Tag Archives: Privatization

Despite growth of sharing economy, Wichita relies on centralization

The sharing economy provides for the decentralization and privatization of regulation, but the City of Wichita clings to the old ways.

Letter in Wichita Eagle, excerpt
Letter in Wichita Eagle, excerpt
In May the Wichita Eagle printed a letter from a Wichitan describing his recent cab ride from the airport: “I got in the cab to go home, and that turned out to be the most offensive encounter of my trip. The driver was dressed perfectly for slopping hogs. The cab plainly stank. There were spills, trash, crumbs, scuzzy windows, sticky door panels. Ugh.”

Not having been in a taxicab in Wichita for some years, I was surprised to learn of this person’s experience. There is a law, after all. Section 3.84.140 of the Wichita municipal code provides that “Any vehicle used as a taxicab shall be kept clean, of good appearance … ” Section 3.84.320 mandates that no taxicab driver shall “Fail to maintain their personal appearance by being neat and clean in dress and person.” Also, no driver shall “Fail to keep clothing in good repair, free of rips, tears and stains” or “Operate any taxicab which is not in a clean and/or sanitary condition.”

These laws were implemented in 2012 as a result of former mayor Carl Brewer’s frustration with the complaints he received regarding Wichita taxicabs. The instinct of politicians and bureaucrats is that if there’s a problem, a new or tougher law can provide the solution. The regulations mentioned above are part of the city’s solution, as are mandatory customer service training classes.

But as we learn from May of this year, these regulations aren’t working, according to at least one person whose judgment the Wichita Eagle trusted enough to print.

At the time, the city’s actions in creating tougher regulations had a whiff of plausibility. But right about the time that Wichita implemented new regulations the market for personal rides started to change. That change was the increasing popularity, availability, and refinement of Uber and other similar services. Uber started operations in Wichita in 2014.

What is different about Uber from regular taxicabs? For one, drivers are rated each time they serve a passenger. (Passengers are rated too, by the drivers.)

Which form of regulation do you suppose is most effective? Regulation by government, or regulation by consumers? The letter in the Eagle tells of the failure of government regulation. But no one except that passenger likely knows how bad was the experience of riding in that cab. (Well, that passenger and the driver’s others passengers, probably. A cab doesn’t get that grungy in just a day.)

But a bad Uber trip contributes to a driver’s public reputation. (Bad passengers also develop a reputation that drivers can see.) It’s a powerful system of regulation of each and every time service is provided.

Further evidence of the failure of laws and regulations — or the city’s application and enforcement of them — is that the letter writer begged the city to pass laws that are already on the books: “Wichita, please enact standards for dress, cleanliness and vehicle condition to protect our reputation. Don’t let the impression of the nation’s best airport be sullied by taxicabs.”

Decentralize and privatize

Jeffrey Tucker
Jeffrey Tucker
Last week the author Jeffrey Tucker appeared on WichitaLiberty.TV. As we talked about Uber and other services in the sharing economy, I mentioned that this is the decentralization of regulation. Tucker repeated the idea, calling it the privatization of regulation. Both terms apply.

But Wichita’s 2012 taxicab regulations are still the law. As the Wichita Eagle reports, drivers are being trained by bureaucrats. Cabs are still dirty and drivers slovenly. It seems to me that the Wichita regulations are contrary to how Uber operates, leaving the company operating in the shadows, vulnerable to a clampdown at any time. That is something the city needs to change.

Efficiency has not come to Kansas government

Kansas state government needs to cut spending, but finds itself in a difficult situation of its own making.

The budget bill under consideration in the Kansas Legislature calls for spending $3 million for the production of an efficiency analysis review. It’s a good idea, but is too late to help the legislature balance the budget this year.

Trimming Kansas government spending is a long-term project. The legislature has looked at several bills that would help control spending, but has not passed the bills. Had they been passed when introduced, the state would be in a much better position to make reforms. But a look at the history of these bills leads us to wonder if the leaders of our state government — both in the executive and legislative branches — are really serious about controlling spending.

The three bills — explained in detail below — were in play during the 2011 and 2012 legislative sessions. They all passed the House of Representatives in 2011. But given that the Senate was in the hands of moderate Republicans, there was little chance that the bills would also pass the Senate. That’s what happened. Each bill died in the Senate.

Starting with the 2013 session, however, the Senate has been in conservative hands. Have the bills been reintroduced? With the exception of the efficiency analysis review mentioned above and a look at K — 12 education, I don’t believe the bills, or anything else like them, have been introduced or considered.

Both chambers of the Kansas Legislature and the governor’s mansion have been under the control of conservatives for three years, but no serious initiative to control spending has emerged, with the exception of the efficiency task force on K — 12 education. This ought to cause voters to ask if the desire and will to cut spending truly exists.

It’s curious that liberals and progressives in Kansas are opposed to efforts to increase efficiency, such as the school task force. If the government services that liberals support are truly vital, they ought to insist that they are delivered as efficiently as possible so that the greatest number may benefit to the greatest extent. But that doesn’t happen.

A simple path forward

Recently I attended a meeting where a speaker reported his observations of state workers wasting time while at work. He contrasted that to the private sector, where he said this waste is less likely to happen. Shouldn’t we investigate state agencies, looking for instances of waste, and when found, eliminate the waste, he asked? It’s a good idea, but something that I think would be difficult to accomplish.

There is an easier way to root out inefficiencies in the operations of state government — and local and federal too. That is to use the benefits of the private sector that the speaker praised. We can do this by outsourcing government functions to the private sector. Then, the work is done under the motivations that exist in the private sector.

Kansas Policy Institute produced a report in 2013 that shows how Kansas can save using the principles of privatization and outsourcing. The report is Better Service, Better Price: How privatization can streamline government, improve services, and reduce costs for Kansas taxpayers.

Reforms of this nature take some time to implement. Several years ago Kansas governmental leaders had time to start the state on a path to reform, but did not take the opportunity. Now these same leaders are considering raising taxes to balance the Kansas budget. This did not have to happen.

The bills that did not pass

In 2011 the Kansas Legislature lost three opportunities to do just this. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the Senate, or had its contents stripped and replaced with different legislation.

Each of these bills represents a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy. There is no reason why these bills, or similar measures, could not be revived. The improvements these bills would foster will not balance next year’s budget. But they will set the stage for controlling the growth of Kansas government spending. This will leave more money in the private sector, which will help Kansas grow.

Kansas Streamlining Government Act

HB 2120, according to its supplemental note, “would establish the Kansas Streamlining Government Act, which would have the purpose of improving the performance, efficiency, and operations of state government by reviewing certain state agencies, programs, boards, and commissions.” Fee-funded agencies — examples include Kansas dental board and Kansas real estate commission — would be exempt from this bill.

In more detail, the text of the bill explains: “The purposes of the Kansas streamlining government act are to improve the performance, streamline the operations, improve the effectiveness and efficiency, and reduce the operating costs of the executive branch of state government by reviewing state programs, policies, processes, original positions, staffing levels, agencies, boards and commissions, identifying those that should be eliminated, combined, reorganized, downsized or otherwise altered, and recommending proposed executive reorganization orders, executive orders, legislation, rules and regulations, or other actions to accomplish such changes and achieve such results.”

In testimony in support of this legislation, Dave Trabert, President of Kansas Policy Institute offered testimony that echoed findings of the public choice school of economics and politics: “Some people may view a particular expenditure as unnecessary to the fulfillment of a program’s or an agency’s primary mission while others may see it as essential. Absent an independent review, we are expecting government employees to put their own self-interests aside and make completely unbiased decisions on how best to spend taxpayer funds. It’s not that government employees are intentionally wasteful; it’s that they are human beings and setting self-interests aside is challenge we all face.”

