers for comparison, but the results are the same: Wichita lags behind in terms of job growth.
Despite this evidence, the mayor thinks we’re doing well, and he is proud of our economic development efforts. In his address, he told the audience this: “For the past five years — the Greater Wichita Economic Development Coalition has helped generate nearly 10,000 jobs and more than 400 million in capital investment.”
That sounds like a lot of jobs. But we have to temper that number. We know that we don’t update our job statistics to reflect jobs that didn’t last for very long. We also must realize that some of these jobs would have been created without the involvement of our economic development agencies. We also must realize that these economic development efforts have a cost, and that cost is harmful to our economy and job creation.
But even if we give our economic development agencies sole credit for these 10,000 jobs, let’s apply a little arithmetic to provide some context. The Bureau of Labor Statistics tells us that the labor force in the Wichita Metropolitan area is about 302,000 people. that number, by the way, has been declining since 2009. If we take the 10,000 jobs — recognizing that was for five years — that averages to 2,000 jobs per year. That’s in the neighborhood of six percent of the labor force.
Does that represent a significant factor in the Wichita area economy? Remember, that calculation gives government more credit that it deserves. When we combine this with Wichita’s lackluster performance in creating jobs compared to our peers, I really don’t think we should be proud of our government’s economic development efforts.
In his State of the City Address, Wichita Mayor Carl Brewer also said we need to “continue to diversify our economy.” But we’re not doing that. Our economic development programs heavily favor the aviation industry, which makes it more difficult for aspiring companies in other diverse industries to start and thrive.
The mayor told the audience that “We will also continue to support our successful affordable airfares program.” This is the program whereby Wichita and the state of Kansas pay a discount airline to provide service in Wichita. It was AirTran, but is now Southwest. It is thought that if one airline has low fares, others will reduce their fares to match. That’s probably the case. But I’ve done the research, and there is another effect. As can be seen in the nearby chart, the number of flights and the number of available seats is declining in Wichita. These measures are also declining on a national level, but they are declining faster in Wichita than for the nation.
The mayor also asked for cooperation in using Southwest Airlines, advising the audience: “So when you make your corporate travel plans, please remember our community’s commitment to supporting low-cost carriers.” Well. How would you feel if you worked for one of our air carriers that don’t receive a subsidy, such as American, United, and Delta? How would you feel if you owned stock in one of these airlines, as does nearly everyone who holds broad-based index funds in their retirement or investment accounts?
In the past, the subsidized discount carrier has carried around ten percent of Wichita’s passengers. So we are vitally dependent on the legacy, or major, airlines, and we don’t need to insult them, as I believe the mayor did.
(To help you explore Wichita airport data, I’ve created an interactive visualization. Click here to open the visualization in a new window. You may add or remove any number of airports. Or, if you’d like to watch a video, click on Wichita Airport statistics: The video.)
Water was another topic that the mayor touched on. He told the audience: “The city has also invested in the second phase of the aquifer storage and recovery project known as ASR. New construction was completed in time to help with the drought. More than 100 million gallons were diverted from the little Arkansas River directly to customers.” 100 million gallons sounds like a lot of water. But what is the context? Well, 100 million gallons is about how much water we use on a single hot summer day.
And what about the ASR, or aquifer storage and recovery program? Its cost, so far for Phases I and II, is $247 million. Two more phases are contemplated. Despite this investment, and despite the plan’s boasts, Wichitans were threatened with huge fines for excessive water usage. The Wichita City Council also started a rebate program so that citizens were forced to pay for other people to buy low-water usage appliances. Expensive city decorative fountains were dry for a time.
Why were these measures necessary? A document created in March 2013 — that’s just as Wichita realized the city was running out of water — is titled “Wichita Area Future Water Supply: A Model Program for Other Municipalities.” It states: “In 1993 the Wichita City Council adopted an Integrated Local Water Supply Plan that identified cost effective water resources that would be adequate to meet Wichita’s water supply needs through the year 2050.” This squares with what former mayor Bob Knight recently told the Wichita Pachyderm Club, that when he was in office, Wichita had sufficient water for the next 50 years. He was told that about 10 years ago.
Just to give you an idea of how seriously we should take the claims made in speeches like this, here’s what the mayor told us in his 2009 State of the City Address: “We will continue work on the state-of-the art water supply system, known as the ASR project. It will provide the Wichita area with sufficient water for the next 50 years. Economic Development is not possible without an adequate water supply.” The mayor’s right. We need an adequate water supply. But it appears that despite huge expense and the boasts of city officials — including the mayor — we don’t have a secure water supply.
The mayor also addressed transit. He asked the community to answer a few questions, such as:
Should we have more stops to drop off and pick up riders?
Should we run later hours during the week and on the weekends?
Should we find new partners to extend our service area and help with costs?
The problem with questions like these are that citizens don’t have all the information needed to make an informed answer. Would we like to have more bus service? Who could answer no to such a question?
But if the mayor had told us that the cost per passenger mile for Wichita transit buses is 95 cents, or that only 30 percent of the operating costs are paid by fares, people might answer these questions differently. (That 30 percent would be lower if we included the cost of capital, that is, the cost of the buses.) And when the mayor asked citizens to weigh in at the Activate Wichita website: I looked, and there’s no topic for transit.
But even if citizens were informed of these costs, their answers are still not fully reliable. That’s because of the disconnect between the payment for the service and the actual bus service. Because so much of the cost of providing bus service is paid for someone else, we don’t really see the total cost of a bus trip. That’s often a problem with services provided by the government. Since someone else is paying, there’s not the same concern for receiving value as there is when people spend their own money.
The Activate Wichita website, by the way. When citizens are asked to rate ideas, to express their approval or — well, that’s the problem. Your choices for voting on an idea are: “I Love It!” … “I Like It!” … “It’s OK.” … “Neutral.” That’s it. There’s no voting option for expressing disagreement or disapproval with an idea. “Neutral” is as much dissent as Wichitans are allowed to express in this system. On this system that city leaders say they rely on for gathering citizen input, there needs to be a voting selection that expresses disagreement or disapproval with an idea. Otherwise when votes are tallied, the worst that any idea can be is “neutral.” City planners may get a false impression that all these ideas a fine and dandy.
On the topic of citizen involvement: The mayor also told us this: “A few weeks ago – the city launched the Office of Community Engagement.” That’s something that the city needs, based on data the city has gathered. The Wichita Performance Measures Report holds some data from a survey called the National Research Center National Citizen Survey. Survey respondents were asked to rate “the job Wichita does at welcoming citizen involvement.” The results are shown in the nearby chart I created from data in the most recent version of the Wichita Performance Measure Report. The numbers are the percent of respondents giving “excellent” or “good” as their response to the question. The values for the last three administrations of the survey are between 35 percent and 39 percent. The report says this performance is “much below” a benchmark set by the National Research Center. The report tells us that the city expects to re-survey citizens in 2014. For that year, the city has given itself the lofty target of 40 percent of citizens rating the job Wichita does at welcoming citizen involvement as excellent or good. Maybe an Office of Community Engagement will help.
Last year the city conducted an extensive survey of residents. Of this survey, the mayor said: “We learned that more than 70% of our residents are willing to rise above their personal interests to do what’s best for the community.”
The problem with this is that it relies on the false concept of a conflict between personal interests and what is good for the community. In the marketplace, which is the opposite of government, people advance their self-interest in one legitimate way: By finding out the goods and services that others want, and then providing them. If you can do this well and efficiently, you can earn profits. It’s the quest for profits — that’s self interest — that drives people to figure out what others want, and then to work hard to provide that. Everyone benefits.
This quest for profits could, and should, apply to areas that are under the control of government. But people are so afraid that someone will earn a profit by serving their fellow man. Recently John Stossel spotlighted a park in New York City that is run by a private corporation with the aim of earning a profit. People are happy with the new park. They feel safe, even though the park doesn’t discriminate and still lets homeless people stay there. There’s commerce going on, selling food, for example. People like that, and evidence of that is the profit being earned. But Stossel’s guest was critical and unhappy because someone was earning a profit, even though park patrons were happy with the park and most were unaware of its private sector operation.
So when the park was operated by the city — for the common good, that is — not many people used it. It was dirty and trashy, and people didn’t feel safe. Under the profit motive, people like the park and they use it. So where is the conflict between personal interest and what is good for the community?
Now, not everything government does is bad. But when government dabbles in areas that the private sector can do very well, we see problems. As an example, the city wants to help real estate developers, but the city handled a recent situation so badly that the mayor apologized in his address, saying “We are also taking steps to ensure we have integrity and openness when we solicit proposals for development in the core area.”
Citizens that pay attention at city hall also note there are several small groups that contribute heavily to campaigns. Then the mayor and council members vote to give financial benefits to these people. These are not isolated incidents. This behavior is repeated over and over. Some cities have laws against this type of behavior. But in Wichita, while we’re being encouraged to put “what is good for the community” above our personal self-interest, we see city hall run over by cronyism. That is, by people using city government for their own interests. In the name of the “common good,” of course.
At the end of his speech, the mayor asked citizens to “get into the game,” saying: “We need you to be a player — not a spectator — to win a better and brighter tomorrow.”
But we’ve seen what happens when people want to be involved, but not in the way the mayor and council want. Do you remember the chart of airport data? Last year I presented that information to the city council. It so happened that Sedgwick County Commissioner Karl Peterjohn had appointed me to the Airport Advisory Board, and later in that same meeting the city council voted on my appointment. I was rejected. Only one council member voted in my favor. The Wichita Eagle reported: “Mayor Carl Brewer was clear after the meeting: The city wants a positive voice on the airport advisory board, which provides advice to the council on airport-related issues.” A positive voice is more valued than a critical voice, it seems.
You may also remember how Susan Estes of Americans for Prosperity testified at a meeting of the Wichita City Council. She cited a section of the Wichita City Code that says council members shall refrain from making decisions involving, among other things, friends and business associates. She asked the mayor to observe that part of the city code. But the mayor lashed out at Estes and others and threatened a lawsuit.
At least this year the mayor didn’t mention the importance of open and transparent government, as he usually does. Because based on Activate Wichita — where there is no disagreement allowed, to rejecting board appointments simply because someone might be critical of the city’s programs, to threatening those who ask the mayor and council members to follow the laws that they passed, to the city’s hostile attitude towards the citizen’s right to know: The message we get is this: The city welcomes your involvement, but only up to a point. Question the authority, and you’re not welcome.
That’s the state of Wichita government, that government to be distinguished from the many wonderful people who live here. We can be thankful for the difference.
Some background material:
It’s harmful when citizens are not armed with information and research. But when government officials and bureaucrats with the power to tax and plan our economies are uninformed, people suffer as our economy becomes less prosperous than it could be.
Today, in the name of creating jobs, the Sedgwick County Commission voted in favor of granting an economic development incentive to an expanding Wichita manufacturing firm. Commissioners Karl Peterjohn and Richard Ranzau voted against the award.
The action taken today is in addition to an award by the State of Kansas, and another likely to be awarded by the Wichita City Council. See Why is business welfare necessary in Wichita? for more background.
Intervention in the economy such as this does more harm than good, as we’ll see in a moment. It’s important that we learn the facts about incentives like these, as the Wichita area has the potential to become even more dependent on incentives and subsidies as a way of economic development.
For example, the president of Greater Wichita Economic Development Coalition recently broadcast an email with the subject heading “Investor Alert: WBJ outlines Mars Deal Development Incentives as one example of Aggressive Competition.” The email read as follows:
You are well aware of the Mars deal in Topeka and you are likely aware that no city outside the greater Kansas City Metro Area was given the opportunity to bid this project.
In my mind the take away from this Wichita Business Journal article is that our competition — local, state and international — have enormous tools to ensure economic development success.
The Mars project has the potential to receive $9.1 million in local incentives over the next five years not including the property tax abatement estimated at $10.0M.
Messages like this — that we don’t have enough tools to compete — are common in Wichita. Politicians like Wichita Mayor Carl Brewer call for devoted revenue streams to fund economic development incentives.
What, though, is the track record of incentives? Those who, like myself, call for an end to their use: Don’t we want people to have jobs?
We need to decide what to believe. Should we believe our own eyes — that is, what we can easily see or are being told by our leaders — or something else?
Here’s a summary of the peer-reviewed academic research that examines the local impact of targeted tax incentives from an empirical point of view. “Peer-reviewed” means these studies were stripped of identification of authorship and then subjected to critique by other economists, and were able to pass that review.
Ambrosius (1989). National study of development incentives, 1969 — 1985.
Finding: No evidence of incentive impact on manufacturing value-added or unemployment, thus suggesting that tax incentives were ineffective.
Trogan (1999). National study of state economic growth and development programs, 1979 — 1995.
Finding: General fiscal policy found to be mildly effective, while targeted incentives reduced economic performance (as measured by per capita income).
Gabe and Kraybill (2002). 366 Ohio firms, 1993 — 1995.
Finding: Small reduction in employment by businesses which received Ohio’s tax incentives.
Fox and Murray (2004). Panel study of impacts of entry by 109 large firms in the 1980s.
Finding: No evidence of large firm impacts on local economy.
Edmiston (2004). Panel study of large firm entrance in Georgia, 1984 — 1998
Finding: Employment impact of large firms is less than gross job creation (by about 70%), and thus tax incentives are unlikely to be efficacious.
Hicks (2004). Panel study of gaming casinos in 15 counties (matched to 15 non-gambling counties).
Finding: No employment or income impacts associated with the opening of a large gambling facility. There is significant employment adjustment across industries.
LaFaive and Hicks (2005). Panel study of Michigan’s MEGA tax incentives, 1995 — 2004.
Finding: Tax incentives had no impact on targeted industries (wholesale and manufacturing), but did lead to a transient increase in construction employment at the cost of roughly $125,000 per job.
Hicks (2007a). Panel study of California’s EDA grants to Wal-Mart in the 1990s.
Finding: The receipt of a grant did increase the likelihood that Wal-Mart would locate within a county (about $1.2 million generated a 1% increase in the probability a county would receive a new Wal-Mart), but this had no effect on retail employment overall.
Hicks (2007b). Panel study of entry by large retailer (Cabela’s).
Finding: No permanent employment increase across a quasi-experimental panel of all Cabela’s stores from 1998 to 2003.
(Based on Figure 8.1: Empirical Studies of Large Firm Impacts and Tax Incentive Efficacy, in Unleashing Capitalism: Why Prosperity Stops at the West Virginia Border and How to Fix It, Russell S. Sobel, editor. Available here.)
In discussing this research, the authors of Unleashing Capitalism explained:
Two important empirical questions are at the heart of the debate over targeted tax incentives. The first is whether or not tax incentives actually influence firms’ location choices. The second, and perhaps more important question, is whether, in combination with firms’ location decisions, tax incentives actually lead to improved local economic performance.
We begin by noting that businesses do, in fact, seem to be responsive to state and local economic development incentives. … All of the aforementioned studies, which find business location decisions to be favorably influenced by targeted tax incentives, also conclude that the benefits to the communities that offered them were less than their costs.
So yes, business firms are influenced by incentives. But the cost of the incentives is greater than the benefit. This research shows, over and over, that the cost-benefit ratio analysis that decision makers use is not meaningful or reliable.
So why do we use incentives? Why do so few in government or the public understand? Continuing from Unleashing Capitalism:
Given serious doubts about the efficacy of tax incentives, why are they so popular? The answer is that businesses looking to expand their plants or to move to new locations have strong incentives to lobby for tax breaks and other subsidies that add to owners’ profits and, moreover, encouraging a bidding war between two or more state or local governments promises to increase the value of the incentives they can extract from any one of them. Politicians interested in re-election, in turn, have strong incentives to respond to private firms’ self-serving subsidy demands in order to take credit for enticing a high-profile company to town or to avoid blame for the jobs that would be lost if an existing employer moved to another location. The politicians will be supported on the tax-incentive issue by other groups having immediate financial stakes in the process, including local real estate developers, investment bankers (who float public bond issues and arrange financing for the incoming firm), and economic development officials whose livelihoods depend on success in chasing after ornaments to add to the local or state economy.
The special interests of subsidy-seeking private firms dominate the political process because voter-taxpayers are only weakly motivated to become informed about the costs of tax incentive programs and to organize in opposition to them. They see the jobs “created” at a new plant; they do not see the jobs that are lost elsewhere in the economy as a result of the higher tax burden imposed on other businesses and as a result of the economic resources reallocated from productive activities toward lobbying government to obtain these favors. Nor can they readily see the higher future tax bill they themselves will be required to pay in order to amortize and service the public debt issued to finance the subsidies diverted into the pockets of the owners of politically influential private companies.
“Politicians interested in re-election.” This describes almost all elected officials.
“Economic development officials whose livelihoods depend on success in chasing after ornaments.” This is Tim Chase and the other members of the economic development regime in Wichita.
Today, in explaining his vote in favor of granting a target economic development incentive, Sedgwick County Commissioner Dave Unruh recognized a “certain pragmatism that is required here.” He said we’re really concerned about jobs, and that jobs is the number one priority. Sometimes creating jobs requires us, he said, to compete in the practical world. It would be better if there were no incentives, he said. “But the truth of the matter is that we have to sometimes provide incentives, subsidies, abatements, whatever category it falls in, in order to compete and secure the jobs and company that we’re trying to win.”
This is the standard argument, even of politically liberal members of commissions and councils. Jobs, jobs, jobs. We don’t like to use incentives — they all say this, especially conservatives — but we learned that we must use incentives if we want jobs. This embrace of pragmatism is called “maturing in office.”
But I would ask these officials like Unruh this question: What about all the research that says incentives do more harm to jobs than good?
What do Commissioners Unruh, Skelton, and Norton believe phrases like these mean?
“No evidence of incentive impact on manufacturing value-added or unemployment”
“Small reduction in employment by businesses which received Ohio’s tax incentives”
“No evidence of large firm impacts on local economy”
“No permanent employment increase across a quasi-experimental panel of all Cabela’s stores”
“Employment impact of large firms is less than gross job creation (by about 70%)”
These research programs illustrate the fallacy of the seen and the unseen. It is easy to see the jobs being created by economic development incentives. I do not deny that jobs are created at firms that receive incentives, at least most of the time. But these jobs are easy to see, and government makes sure we see them. We’re going to endure the groundbreaking and ribbon-cutting ceremonies. It’s easy for news reporters to find the newly-hired and grateful workers, or to show video footage of a new manufacturing plant.
But it’s very difficult to find specific instances of the harm that government intervention produces. It is, generally, dispersed. People who lose their jobs usually don’t know the root cause of why they are now unemployed. Businesses whose sales decline often can’t figure out why.
But uncontroverted evidences tells us this is true: These incentives, along with other forms of government interventionism, do more harm than good.
We can understand the average citizen being susceptible to arguments make by the likes of GWEDC’s Chase and the three Sedgwick county commissioners that voted for this incentive. Citizens generally don’t have the education, the time, and the initiative to evaluate these matters.
But for economic development professionals and elected officials with the power to tax and spend? Not knowing this research is inexcusable, and ignoring it is deplorable.
In a move sure to help citizens learn more about government, Sedgwick County has started posting legislative updates from its lobbyist in Topeka. Correction: These reports are from our taxpayer-funded lobbyist.
The reports can be found on the Government Relations page.
This program was started at the initiative of Commissioner Karl Peterjohn. Other local units of government should follow this example. These reports, after all, are paid for by taxpayers.
Thursday I was guest host on the Joseph Ashby Show. If you haven’t been aware of this, Joseph’s son Titus — just two years old — has the amazing ability to shoot a basketball. Recently Joseph put together a video of Titus and his accomplishments and posted it to YouTube. As of this writing the video has been viewed 4,914,950 times, and that’s just since it was premiered on Sunday. (Click here to view the video.)
As a result, Titus has been receiving quite a bit of media attention. Thursday the entire Ashby family appeared on the NBC Today Show (video here). On Friday Joseph and Titus appeared on Fox and Friends (video here). There have been countless other media mentions.
So I was quite happy to substitute as a guest host on the Joseph Ashby Show Thursday. Callers included Sedgwick County Commissioner Karl Peterjohn, Jennifer Baysinger speaking about the death penalty and Kansas Coalition Against the Death Penalty, John Todd speaking about the Wichita Pachyderm Club, Terence Grado of Generation Opportunity talking about youth unemployment, and Drew, a frequent caller to the show who is very perceptive. You can listen to the show below.
At the October 31 meeting of the Sedgwick County Commission, Karl Peterjohn introduced a measure that would let the Kansas Legislature know that the commission supports improving the tax climate in Kansas, and specifically would limit property tax growth. But electoral politics forced a delay in a vote.
In response to Peterjohn’s proposal, the coalition of one Democrat and two liberal Republicans that form the working majority on the commission maneuvered to delay voting on the measure until after the November 6 election. With the item appearing on tomorrow’s agenda, it’s very likely that the majority coalition — Commission Chair Tim Norton, Dave Unruh, and Jim Skelton — will vote against the proposal.
Why the rush for delay? Norton was facing a vigorous challenge in the election. He couldn’t afford to cast a vote against property tax reform. With Skelton publicly supporting Norton, and Unruh doing so behind the scenes, the two Republicans supported their liberal Democratic fellow traveler in delaying the vote until after the election.
But after the election, Norton is free to vote against property tax reform. Skelton and Unruh don’t face the voters for another two years, and they’ll be relying on the short memory span of most voters.
The sale of a radio tower owned by Sedgwick County reveals another case of local government not looking out for the interests of citizens and taxpayers, with the realization that the stain of cronyism is alive and well.
As a result of system upgrades, the county no longer needs a radio tower located near 77th Street North and Interstate 135. Pixius Communications, LLC made an offer to purchase the tower and the five acre tower site for $280,000. The county proceeded making arrangements for the sale, preparing a sales agreement contract between Sedgwick County and Pixius with a sales price of $280,000, along with several other legal documents necessary to support the sale. These documents are available at the agenda file for this item.
Commission Chair Tim Norton, because of his receipt of campaign contributions from Pixius, Jay Maxwell (owner of Pixius), and Penny Maxwell (spouse of owner), was going to abstain from voting. (Skelton has accepted contributions from the Maxwells, but he was going to vote nonetheless.)
So there was not a majority of three votes to accept the Pixius offer. Buchanan suggested the auction. All commissioners agreed.
Now we know the results of the auction: A Florida company offered $610,000. After a sales commission ($55,000) and half of closing costs ($1,128), the county will net $553,872. That’s almost twice the price the county manager and two commissioners were willing to sell the tower for.
There’s something else: What will be the appraised value of the tower and site for tax purposes? The selling price of a property is strong evidence of its value. As a result of the auction, therefore, this property is likely to be appraised at $610,000 instead of $280,000. That’s good for those who think it’s good for government to bring in more tax revenue.
This episode is another instance where no-bid contracts and cronyism cost taxpayers. Maxwell, the almost-beneficiary of this sweetheart no-bid contract, has been the recipient of many benefits at taxpayer expense, such as tax increment financing and community improvement district taxes. He’s tried for more, but even the Wichita City Council has a limit to its cronyism, now and then. Although cronyism and no-bid contracts have been a problem at Wichita City Hall.
Interestingly, a recent KSN Television news story characterized Ranzau and Peterjohn as “hardline fiscal conservatives.” The story went on to report “Incumbent Democrat Tim Norton often sides with the two more moderate members of the commission with many votes being decided by a 3-2 margin.” Those moderate members are, of course, Unruh and Skelton.
Norton didn’t have to take sides — at least publicly — on this issue, but I’m confident that if this was not an election year for Norton, he would have voted for the original Pixius deal that we now see was a disaster for taxpayers.
In the KSN story Norton was quoted as saying “I’m a business man of many years in Wichita. I understand the business climate and job retention.”
Unruh and Skelton are also businessmen. I hope these commissioners look after their personal business with more care and concern than they have shown for the business of taxpayers.
Those who have made records requests in Kansas are probably not surprised that KPI has had difficulty in having its records requests respected and filled. In 2007 Better Government Association and National Freedom of Information Coalition gave Kansas a letter grade of “F” for its open records law. Last year State Integrity Investigation looked at the states, and Kansas did not rank well there, either. See Kansas rates low in access to records.
This week KPI president Dave Trabert appeared before the Sedgwick County Commission to express his concerns regarding the failure of Greater Wichita Economic Development Coalition to fulfill a records request made under the provisions of the Kansas Open Records Act. Video is at Open government in Sedgwick County Kansas.
Dave Unruh asked Trabert if GWEDC had responded to his records request. Trabert said yes, and the response from GWEDC is that the agency believes it has complied with the open records law. This, he explained, is a common response from agencies.
Commission Chair Tim Norton expressed concern that any non-profit the commission gives money to would have to hire legal help, which he termed an unintended consequence. He made a motion to receive and file Trabert’s remarks, which is routine. His motion also included taking this matter under advisement, which is what politicians do in order to bury something. Unruh seconded the motion.
Peterjohn made a substitute motion that a representative from GWEDC would appear before the commission and discuss the open records act. This motion passed four to one, with Unruh in the minority. Even though Norton voted in favor of Peterjohn’s motion, it’s evident that he isn’t in favor of more government transparency. Unruh’s vote against government transparency was explicit.
Wichita school district records request
USD 259, the Wichita public school district, also declined to fulfill a records request submitted by KPI. In a press release, KPI details the overly-legalistic interpretation of the KORA statute that the Wichita school district uses to claim that the records are exempt from disclosure.
In a news report on KSN Television, school board president Lynn Rogers explained the district’s reason for denying the records request: “But some school board members with USD 259 in Wichita say, the numbers brought up in court are preliminary numbers. That’s the reason they are not handing them over to KPI. ‘We have worked very hard over the years to be very forthright and we’ve tried to disclose the information when we have it,’ says Lynn Rogers.’”
This claim by Rogers — if sincere — is a break from the past. In 2008 Rogers told me that it is a burden when citizens make requests for records.
Until recently the Wichita school district had placed its monthly checkbook register on its website each month, and then removed it after a month had passed. Rogers explained that the district didn’t have space on its servers to hold these documents. That explanation is total nonsense, as the pdf check register documents are a very small fraction of the size of video files that the district hosted on its servers. Video files, by the way, not related to instruction, but holding coverage of groundbreaking ceremonies.
City of Wichita
KPI has made records requests to other local governmental agencies. Some have refused to comply on the basis that they are not public agencies as defined in Kansas statutes. This was the case when I made records requests to Wichita Downtown Development Corporation, Greater Wichita Economic Development Coalition, and Go Wichita Convention and Visitors Bureau.
In 2009 I addressed the Wichita City Council and asked that the city direct that WDDC follow the law and fulfill my records requests. (Video is at Video: City of Wichita and the Kansas Open Records Act.)
In my remarks, I told Mayor Carl Brewer and the council this:
The Kansas Open Records Act (KORA), in KSA 45-216 (a) states: “It is declared to be the public policy of the state that public records shall be open for inspection by any person unless otherwise provided by this act, and this act shall be liberally construed and applied to promote such policy.”
But in my recent experience, our city’s legal staff has decided to act contrary to this policy. It’s not only the spirit of this law that the city is violating, but also the letter of the law as well.
Recently I requested some records from the Wichita Downtown Development Corporation. Although the WDDC cooperated and gave me the records I requested, the city denies that the WDDC is a public agency as defined in the Kansas Open Records Act.
This is an important issue to resolve.
In the future, requests may be made for records for which the WDDC may not be willing to cooperate. In this case, citizens will have to rely on compliance with the law, not voluntary cooperation. Or, other people may make records requests and may not be as willing as I have been to pursue the matter. Additionally, citizens may want to attend WDDC’s meetings under the provisions of the Kansas Open Meetings Act.
Furthermore, there are other organizations similarly situated. These include the Greater Wichita Economic Development Coalition and the Go Wichita Convention and Visitors Bureau. These organizations should properly be ruled public agencies as defined in the Kansas Open Records Act so that citizens and journalists may freely request their records and attend their meetings.
Here’s why the WDDC is a public agency subject to the Open Records Act. KSA 45-217 (f)(1) states: “‘Public agency’ means the state or any political or taxing subdivision of the state or any office, officer, agency or instrumentality thereof, or any other entity receiving or expending and supported in whole or in part by the public funds appropriated by the state or by public funds of any political or taxing subdivision of the state.”
The Kansas Attorney General’s office offers additional guidance: “A public agency is the state or any political or taxing subdivision, or any office, officer, or agency thereof, or any other entity, receiving or expending and supported in whole or part by public funds. It is some office or agency that is connected with state or local government.”
The WDDC is wholly supported by a special property tax district. Plain and simple. That is the entire source of their funding, except for some private fundraising done this year.
The city cites an exception under which organizations are not subject to the Kansas Open Records Act: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.”
The purpose of this exception is so that every vendor that sells goods and services to government agencies is not subject to the Kansas Open Records Act. For example, if a city buys an automobile, the dealer is not subject simply because it sold a car to the city.
But this statute contains an important qualifier: the word “solely.” In this case, the relationship between the City of Wichita and the WDDC is not that of solely customer and vendor. Instead, the city created a special tax district that is the source of substantially all WDDC’s revenue, and the existence of the district must be renewed by the city soon. The WDDC performs a governmental function that some cities decide to keep in-house. The WDDC has only one “customer,” to my knowledge, that being the City of Wichita.
Furthermore, the revenue that the WDDC receives each year is dependent on the property tax collected in the special taxing district.
The only reasonable conclusion to draw is that in terms of both funding and function, the WDDC is effectively a branch of Wichita city government.
The refusal of the city’s legal department to acknowledge these facts and concede that the WDDC is a public agency stands reason on its head. It’s also contrary to the expressly stated public policy of the state of Kansas. It’s an intolerable situation that cannot be allowed to exist.
Mr. Mayor and members of the council, it doesn’t take a liberal application of the Kansas Open Records Act to correct this situation. All that is required is to read the law and follow it. That’s what I’m asking this body to do: ask the city legal department to comply with the clear language and intent of the Kansas Open Records Act.
The following year when WDDC’s contract was before the council for renewal, I asked that the city, as part of the contract, agree that WDDC is a public agency as defined in Kansas law. (Video is at Kansas Open Records Act at Wichita City Council.) Then-council member Paul Gray, after noting that he had heard all council members speak in favor of government transparency, said that even if WDDC is not a public agency under the law, why can’t it still proceed and fulfill records requests? This is an important point. The Kansas Open Records Act contains many exclusions that agencies use to avoid releasing records. But agencies may release the records if they want.