The bill passed the House of Representatives by a vote of 79 to 40. It was referred to the Senate Committee on Federal and State Affairs, where it did not advance.

Privatization and public-private partnerships

Another bill that did not advance was HB 2194, which in its original form would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships.

According to the supplemental note for the bill, “The purpose of the Council would be to ensure that certain state agencies, including the Board of Regents and postsecondary educational institutions, would: 1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced. Excluded from the state agencies covered by the bill would be any entity not receiving State General Fund or federal funds appropriation.”

This bill passed by a vote of 68 to 51 in the House of Representatives. It did not advance in the Senate, falling victim to a “gut-and-go” maneuver where its contents were replaced with legislation on an entirely different topic.

Opposing this bill was Kansas Organization of State Employees (KOSE), a union for executive branch state employees. It advised its “brothers and sisters” that the bill “… establishes a partisan commission of big-business interests to privatize state services putting a wolf in charge of the hen house. To be clear, this bill allows for future privatization of nearly all services provided by state workers. Make no mistake, this proposal is a privatization scheme that will begin the process of outsourcing our work to private contractors. Under a privatization scheme for any state agency or service, the employees involved will lose their rights under our MOA and will be forced to adhere to the whims of a private contractor who typically provides less pay and poor benefits. Most workers affected by privatization schemes are not guaranteed to keep their jobs once an agency or service is outsourced.”

Note the use of “outsourcing our work.” This underscores the sense of entitlement of many government workers: It is not work done for the benefit of Kansans; to them it is our work.

Then, there’s the warning that private industry pays less. Most of the time representatives of state workers like KOSE make the case that it is they who are underpaid, but here the argument is turned around when it supports the case they want to make. One thing is probably true: Benefits — at least pension plans — may be lower in the private sector. But we’re now painfully aware that state government has promised its workers more pension benefits than the state has been willing to fund.

Performance measures

Another bill that didn’t pass the entire legislature was HB 2158, which would have created performance measures for state agencies and reported that information to the public. The supplemental note says that the bill “as amended, would institute a new process for modifying current performance measures and establishing new standardized performance measures to be used by all state agencies in support of the annual budget requests. State agencies would be required to consult with representatives of the Director of the Budget and the Legislative Research Department to modify each agency’s current performance measures, to standardize such performance measures, and to utilize best practices in all state agencies.” Results of the performance measures would be posted on a public website.

This bill passed the House of Representatives by a nearly unanimous vote of 119 to 2. In the Senate, this bill was stripped of its content using the “gut-and-go” procedure and did not proceed intact to a vote.

Opposition to these bills from Democrats often included remarks on the irony of those who were recently elected on the promise of shrinking government now proposing to enlarge government through the creation of these commissions and councils. These bills, however, proposed to spend modest amounts increasing the manageability of government, not the actual range and scope of government itself. As it turns out, many in the legislature — this includes Senate Republicans who initiated or went along with the legislative maneuvers that killed these bills — are happy with the operations of state government remaining in the shadows.

These proposals to scale back the services that government provides — or to have existing services be delivered by the private sector — mean that there will be fewer government employees, and fewer members of government worker unions. This is another fertile area of gathering support for killing these bills.

State workers and their supporters also argue that fewer state workers mean fewer people paying state and other taxes. Forgotten by them is the fact that the taxes taken to pay these workers means less economic activity and fewer jobs in the private sector.

As to not wanting performance measures: Supporters of the status quo say that people outside of government don’t understand how to make the decisions that government workers make. In one sense, this may be true. In the private sector, profitability is the benchmark of success. Government has no comparable measure when it decides to, say, spend some $300 million to renovate the Kansas Capitol. But once it decides to do so, the benchmark and measurement of profitability in executing the service can be utilized by private sector operators. Of course, private contractors will be subject to the discipline of the profit and loss system, something missing from government.

Kansas must get serious about spending

As Kansas struggles to balance the budget for this year and the next, the state needs to prepare for future budgets by resolving the problem of spending.

Click to open this visualization in a new window.
Click to open this visualization in a new window.
Why is controlling spending important? The slow rate of growth of the Kansas economy has been a problem for years. This interactive visualization lets you compare gross domestic product growth of Kansas with other states. Kansas has reduced income taxes, but Kansas has not reduced spending to match. There is pressure to balance future budgets with tax increases instead of spending cuts. Because of the lagging performance of the Kansas economy, it’s important to reduce the footprint of state government to make room for the private sector economy to grow.

Kansas Policy Institute has provided a plan for balancing the Kansas budget. It relies on structural changes and small improvements in efficiency.

Kansas can balance its budget by improving the operations of, and reducing the cost of, state government. In 2011 the Kansas Legislature lost three opportunities to do just this. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the Senate, or had its contents stripped and replaced with different legislation.

Each of these bills represents a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy. There is no reason why these bills, or similar measures, could not be revived. The improvements these bills would foster will not balance next year’s budget. But they will set the stage for controlling the growth of Kansas government spending. This will leave more money in the private sector, which will help Kansas grow.

Kansas Streamlining Government Act

HB 2120, according to its supplemental note, “would establish the Kansas Streamlining Government Act, which would have the purpose of improving the performance, efficiency, and operations of state government by reviewing certain state agencies, programs, boards, and commissions.” Fee-funded agencies — examples include Kansas dental board and Kansas real estate commission — would be exempt from this bill.

In more detail, the text of the bill explains: “The purposes of the Kansas streamlining government act are to improve the performance, streamline the operations, improve the effectiveness and efficiency, and reduce the operating costs of the executive branch of state government by reviewing state programs, policies, processes, original positions, staffing levels, agencies, boards and commissions, identifying those that should be eliminated, combined, reorganized, downsized or otherwise altered, and recommending proposed executive reorganization orders, executive orders, legislation, rules and regulations, or other actions to accomplish such changes and achieve such results.”

In testimony in support of this legislation, Dave Trabert, President of Kansas Policy Institute offered testimony that echoed findings of the public choice school of economics and politics: “Some people may view a particular expenditure as unnecessary to the fulfillment of a program’s or an agency’s primary mission while others may see it as essential. Absent an independent review, we are expecting government employees to put their own self-interests aside and make completely unbiased decisions on how best to spend taxpayer funds. It’s not that government employees are intentionally wasteful; it’s that they are human beings and setting self-interests aside is challenge we all face.”

The bill passed the House of Representatives by a vote of 79 to 40. It was referred to the Senate Committee on Federal and State Affairs, where it did not advance.

Privatization and public-private partnerships

Another bill that did not advance was HB 2194, which in its original form would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships.

According to the supplemental note for the bill, “The purpose of the Council would be to ensure that certain state agencies, including the Board of Regents and postsecondary educational institutions, would: 1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced. Excluded from the state agencies covered by the bill would be any entity not receiving State General Fund or federal funds appropriation.”

This bill passed by a vote of 68 to 51 in the House of Representatives. It did not advance in the Senate, falling victim to a “gut-and-go” maneuver where its contents were replaced with legislation on an entirely different topic.

Opposing this bill was Kansas Organization of State Employees (KOSE), a union for executive branch state employees. It advised its “brothers and sisters” that the bill “… establishes a partisan commission of big-business interests to privatize state services putting a wolf in charge of the hen house. To be clear, this bill allows for future privatization of nearly all services provided by state workers. Make no mistake, this proposal is a privatization scheme that will begin the process of outsourcing our work to private contractors. Under a privatization scheme for any state agency or service, the employees involved will lose their rights under our MOA and will be forced to adhere to the whims of a private contractor who typically provides less pay and poor benefits. Most workers affected by privatization schemes are not guaranteed to keep their jobs once an agency or service is outsourced.”

Note the use of “outsourcing our work.” This underscores the sense of entitlement of many government workers: It is not work done for the benefit of Kansans; to them it is our work.

Then, there’s the warning that private industry pays less. Most of the time representatives of state workers like KOSE make the case that it is they who are underpaid, but here the argument is turned around when it supports the case they want to make. One thing is probably true: Benefits — at least pension plans — may be lower in the private sector. But we’re now painfully aware that state government has promised its workers more pension benefits than the state has been willing to fund.

Performance measures

Another bill that didn’t pass the entire legislature was HB 2158, which would have created performance measures for state agencies and reported that information to the public. The supplemental note says that the bill “as amended, would institute a new process for modifying current performance measures and establishing new standardized performance measures to be used by all state agencies in support of the annual budget requests. State agencies would be required to consult with representatives of the Director of the Budget and the Legislative Research Department to modify each agency’s current performance measures, to standardize such performance measures, and to utilize best practices in all state agencies.” Results of the performance measures would be posted on a public website.

This bill passed the House of Representatives by a nearly unanimous vote of 119 to 2. In the Senate, this bill was stripped of its content using the “gut-and-go” procedure and did not proceed intact to a vote.

Opposition to these bills from Democrats often included remarks on the irony of those who were recently elected on the promise of shrinking government now proposing to enlarge government through the creation of these commissions and councils. These bills, however, proposed to spend modest amounts increasing the manageability of government, not the actual range and scope of government itself. As it turns out, many in the legislature — this includes Senate Republicans who initiated or went along with the legislative maneuvers that killed these bills — are happy with the operations of state government remaining in the shadows.

These proposals to scale back the services that government provides — or to have existing services be delivered by the private sector — mean that there will be fewer government employees, and fewer members of government worker unions. This is another fertile area of gathering support for killing these bills.

State workers and their supporters also argue that fewer state workers mean fewer people paying state and other taxes. Forgotten by them is the fact that the taxes taken to pay these workers means less economic activity and fewer jobs in the private sector.

As to not wanting performance measures: Supporters of the status quo say that people outside of government don’t understand how to make the decisions that government workers make. In one sense, this may be true. In the private sector, profitability is the benchmark of success. Government has no comparable measure when it decides to, say, spend some $300 million to renovate the Kansas Capitol. But once it decides to do so, the benchmark and measurement of profitability in executing the service can be utilized by private sector operators. Of course, private contractors will be subject to the discipline of the profit and loss system, something again missing from government.

Public opinion on Wichita sales tax

As Wichita prepares to debate the desirability of a sales tax increase, a public opinion poll finds little support for the tax and the city’s plans.

Wichita City Hall 2014-08-05 11In April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase. In summary:

  • Only 28% say the city has been spending efficiently.
  • Only 34% agree with the idea of local governments using taxpayer money to provide subsidies to certain businesses for economic development.
  • When asked whether they would personally pay a higher sales tax to pay for certain things, there was majority support for securing a long term water source, maintaining existing infrastructure, and building new infrastructure, but one-third or less would pay a higher sales tax for business incentives, developing downtown Wichita, and expanding or renovating convention spaces.
  • 78% said that to fund existing infrastructure, build new infrastructure, and secure a long-term water source Wichita should fund those items by adjusting spending and being more efficient rather than raising taxes.

More detail on these results follows.

Is city spending efficiently?

The first question the survey asked was “In the past few years, have Wichita city officials used taxpayer money efficiently? Or inefficiently?” Following are the results for everyone, and then divided by political party and political ideology.

Overall, 58 percent believe city spending was inefficient, compared to 28 percent believing spending was efficient.

The results are surprisingly consistent. An exception is that political independents strongly believed that city spending was inefficient. Those identifying as liberal were more likely to say that city spending was inefficient.

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Taxes for subsidies for economic development

About one-third of voters polled support local governments using taxpayer money to provide subsidies to certain businesses for economic development.

The second question the survey asked was “In general, do you agree? Or disagree? With the idea of local governments using taxpayer money to provide subsidies to certain businesses for economic development?” Following are the results for everyone, and then divided by political party and political ideology.

Overall, 55 percent disagreed with using taxpayer money to provide subsidies to certain businesses for economic development. 34 percent agreed.

The results are fairly consistent across political party and ideology, although Republicans are somewhat more likely to agree with using taxpayer funds for economic development incentives, as are those who self-identify as political moderates.

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Voters willing to pay for fundamentals

Voters are willing to pay a higher sales tax for fundamentals like infrastructure and water supply, and less willing for business incentives, downtown development, and convention centers.

In a series of questions asking if Wichita voters would be willing to pay a higher sales tax to provide certain services, a pattern appeared: Voters are willing to pay for things that are fundamental in nature, and less willing to pay for others.

As can be seen in the nearby chart, voters are willing to pay for infrastructure, and more willing to pay for maintenance of existing infrastructure than for new infrastructure. Voters are most willing to pay for securing a long-term water source.

kansas-policy-institute-2014-04-willing-to-fund

For business incentives, downtown development, and convention centers, Wichita voters express less willingness to pay higher sales tax to fund these items.

For the first three items, the average was 68 percent of voters willing to pay a higher sales tax. For the last three, the average is 30 percent.

Following is the complete text of the questions:

Would you personally be willing to pay a higher sales tax in the city of Wichita to fund incentives to businesses expanding in Wichita or moving here from other states?

Would you personally be willing to pay a higher sales tax in the city of Wichita to fund maintenance work on existing infrastructure, such as sewers and roads?

Would you personally be willing to pay a higher sales tax in the city of Wichita to fund new infrastructure, such as new highways and passenger rail connections?

Would you personally be willing to pay a higher sales tax in the city of Wichita to continue developing downtown Wichita with apartments, businesses, and entertainment destinations?

Would you personally be willing to pay a higher sales tax in the city of Wichita to expand or renovate convention spaces, such as the Hyatt Hotel and Century II?

Would you personally be willing to pay a higher sales tax in the city of Wichita to secure a long-term water source?

How to pay for infrastructure

Wichita voters prefer adjusting spending, becoming more efficient, using public-private partnerships, and privatization to raising taxes.

Question nine asked how Wichita voters preferred paying for new government spending: “To fund existing infrastructure, build new infrastructure, and secure a long-term water source should Wichita fund those items by adjusting spending and being more efficient rather than raising taxes?”

Overall, 78 percent of Wichita voters answered “Yes,” meaning they prefer that Wichita adjust spending and become more efficient. 12 percent answered “No,” meaning they were in favor of raising taxes instead.

A related question was “Should Wichita fund those items through public-private partnerships, or privatization, rather than raising taxes?”

Overall, 65 percent answered “Yes,” meaning they prefer public-private partnerships, or privatization. 25 percent answered “No,” indicating a preference for raising taxes.

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McGinn, as committee chair, was not for performance measures

A 2011 Kansas bill could have increased the accountability of state government, but committee chair Carolyn McGinn wasn’t in favor.

In the 2011 session of the Kansas Legislature, several bills were proposed that would streamline government and investigate opportunities for privatization.

Another proposed bill in 2011 was HB 2158, which would have created performance measures for state agencies and reported that information to the public. The supplemental note says that the bill “as amended, would institute a new process for modifying current performance measures and establishing new standardized performance measures to be used by all state agencies in support of the annual budget requests. State agencies would be required to consult with representatives of the Director of the Budget and the Legislative Research Department to modify each agency’s current performance measures, to standardize such performance measures, and to utilize best practices in all state agencies.” Results of the performance measures would be posted on a public website.