Any council member could have made the motion that I asked for. But no one, including Gray, former council member Sue Schlapp, former member Jim Skelton (now on the Sedgwick County Commission), Mayor Carl Brewer, and council members Jeff Longwell (district 5, west and northwest Wichita), Janet Miller (district 6, north central Wichita), and Lavonta Williams (district 1, northeast Wichita) would make a motion to increase government transparency and citizens’ right to know. Wichita city manager Robert Layton offered no recommendation to the council.
Last year I appeared again before the council to ask that Go Wichita agree that it is a public agency as defined in the open records act. Randy Brown, who is chair of the Kansas Sunshine Coalition for Open Government and former opinion page editor of the Wichita Eagle was at the meeting and spoke on this matter. In his remarks, Brown said “It may not be the obligation of the City of Wichita to enforce the Kansas Open Records Act legally, but certainly morally you guys have that obligation. To keep something cloudy when it should be transparent I think is foolishness on the part of any public body, and a slap in the face of the citizens of Kansas. By every definition that we’ve discovered, organizations such as Go Wichita are subject to the Kansas Open Records Act.”
Brown said that he’s amazed when public officials don’t realize that transparency helps build trust in government, thereby helping public officials themselves. He added “Open government is essential to a democracy. It’s the only way citizens know what’s going on. … But the Kansas Open Records Act is clear: Public records are to be made public, and that law is to be construed liberally, not by some facile legal arguments that keep these records secret.”
He recommended to the council, as I did, that the contract be contingent on Go Wichita following the Kansas Open Records Act.
Discussion on this matter revealed a serious lack of knowledge by some council members regarding the Kansas Open Records Act. In remarks from the bench James Clendenin (district 3, southeast and south Wichita) asked the city manager a series of questions aimed at determining whether the city was satisfied with the level of service that Go Wichita has provided. He then extended that argument, wondering if any company the city contracts with that is providing satisfactory products or service would be subject to “government intrusion” through records requests. Would this discourage companies from wanting to be contractors?
First, the Kansas Open Records Act does not say anything about whether a company is providing satisfactory service to government. That simply isn’t a factor, and is not a basis for my records request to Go Wichita. Additionally, the Kansas Open Records Act contains a large exception, which excepts: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.” So companies that sell to government in the ordinary course of business are not subject to the open records law. Go Wichita is distinguished, since it is almost entirely funded by taxes and has, I believe, just a single client: the City of Wichita.
Finally, we should note that the open records law does not represent government intrusion, as Clendenin claimed. Open records laws offer citizens the ability to get an inside look at the working of government. That’s oversight, not intrusion.
Pete Meitzner (district 2, east Wichita) asked that there might be a workshop to develop a policy on records requests. He expressed concern that departments might be overwhelmed with requests from me that they have to respond to in a timely fashion, accusing me of “attempt to bury any of our departments in freedom of information acts [sic].” Such a workshop would probably be presented by Wichita City Attorney Gary Rebenstorf. His attitude towards the open records law is that of hostility, and is not on the side of citizens.
In making this argument, Mr. Meitzner might have taken the time to learn how many records requests I’ve made to the city. The answer, to the best of my recollection, is that I made no requests that year to the city citing the open records act. I have made perhaps a half-dozen informal requests, most of which I believe were fulfilled consuming just a few moments of someone’s time.
As to Meitzner’s concern over the costs of fulfilling records requests: The law allows for government and agencies to charge fees to fulfill requests. They often do this, and I have paid these fees. But more important than this, the attitude of council member Meitzner is troubling. Government should be responsive to citizens. As Randy Brown told the council, government should welcome opportunities to share information and be open and transparent.
Michael O’Donnell (district 4, south and southwest Wichita) made a motion that the contract be approved, but amended that Go Wichita will comply with the Kansas Open Records Act. That motion didn’t receive a second.
Brown and I appeared on the KAKE Television public affairs program This Week in Kansas to discuss this matter. Video is at In Wichita, disdain for open records and government transparency.
Enforcement of Kansas Open Records Act
In Kansas, when citizens believe that agencies are not complying with the Kansas Open Records Act, they have three options. One is to ask the Kansas Attorney General for help. But the policy of the Attorney General is to refer all cases to the local District Attorney, which is what I did. The other way to proceed is for a citizen to pursue legal action at their own expense.
After 14 months, Sedgwick County DA Nola Foulston’s office decided in favor of the governmental agencies. See Sedgwick County DA Response to KORA Request to Wichita Downtown Development Corporation.
When newspapers have their records requests refused, they usually give publicity to this. The Wichita Eagle is aware of my difficulties with records requests in Wichita, as their reporters have attended a number of meetings where my records requests were discussed, sometimes at length. But so far no coverage of an issue that, were the newspaper in my shoes, would undoubtedly covered on the front page. Something tells me that KPI won’t get any coverage, either.
Additional information on this topic is at:
- Open records, rights of Kansans disrespected at Wichita City Council
- Wichita open records issue buried
- For Wichita city government, open records are not valued
- Wichita open records intent not what it seems
- Wichita Convention and Visitors Bureau should follow Kansas Open Records Act
- City of Wichita and the Kansas Open Records Act
- Wichita’s open records policy is contrary to the interests of citizens
- Wichita Downtown Development Corporation and City of Wichita refuse to follow Kansas Open Records Act
- Kansas open records examined
- Kansas open records law needs an overhaul
- In Wichita, disdain for open records and government transparency
- Video: Open Records at Wichita City Council
- Video: City of Wichita and the Kansas Open Records Act
- Video: Kansas Open Records Act at Wichita City Council
Tuesday’s primary election in Kansas was notable for the large number of victories by conservative challengers over Republican senate incumbents. Also important is that voters in Wichita and the surrounding area rejected, for the second time this year, the culture of political cronyism that passes for economic development in Wichita.
On Tuesday incumbent Sedgwick County Commissioner Karl Peterjohn defeated a challenge by Wichita City Council Member Jeff Longwell. The contrast was clear: Peterjohn with his long-time, outspoken advocacy for limited government and free market principles, although perhaps tempered a bit based on some votes he’s made. Longwell, however, advocates for “more tools in the toolbox.” In other words, a larger role for government in economic development and centralized planning.
The result: Peterjohn won, 57 percent to 43 percent.
Longwell had the endorsements of many Wichita-area politicians, including Wichita Mayor Carl Brewer and all other Wichita City Council members except Michael O’Donnell (district 4, south and southwest Wichita): Vice Mayor Janet Miller (district 6, north central Wichita) and council members Lavonta Williams (district 1, northeast Wichita), James Clendenin (district 3, southeast and south Wichita), and Pete Meitzner (district 2, east Wichita).
In addition to these endorsements, Longwell had a large money advantage over Peterjohn. According to campaign finance reports filed July 30, Longwell had raised nearly $62,000.
Peterjohn’s July 30 report showed about $20,000 raised, so as of that date Longwell had over three times as much campaign money at his disposal than Peterjohn.
The money advantage and the endorsements are linked. On Longwell’s July 30 campaign finance report we learned that executives of a Michigan construction company made campaign contributions immediately before and after Longwell participated in a city council voted that benefited them. Key Construction, a heavy contributor to Longwell’s campaign, also benefited from Longwell’s vote that day. This was just another episode in Longwell’s history of voting for overpriced no-bid contracts and no-interest city loans for his large campaign contributors.
The day after Peterjohn held a news conference questioning Longwell’s Michigan contributions, Longwell held the news conference that announced the above-mentioned endorsements. Many of those endorsers also receive campaign money from those they award with no-bid contracts and other taxpayer-funded largesse.
Despite the advantage in campaign funds and the endorsements, voters in west Wichita and west Sedgwick County rejected the political cronyism that is Jeff Longwell’s legacy in government service.
It’s the second time this year voters have rejected cronyism. In February Wichita voters voted down a tax giveaway to the Ambassador Hotel by a margin of 62 percent to 38 percent.
Longwell played a role in that election, too. When citizens exercised their constitutional right to challenge the taxpayer-funded giveaway to the hotel, Jeff Longwell said it was “disappointing,” and a “stunt.” He said that using this fundamental aspect of democracy causes citizens to “lose credibility.”
When it came time for the council to set the date for the special election on the hotel tax, Longwell attempted to have the election commissioner set the date as early as possible, obviously thinking that a short campaign would benefit the hotel developers.
Those hotel developers, by the way, included many of Longwell’s long-time campaign contributors.
After Wichita voters rejected this special tax deal, the Wall Street Journal in a column titled “A Wichita Shocker: You can beat city hall” wrote: “Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.”
It’s no wonder Longwell was disappointed when citizens petitioned their government. Voters soundly rejected the political cronyism and sweetheart deals that are Longwell’s legacy.
The headline in the Kansas City Star reads “Voters reject middle ground in Kansas Senate races.” A more accurate conclusion is that voters have realized that the governance of Kansas by a coalition of Democrats and left-wing Republicans has not been in the state’s best interest. Stagnate job growth as compared to other states, increasing spending on schools with no accountability and not even an honest discussion of achievement, falling behind other states in school reform and school choice, a highly undemocratic method of selecting our state’s top judges, resistance to privatization and other measures to streamline government, business tax costs topped by only a few other states: these are some of the results of this coalition.
But yesterday, Kansas voters said goodbye to many of the left-wing Republicans — the so-called “moderates” or “traditional Republicans” — and nominated conservatives in their place. Some nominees face Democratic challengers in November.
The results are a surprise not only for the number of victories by conservatives, but the margin of victory. In Johnson County, incumbent Senator Tim Owens was defeated 60 to 40. Owens ranked at the bottom of all senators — Democrats included — in the Kansas Economic Freedom Index.
In a neighboring district, incumbent Senator Mary Pilcher-Cook won her primary election by a 64 to 36 margin. Pilcher-Cook ranked at the top of the Kansas Economic Freedom index. Conservative Steve Abrams, who ranked well in the KEFI, also defeated a challenger.
Another notable result is the defeat of Senate President Steve Morris.
Other defeats of moderates, some being incumbents, include Jeff Melcher over Pat Colloton to replace John Vratil, Jacob LaTurner over Bob Marshall, Forrest Knox over John Grange, Jeff King over Dwayne Umbarger, Greg Smith over Joe Beveridge, Bob Reader over Roger Reitz, Tom Arpke over Pete Brungardt, Michael O’Donnell over Jean Schodorf, Mitch Holmes over Ruth Teichmann, and Dan Kerschen over Dick Kelsey. Kelsey will dispute being lumped in the moderate camp, but on economic freedom issues, he ranked just barely above neutral.
There were some victories for the moderates. Kay Wolf won the primary to replace Terrie Huntington, which is a retention for moderates. In Topeka, moderate Vicki Schmidt retains a place in the Senate, as does Carolyn McGinn in south-central Kansas. Pat Apple defeated a challenge from Charlotte O’Hara. Apple ranks barely above neutral in the KEFI, while O’Hara, in the Kansas House, was near the top. Jeff Longbine survived a challenge from conservative James Fawcett.
Commenting on the results, Americans for Prosperity–Kansas state director Derrick Sontag said “The primary results make one thing clear: Kansans support those who promote fiscally conservative, limited government, free market policies. Fiscal conservatives are now being elected because of the policies that have failed our state for years. This new field of candidates vying for office reflects a continued desire to put a stop to the rampant state spending and high tax burdens of the past. It is evident from the results at the ballot box that Kansans want a reasonable, responsible government and we are optimistic that our state is now starting to head down the path toward prosperity and a strong Kansas economy.”
In local races in south-central Kansas, voters rejected the challenge by left-wing Republican Wichita City Council Member Jeff Longwell to incumbent Karl Peterjohn. Longwell had the endorsement of Wichita Mayor Carl Brewer and all Wichita City Council members except Michael O’Donnell (district 4, south and southwest Wichita). Three Sedgwick County Commission members endorsed Longwell, too. As there is no Democratic contestant, this race is over.
In suburban Andover, voters rejected a proposed property tax increase for schools. Update: After the final canvass of votes, the tax increase passed by two votes.
In a story filed at the Wichita Eagle online site, Wichita City Council Member Jeff Longwell stated “We often get contributions from a wide variety of sources, including out-of-town people.” (Sedgwick County Commissioner Karl Peterjohn questions out-of-state contributions to challenger Jeff Longwell, viewable at http://www.kansas.com/2012/08/01/2431332/sedgwick-county-commissioner-karl.html)
Peterjohn had called attention to $3,250 in contributions received by Longwell from executives and family associated with Walbridge, a Michigan construction company. These contributions were received immediately before and after Longwell voted in favor of Walbridge and its local partner in a contract dispute.
Analysis of Longwell’s July 30, 2012 campaign finance report shows that the only contributions received from addresses outside Kansas are the Walbridge contributions from Michigan, which contradicts Longwell’s claim.
Additionally, analysis of ten recent campaign finance reports filed by Longwell going back to 2007 found three contributions totaling $1,500 from California addresses.
A campaign finance report filed by Wichita City Council Member Jeff Longwell contains contributions from executives associated with Walbridge, a Michigan construction company partnering with Key Construction to build the new Wichita airport terminal.
Longwell is running for Sedgwick County Commission, District 3. He faces Karl Peterjohn in the August 7, 2012 Republican party primary.
These contributions are of interest because on July 17, 2012, the Wichita City Council, sitting in a quasi-judicial capacity, made a decision in favor of Key and Walbridge that will cost some group of taxpayers or airport customers an extra $2.1 million. Five council members, including Longwell, voted in favor of this decision. Two members were opposed.
These parties and dollar amounts appeared on Longwell’s campaign finance report filed on July 30, 2012:
John Rakolta, Chairman and Chief Executive Officer, Walbridge, $500
Terry Rakolta (apparent spouse of John Rakolta), $500
Vincent J. Deangelis, Senior Vice President and Chief Financial Officer, Walbridge, $500
Ronald Hausman, Executive Vice President, Walbridge, $500
Ester Hausman (apparent spouse of Ronald Hausman), $500
Scott Penrod, Vice President, Walbridge, $250
Randy Abdallah, Senior Vice President, Walbridge, $250
Elizabeth Wasiniak, Walbridge, $250
The total is $3,250. The first two contributions were made on July 16, 2012, and the rest on July 20, 2012, according to Longwell’s campaign finance report. The Wichita city council handled the Key/Walbridge contract at its July 17, 2012 meeting.
Besides the Walbridge contributions, Key Construction and its executives contributed $6,500 to Longwell’s county commission campaign. Key and its executives have been heavy contributors to Longwell’s other campaigns, as well as to Wichita Mayor Carl Brewer and many other Wichita City Council members. Brewer and Key executives also travel together on fishing expeditions.
February 24, 2012: Bids for new airport terminal opened. Dondlinger Hunt did not meet the federal Disadvantaged Business Enterprise (DBE) contract goal for participation at the time of bid opening, as required by the bid documents. Dondlinger supplies additional information.
April 2, 2012: Wichita Airport Authority staff found Dondlinger Hunt bid insufficient to meet federal requirements.
May 31, 2012: Director of Airports, acting as reconsideration official, affirmed that Dondlinger Hunt bid is non-responsive.