This bill passed the House of Representatives by a nearly unanimous vote of 119 to 2. But in the Senate, this bill was victim of a “gut-and-go” maneuver in a committee chaired by Carolyn McGinn. In effect, the bill died and was not considered by the entire Senate.

This bill proposed to spend modest amounts increasing the manageability of government, not the actual range and scope of government itself. It, along with the other two, would have started Kansas on a path towards spending responsibly.

As it turns out, many in the legislature — this includes Senate Republicans who initiated or went along with the legislative maneuvers that killed these bills — are happy with the operations of state government remaining in the shadows.

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

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

To fund government, Wichitans prefer alternatives to raising taxes

Wichita City Budget Cover, 1975Wichita voters prefer adjusting spending, becoming more efficient, using public-private partnerships, and privatization to raising taxes.

In April Kansas Policy Institute commissioned SurveyUSA to conduct a scientific poll concerning current topics in Wichita. The press release from KPI, along with a link to the complete survey results, is available at Poll: Wichitans don’t want sales tax increase.

Question nine asked how Wichita voters preferred paying for new government spending: “To fund existing infrastructure, build new infrastructure, and secure a long-term water source should Wichita fund those items by adjusting spending and being more efficient rather than raising taxes?”

Overall, 78 percent of Wichita voters answered “Yes,” meaning they prefer that Wichita adjust spending and become more efficient. 12 percent answered “No,” meaning they were in favor of raising taxes instead.

A related question was “Should Wichita fund those items through public-private partnerships, or privatization, rather than raising taxes?”

Overall, 65 percent answered “Yes,” meaning they prefer public-private partnerships, or privatization. 25 percent answered “No,” indicating a preference for raising taxes.

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Poll: Wichitans don’t want sales tax increase

kansas-policy-institute-logoFollowing is a press release from Kansas Policy Institute.

Scientific Poll: Wichitans Don’t Want Sales Tax Increase

They’re opposed to business incentives, want to pursue privatization over tax increases, and have concerns about how city hall has recently spent money.

May 2, 2014 — Wichita — According to a newly released poll from Kansas Policy Institute, Wichitans may want more jobs and a secure water source but they certainly don’t support a sales tax increase as the means to get either. A scientific survey of 502 registered Wichita voters, conducted by SurveyUSA, shows strong opposition to a sales tax increase, as well as a possible explanation for their opposition. Full results, cross tabs, and methodology are available here.

  • 63 percent oppose a sales tax increase to provide incentives to businesses; only 28 percent support the idea
  • 64 percent oppose a sales tax increase to expand or renovate convention spaces such as the Hyatt Hotel and Century II; only 28 percent support the idea
  • 78 percent would be willing to pay a higher sales tax to secure a long-term water source and build new infrastructure but 65 percent believe the City should fund those projects through privatization rather than raise taxes.

“Government typically claims that citizen support for certain projects means they are also supportive of higher taxes, but that’s often because citizens are presented with false choices,” said Dave Trabert, president of Kansas Policy Institute. “That’s exactly what the City of Wichita did with their ACT ICT community meetings. Wichita officials were simply looking for justification to do what they wanted to do — raise taxes.”

Trabert believes the survey provides insight on citizens’ opposition to tax increases. “Only 28 percent of Wichitans believe city officials have efficiently used taxpayer money. 78 percent believe the City should adjust spending and be more efficient to fund new infrastructure and secure a long-term water source. City officials would understand that if they had an honest dialogue with citizens about all of the options, instead of just pushing a tax increase.”

Kansas Policy Institute is planning a series of public forums over the coming months to examine multiple options for long-term water solutions, economic development and infrastructure. National experts on privatization and other options will be brought in, as well as government officials who have successfully used privatization to provide services. The effectiveness of taxpayer subsidies will also be explored. Local elected officials and other civic leaders will be invited to participate.

In Wichita, more tax for more transit?

Wichita City HallIn 2014 it is likely that Wichitans will be asked to pay an increased sales tax, part of which would fund the existing bus transit service, as the system is not sustaining itself. Another part of the increased sales tax might expand the service. Wichitans ought to think twice before voting to spend additional taxpayer funds for either reason. In fact, Wichita ought to consider spending less on public transit, and look to the private sector to provide transit that people want to use, and which meets their real needs.

Transit is expensive. To be more precise, government-provided transit is expensive. I’ve gathered data from the National Transit Database and provided it in a more useful format that that provided by the government. You may click here to use this interactive visualization of operating costs. (This table provides the codes that are used.) As for Wichita, the nearby excerpt (click for a larger version) shows that for 2011, the cost per passenger mile for the “regular” bus service was $0.97. This is not the cost to move a bus one mile. It is the cost to move one passenger one mile. This value is not out of line compared to other cities.

wichita-transit-2014-01

If Wichita were to expand its transit service to offer wider coverage and longer hours of service, the cost per passenger mile probably would not go down. We would still have a system that is very expensive, especially considering the level of service that would still be provided.

Can the private sector do better? One thing we could do is to outsource or privatize the transit system. Government would still pay for the system, but the private sector would operate the buses. This would likely be an improvement, as outsourcing almost always results in lower costs and improved service.

(By the way, many people would be surprised to learn of the fraction of expenses paid for through fares. Considering operating expenses only, the number is 13.5 percent. Considering operating and capital costs, just 12.1 percent comes from fare revenue. The remainder is provided by taxpayers. So when a bus rider puts a dollar in the farebox, taxpayers contribute an additional six dollars to fund the system.)

What Wichita could do to really improve service is to allow private competition to the existing transit system. Here’s an example of what could happen:

Brooklyn’s dollar van fleet is a tantalizing demonstration of how we might supplement mass transit with privately-owned mini-transit entrepreneurs.

America’s 20th largest bus service — hauling 120,000 riders a day — is profitable and also illegal. It’s not really a bus service at all, but a willy-nilly aggregation of 350 licensed and 500 unlicensed privately-owned “dollar vans” that roam the streets of Brooklyn and Queens, picking up passengers from street corners where city buses are either missing or inconvenient. The dollar van fleet is a tantalizing demonstration of how we might supplement mass transit to include privately-owned mini-transit entrepreneurs, giving people alternative ways to get around, and creating jobs. (The (Illegal) Private Bus System That Works, The Atlantic.)

This is not an example of government paying a private-sector company to do a job that government formerly did. Instead, this is allowing the private sector to operate on its own, free to succeed or fail based on how well it provides service. It’s allowing the private sector to be flexible and innovative in ways that government bureaucracy, like our transit system, is not able.

There are other things we could do to help improve transit service in Wichita. On his television show, John Stossel recently had a segment on a system called “Lyft.” This is a system available in about a dozen large cities in America, and there are other similar systems. You might sign up to be a driver. You go through a background check, and if you pass, you’re a driver for Lyft. Then people who need a ride use their smart phone to request a trip. You, as a Lyft driver, can decide if you’d like to provide the ride.

After the driver drops off the rider, the rider — that is the customer — decides how much to pay the driver for the ride. The system makes a suggestion, but other than that it’s up to the customer to decide how much to pay. As you might imagine, the system uses feedback to rate both drivers and customers. People in the Lyft system have an incentive to be good providers of service, and also good consumers of service.

Isn’t that a tremendous contrast to the way government works? Government works through force — through taxation — requiring all of us to pay to support a bus system that very few people use. And few people use the system because — like most government programs — the service is lousy. It’s a self-perpetuating feedback loop. Lousy government service leads to few people using the service, which leads to the need for more subsidy. But in the Lyft system people willingly cooperate, aided by technology.