June 22, 2012: Contract Compliance Officer for the City of Wichita also found Dondlinger Hunt bid to be non-responsive.
July 3, 2012: Board of Bids found Dondlinger Hunt bid to be non-responsive.
July 16, 2012: John Rakolta, Chairman and CEO of Walbridge, and Terry Rakolta contribute $1,000 to Jeff Longwell’s campaign.
July 17, 2012: Wichita City Council on 5 to 2 vote found Dondlinger Hunt bid to be non-responsive. Key/Walbridge is presumptive contract winner.
July 20, 2012: Other Walbridge executive contribute $2,250 to Jeff Longwell’s campaign.
July 30, 2012: Campaign finance report filed.
This morning the Sedgwick County Commission voted to select member Tim Norton of Haysville as chairman for the upcoming year. Norton, a Democrat, received the votes of two of the board’s four Republican members: Those of outgoing Chairman Dave Unruh and Jim Skelton.
It may be remarkable that a board with a four to one majority in one party elected a member of the minority party to serve as chair, or it may simply be a reflection of the actual ideological makeup of the board. Peterjohn and Ranzau consistently take stances and make votes that favor limited government and free markets, while Unruh and Skelton generally join with the politically-liberal Norton on most issues. The chairman is more than just a ceremonial position, as the chairman presides over commission meetings. On many agenda items, the commission is not obligated to hear testimony from citizens, although it must when there are items that have public hearings required by law. It was the practice of Kelly Parks and Peterjohn, when they served as chair, to allow anyone who appeared at meetings to speak. In his term as chair, Unruh was seen as less accommodating, although I think that anyone who really cared to was allowed to speak, sometimes with a gentle admonition to hurry along. It is unknown in what manner Norton will run the meetings while he is chair. A hint: He’s objected to the term “ObamaCare” as pejorative, so I wouldn’t use that word around the courthouse.
For Chairman Pro Tem, the commissioners selected Skelton. Ranzau’s name was placed into nomination by Peterjohn, and he received the same two votes as he did for chairman. The votes for Skelton by Norton and Unruh are surprising. Skelton’s recent behavior has been erratic, even bizarre at times. His recent appearance at the Wichita City Council (video here) brought laughter and guffaws from both the bench and the public. I got the sense, however, the people were laughing at Skelton, not with him.
Unruh’s selection for 2011 Chairman’s award
Chairman Unruh selected Visioneering Wichita as the recipient of the annual Chairman’s award. This organization is in favor of government intervention into the economy — and people’s lives — on a large and increasing scale. Most of the items on its legislative agenda involve more government spending. While Visioneering — its chair Jon Rolph, anyway — denies advocating for increased taxes, Milton Friedman has taught us that it is the level of spending that is the true measure of the size of government. The size of that Visioneering seeks to expand.
This week the Sedgwick County Commission considered whether to participate in a HUD Sustainable Communities Regional Planning Grant.
A letter from Sedgwick County Manager Bill Buchanan to commissioners said that the grant will “consist of multi-jurisdictional planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic prosperity, social equity, energy use and climate change, and public health and environmental impact.”
The budget of the grant is $2,141,177 to fund the three-year plan development process, with $1,370,000 from federal funds and $771,177 of “leveraged resources” as a local match. These leveraged resources are in the form of in-kind contributions of staff time, plus $60,000 in cash.
While Sedgwick County will be the grant’s “fiscal agent,” the work will be done by Regional Economic Area Partnership (REAP), an umbrella organization with the mission of, according to its website: “Guide state and national actions that affect economic development in the region and adopt joint actions among member governments that enhance the regional economy.”
REAP’s members include city and county governments in a nine-county area in south-central Kansas. One of its duties is to administer the Kansas Affordable Airfares Program, the program that pays subsidies to airlines to provide service to the Wichita airport. In 2011, Sedgwick County paid $15,272 in “assessments” for its membership in REAP, while the City of Wichita paid $27,192. Governments pay smaller amounts as part of REAP’s water resources program.
The counties that are considering participating in this planning grant are Reno, Harvey, Sedgwick, Sumner, and Butler.
County documents specify the county’s in-kind contribution as $120,707. That consists of portions of the salary and benefits for four existing employees, plus $85,800 in “indirect administration costs.” There is no cash match at this time.
John Schlegel, Director of Planning for the Wichita-Sedgwick County Metropolitan Area Planning Department, told commissioners that the end product of this grant would be the development of a regional plan for sustainable development. He said that we don’t know what the plan would contain, but that the purpose of the grant program is to get regions to work together on sustainability issues. The target area of the grant is a five-county area around Sedgwick County.
He said that examples of issues would be economic development, workforce development, fiscal sustainability such as balanced budgets and spending priorities, and working together to create efficiencies in the region like joint purchasing and cost sharing.
Commissioner Richard Ranzau asked to see a copy of the completed application, but the application is not complete.
In his remarks, Ranzau described the application process, reading from the application document: “The applicant must show a clear connection between the need that they have identified within the region, the proposed approach to address those conditions, and the outcomes they anticipate the plan will produce.” He said that it appears that REAP will do these within the application, but the commission is being asked to approve and commit to these items without having seen them, which he described as irresponsible. He made a motion that action on the grant be delayed until these things are known.
Joe Yager, chief executive officer of REAP, said that last year’s grant application is available on the REAP website, and that is the closest thing to a draft application that is available today. This year’s application is a second year of the program. Last year the commission voted not to participate in the grant by a 3 to 2 vote.
Commissioner Karl Peterjohn wondered if the new planning consortium is a duplication of existing regional authorities. He listed seven different groups, besides REAP, that are involved in planning for the region.
In further remarks, Peterjohn was concerned that smaller counties will have the same voting representation as Sedgwick County, which is many times larger than the small counties.
In response to a question from Peterjohn, Yager said that the current application is for category 1 funds only, which are for planning purposes. If REAP is successful in the application, it could apply for category 2 funds, which are for implementation of a plan.
Answering another question, Yager said that “livability principles,” which applicants must be committed to advance, are providing more transportation choices, promoting equitable and affordable housing, enhancing economic competitiveness, supporting existing communities, coordinating policies and leveraging investments, and valuing communities and neighborhoods. Peterjohn said these principles were not supplied in the information made available to commissioners.
Peterjohn said these principles sound innocuous on their face, but when details are examined, he said he could not support a “Washington-driven agenda” that could not pass the present Congress. He described this effort as part of an “administrative end-around,” baiting us with a federal grant, that will allow Washington, HUD, and EPA to “drive what we do in our community.”
The motion on deferring the item failed on a 2 to 3 vote, with Peterjohn and Ranzau voting for it.
The commission heard from three citizens. In his remarks, John Todd referenced a slide titled “Common Concerns” from a presentation given by REAP. Todd listed these concerns, which include: “A method of Social Engineering to restrict residence in the suburbs and rural areas and force Americans into city centers; a blueprint for the transformation of our society into total Federal control; will enforce Federal Sustainable Development zoning and control of local communities; will create a massive new ‘development’ bureaucracy; will drive up the cost of energy to heat and cool your home; will drive up the cost of gasoline as a way to get you out of your car; and will force you to spend thousands of dollars on your home in order to comply.”
Susan Estes of Americans for Prosperity challenged the attitude of some commissioners, particularly Jim Skelton, which is that approving the planning grant does not commit us to implementing the plan. She told the commissioners “If you know you don’t like the federal government coming in and planning for you, say so now. Let’s get it over with and be upfront and honest to those involved,” referring to the other cities and counties that may participate in the grant and planning process.
She characterized the language that appears in the grant materials as meaning “more control and less liberty.”
In his remarks, Ranzau asked Schlegel what problem we will solve by participating in the grant. Schlegel answered that the purpose of the grant is to “build the greater regional capacity for regions to better compete in what is really becoming a global marketplace.” This is the end product, he said.
Ranzau said that we don’t need more planning, that we have more than enough planning at the present time. This grant, he said, would create another consortium that is unaccountable to the people, as no one is elected to them. The organizations receive tax dollars, and while some elected officials serve on these bodies, it is not the same as being directly accountable to the people. The fact that the grant requires a new consortium to be formed is evidence that the agenda is to circumvent the will of the people, he said.
Ranzau also said that Schlegel told him that “acceptance of this grant will take REAP to another level, because right now they are struggling, and this will help plot the course for REAP.” He said that REAP, which is housed at the Hugo Wall School of Public Affairs at Wichita State University, needs to expand its role and authority in order to give it “something to do.” He said the grant will promote the “progressive agenda” of the Obama administration in this way.
Later Commission Chair Dave Unruh disputed the contention regarding the workload of REAP.
Ranzau also questioned whether we want the federal government to be a “source of solutions” for our local communities. He also questioned one of the stated goals of the program, which is to reduce cost to taxpayers. It’s a new program, he said, and would not reduce the cost to taxpayers.
He further questioned the ability of the grant program to help teach local communities to be fiscally responsible. With federal spending out of control, he said the federal government is not in a position to help in this regard.
He further said that talking in generalities sounds benign, and that he wanted to know what he is committing the county to this year. Repeating the concerns of Peterjohn, Ranzau said that accepting this grant would be accepting the policies of the Obama Administration as our own. He said that in the 2010 elections the people repudiated the agenda of the president, and this grant program is an example of the type of programs people have said they don’t want. It is concern with the agenda behind this grant program that is his greatest concern, he later explained.
Continuing, Ranzau questioned the ability of the federal government to create conditions for sustainable growth: “You’ve got to be kidding me. Look at the vision they now have for growth in this county. It’s a disaster. And now they want to take the same policies that have created and made our current economic situation worse — they want to bring them to our local communities by these sorts of grants.”
Both Ranzau and Peterjohn questioned the ability of this grant to produce affordable housing, citing the government’s role in the ongoing housing crisis.
Ranzau, who has voted against many grants, added that this is the “the worst and most troublesome grant” he’s seen in his time in office, adding that the grant is clearly an agenda created by President Obama. He said there are politicians who ran for office on platforms of limited government and fiscal responsibility, and this grant is an opportunity for them to “act on those values.”
In further discussion, it was brought out that each region makes its own definition of what sustainability means to it, but Yager provided this definition of sustainability: “Meeting the needs of the present without compromising the ability of future generations to meet their own needs.”
In his remarks, Unruh said that Sedgwick County has been involved in sustainability thinking and planning for at least two years. He said this is a strategy that helps the county plan for the future. He asked manager Buchanan if the county had a definition of sustainability. Buchanan replied the County has taken a similar approach to the International City/County Management Association, which he said involves four factors: Economic stability — sufficient jobs and economic development; ensuring that local governments are fiscally healthy so that they can provide quality services; social equity, which he said ensures that the delivery of services in communities is equitable; and the environment, which he said was not about global warming, but rather making sure we’re not wasting natural resources.
Unruh said that we are not opposed to these principles, that these are reasonable activities for elected officials. He added that regionalism is the “whole measuring stick.” We must consider communities close to us when planning, he added. It is reasonable to get these people together on a voluntary and non-binding basis. While he said he didn’t like excess spending at the federal level, it is his money that the federal government is spending, and we should take advantage of this program, adding that we need to plan. If the plans are not acceptable, he said we could simply not adopt them. He disagreed with the contention of Ranzau and Peterjohn that this process causes the county to yield to any master plan developed by the federal government. He again mentioned that we are using our money to develop this plan, and asked our federal officeholders to stop spending money in this way.
He added that he believes in limited government and fiscal responsibility, and that accessing these resources does not make him “hypocritical, insincere, or untruthful.”
In rebuttal to Buchanan, Ranzau said that the grant funding document says that one of the goals is to reduce greenhouse gas emissions, which are believed by many to be a cause of global warming or climate change. The document does mention helping regions “consider the interdependent challenges of … energy use and climate change.” This language was transmitted to commissioners in a letter from Buchanan. Ranzau again said it is important not to downplay the agenda that is associated with the grant funds. In earlier remarks, Ranzau had described how applications would be scored or ranked, and that winning applications would need to conform to the goals of HUD.
The commission voted to approve the grant, with Unruh, Norton, and Skelton voting in favor, and Ranzau and Peterjohn voting against.
Discussions such as these, where the role of government and the nature of the proper relationship between the federal government and states, counties, and cities, are a regular feature at Sedgwick County Commission meetings, due to the concerns of Peterjohn and Ranzau. These discussion do not often take place at the Wichita City Council, unless initiated by citizens whose testify on matters.
The remarks of chairman Unruh illustrated one of the important conundrums of our day. Many are opposed to the level of federal (and other government) spending. Polls indicate that more and more people are concerned about this issue. Yet, it is difficult to stop the spending.
In particular, the grant process is thorny. The principled stand of Ranzau, and sometimes Peterjohn, is that we should simply refuse to participate in the spending — both federal and local — that grants imply, and in the process also accepting the strings attached to them. Others, Unruh and Skelton in particular, have what they believe is a pragmatic view, arguing that it is our money that paid for these grant programs, and so by participating in grants we are getting back some of the tax funds we send to Washington. This reasoning allows Unruh to profess belief in limited government and fiscal responsibility while at the same time participating in this spending.
But there is no doubt that accepting federal money such as these grant funds means buying in to at least parts of the progressive Obama agenda, something that I think conservatives like Unruh and Skelton would not do on a stand-alone basis. This is an example of the power and temptation of what appears to be “free” federal money, and Ranzau and Peterjohn are correctly concerned and appropriately wary.
It is even more troublesome to realize that this power over us is exercised using our own money, as Skelton and Unruh rightly recognize, but nonetheless go along.
There may be a legislative solution someday. First, we can elect federal officials who will stop these programs. But the temptation to bring money back to the home district, either through grant programs or old-fashioned pork barrel spending, is overwhelming. Just this week U.S. Senator Jerry Moran, who voted against raising the debt ceiling in August, pledged to find more federal funds to pay for Wichita’s aquifer storage and recovery program.
An example of legislation that may work is a bill recently introduced by U. S. Representative Mike Pompeo of Wichita and others. The bill is H. R. 2961: To amend the Patient Protection and Affordable Care Act to have Early Innovator grant funds returned by States apply towards deficit reduction. The purpose of the bill is to direct the early innovator grant funds that Kansas Governor Sam Brownback returned towards deficit reduction, rather than being spent somewhere else.
The fiscal conservatives who vote to accept federal grant funds should be aware of research that indicates that these grants cause future tax increases. In my reporting on such a study I wrote: This is important because, in their words, “Federal grants often result in states creating new programs and hiring new employees, and when the federal funding for that specific purpose is discontinued, these new state programs must either be discontinued or financed through increases in state own source taxes.” … The authors caution: “Far from always being an unintended consequence, some federal grants are made with the intention that states will pick up funding the program in the future.”
The conclusion to this research paper (Do Intergovernmental Grants Create Ratchets in State and Local Taxes?) states:
Our results clearly demonstrate that grant funding to state and local governments results in higher own source revenue and taxes in the future to support the programs initiated with the federal grant monies. … Most importantly, our results suggest that the recent large increase in federal grants to state and local governments that has occurred as part of the American Recovery and Reinvestment Act (ARRA) will have significant future tax implications at the state and local level as these governments raise revenue to continue these newly funded programs into the future. Federal grants to state and local governments have risen from $461 billion in 2008 to $654 billion in 2010. Based on our estimates, future state taxes will rise by between 33 and 42 cents for every dollar in federal grants states received today, while local revenues will rise by between 23 and 46 cents for every dollar in federal (or state) grants received today. Using our estimates, this increase of $200 billion in federal grants will eventually result in roughly $80 billion in future state and local tax and own source revenue increases. This suggests the true cost of fiscal stimulus is underestimated when the costs of future state and local tax increases are overlooked.
The situation in which we find ourselves was accurately described by economist Walter E. Williams in his recent visit to Wichita. As I reported: “The essence of our relationship with government is coercion,” Williams told the audience. This, he said, represents our major problem as a nation today: We’ve come to accept the idea of government taking from one to give to another. But the blame, Williams said, does not belong with politicians — “at least not very much.” Instead, he said that the blame lies with us, the people who elect them to office in order to get things for us. A candidate who said he would do only the things that the Constitution authorizes would not have much of a chance at being elected.
The further problem is that if Kansans don’t elect officials who will bring federal dollars to Kansas, it doesn’t mean that Kansans will pay lower federal taxes. The money, taken from Kansans, will go to other states, leading to this conundrum: “That is, once legalized theft begins, it pays for everybody to participate.”
We face a moral dilemma, then. Williams listed several great empires that declined for doing precisely what we’re doing: “Bread and circuses,” or big government spending.
Reports that income earned by the Intrust Bank Arena is down sharply has brought the arena’s finances back into the news. The arena, located in downtown Wichita and owned by Sedgwick County, is deemed to be a success by the county and arena boosters based on “profit” figures generated during its first year of operations. But these numbers are not an honest assessment of the arena’s financial performance.
When the numbers were presented to Sedgwick County commissioners this week, commission chair Dave Unruh said that he is “pleased that we we still are showing black ink.”
He then made remarks that show the severe misunderstanding that he and almost everyone labor under regarding the nature of the spending on the arena: “I want to underscore the fact that the citizens of Sedgwick County voted to pay for this facility in advance. And so not having debt service on it is just a huge benefit to our government and to the citizens, so we can go forward without having to having to worry about making those payments and still show positive cash flow. So it’s still a great benefit to our community and I’m still pleased with this report.”
The contention of Unruh and other arena boosters is that the capital investment of $183,625,241 (not including an operating and maintenance reserve) on the arena is merely a historical artifact, something that happened in the past and that has no bearing today. This attitude, however, disrespects the sacrifices of the people of Sedgwick County and its visitors to raise those funds.
Since it is only one year old, presumably the arena could be sold for something near its building cost, less an allowance for wear and tear. If not, then the county has a lot of explaining to do as to why it built an asset that has no market value.
But even if the arena has no market value — and I suspect that in reality it has very little value — it still has an economic cost that must be recognized, that cost being the sales tax collected to pay for it. While arena boosters dismiss this as past history, the county recognizes this cost each year, and will continue to do so for many years.
The county, however, doesn’t go out of its way to present the complete and accurate accounting of the arena’s cost. Instead, the county and arena boosters trumpet the “profit” earned by the arena for the county according to an operating and management agreement between the county and SMG, a company that operates the arena.
This agreement specifies a revenue sharing mechanism between the county and SMG. Based on the terms of the agreement, Sedgwick County received payment of $1,116,442 for the 2010 year. While described as profit by many — and there was much crowing over the seemingly large amount — this payment does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “not intended to be a complete presentation of INTRUST Bank Arena’s financial position and results of operations and are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.”
That bears repeating: This is not a reckoning of profit and loss in any recognized sense. It is simply an agreement between Sedgwick County and SMG as to how SMG is to be paid.
Commissioner Karl Peterjohn has warned that these figures — and the monthly “profit” figures presented to commissioners — do not include depreciation expense. That expense is a method of recognizing and accounting for the large capital cost of the arena — the cost that arena boosters dismiss.
In April Sedgwick County released that depreciation number in its 2010 Comprehensive Annual Report. The number is pretty big: $4.4 million, some four times the purported “earnings” of the arena.
Any honest accounting or reckoning of the performance of Intrust Bank Arena must take this number into account. Unruh is correct in that this depreciation expense is not a cash expense that affects cash flow. That cash was spent during the construction phase of the arena.
But depreciation expense provides a way to recognize and account for the cost of long-lived assets like buildings over their lifespan. It recognizes and respects the investment of those who paid the sales tax. When we follow standard practices like recognizing the cost of capital assets through depreciation expense, we’re forced to recognize that there’s a $4.4 million gorilla in the room that arena boosters don’t want to talk about.
Using information about arena operations contained in the operations report, we can construct what an actual income statement for the arena would look like, following generally accepted business principles. According to the statement, total operating income for 2010 was $7,005,224. Operating expenses were $4,994,488. Subtracting gives a figure of $2,010,736. This number, however, is not labeled a profit in the report. Instead, the report calls it “Increase in Net Assets Arising from Operating Activities Managed by SMG.”
An accounting of profit would have to subtract the $4.4 million in depreciation expense. Doing that results in a loss of $2,389,264. This — or something like it — is the number we should be discussing when assessing the financial performance of Intrust Bank Arena.
Fiscal conservatives — and sometimes even liberals — often speak of “running government like a business.” As an example, Unruh’s campaign website from last year states “… as a business owner he works hard to apply good business principles to County government …”
But here’s an example of conservative government leaders ignoring a basic business principle in order to paint a rosy picture of a government spending project. Unruh is not alone in doing this.
Without honest discussion of numbers like these, we make decisions based on incomplete and false information. This is especially important as civic leaders agitate for another sales tax or other taxes to pay for more public investment. The sales pitch is that once the tax is collected and the assets paid for, we don’t need to consider the cost. They contend, as is the attitude of Unruh and arena boosters, that we can just sweep it under the rug and pretend it doesn’t exist. This is a false line of reasoning, and citizens ought not to be fooled.
More jobs, but … Today’s jobs reports shows more jobs created than the small number many feared would be reported. Commenting on this is Americans for Limited Government President Bill Wilson: “Today the Labor Department’s announcement of the unemployment report showing 117,000 new jobs created is a testimony to America’s job creators who are fighting hard against the economic headwinds created by Obama’s bullheaded adherence to a failed 1930s economic philosophy. … The drop in the unemployment rate to 9.1 percent though is a false signal as the drop is largely attributable to even more Americans giving up hope of getting a job and dropping out of the workforce. Since Obama has become president, Americans have been leaving the workforce in droves. For them, and the almost 14 million unemployed, Obama’s change has robbed them of hope.”
Sedgwick County budget. Wednesday’s meeting of the Sedgwick County Commission featured some actual legislative action as two fiscally conservative commissioners sought to reign in some county spending as the commissioners considered the 2012 budget. Commissioner Karl Peterjohn offered an amendment that would have reduced county spending by almost $500,000 in net spending reduction by eliminating one county center in health data, eliminating the new county lobbyist position, cutting $125,000 in airline subsidies as well as other business incentive spending, and several smaller categories of county spending. This amendment failed with only Commissioner Richard Ranzau voting with Peterjohn. A second amendment by Peterjohn deleted the new county lobbyist position to save $83,546. This amendment failed by the same vote as the first.
There are emergencies, and then there aren’t. KAKE Television reports that during Wednesday evening’s storm, about 65 percent of the calls handled by the 911 system operators were for non-emergency reasons. “A majority of the calls from the storm were people requesting to be transferred to the electric company,” the station reports. Story and video at Majority Of Emergency Calls Were Non-Emergencies .
Debt ceiling bill seen as feckless. The Cato Institute’s Jagadeesh Gokhale sums it up quite colorfully: “It’s been a frustrating two months watching politicians alternately squirm and spin only to achieve a damp squib of a deal.” He also writes that “The President and leaders in Congress have basically thrown in the towel.” The problems, he writes are “far too little by way of spending cuts, keeps open the possibility of new taxes, and hikes the debt ceiling substantially.” The major problems of Medicare, Medicaid and Social Security were not addressed, he adds. More from Gokhale at The Debt Deal: Failures of Leadership and Resolve. … His colleague Daniel J. Mitchell notes the path American is taking: “America is on a path to becoming a Greek-style welfare state. Thanks to the Bush-Obama spending binge, the burden of federal spending has climbed to about 25% of national economic output, up from only 18.2% of GDP when Bill Clinton left office.” Of the spending cuts, he writes “federal spending will actually be higher every year and that the cuts were based on Washington math (a spending increase becomes a spending cut if outlays don’t climb as fast as some artificial benchmark).” It is thought that spending cuts amount to only $22 billion next year. Out of likely $3.6 trillion budget, that’s 0.6 percent. Mitchell concludes: “One group of people, however, unambiguously got the short end of the stick in this budget deal. Ordinary Americans are caught in the middle. They’re not poor enough to benefit from the federal government’s plethora of income-redistribution programs. But they’re not rich enough to have the clever lobbyists and insider connections needed to benefit from the high-dollar handouts like ethanol subsidies and bank bailouts. Instead, middle-class Americans play by the rules, pay ever-higher taxes, and struggle to make ends meet while the establishment of both parties engages in posturing as America slowly drifts toward a Greek-style fiscal meltdown.” More from Mitchell at Debt Deal: Politicians Win, Middle Class Loses.
Higher fuel standards mean higher death toll. It’s simple physics, writes the Washington Examiner. Weight is the main enemy of fuel economy, so higher fuel economy standards from the government mean lighter cars. This lighter weight translates directly into highway deaths: “In 2003, for example, a National Highway Traffic Safety Administration study estimated that for every 100 pounds of weight taken out of a car weighing under 3,000 pounds, the death rate goes up more than 5 percent; the increase is slightly less than 5 percent for those weighing more than 3,000 pounds. Two years before that, a National Academy of Sciences study estimated that the lighter vehicles required to satisfy CAFE were responsible for as many as 2,600 highway deaths in one year alone. And in 1999, a comprehensive multiple regression analysis by USA Today of the government’s Fatality Analysis Reporting System data concluded that 7,700 people died for every one additional mpg attributable to CAFE regulation.” … Thomas Sowell warned us of this in 2005 when he wrote “Many of the same people who cry ‘No blood for oil!’ also want higher gas mileage standards for cars. But higher mileage standards have meant lighter and more flimsy cars, leading to more injuries and deaths in accidents — in other words, trading blood for oil.” … This is another example of the unintended consequences of regulation, although many times the consequences are intended.
Myths about markets. Tom G. Palmer has a wonderful paper that tackles the criticisms of free markets that have evolved into myths. For example, the first myth is that markets are immoral or amoral. Palmer states the myth: Markets make people think only about the calculation of advantage, pure and simple. There’s no morality in market exchange, no commitment to what makes us distinct as humans: our ability to think not only about what’s advantageous to us, but about what is right and what is wrong, what is moral and what is immoral. His destruction of the myth: “A more false claim would be hard to imagine. For there to be exchange there has to be respect for justice. People who exchange differ from people who merely take; exchangers show respect for the rightful claims of other people. The reason that people engage in exchange in the first place is that they want what others have but are constrained by morality and law from simply taking it. An exchange is a change from one allocation of resources to another; that means that any exchange is measured against a baseline, such that if no exchange takes place, the parties keep what they already have. The framework for exchange requires a sound foundation in justice. Without such moral and legal foundations, there can be no exchange. Markets are not merely founded on respect for justice, however. They are also founded on the ability of humans to take into account, not only their own desires, but the desires of others, to put themselves in the places of others. A restaurateur who didn’t care what his diners wanted would not be in business long. If the guests are made sick by the food, they won’t come back. If the food fails to please them, they won’t come back. He will be out of business. Markets provide incentives for participants to put themselves in the position of others, to consider what their desires are, and to try to see things as they see them. Markets are the alternative to violence. Markets make us social. Markets remind us that other people matter, too.” … The entire paper is at Twenty Myths about Markets.
What are rights? “Individuals have rights. But are they natural? And how do they compare and contrast with legal or constitutional rights? Are legal or constitutional rights similar to those inalienable rights mentioned in the Declaration of Independence? Professor Aeon Skoble distinguishes such constitutional rights, such as the right to vote, from the rights protected by governments and constitutions — natural rights not actually granted by governments themselves. He concludes that legal systems should create rights that are compatible with natural rights.” This video is from LearnLiberty.org, a project of Institute for Humane Studies, and many other informative videos are available.
A new report by the Kauffman Foundation holds unsettling information for the future of job growth in the United States. Kauffman has been at the forefront of research regarding entrepreneurship and job formation.
Previous Kauffman research has emphasized the importance of young firms in productivity growth. Research by Art Hall found that for the period 2000 to 2005, young firms created nearly all the net job growth in Kansas.
So young firms — these are new firms, and while usually small, the category is not the same as small businesses in general — are important drivers of productivity and job growth. That’s why the recent conclusion from Kauffman in its report Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation is troubling: “The United States appears to be suffering from a long-term leak in job creation that pre-dates the recession and has the potential to persist for an unknown time. The heart of the problem is a pullback by newly created businesses, the economy’s most critical source of job creation, which are generating substantially fewer jobs than one would expect based on past experience. … This trend has only worsened since the onset of the most recent recession. The cohort of firms started in 2009, for example, is on track to contribute close to a million jobs less in its first five to ten years than historical averages.”
The report mentions two assumptions that are commonly made regarding employment that the authors believe are incorrect:
First, policymakers’ focus on big changes in employment because of events such as a new manufacturing plant or the recruitment of a business to a community ignore the more important fact that our jobs outlook will be driven more by the collective decisions of the millions of young and small businesses whose changing employment patterns are not as easy to see or influence. Second, it is just as easy to be deluded into thinking that the jobs problem will be solved by growth in the number of the self-employed.
The importance of young firms is vital to formulating Kansas economic development policy. Kansas Governor Sam Brownback has incorporated some of the ideas of economic dynamism in his economic plan released in February. The idea of dynamism, as developed by Dr. Art Hall, is that economic development is best pursued by creating a level playing field where as much business experimentation as possible can take place. The marketplace will sort out the best firms. The idea that government economic development agencies can select which firms should receive special treatment is sure to fail. It is failing.
While the governor’s plan promotes the idea of economic dynamism, some of his actual policies, such as retaining a multi-million dollar slush fund for economic development, are contrary to the free marketplace of business experimentation and letting markets pick winning firms.
At the City of Wichita, economic development policy is tracking on an even worse direction. Among city hall bureaucrats and city council members, there is not a single person who appears to understand the importance of free markets and capitalism except for one: council member Michael O’Donnell, who represents district 4 (south and southwest Wichita).
The policy of Wichita is that of explicit crony capitalism, with city leaders believing they have the wisdom to develop policies that recognize which firms are worthy of taxpayer support. And if they want to grant subsidies to firms that don’t meet policies, they find exceptions or write new policies. Elected officials like Wichita Mayor Carl Brewer and city council member Jeff Longwell lust for more tools in the economic development toolbox.
At the Sedgwick County Commission, two of the five members — Karl Peterjohn and Richard Ranzau understand the importance of free markets for economic development. But the city has a much larger role in targeted incentives for economic development, as it is the source of tax increment financing districts, industrial revenue bonds, economic development exemptions, community improvement districts, and other harmful forms on economic interventionism.