Could Lyft work in Wichita? Not likely, because government stands in the way. I’m pretty sure Lyft would be illegal in Wichita. The city recently passed taxicab regulations that are quite strict: Taxi companies must have a central office, staffed at least 40 hours per week; a dispatch system operating 24 hours per day, seven days per week; enough cabs to operate city-wide service, which the city has determined is ten cabs; and a supervisor on duty at all times cabs are operating.

These regulations stifle innovation and entrepreneurship. Things like Lyft and the dollar vans aren’t compatible with these regulations. These regulations mean that our present transit and taxi service — which no one seems happy with — is all that we will ever have.

Here’s something else: In the Lyft system, passengers ride in the front seat of the car next to the driver. Total strangers do that! Can you imagine if you asked to sit in the front seat of a taxicab in Wichita? This is the private sector versus government-regulated monopolies.

transit-service-in-wichita

Recently the director of the Wichita transit system made a presentation to Wichita City Council members outlining various possibilities about what Wichita could do with bus service. Was allowing the private sector a role in providing transit a possibility? Not that I heard. It’s just not in the DNA of government bureaucrats and unfortunately, many elected officials, to consider letting the private sector do a job.

WichitaLiberty.TV December 8, 2013

WichitaLiberty.TV.16In this episode of WichitaLiberty.TV: Wichita city leaders are preparing to ask Wichita voters to approve a sales tax increase. What would this money be used for? Are there alternatives, such as private sector integration, that the city could consider? Then: What is the role of the Wichita Metro Chamber of Commerce? Is it promoting capitalism, or something else? Finally, David Hart, who is Director of the Online Library of Liberty Project at the Liberty Fund, explains some of the lessons of Frederic Bastiat, including the broken window fallacy. Episode 23, broadcast December 8, 2013. View below, or click here to view at YouTube.

Wichita won’t consider this, I’m sure

City of Wichita logoAs Wichita considers continuing taxing everyone to pay for a transit system that few people use, and as Wichita considers taxing everyone even more to pay for a bigger transit system that only a few additional people will use, here’s an example of something that I’m sure is not under consideration: Privatization, entrepreneurship, and diversity.

What Kansas should do

As the Kansas Legislature struggles to end its 2013 session, budgetary and taxation issues remain to be resolved. It’s important that the legislature resolve these issues in a way that positions Kansas for economic growth, rather than retaining the policies that have led to stagnation compared to other states.

Personal income growth, Kansas and selected states, 2013

Here’s what the Kansas Legislature needs to do:

  • Keep the current sales tax rate.
  • Eliminate sales tax on food.
  • Reduce individual income and corporate income tax rates.
  • Get serious about reducing spending.

The legislature should reduce Kansas income tax rates by an amount that would be revenue-neutral, so that state spending does not grow. This moves Kansas towards more of a “Fair Tax” model, which many economists agree is better than taxing income. Elimination of the sales tax on food removes much of the regressive nature of the sales tax.

To the extent that the legislature believes it needs other funds, take it from transportation funding. We’ve spent a lot on roads and highways in recent years. It’s enough for now.

Another important thing the legislature needs to do is get serious about reducing government spending. Kansas lost an important chance to save money — although a relatively small amount — when school choice programs failed to pass. These programs, across the country, save state and local governments money. Unfortunately, Kansas legislative leaders did not use this argument.

Job growth, Kansas and selected states, 2013

How to save

In 2011 the Kansas Legislature lost three opportunities to save money and improve the operations of state government. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the moderate-controlled Senate, or had its contents stripped and replaced with different legislation.

Each of these bills represented a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy.

One bill was called the Kansas Streamlining Government Act, another would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships, and another would have created performance measures for state agencies and report that information to the public. More information on these bills is at Kansas budget solution overlooked.

We have to wonder why these bills — or similar measures — were not introduced and advanced this year when the opposition in the Senate is weaker. These are the types of measures we need to take as a state.

Kansas needs to focus on growth when wrapping up session

Oil painting "Tragic Prelude" (1938-40) by John Steuart Curry (1897-1946)As the Kansas Legislature prepares to end its 2013 session, budgetary and taxation issues remain to be resolved. It’s important that the legislature resolve these issues in a way that positions Kansas for economic growth, rather than retaining the policies that have led to stagnation compared to other states.

First, let’s stop talking about the need to “pay for tax cuts.” The only way in which tax cuts have a cost is if you believe that your income belongs first to government, and then to you. While that schema is preferred by Kansas Progressives, it’s contrary to freedom and destructive to jobs and prosperity. Kansas will be better off if Kansans are able to control more of their own spending, rather than having government spend it for them.

Second, we must remember that the projected “holes in the budget” or deficits have two moving parts: Income and spending. Any deficit or surplus is produced equally by both factors. A reduction in income to the government produces a deficit only if government chooses to keep spending.

Third, let’s stop talking about “irresponsible tax cuts” and how cutting taxes is an “experiment.” To proceed as Kansas has — that would be irresponsible, as we know that Kansas has been underperforming relative to other states. No experimentation is needed. We know that Kansas has not done well.

Fourth, we need to make sure that everyone is starting from the same set of facts. Here’s one example: While critics of the new Kansas tax policy focus on the elimination of state income taxes on certain forms of business organization, marginal tax rates were lowered for everyone. Additionally, the standard deduction was increased for everyone, meaning that zero tax is paid on a larger share of everyone’s income.

But one tax was raised. Kansas had a program that rebated sales tax paid on food. This was limited to those with modest incomes or over a certain age. It is generally recognized that the sales tax is a regressive tax, meaning that those with low incomes pay a larger share of their income in tax. Reducing this perceived inequity was the goal of the credit program.

In recognition of this, Kansas should eliminate the sales tax on food, especially if we keep the current high sales tax rate. This eliminates the clunky tax credit program and lets everyone save on food taxes every day, not just at tax filing time.

Critics also say that taxes were raised on some low income families. This argument is based on some tax credit programs that were eliminated, such as the tax credit for child and dependent care expenses, and another tax credit for child day care expenses. It’s important to remember that these programs were implemented as a tax credits, and they are properly categorized as welfare spending accomplished through the tax system. If we want to keep this welfare spending, let’s do it some other way. Spending through the tax system complicates the understanding of government finances.

What Kansas should do

Here’s what the Kansas Legislature needs to do: Keep the current sales tax rate, eliminate sales tax on food, and reduce individual income and corporate income tax rates. Reduce the income tax rates by an amount that would be revenue-neutral, so that state spending does not grow. This moves us towards more of a “Fair Tax” model, which many economists agree is better than taxing income. Elimination of the sales tax on food removes much of the regressivity of the sales tax.

To the extent that the legislature believes it needs other funds, take it from transportation funding. We’ve spent a lot on roads and highways in recent years. It’s enough for now.

Another important thing the legislature needs to do is get serious about reducing government spending. Kansas lost an important chance to save money — although a relatively small amount — when school choice programs failed to pass. These programs, across the country, save state and local governments money. Unfortunately, Kansas legislative leaders did not use this argument.

More ways to save: In 2011 the Kansas Legislature lost three opportunities to save money and improve the operations of state government. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the moderate-controlled Senate, or had its contents stripped and replaced with different legislation.

Each of these bills represented a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy.

One bill was called the Kansas Streamlining Government Act, another would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships, and another would have created performance measures for state agencies and report that information to the public. More information on these bills is at Kansas budget solution overlooked.

We have to wonder why these bills — or similar measures — were not introduced and advanced this year when the opposition in the Senate is weaker. These are the types of measures we need to take as a state.