This Week in Kansas. On this week’s edition of the KAKE Television public affairs program This Week in Kansas, Ken Ciboski (Associate Professor of Political Science at Wichita State University), John D’Angelo (Arts & Cultural Services Manager for the City of Wichita), and myself join host Tim Brown for a discussion of arts and government funding in Kansas. This Week in Kansas airs in Wichita and western Kansas at 9:00 am Sundays on KAKE channel 10.
Kansas taxes. A short report produced by Americans for Prosperity, Kansas shows some of the reasons why economic growth in Kansas has been sluggish: “Kansas’ state and local tax burden continues to be amongst the highest in the region.” Kansas has fewer private sector jobs than it did ten years ago. And in what should be a grave cause for alarm, Kansas was the only state to have a net loss of private sector jobs over the last year. … A table of figures illustrates that although Oklahoma kept its sales tax rate low and constant while Kansas increased its rate, tax revenue increased much more in Oklahoma. Download the report at AFP-Kansas Income Tax Policy Primer.
Wichita sales tax. Speaking of sales tax and its harmful effect, Wichita seems to want to raise its rate. Proposals have been floated for a sales tax for economic development in general, for increased transit (bus) service, for drainage projects, and for downtown projects. Boosters cite the Intrust Bank Arena as an example of a successful project paid for by a sales tax that disappeared as promised. That’s despite the dreams of Sedgwick County Commissioner Tim Norton: “Then, as that tax was nearing its end, Norton ‘wondered … whether a 1 percent sales tax could help the county raise revenue.’ (‘Norton floats idea of 1 percent county sales tax,’ Wichita Eagle, April 4, 2007)” … Boosters of the arena promote it as a financial success, and there was the presentation to the county of a check for $1,116,442 as its share of the arena’s earnings. This figure, however, does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “special-purpose financial statements” and “are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.” In particular, Commissioner Karl Peterjohn has warned that these figures — and the monthly “profit” figures presented to commissioners — do not include depreciation expense. That expense is a method of recognizing and accounting for the large capital cost of the arena. In April the County released that number, and I believe it has not been reported by any news media. That may be because the number is pretty big — $4.4 million, some four times the purported “earnings” of the arena. … Without honest discussion of numbers like these, we make decisions based on incomplete and false information. Don’t look for many local government leaders and officials to talk about this number, and certainly not the Wichita Eagle editorial page.
Koch criticism backfires — again. For those who follow the issue, it’s no surprise that Lee Fang, a reporter for the liberal think tank Canter for American Progress has come out with another attack on Charles and David Koch. Mark Hemingway of the Weekly Standard reports on this effort: “Think Progress reporter Lee Fang has a long history of being spectacularly wrong. However, there’s a seemingly unending thirst for his breathless demonization of the Koch brothers and other rants about corporate greed among the low IQ end of the liberal spectrum.” Fang disagrees with a recent U.S. Supreme Court decision, and he lambasts the litigators who brought the suit as “heavily financed by right-wing corporate money, particularly from Koch Industries and Walmart.” He also criticizes organizations for not dislosing their donors. Hemingway notes this: “In the case of the Koch brothers, they have been outspoken philosophical libertarians for decades. Their support of free speech over onerous campaign laws is entirely consistent and should not be surprising. However, in the case of Wal-Mart Fang is also astoundingly hypocritical. Because you know who else is a ‘Walton-Funded Group’? Lee Fang’s employer.” And the secret donations that Fang rails against so passionately? Hemingway again: “You know who else accepts ‘secret donations from individuals and corporations’? That’s right — the Center for American Progress.” … For another example of Fang’s reporting, see ThinkProgress and Lee Fang: wrong again.
Tension on debt ceiling issue. In The Wall Street Journal Kimberly Strassel writes that the current debt and spending crisis may lead to an end to farm subsidies, something she described as a “sacred federal spending cow:” “For decades, the House and Senate agriculture committees have been the last redoubts of congressional bipartisanship, liberals and conservatives united in beating back any outside attempts to cut off tens of billions annually for price supports, crop insurance, weather assistance, conservation handouts and nutrition programs. The last real stab at reform was the mid-1990s Freedom to Farm bill. Most of the changes were obliterated by subsequent bailouts and new spending.” … She describes how Arizona Congressman Jeff Flake got a limit of farm subsidies through the Appropriations Committee, but House Agriculture Committee Chairman Frank Lucas used a maneuver to block Flake’s proposal. So much for that effort at reform, blocked by a Republican. Lucas’ website promotes a conservative message, with one post criticizing bailouts. But not for farmers, it seems. … Wichita’s Mike Pompeo is mentioned: “Mr. Pompeo is waiting to see what debt package emerges and says his vote will depend on whether it contains real ‘structural’ reform. But he also tells me he doesn’t intend to let parochial interests cloud his decision. ‘I came here to be a small-government guy every day, and not just when it is spending cuts in somebody else’s district,’ he says.” … Although not mentioned in this article, Tim Huelskamp, who represents the Kansas first district, has been upfront in discussing the need to reduce or eliminate farm subsides, and so far, many farmers seem to be accepting of that. Huelskamp’s district, which covers all of western Kansas (and more), is usually second on the list of congressional districts in terms of total farm subsidies received. For 2009, that figure was $369 million.
Stossel: The Money Hole. A recent episode of John Stossel’s television program is now available on the free hulu service by clicking on The Money Hole. Writes Stossel in his introduction to the show: “We will soon spend ourselves into oblivion. But finally … movement! Budget slashing proposals from Paul Ryan, the Republican Study Committee, Ron Paul, Rand Paul and even Tim Pawlenty! But politicians and real people across the spectrum still resist change. What should government do? What’s its role? What have other countries done? The Money Hole tackles that.”
By Karl Peterjohn.
Removing politics from the Kansas judiciary is about as likely as removing the moo from a cow. In Kansas the there is no transparency and a great deal of discrimination in this back room judicial selection process. Judge Ricard D. Greene’s defense of appellate judge selection (February 24, 2011 Wichita Eagle) in Kansas neglected these odious features in his defense of this terribly flawed system.
I write this as a second-class Kansan who has been disenfranchised in the process of selecting a majority of this powerful governmental committee that is dominated by the members of the Kansas bar and the group that picks who will become its appellate judges. There is no other government panel in Kansas that empowers one small class of special citizens at the expense of the rest of us. I recently asked the Secretary of State’s office for the election results for selecting this powerful state committee’s lawyer members. I was told that information is not available.
Five of the nine members of this powerful committee are elected solely by the members of the Kansas bar. The other four are appointed by the governor. While this committee selection process is used in a number of other states, none of them provide for making a majority of its members are lawyers.
This type of closed door selection process which occurs outside the public’s view is a reason why a few years ago, six of the seven members of the Kansas Supreme Court who had been selected using this process were members of one political party while the seventh who wasn’t, was a friend of the governor (see kansasmeadowlark.com). The latter was judicially reprimanded but that admonishment and the underlying egregious misbehavior that led to this punishment did not keep Lawton Nuss from his current promotion to be the Chief Justice of the Kansas Supreme Court.
Yeah, there aren’t any politics here. Yeah, only the best and the brightest are being added to the court according to Judge Greene. I must note that none of the Eagle’s news coverage of Nuss during his retention election last year mentioned his reprimand or kept the Eagle’s editorial page from endorsing him despite his ex parte abuse with litigants in the Montoy case.
Judicial selection is important and decisions will impact state policy. Must the state spend $853 million more for K-12 schooling to comply with the KS Constitution? Yes says the unanimous supreme court in overruling its own earlier decision. Are state owned casinos constitutional? Yes again, despite the fact that there never was a statewide vote on legalized casinos. Was the Kansas death penalty constitutional? The Kansas Supreme Court overruled itself from an earlier case and said no, but then Attorney General Kline took this case to the US Supreme Court. Kline won in Washington and that decision was reversed.
Today, the politics of the Kansas judiciary are now occurring behind the closed door-back rooms of the bar association. Transparency is non existent when the meetings of the government committee occur behind closed doors and without any public records being recorded from these meetings.
KU law professor Stephen J. Ware has written that this is an inequality that goes against the “one person, one vote” principle of democracies. The power of a vote of a member of the bar is “infinitely more powerful” than the votes of non-lawyers.
When comparing the method of judicial selection in Kansas to other states, Ware said that “Kansas is the only state that gives its bar the power to select the majority of its supreme court nominating commission.”
The Kansas House majority supporting HB 2101 should be praised for eliminating this vestige of elite discrimination by one class of specially empowered citizens. The attorneys and their hand picked judges won’t like this bill, but the politics of judicial selection should be out in public where everyone has a say as well as a clear view, instead of hidden in back rooms. I hope that a majority of the Kansas senate as well as Governor Sam Brownback agree and HB 2101 becomes law as a first step in reforming appellate judicial selection in Kansas.
This week at Wichita City Council. This Tuesday, six speakers have signed up to appear on the public agenda. This is a portion of the meeting where citizens may speak on nearly any topic. Five are speaking on the city’s proposed trash plan, while one is speaking on a city-wide recycling project. … Approval of the city’s legislative agenda will be considered. Probably the greatest threat to economic freedom is this plank: “City of Wichita supports continued use of effective private-public partnerships and the appropriate intervention of state and local governments to spur economic development.” Also the city expresses support for highly subsidized, expensive, and little-used passenger rail service. … Also the council will consider amending the Wichita-Sedgwick County Comprehensive Plan to include Project Downtown: The Master Plan for Wichita. This is the plan that consulting firm Goody Clancy developed for the revitalization of downtown Wichita. The complete agenda report is at Wichita City Council, December 14, 2010.
Sedgwick County Commission this week. On Wednesday the Sedgwick County Commission will vote on its legislative agenda. The agenda, or platform, is not law, but expresses the sentiment or desire of the commission. Last year Commissioner Karl Peterjohn shepherded through the requirement that voters approve all tax rate increases. This year the same language is proposed, but it may not pass. (The proposed language is this: “All local sales tax increases must be approved by voters under Kansas law. All property tax increases that raise the mill levy should also be required to receive voter approval.”) Some commissioners believe that voters elect them to use their judgment to make decisions on taxes, while other commissioners believe voters should have the final say on something as important as this. The agenda and backup material for Wednesday’s meeting is at Sedgwick County Commission, December 15, 2010.
Wichita Eagle: Adopt downtown plan. Today’s Wichita Eagle editorial calls for passage of the downtown master plan recently developed by planning firm Goody Clancy. Rhonda Holman argues that a “busier, richer core” will benefit the town economically, adding that “downtown matters too much to be left to chance.” The idea that the core is essential to progress is taken as a given, but when downtown supporters are questioned, no evidence to support this nostrum is given. Also, this concept of “chance” that Holman doesn’t trust could also be described as a dynamic marketplace of ideas and capital, with many diverse players with dispersed knowledge acting to advance their own self-interest by creating things people will freely buy, all coordinated through the magic of the price system. What Wichita — with Holman’s support — plans to do is to replace this with the bureaucratic and political system.
City planning by “Those Who Know Best.” “While the fixations of trendy planners might not register on the list of things that average Americans think about, these new utopian land-use ideals are filtering down into government agencies and city councils, and might eventually impact the way we all live.” Writing in the Orange County Register, Steven Greenhut quotes the definition of New Urbanism: “New Urbanism is the most important planning movement this century, and is about creating a better future for us all. It is an international movement to reform the design of the built environment, and is about raising our quality of life and standard of living by creating better places to live. New Urbanism is the revival of our lost art of place-making, and is essentially a reordering of the built environment into the form of complete cities, towns, villages and neighborhoods …” He warns: “Whenever some ideologue claims to offer the most important thing since sliced bread and then promises to reorder my life around it, we should all get nervous.” (The downtown Wichita planners do not use the term “New Urbanism,” but they share the same characteristics and goals.) And even more strongly: “The New Urbanists claim to want to give our lives meaning by creating superior urban forms of living, yet they miss the most meaningful things in life because they emphasize architecture over people. Like all totalitarians, they assume that what they prefer is so good and noble that they have the moral right to impose it on everybody else. The rest of us need to take notice now, so there is still time to oppose it.”
Anderson appointment criticized. KU political science professor Burdett Loomis criticizes the appointment of Steven J. Anderson to be the new Kansas budget director, branding him an “ideologue” that has made “broadside attacks on public education.” Anderson believes in limited government, and his “attacks” on public — let’s be clear here — government schools are advocating school choice through vouchers. In states where vouchers are used, evidence is that public schools improve in response to the competition from private schools that parents can now actually afford. Plus, the state saves money, too. Loomis also criticizes Anderson for uncovering the large unspent fund balances in many Kansas agencies, balances that Loomis seems to doubt exist. Overall, Loomis presents an argument for the status quo in Kansas government, and the potential for change in the direction of restraining its growth has Loomis — in his own words — “concerned — worried, even.”
This Friday (July 30) the Wichita Pachyderm Club features “A celebration of Milton Friedman’s birthday featuring a discussion of the Friedrich Hayek and the John Maynard Keynes economic schools of thought.”
Presenters will be Karl Peterjohn, Sedgwick County Commissioner, for Hayek, and Bill Miles, WSU Assoc. Professor of Economics For Keynes.
All are welcome to attend Wichita Pachyderm Club meetings. The program costs $10, which includes a delicious buffet lunch including salad, soup, two main dishes, and ice tea and coffee. The meeting starts at noon, although it’s recommended to arrive fifteen minutes early to get your lunch before the program starts.
The Wichita Petroleum Club is on the ninth floor of the Bank of America Building at 100 N. Broadway (north side of Douglas between Topeka and Broadway) in Wichita, Kansas (click for a map and directions). You may park in the garage (enter west side of Broadway between Douglas and First Streets) and use the sky walk to enter the Bank of America building. The Petroleum Club will stamp your parking ticket and the fee will be $1.00. Or, there is usually some metered and free street parking nearby.
The financial issue concerns the way that EMS employee pay is budgeted and its impact on the county’s budget. Commission chair Karl Peterjohn and Commissioner Kelly Parks asked questions of the county’s auditor on this matter, exercising what Peterjohn describes as due diligence. But the issue has grown to become political.
In a Wichita Eagle news story, the county’s chief financial officer said he expected to receive a bill from the auditor for about $900 as a result of what the Eagle characterized as an audit. As this was initiated without a vote by the entire commission, some members are “irked,” according to the news article.
Peterjohn says that the questions he asked are “within the normal scope of the contract between Sedgwick County and AGH” and that there should be no charge for answering these questions. He also notes that the auditing firm works for the commissioners specifically.
There is disagreement as to the scope of the financial irregularity. In an email message, Peterjohn said that “[Commissioner Dave Unruh] does not believe that there is a financial problem here. I strongly disagree. The county will republish its budget because of this problem.”
Following is a letter Peterjohn wrote to the editor of the Wichita Eagle.
I am writing to demand a retraction from the Wichita Eagle’s July 14, 2010 headline, “Parks, Peterjohn order audit without vote.”
We did not order an audit and the article that Ms. Gruver wrote does not state that we did. We did discuss a $300,000 discrepancy that county staff had found in the EMS Department with the county’s outside auditor Mark Dick. Mr. Dick is operating under an existing contract that his accounting firm, Allen Gibbs & Houlik (AGH) has with Sedgwick County. This sizable financial discrepancy extended back to 2007.
The current contract that the county has with AGH goes back to 2008. AGH’s accounting work with the county goes back decades and well before 2007. The current contract requires AGH to perform outside auditing of the county’s books and related financial services. This specifically includes: “…require AGH plan and perform the audit to obtain reasonable, rather than absolute assurance about whether the financial statements are free of material misstatement whether caused by error, fraudulent financial reporting or misappropriation of assets.”
The unexpected and negative financial revelation about this $300,000 discrepancy led me to want to know if AGH would be changing their letter concerning the county’s financial reporting for last year or any previous years going back to 2007. I was also concerned that problems in one county department might extend to other departments as well as revising any of the previous audit letters issued by AGH in the past. This is especially necessary since we are beginning to work on our 2011 budget and my questions to Mr. Dick reflected these concerns on this subject.
This is the appropriate and proper form of due diligence that is needed to be asked by any elected official who has the responsibility for the expenditure of taxpayers’ funds. My inquiry as well as Commissioner Parks may have led AGH to take action under the terms of this contract relating to county finances and record keeping.
I asked questions. So did Commissioner Parks. Commissioners ask questions all the time without having to meet and cast votes. In the 18 months that I have been a commissioner, Mr. Dick and AGH have presented the results of their annual audit to the commission. At that time Mr. Dick has said that the auditors work for the commissioners and are ready to answer any financial and audit related questions we have under this contract.
If there are financial discrepancies in a county department, this needs to be identified and corrected. A lack of proper and appropriate financial controls can impact the county’s bond rating and I believe that by asking my questions, along with Commissioner Parks’, for Mr. Dick were appropriate and were the due diligence that needed to be performed.
Mr. Dick responded to our inquiry since he was not aware of this $300,000 discrepancy until we told him. Mr. Dick looked into this matter under the terms of the AGH-Sedgwick County contract. Mr. Dick then issued a letter to all of the commissioners informing us of what he had found. Commissioner Unruh then expressed his opinion about this inquiry at the commissioner staff meeting last Tuesday.
If county records are flawed, there are provisions to cover this within the contract. These provisions include, “… establishing and maintaining effective internal control over financial reporting and safeguarding assets, and for informing us of all significant deficiencies in the design or operation of such controls of which it has knowledge,” is a county responsibility. In addition the county is also responsible for, “… for adjusting the financial statements to correct material misstatements,” and “… properly recording transactions in the records.”
My intent in asking questions is to make sure that taxpayers’ funds are being spent appropriately and proper records are being kept. Let me add that in many cases in this country public officials, both appointed and elected, have lost their jobs for financial discrepancies a good deal smaller than $300,000 or improper financial variances that are a lot less than 4 years in length. This variance will require the county to re-publish its budget.
I believed that the questions I asked were within the normal scope of the contract between Sedgwick County and AGH. The headline that Commissioner Parks and myself ordered an audit outside the boundaries of this contract without a required vote is odious and false.
By Karl Peterjohn
The United States Supreme Court narrowly agreed today that the 2nd Amendment to the U.S. Constitution protects an individuals right to possess firearms. Sadly, this was a narrow, 5-4 decision that could be changed when another 2nd Amendment case works its way to the Court when its membership changes.
This has happened in the past. In fact, my lawyer friends tell me that it is not unusual for this to happen.
Yet this is an individual right. The United States could not have been created if this had not been implicit among the rights claimed by our colonial forefathers.
One overlooked fact is that this right is clearly called out in many state constitutions. This includes Kansas where Section 4 in the Kansas Bill of Rights states: “Bear arms; armies. The people have the right to bear arms for their defense and security; but standing armies, in time of peace are dangerous to liberty, and shall not be tolerated, and the military shall be in strict subordination to the civil power.”
That’s clear language. The people have this right and not the “national guard” as the statist left has been alleging. The fear expressed here if of standing armies, not individuals and their firearms. Now, this is not to say that this language cannot be misconstrued. It can and in Kansas, it has.
However, the people have this power and this language clearly says so. Like the First Amendment in our federal Bill of Rights that begins, “Congress shall make no law…” when it comes to religion, speech, or press. Despite this, the regulation of speech continues and even thrives. Efforts to continue to destroy our 2nd Amendment freedoms will continue.
The odious statist mayor in Chicago has said that they will continue to flout the 2nd Amendment. However, this is a victory for freedom, but only by a tiny 5-4 margin.
While making this community as safe as possible from criminal activity is a never-ending challenge a major achievement has been accomplished in Sedgwick County. The Sedgwick County jail population growth that appeared to be rising inexorably has been reversed in the last nine months.
This is a major success.
The June 18 Wichita Eagle editorial and news coverage about the recent success is understated with figures that diminish instead of accurately reflecting this accomplishment. As the new commissioner I had to cast a very difficult vote to appropriate additional tax funds of $2 million to finance the growing jail population last year. The jail population had been rising throughout 2009.
By last October we had as many as 1,760 people in the jail, work release, or in other county jails around Kansas. That month’s average was 1,736. This was much higher than the beginning of the year.
What changed? The county has expanded a number of alternative programs including day reporting, drug court, mental health court, and around the beginning of September, an expanded pre-trial services program. The intent was to make the people involved in a variety of misdemeanors and non-appearances for court dates more accountable for these types of illegal behavior and an extra benefit would be a reduced cost to taxpayers.
In addition, a series of articles discussed the delays in sentenced criminals in being sent to the state prison.The impact of these articles resulted in changes and has had a major positive impact on the number of people occupying the county jail. In one day last month, the number of people in the jail dropped to 1,477.
The cost of putting a person in the jail is over $65 a day. Pre-trial services cost per person is roughly 1/10 that cost. The jail problem is not solved, but the dimension of this problem has changed significantly for the better with a population that is closer to 1,500 than 1,750. June 22 there were 1,502. This is about the same as the average number of people in the jail between 2005-to-2008. When the cost exceeds $65 a day, this translates into $5 million a year, or over 1 mill on county property taxes.
There are no final solutions for the larger issue of crime. However, there are much lower cost alternatives that are now being used to help keep this community safe. This success by Sedgwick County has not mentioned any of these jail population figures in the editorial commentary or news coverage. There is a lot of credit that deserves to be shared with all of the people: elected, staff, and judicial who are all involved in trying to keep our community safe.
As a county commission candidate in 2008, I spoke out against spending over $125,000 per bed for additional space in the county jail expansion proposal that had a total price tag of almost $50 million. I said that there were better options available to keep this county safe at a reasonable price. These detention figures indicate that Sedgwick County is making significant progress in utilizing lower cost detention options.
When the Kansas Chamber of Commerce recently referred to the need to control Kansas government spending and taxes, a few politicians and newspaper editorial writers embellished what the Chamber actually said in order to make their own political points.
Here’s what the Kansas Chamber said in its press release dated May 8:
“As of today, the legislature has failed to address the needs and wishes of the business community. It has instead catered to the needs of those at the government trough. The Kansas legislature has turned a deaf ear to the hard-working businessmen and women who have made the decision to invest in Kansas and provide jobs for our citizens. Instead of responsibly funding state government without raising taxes, a coalition of liberal House and Senate members have instead chosen to slash crucial services and push for a historic tax hike on Kansas families,” said Kansas Chamber President Kent Beisner.
Kansas Governor Mark Parkinson, an advocate for greater government spending and taxing, seized this opportunity for political gamesmanship. His press release on May 10 stated “It is heartbreaking to think that somebody would equate the disabled, the elderly, school children, veterans, law enforcement and the poor to pigs at a trough.”
His message used the “pigs at a trough” symbolism several additional times.
The Governor’s use of the word “pigs” — inflammatory imagry, to say the least — started making the rounds. It was picked up by editorialists and other writers, including the Wichita Eagle’s opinion editor Phillip Brownlee. In his editorial Kids, disabled aren’t pigs at a trough (Wichita Eagle, May 13) Brownlee wrote: “So schoolchildren and individuals with disabilities are akin to pigs at a trough?”
Brownlee’s editorial starts by complaining that the Kansas Chamber used some “over-the-top rhetoric during the state budget debate.”
Well, the Kansas Chamber didn’t use the word “pigs.” That was the governor’s language, then repeated by liberal editorial writers like Brownlee and the Winfield Daily Courier’s David Seaton when he editorialized: “Efforts by the president of the Kansas Chamber of Commerce to characterize educators, the elderly, the disabled and public safety employees as pigs at ‘the government trough’ did not succeed.”
Since Governor Parkinson brought it up, we ought to think about it for a moment. Schoolchildren, of course, aren’t pigs at the trough, no matter what the governor and Wichita Eagle say. For one, children don’t make the decision to attend public (government) schools, as their parents make that decision for them. It is the schools themselves, specifically school spending advocates in the form of Kansas National Education Association (or KNEA, the teachers union) and the Kansas Association of School Boards (KASB) that are the pigs.
If these school spending advocates were truly concerned about the education of Kansas schoolchildren, they would allow for government spending on education to be targeted at the child, to be spent wherever parents feel their children’s needs will best be met. But the school spending lobby in Kansas vigorously resists any challenge to their monopoly on public money for education, which reveals that they’re really more interested in spending on schools by any means, at any cost rather than on education.
If we need any more evidence of the never-ending appetite of schools for money, consider a story told by Kansas House Speaker Pro Tem Arlen Siegfreid (R-Olathe) of a conversation he had with Mark Tallman, lobbyist for the Kansas Association of School Boards: “During our discussion I asked Mr. Tallman if we (the State) had the ability to give the schools everything he asked for would he still ask for even more money for schools. His answer was, ‘Of course, that’s my job.’”
The Eagle editorial mentions a number of local chambers of commerce that have split away from the state chamber. We should recognize that in many cases, local chambers have become boosters for big government taxes and spending. An article titled Tax Chambers by the Wall Street Journal’s Stephen Moore explains the decline of local chambers of commerce: “The Chamber of Commerce, long a supporter of limited government and low taxes, was part of the coalition backing the Reagan revolution in the 1980s. On the national level, the organization still follows a pro-growth agenda — but thanks to an astonishing political transformation, many chambers of commerce on the state and local level have been abandoning these goals. They’re becoming, in effect, lobbyists for big government.”
This was certainly the case with the Wichita Metro Chamber of Commerce. Under its president Brian Derreberry, it had been in favor of increased government interventionism instead of free markets. An example was its support of proven fiscal conservative Karl Peterjohn’s opponent in the campaign for Sedgwick County Commissioner in 2008. In that campaign, the Wichita Chamber spent some $19,000 — 44% of all it spent on campaigns that year — on Peterjohn’s opponent, a small town mayor who had just increased taxes.
Last year the Wichita Chamber hired former Kansas House Member Jason Watkins to be its lobbyist. The hiring of Watkins, a fiscal conservative, seemed to signal a possible shift in the Wichita Chamber’s direction. The fact that the Wichita Chamber did not break away from the Kansas Chamber’s opposition to tax increases validates that perception.
We should also note that many of the goals of the Kansas Chamber, such as efficient government, reducing taxes, encouraging business investment and growth, and promoting economic growth in Kansas, are good for all Kansans, not just business. Even government employees — and the governor himself — must realize that government does not create wealth. Instead, it is business that creates wealth that provides for our standard of living. It is business that creates the economic activity that generates the tax revenue that makes government spending possible.
The Eagle’s repetition of the governor’s attack on the Kansas Chamber fits right in with its pro-government, anti-economic freedom agenda.
On Friday April 30, Karl Peterjohn will address members and guests of the Wichita Pachyderm Club. Peterjohn is the chair of the Sedgwick County Commission. His topic will be “A view from the county commission.”
All are welcome to attend Pachyderm club meetings. The program costs $10, which includes a delicious buffet lunch including salad, soup, two main dishes, and ice tea and coffee. The meeting starts at noon, although it’s recommended to arrive fifteen minutes early to get your lunch before the program starts.
The Wichita Petroleum Club is on the ninth floor of the Bank of America Building at 100 N. Broadway (north side of Douglas between Topeka and Broadway) in Wichita, Kansas (click for a map and directions). Park in the garage just across Broadway and use the sky walk to enter the Bank of America building. Bring your parking garage ticket to be stamped and your parking fee will be only $1.00. There is usually some metered and free street parking nearby.
I’ve come into possession of some of the Kansas legislature vote ratings that Karl Peterjohn of the Kansas Taxpayers Network produced. I’ve made available the annual ratings of both the Kansas House of Representatives and the Kansas Senate back to 1996. Only the ratings for 2002 are missing from this collection.
These ratings are valuable because they record what legislators actually do, which is in some cases very different from what legislators say they do.
The ratings can be found at Kansas legislative scorecards and rankings.
A related project is my Kansas Economic Freedom Index.
Kansans need to know the true voting record of members of the legislature. Legislative scorecards or ratings can be a valuable resource for learning about the actions and record of legislators. These ratings are valuable because they record what a legislator actually does. Sometimes that’s different from what legislators say they do.
Producing a meaningful rating is not a simple matter. You need to find votes that discriminate between political positions, as including a bill where the vote was 115 to 3 provides little discriminative value. Sometimes there are procedural votes leading up to final passage, and it may be these somewhat obscure votes that provide the ability to meaningfully distinguish political positions.
Through the 2008 legislative session, Karl Peterjohn of the Kansas Taxpayers Network produced scorecards. After Peterjohn was elected to the Sedgwick County Commission in 2008, KTN merged with the Kansas Chapter of Americans For Prosperity. AFP produced ratings for the 2009 session.
A related project is my Kansas Economic Freedom Index.
Following are the scorecards for recent sessions.
Kansas Senate Legislative Scorecard 2009
Kansas Senate Legislative Scorecard 2008
Kansas Senate Legislative Scorecard 2007
Kansas Senate Legislative Scorecard 2005
Kansas Senate Legislative Scorecard 2004
Kansas Senate Legislative Scorecard 2003
Kansas Senate Legislative Scorecard 2001
Kansas Senate Legislative Scorecard 2000
Kansas Senate Legislative Scorecard 1999
Kansas Senate Legislative Scorecard 1998
Kansas Senate Legislative Scorecard 1997
Kansas Senate Legislative Scorecard 1996
Kansas House of Representatives
Kansas House Legislative Scorecard 2009
Kansas House Legislative Scorecard 2008
Kansas House Legislative Scorecard 2007
Kansas House Legislative Scorecard 2005
Kansas House Legislative Scorecard 2004
Kansas House Legislative Scorecard 2003
Kansas House Legislative Scorecard 2001
Kansas House Legislative Scorecard 2000
Kansas House Legislative Scorecard 1999
Kansas House Legislative Scorecard 1998
Kansas House Legislative Scorecard 1997
Kansas House Legislative Scorecard 1996
A note to readers: I served as co-manager of Peterjohn’s campaign in 2008.
Citizens of Sedgwick County should appreciate Peterjohn’s first year of service, just concluded, where he often asked questions from the bench that no one else asks — or even thinks of asking. In the coming year we should benefit from Peterjohn’s leadership, which will be especially important as the county navigates what is sure to be a difficult year financially.
Kansans need to know the true voting record of members of the legislature. Legislative scorecards or ratings can be a valuable resource for learning about the actions and record of legislators.