Legislator’s guide to delivering better service at a better price

Service bell

From Kansas Policy Institute:

How can Kansas get to the point of lowering spending, lowering taxes, and allowing for more job creation? It is not an easy process, but “A Legislator’s Guide to Delivering Better Service at a Better Price” offers an outline. This road map from KPI was recently released and will be updated as new analysis is added and ideas are refined.

A few of the ideas from the guide:

  • Use the $2.5 billion held in cash reserves by state agencies to manage the process of lowering spending (Page 3).
  • Review discretionary spending. For instance, State agencies spent $5.8 million on Advertising in 2012 (Page 6).
  • Set up a privatization panel to deliver higher quality service at lower prices (Page 7).
  • Utilize priority-based budgeting that requires each agency to prioritize every program or service from most to least effective. Those on the bottom of the list can be considered for possible elimination and/or being scaled back (Page 7).

The report is at A Legislator’s Guide to Delivering Better Service at a Better Price: How to reduce government spending and create a better taxpayer experience.

Privatization study released

Better Service, Better Price: How privatization can streamline government, improve services, and reduce costs for Kansas taxpayers

Kansas Policy Institute has released a study looking at privatization of government services. From KPI’s press release:

As the 2013 Legislature begins its work the discussion remains focused on implementing last year’s tax reform package. A new study from Kansas Policy Institute makes clear a good deal of the dollars necessary to implement reform without raising taxes, an 8.5 percent efficiency savings, can be achieved via a slate of reforms commonly referred to as privatization. “Better Service, Better Price,” goes through best practices and case studies to arrive at standard cost savings of between five and 20 percent — a good step toward realizing the benefits of HB 2117.

“Too often we’re faced with the false choice of either higher taxes or fewer government services,” said KPI president Dave Trabert. “This paper makes clear that governments at all levels and around the country are refusing that false choice and taking steps to deliver essential services at a better price with better outcomes.”

Privatization reforms include contracting, franchising, and outright divesture of government-owned assets or functions. Examples from around the country demonstrated 130 different outsourcing initiatives in Florida saving $500 million in cash-flow dollars and 345 opportunities for public-private partnerships in the City of Tulsa. The study also highlights existing efforts in Kansas such as the City of Wichita saving $1.3 million annually by outsourcing mowing operations, beginning in 2009, and Kansas State University allowing its on-campus bookstore to be operated by Varney’s, a private entity and previous competitor.

In addition to case studies and establishing the vocabulary of privatization, a good deal of discussion is provided to best practices. Transparency in contracting and purchasing, truly competitive and open bidding, and quality-driven outcomes help protect taxpayer interests when government dollars go to private entities.

“Privatization and public-private partnerships are proven policy tools used by policymakers of all political stripes to control spending and improve public services — something that is more critical than ever given the fiscal challenges that many states and local governments continue to face in the wake of the 2008 recession,” said the study’s lead author Leonard Gilroy, the director of government reform at the Reason Foundation. “It is our hope that this new report will help state and local officials in Kansas better understand the range of potential privatization opportunities at their disposal to help navigate the ‘new normal’ of budget constraints and lower the costs of government to taxpayers.”

Trabert concluded by saying, “With Kansas’ general fund spending having increased by 48 percent in the past decade there are absolutely opportunities for efficiency and savings. In many cases, this could certainly be accomplished by utilizing private sector expertise while at the same time delivering better service to Kansans.”

The document may be read at Better Service, Better Price: How privatization can streamline government, improve services, and reduce costs for Kansas taxpayers.

The Kansas Legislature has considered privatization in recent years. Two years ago a bill passed the House, but did not advance in the Senate. The bill was HB 2194, which in its original form would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships.

According to the supplemental note for the bill, “The purpose of the Council would be to ensure that certain state agencies, including the Board of Regents and postsecondary educational institutions, would: 1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced. Excluded from the state agencies covered by the bill would be any entity not receiving State General Fund or federal funds appropriation.”

This bill passed by a vote of 68 to 51 in the House of Representatives. It did not advance in the Senate, falling victim to a “gut-and-go” maneuver where its contents were replaced with legislation on a different topic.

Opposing this bill was Kansas Organization of State Employees (KOSE), a union for executive branch state employees. It advised its “brothers and sisters” that the bill “… establishes a partisan commission of big-business interests to privatize state services putting a wolf in charge of the hen house. To be clear, this bill allows for future privatization of nearly all services provided by state workers. Make no mistake, this proposal is a privatization scheme that will begin the process of outsourcing our work to private contractors. Under a privatization scheme for any state agency or service, the employees involved will lose their rights under our MOA and will be forced to adhere to the whims of a private contractor who typically provides less pay and poor benefits. Most workers affected by privatization schemes are not guaranteed to keep their jobs once an agency or service is outsourced.”

Note the use of “outsourcing our work.” This underscores the sense of entitlement of many government workers: It is not work done for the benefit of Kansans, it is our work.

Then, there’s the warning that private industry pays less. Most of the time representatives of state workers like KOSE make the case that it is they who are underpaid, but here the argument is turned around when it supports the case they want to make. One thing is probably true: Benefits — at least pension plans — may be lower in the private sector. But we’re now painfully aware that state government has promised its workers more pension benefits than the state has been willing to pay for.

Kansas budget solution overlooked

As Kansas prepares for a legislative session that must find ways to balance a budget in the face of declining revenues, not all solutions are being considered.

Generally, the choices are presented as either raising revenues or cutting services. An example comes from H. Edward Flentje of Wichita State University. In a recent op-ed, he presents two solutions: (a) raising more revenue, by canceling the recently-passed tax cuts and retaining the current sales tax rate hike instead of letting it expire, or (b) cutting services. (H. Edward Flentje : State facing fiscal cliff, December 16, 2012 Wichita Eagle)

In the Kansas City Star, Steve Rose made a similar argument.

I hope that “cutting services” means cutting spending on services, not the actual level of services the state provides, although that could probably use some trimming, too.

How much spending does the state need to cut? Kansas Policy Institute has calculated that a one-time spending cut of 8.5 percent, followed by spending growth of four percent per year, would produce a balanced budget with ending balances.

Does anyone think this goal can’t be met? If not, then perhaps cutting four percent in each of the next two years could be a goal.

But either way, we can cut spending while maintaining services people have become accustomed to expect from government. Remaking government is a way to do this. We can make government more efficient, despite the claims that it is impossible to do so.

As an example, in 2010 the Wichita school district saved $2.5 million per year by adjusting school starting times, thereby saving on transportation costs. This was after district officials claimed — repeatedly — there was nothing they could cut. Spending had already been “cut to the bone,” officials said.

When we see incidents like this, the governing body trumpets the savings, and then, unfortunately, often stops looking for savings. But we need to keep looking. An example of a way to save money is school choice.

School choice saves states money

While proponents of public school spending argue that school choice programs drain away dollars from what they claim are underfunded public schools, this is not the case.

In 2007 The Friedman Foundation for Educational Choice released the study School Choice by the Numbers: The Fiscal Effect of School Choice Programs, 1990-2006. According to the executive summary: “Every existing school choice program is at least fiscally neutral, and most produce a substantial savings.”

How can this be? The public school spending lobby, which in Kansas is primarily the Kansas National Education Association (KNEA, the teachers union) and the Kansas Association of School Boards (KASB), would have us believe that educational freedom would kill public education. They say that school choice program drain scarce resources from the public school system.

But when researchers looked at the actual effects, they found this: “In nearly every school choice program, the dollar value of the voucher or scholarship is less than or equal to the state’s formula spending per student. This means states are spending the same amount or less on students in school choice programs than they would have spent on the same students if they had attended public schools, producing a fiscal savings.”