These ratings are valuable because they record what a legislator actually does. Sometimes that’s different from what legislators say they do.
Producing a meaningful rating is difficult. You need to find votes that discriminate between political positions, as including a bill where the vote was 115 to 3 provides little discriminative value. Sometimes there are procedural votes leading up to final passage, and it may be these somewhat obscure votes that provide the ability to meaningfully distinguish political positions.
Through the 2008 legislative session, Karl Peterjohn of the Kansas Taxpayers Network produced scorecards. After Peterjohn was elected to the Sedgwick County Commission in 2008, KTN merged with the Kansas Chapter of Americans For Prosperity. AFP produced ratings for the 2009 and 2010 session. Also, the Kansas Economic Freedom Index produces legislative ratings.
Following are the scorecards for recent sessions.
Kansas Senate Legislative Scorecard 2010
Kansas Senate Legislative Scorecard 2009
Kansas Senate Legislative Scorecard 2008
Kansas Senate Legislative Scorecard 2007
Kansas Senate Legislative Scorecard 2005
Kansas Senate Legislative Scorecard 2004
Kansas Senate Legislative Scorecard 2003
Kansas Senate Legislative Scorecard 2002
Kansas Senate Legislative Scorecard 2001
Kansas Senate Legislative Scorecard 2000
Kansas Senate Legislative Scorecard 1999
Kansas Senate Legislative Scorecard 1998
Kansas Senate Legislative Scorecard 1997
Kansas Senate Legislative Scorecard 1996
Kansas House of Representatives
Kansas House Legislative Scorecard 2010
Kansas House Legislative Scorecard 2009
Kansas House Legislative Scorecard 2008
Kansas House Legislative Scorecard 2007
Kansas House Legislative Scorecard 2006
Kansas House Legislative Scorecard 2005
Kansas House Legislative Scorecard 2004
Kansas House Legislative Scorecard 2003
Kansas House Legislative Scorecard 2001
Kansas House Legislative Scorecard 2000
Kansas House Legislative Scorecard 1999
Kansas House Legislative Scorecard 1998
Kansas House Legislative Scorecard 1997
Kansas House Legislative Scorecard 1996
A note to readers: I served as co-manager of Peterjohn’s campaign in 2008.
On the commemorative plaque outside the Intrust Bank Arena in downtown Wichita, there’s a missing name.
The names of eight Sedgwick County commissioners appear, including all who were members of the Commission when the arena sales tax passed in November 2004, all who have served since then, and all present commissioners.
Except for one: current third district commissioner Karl Peterjohn.
In 2004 Peterjohn led opposition to the sales tax ballot measure that funded the arena. When he decided early in 2008 that he would run for the commission against long-time Republican incumbent Tom Winters, Peterjohn told Winters that the next commissioner would have their name on a plaque on the arena. On primary election night, when Peterjohn defeated Winters, Peterjohn told me “I told him [Winters] he could have that spot, and I’m keeping my word.”
It was a gracious gesture.
There’s been a small controversy surrounding Peterjohn in his new role as arena supporter. He participated in the arena’s recent ribbon-cutting ceremony. More importantly, he voted last February for a $1.7 million seating upgrade. That upgrade would reduce the cost of transition between events, and also improve seating and viewing.
That vote, along with participation in the ribbon-cutting, is central to Peterjohn’s goal of seeing that the arena is a success and doesn’t become a fiscal burden on taxpayers. Although the contract with SMG, the arena’s management firm, shields Sedgwick County from losses, that contract comes to an end someday. It’s also full of loopholes that, in my opinion, would allow SMG to make an early exit if arena finances are not favorable.
Working for the success of the arena, therefore, is a logical continuation of Peterjohn’s concern for the taxpayer, the same concern as when he opposed the arena in 2004, he said.
There’s also been grumbling that county commissioners and bureaucrats will receive perks such as tickets and premium parking passes to arena events. Peterjohn said he’s received no tickets or parking perks.
A Wichita Eagle blog post by Deb Gruver on this topic is Karl Peterjohn’s name not on Intrust Bank Arena sign.
Last week, Sedgwick County Commissioner Karl Peterjohn lead a successful effort to add strong protection for taxpayers to the county’s legislative platform. My coverage is at Peterjohn presses taxpayer protection platform through Sedgwick County Commission. Following is a short op-ed from Americans For Prosperity-Kansas on this matter.
I was pleased to learn of the Sedgwick County Commission’s new legislative platform regarding property taxes. It reads, “All local sales tax increases must be approved by voters under Kansas law. All property tax increases that raise the mill levy should also be required to receive voter approval.”
This is a significant step for the Sedgwick County Commission, considering this goes against the position of the Kansas Association of Counties. The supporters of this measure, Commissioners Kelly Parks, Karl Peterjohn, and Gwen Welshimer, should be applauded for recognizing the importance of allowing the people to vote on property tax measures.
However the opponents, Commissioners Dave Unruh and Tim Norton, should be asked why they oppose allowing their constituents to vote on an issue as important as property taxes. If government has a compelling reason for increasing taxes, then shouldn’t it feel comfortable in taking its case to the people?
Americans for Prosperity-Kansas
At today’s meeting of the Sedgwick County Commission, commissioners revised the county’s 2010 legislative platform, adding important and groundbreaking taxpayer protection to the platform. The split vote lets voters know without a doubt where commissioners stand on taxpayer protection issues.
The legislative platform is Sedgwick County’s “wish list” for the legislature. The items in the platform are not laws, but instead indicate the desires of the county commission.
Commissioner Karl Peterjohn proposed new language to add to the legislative platform: “All local sales tax increases must be approved by voters under Kansas law. All property tax increases that raise the mill levy should also be required to receive voter approval.”
Kansas has no such provision, and this is a defect, Peterjohn said. Kansas is one of the few states that have property taxes at the city, county, school district, and state levels. Most states did away with state-wide property taxes in the 1930s, he said, but Kansas did not.
Peterjohn made a motion that this language be included in the legislative platform, and Chairman Kelly Parks seconded.
Peterjohn noted that three of the four states surrounding Kansas have such limitations.
Commissioner Tim Norton asked a question that revealed that cities have more authority than counties to raise sales tax. He said this is an issue of equity, of rebalancing the ways that counties can fund their government. “Counties don’t have the ability to have more tools in their toolbox other than just property tax. … We’re very restricted.” He added that he doesn’t like the idea of artificial ceilings being placed on the county.
Commissioner Dave Unruh agreed with Norton, saying local officials are elected to carry out the responsibility of making responsible budget decisions. A limitation from the state makes no sense, he said.
Norton made the point that the state can place a lid on the ability of counties to raise funds through taxation, and may still place mandates on what counties must do. This compresses the decisions that the commission gets to make, and goes against representative government.
Peterjohn’s motion passed three to two, with Commissioner Gwen Welshimer and Parks joining Peterjohn in the majority, with Unruh and Norton in the minority.
After the meeting, Peterjohn said this platform language represents a major change in the county’s position, a reversal of the county’s historic position on property tax policy. This action is also at odds with the Kansas Association of Counties. It’s a major change, he said.
“Traditionally the local government lobby has been in lockstep opposition to any requirement that property tax hikes get voter approval. Sedgwick County’s shift today is extremely significant for the second-most populous county in the state, the county that contains the largest city in the state, to support voter approval for any increase in property taxes.”
Requiring voter approval of tax increases was one the “Five Reasons to Back Karl Peterjohn” that Peterjohn used in his successful campaign for the county commission last year. His action today represents a move towards fulfilling that pledge.
It’s important to remember what the commission passed was simply their desire — and a split decision at that — for the legislature to pass a law requiring voter approval of tax increases. Whether the legislature acts on this request is anyone’s guess. For such a law to have any chance, it will take a determined advocate to press for it. The commission’s action today created no such advocate. As it stands now, the county will not have a lobbyist in Topeka next year, as the budget passed in August provided no funding for a lobbyist.
Officeholders who are in favor of more government spending are generally opposed to giving voters the right approve or refuse tax rate increases, for the simple reason that voters often refuse to approve the tax hikes. Often the argument is given that the elections that are now necessary are expensive, and there may be emergencies that require the rapid raising of funds. There may be small amounts of validity in these arguments. But tax revenues, through the natural forces of economic growth and rising property tax appraisals, rise on their own without any help from officeholders. Anything that restrains the growth of tax rates, which is what today’s proposal does, is welcome relief as a restraint on the runaway growth of government.
Last week Betty Arnold, a member of the board of USD 259, the Wichita public school district, declared her intent to be a candidate for the Sedgwick County Commission. She’ll be running for the spot currently held by Republican Dave Unruh, who has already filed for re-election.
Arnold, a Democrat, faces an uphill battle, based on registration figures. In this district, my analysis of a recent voter file shows voter registration runs 29% Democratic, 45% Republican, and 26% unaffiliated. (The remainder are Libertarian and Reform party registrants.)
Considering recent voters — I defined this as those who voted in an election in 2008 — the numbers are worse for Arnold. In this case, 30% are Democratic, 21% are unaffiliated, and the Republican number jumps to 49%.
It’s hard to figure out what Arnold could do to persuade Republican voters to support her. Her vote for a property tax increase, her recommendation that voters approve an expensive and unneeded bond issue, and her anti-school choice stance are not positions that will appeal to conservatives and those who value freedom and liberty, be they Republican, unaffiliated, or of any other party.
If the only Republican candidate (incumbent Dave Unruh) consistently took conservative positions, Arnold might have a case to make to moderate Republicans. But Unruh’s vote for a tax increase, his support for the downtown arena tax, and his support of TIF districts and other taxpayer giveaways such as the AirTran subsidy place him firmly in the moderate Republican camp — making it difficult for Arnold to peel off potentially left-leaning Republicans or unaffiliated voters.
Top off this with the likelihood that next year could be a big year for Republicans locally and nationwide, and Arnold starts off way behind.
It’s still possible that Unruh may face a challenge in the Republican primary. Efforts have been made to recruit a candidate, and there is one well-known conservative Republican thought to be looking at the race. Last year’s take-down of moderate Republican commissioner Tom Winters in the August primary by Karl Peterjohn will be very difficult to replicate, as Unruh has shown signs that he has been preparing for the campaign.
Here’s a message from John Todd about additional training provided by Americans For Prosperity.
Tuesday, September 22, 2009 & Wednesday, September 23, 2009
Local Government 101: Learn how to get involved in Sedgwick County Government and how to influence public policy as a citizen activist.
With Special Guest Sedgwick County Commissioner Karl Peterjohn
7:00 p.m. to 9:00 p.m. on Tuesday September 22, 2009, at the Wichita Area Builders Association meeting room, 730 N. Main, Wichita, Kansas 67203
Then, a follow-up event:
9:00 a.m. to 11:30 a.m., Wednesday September 23, 2009
Attend a Board of Sedgwick County Commission Meeting
Sedgwick County Court House, 525 N. Main, Wichita, Kansas 67202
Followed by Lunch 11:45 a.m. To 1:00 p.m.
Spangles Restaurant (Private Meeting Room)
612 S. Broadway, Wichita, Kansas 67202
Menu: Individual choices off the menu with individual tickets plus gratuity.
Attendees will participate in an interactive presentation of the inner workings of Sedgwick County Government and how to foster constructive relationships with elected and non-elected officials and learn ways to influence public policy. Part One is an evening session at the Wichita Area Builders Association meeting room from 7:00-9:00 p.m. on Tuesday, September 22. In this class we will examine a typical Sedgwick County Board of County Commission meeting agenda. Part Two’s session will begin at the Sedgwick County Courthouse on Wednesday, September 23 from 9:00 – 11:30 a.m. to observe a Board of County Commission meeting, followed by a luncheon discussion at Spangles Restaurant meeting room from 11:45 a.m. until 1:00 p.m.
Commissioner Gwen Welshimer used this opportunity to read into the record part of a press release she issued yesterday. The entire press release, as well as video, is at the end of this article.
Commissioner and Chairman Kelly Parks mentioned that he has been disturbed with some headlines in the Wichita Eagle recently, and that the media has “not checked out some of the headlines they’ve put out.”
Commissioner Karl Peterjohn shared his concerns with misleading Wichita Eagle headlines, referring to a headline that appeared after the county approved its budget, as covered in my post Wichita Child Advocacy Center still in business, despite headline.
I spoke to Wichita Eagle reporter Bill Wilson, and he had no comment other than his reporting speaks for itself.
It should be noted that reporters generally don’t write the headlines for their stories.
Regarding this matter, it may be that the parties are quarreling over relatively minor details of events and the meaning of words.
For example, Welshimer’s press release states “Reporter Bill Wilson’s latest article stated that the City of Wichita knew nothing about the County’s plans.” The article referred to (“County scouting locations for site to ease jail crowding” August 20, 2009 Wichita Eagle) states, in part: “The county’s search is unwelcome news to city officials …” (emphasis added)
Editorialist Rhonda Holman‘s August 21 piece repeats this idea: “It reportedly was news to city officials and downtown leaders that county commissioners were discussing the possibility of locating such a facility and hadn’t ruled out the core.” (emphasis added)
Does this all boil down to what the meaning of “news” is? Does “unwelcome news” mean that someone has never heard of an item before, or does it mean “Yes, I am aware of this item, and I don’t like it?”
Following is the full text of the press release issued by Gwen Welshimer on August 25, 2009.
Either the Wichita Eagle knew they were putting out false information on their jail annex stories or they didn’t know for sure and printed their stories recklessly. Their August 20, 21, and 23 articles and editorial, claiming the County Commission had been reviewing properties in Downtown Wichita for a jail annex, were not true. The Eagle’s actions caused considerable concern for Downtown business owners. No commissioner has looked at any Downtown buildings with any real estate agent for the purpose of housing detainees. A retraction and an apology are due to the county from the Eagle.
The Eagle reporter who wrote the stories quoted me erroneously and had not interviewed me. Eagle editorialist, Rhonda Holman committed an egregious act with her August 21 editorial in which she scolded the commission for having the intent to put jail detainees Downtown. Reporter Deb Gruver showed a lack of professionalism by her participation in this deed.
Reporter Bill Wilson’s latest article stated that the City of Wichita knew nothing about the County’s plans. That was also not true. On July 29, the Wichita Mayor, Vice Mayor, and Sedgwick County Commission Chairman and I met at City Hall. The topic of conversation was that the County’s prison farm on McLean and Harry would need to be replaced in the future. This facility is currently being used to house work release detainees who go to their jobs and return there for the duration of their sentence. The Mayor said he would see if the City had a building that could be used for this purpose.
The truth is that Chairman Parks and I took one short afternoon to see two buildings with a real estate agent. We were shown warehouse properties, one off south Southeast Boulevard and one off north I-135. These properties had no potential of filling our needs. The next day the Eagle reported that we were scouting for a site in Downtown Wichita and attempting to do harm to Downtown redevelopment plans. Nothing could have been further from the truth.
I believe the Eagle is angry because of the county’s decision not to continue funding the needs of Downtown and give more consideration to the future of Sedgwick County. County commissioners did put their political careers on the line to raise the money and build a $210 million economic tool for Downtown. I have not witnessed appreciation for this effort. What I have witnessed is a constant demand for more. It appears that we will continue to be harassed by the Eagle, until we bring out the checkbook.
Sedgwick County Commission