So at the state level, school choice programs save money. They don’t cost money to implement; they save money.

Further research on school choice programs funded through tax credits confirms this.

Other ways to save

In 2011 the Kansas Legislature lost three opportunities to save money and improve the operations of state government. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the moderate-controlled Senate, or had its contents stripped and replaced with different legislation.

Each of these bills represents a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy.

Kansas Streamlining Government Act

HB 2120, according to its supplemental note, “would establish the Kansas Streamlining Government Act, which would have the purpose of improving the performance, efficiency, and operations of state government by reviewing certain state agencies, programs, boards, and commissions.” Fee-funded agencies — examples include Kansas dental board and Kansas real estate commission — would be exempt from this bill.

In more detail, the text of the bill explains: “The purposes of the Kansas streamlining government act are to improve the performance, streamline the operations, improve the effectiveness and efficiency, and reduce the operating costs of the executive branch of state government by reviewing state programs, policies, processes, original positions, staffing levels, agencies, boards and commissions, identifying those that should be eliminated, combined, reorganized, downsized or otherwise altered, and recommending proposed executive reorganization orders, executive orders, legislation, rules and regulations, or other actions to accomplish such changes and achieve such results.”

In testimony in support of this legislation, Dave Trabert, President of Kansas Policy Institute offered testimony that echoed findings of the public choice school of economics and politics: “Some people may view a particular expenditure as unnecessary to the fulfillment of a program’s or an agency’s primary mission while others may see it as essential. Absent an independent review, we are expecting government employees to put their own self-interests aside and make completely unbiased decisions on how best to spend taxpayer funds. It’s not that government employees are intentionally wasteful; it’s that they are human beings and setting self-interests aside is challenge we all face.”

The bill passed the House of Representatives by a vote of 79 to 40. It was referred to the Senate Committee on Federal and State Affairs, where it did not advance. HB 2120 died in a senate committee chaired by Pete Brungardt, who was defeated in August.

Privatization and public-private partnerships

Another bill that did not advance was HB 2194, which in its original form would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships.

According to the supplemental note for the bill, “The purpose of the Council would be to ensure that certain state agencies, including the Board of Regents and postsecondary educational institutions, would: 1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced. Excluded from the state agencies covered by the bill would be any entity not receiving State General Fund or federal funds appropriation.”

This bill passed by a vote of 68 to 51 in the House of Representatives. It did not advance in the Senate, falling victim to a “gut-and-go” maneuver where its contents were replaced with legislation on an entirely different topic. Steve Morris, president of the Kansas Senate and a member of the moderate coalition, chaired the committee that killed this legislation. He won’t be in the Senate next year.

Performance measures

Another bill that didn’t pass the entire legislature was HB 2158, which would have created performance measures for state agencies and reported that information to the public. The supplemental note says that the bill “as amended, would institute a new process for modifying current performance measures and establishing new standardized performance measures to be used by all state agencies in support of the annual budget requests. State agencies would be required to consult with representatives of the Director of the Budget and the Legislative Research Department to modify each agency’s current performance measures, to standardize such performance measures, and to utilize best practices in all state agencies.” Results of the performance measures would be posted on a public website.

This bill passed the House of Representatives by a nearly unanimous vote of 119 to 2, with Wichita’s Nile Dillmore and Geraldine Flaharty the two nay votes.

Opposition to these bills from Democrats often included remarks on the irony of those who were recently elected on the promise of shrinking government now proposing to enlarge government through the creation of these commissions and councils. These bills, however, proposed to spend modest amounts increasing the manageability of government, not the actual range and scope of government itself. As it turns out, many in the legislature — this includes Senate Republicans who initiated or went along with the legislative maneuvers that killed these bills — are happy with the operations of state government remaining in the shadows.

HB 2158 was victim of a “gut-and-go” maneuver in a committee chaired by Carolyn McGinn, another member of the moderate coalition. She will be returning to the senate next year, but probably won’t have the ability to stop legislation like this.

Kansas private sector jobs lag government jobs

Government jobs in Kansas have been growing at the expense of private sector jobs.

Some mistakenly say that government employees are good for the economy, because their paychecks pump up the economy. But this analysis ignores the source of government employees’ paychecks, which are taxes. (Or borrowing, which simply delays taxation to some future time, or inflation, which robs money of its value. Fortunately Kansas can’t engage in inflationary monetary policies, but it does borrow.)

If people are not taxed, they spend or invest their money in the way they feel best benefits them. Politicians spend taxpayers’ money for political reasons, say to reward campaign contributors with padded no-bid contracts.

In fact, for many politicians creating government jobs is a good thing. To them, it doesn’t matter whether the jobs are productive, or whether people really want or need what the government workers produce. In the private sector — where firms compete with others for scare resources and the value of activity is judged by profitability — efficiency is prized. Minimizing costs is the goal. Innovation abounds.

As the following chart illustrates, private sector employment growth has lagged behind the growth of government employment. This has happened during the decade that is now being described by some as a period of “reasonableness,” with Kansas taking a “balanced” and “responsible” approach to government. The numbers in the chart illustrate the results of these policies.

This trend has been known. In 2005 Alan Cobb, then State Director of Americans for Prosperity–Kansas, wrote “Unbelievably, this century Kansas has lost 16,700 private sector jobs while the government sector actually added 15,000 jobs.”

In 2011 there were efforts to reform Kansas government so that the cost of government is not so burdensome to the private sector. There was the Kansas Streamlining Government Act, an act to create the Kansas Advisory Council on Privatization and Public-Private Partnerships, and an act to implement performance measures similar to what many business firms use. These bills passed the House of Representatives but didn’t make it through the Senate. See In Kansas, there are ways to reduce the cost of government for details on these measures.

By the way, during this campaign season the Kansas Senate is being described as the last hope for the “reasonable” approach to Kansas government that has produced the results illustrated below.

Kansas private sector job growth compared to other statesKansas job growth. Data is indexed, with January 2001 equal to 1. Source: Bureau of Labor Statistics

In Kansas, there are ways to reduce the cost of government

Recently-passed tax reform in Kansas has lead to fear that the state will suffer large deficits in upcoming years and will have to cut services like education and social services. There are many ways, however, that Kansas government can save money and still provide the essential services that Kansans rely on. One way is to improve the budgeting process.

Something else Kansas needs to do is improve the operations and reduce the cost of state government. In 2011 the Kansas Legislature lost three opportunities to do just this. Three bills, each with this goal, were passed by the House of Representatives, but each failed to pass through the Senate, or had its contents stripped and replaced with different legislation.

Each of these bills represents a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed. These goals, while always important, are now essential for the success of Kansas government and the state’s economy.

Kansas Streamlining Government Act

HB 2120, according to its supplemental note, “would establish the Kansas Streamlining Government Act, which would have the purpose of improving the performance, efficiency, and operations of state government by reviewing certain state agencies, programs, boards, and commissions.” Fee-funded agencies — examples include Kansas dental board and Kansas real estate commission — would be exempt from this bill.

In more detail, the text of the bill explains: “The purposes of the Kansas streamlining government act are to improve the performance, streamline the operations, improve the effectiveness and efficiency, and reduce the operating costs of the executive branch of state government by reviewing state programs, policies, processes, original positions, staffing levels, agencies, boards and commissions, identifying those that should be eliminated, combined, reorganized, downsized or otherwise altered, and recommending proposed executive reorganization orders, executive orders, legislation, rules and regulations, or other actions to accomplish such changes and achieve such results.”

In testimony in support of this legislation, Dave Trabert, President of Kansas Policy Institute offered testimony that echoed findings of the public choice school of economics and politics: “Some people may view a particular expenditure as unnecessary to the fulfillment of a program’s or an agency’s primary mission while others may see it as essential. Absent an independent review, we are expecting government employees to put their own self-interests aside and make completely unbiased decisions on how best to spend taxpayer funds. It’s not that government employees are intentionally wasteful; it’s that they are human beings and setting self-interests aside is challenge we all face.”

The bill passed the House of Representatives by a vote of 79 to 40. It was referred to the Senate Committee on Federal and State Affairs, where it did not advance.

Privatization and public-private partnerships

Another bill that did not advance was HB 2194, which in its original form would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships.

According to the supplemental note for the bill, “The purpose of the Council would be to ensure that certain state agencies, including the Board of Regents and postsecondary educational institutions, would: 1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced. Excluded from the state agencies covered by the bill would be any entity not receiving State General Fund or federal funds appropriation.”

This bill passed by a vote of 68 to 51 in the House of Representatives. It did not advance in the Senate, falling victim to a “gut-and-go” maneuver where its contents were replaced with legislation on an entirely different topic.

Opposing this bill was Kansas Organization of State Employees (KOSE), a union for executive branch state employees. It advised its “brothers and sisters” that the bill “… establishes a partisan commission of big-business interests to privatize state services putting a wolf in charge of the hen house. To be clear, this bill allows for future privatization of nearly all services provided by state workers. Make no mistake, this proposal is a privatization scheme that will begin the process of outsourcing our work to private contractors. Under a privatization scheme for any state agency or service, the employees involved will lose their rights under our MOA and will be forced to adhere to the whims of a private contractor who typically provides less pay and poor benefits. Most workers affected by privatization schemes are not guaranteed to keep their jobs once an agency or service is outsourced.”

Note the use of “outsourcing our work.” This underscores the sense of entitlement of many government workers: It is not work done for the benefit of Kansans; to them it is our work.

Then, there’s the warning that private industry pays less. Most of the time representatives of state workers like KOSE make the case that it is they who are underpaid, but here the argument is turned around when it supports the case they want to make. One thing is probably true: Benefits — at least pension plans — may be lower in the private sector. But we’re now painfully aware that state government has promised its workers more pension benefits than the state has been willing to fund.

Performance measures

Another bill that didn’t pass the entire legislature was HB 2158, which would have created performance measures for state agencies and reported that information to the public. The supplemental note says that the bill “as amended, would institute a new process for modifying current performance measures and establishing new standardized performance measures to be used by all state agencies in support of the annual budget requests. State agencies would be required to consult with representatives of the Director of the Budget and the Legislative Research Department to modify each agency’s current performance measures, to standardize such performance measures, and to utilize best practices in all state agencies.” Results of the performance measures would be posted on a public website.

This bill passed the House of Representatives by a nearly unanimous vote of 119 to 2, with Wichita’s Nile Dillmore and Geraldine Flaharty the two nay votes. In the Senate, this bill was stripped of its content using the “gut-and-go” procedure and did not proceed intact to a vote.

Opposition to these bills from Democrats often included remarks on the irony of those who were recently elected on the promise of shrinking government now proposing to enlarge government through the creation of these commissions and councils. These bills, however, proposed to spend modest amounts increasing the manageability of government, not the actual range and scope of government itself. As it turns out, many in the legislature — this includes Senate Republicans who initiated or went along with the legislative maneuvers that killed these bills — are happy with the operations of state government remaining in the shadows.

These proposals to scale back the services that government provides — or to have existing services be delivered by the private sector — mean that there will be fewer government employees, and fewer members of government worker unions. This is another fertile area of gathering support for killing these bills.

State workers and their supporters also argue that fewer state workers mean fewer people paying state and other taxes. Forgotten by them is the fact that the taxes taken to pay these workers means less economic activity and fewer jobs in the private sector. And, in fact, Kansas has seen the number of government workers — at all levels — rise.

As to not wanting performance measures: Supporters of the status quo say that people outside of government don’t understand how to make the decisions that government workers make. In one sense, this may be true. In the private sector, profitability is the benchmark of success. Government has no comparable measure when it decides to, say, spend some $300 million to renovate the Kansas Capitol. But once it decides to do so, the benchmark and measurement of profitability in executing the service can be utilized by private sector operators. Of course, private contractors will be subject to the discipline of the profit and loss system, something again missing from government.

In Kansas Legislature, opportunities for saving were lost

This year the Kansas Legislature lost three opportunities to improve the operations and reduce the cost of state government. Three bills, each with this goal, were passed by the House of Representatives, but each failed to make through the Senate, or had its contents stripped and replaced with different legislation.

Each of these bills represents a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed.

Kansas Streamlining Government Act

HB 2120, according to its supplemental note, “would establish the Kansas Streamlining Government Act, which would have the purpose of improving the performance, efficiency, and operations of state government by reviewing certain state agencies, programs, boards, and commissions.” Fee-funded agencies — examples include Kansas dental board and Kansas real estate commission — would be exempt from this bill.

In more detail, the text of the bill explains: “The purposes of the Kansas streamlining government act are to improve the performance, streamline the operations, improve the effectiveness and efficiency, and reduce the operating costs of the executive branch of state government by reviewing state programs, policies, processes, original positions, staffing levels, agencies, boards and commissions, identifying those that should be eliminated, combined, reorganized, downsized or otherwise altered, and recommending proposed executive reorganization orders, executive orders, legislation, rules and regulations, or other actions to accomplish such changes and achieve such results.”

In testimony in support of this legislation, Dave Trabert, President of Kansas Policy Institute offered testimony that echoed findings of the public choice school of economics and politics: “Some people may view a particular expenditure as unnecessary to the fulfillment of a program’s or an agency’s primary mission while others may see it as essential. Absent an independent review, we are expecting government employees to put their own self-interests aside and make completely unbiased decisions on how best to spend taxpayer funds. It’s not that government employees are intentionally wasteful; it’s that they are human beings and setting self-interests aside is challenge we all face.”

On February 25 the bill passed the House of Representatives by a vote of 79 to 40. It was referred to the Senate Committee on Federal and State Affairs, where it did not advance.

Privatization and public-private partnerships

Another bill that did not advance was HB 2194, which in its original form would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships.

According to the supplemental note for the bill, “The purpose of the Council would be to ensure that certain state agencies, including the Board of Regents and postsecondary educational institutions, would: 1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced. Excluded from the state agencies covered by the bill would be any entity not receiving State General Fund or federal funds appropriation.”

This bill passed by a vote of 68 to 51 in the House of Representatives. It did not advance in the Senate, falling victim to a “gut-and-go” maneuver where its contents were replaced with legislation on an entirely different topic.

Opposing this bill was Kansas Organization of State Employees (KOSE), a union for executive branch state employees. It advised its “brothers and sisters” that the bill “… establishes a partisan commission of big-business interests to privatize state services putting a wolf in charge of the hen house. To be clear, this bill allows for future privatization of nearly all services provided by state workers. Make no mistake, this proposal is a privatization scheme that will begin the process of outsourcing our work to private contractors. Under a privatization scheme for any state agency or service, the employees involved will lose their rights under our MOA and will be forced to adhere to the whims of a private contractor who typically provides less pay and poor benefits. Most workers affected by privatization schemes are not guaranteed to keep their jobs once an agency or service is outsourced.”

Note the use of “outsourcing our work.” This underscores the sense of entitlement of many government workers: It is not work done for the benefit of Kansans, it is our work.

Then, there’s the warning that private industry pays less. Most of the time representatives of state workers like KOSE make the case that it is they who are underpaid, but here the argument is turned around when it supports the case they want to make. One thing is probably true: Benefits — at least pension plans — may be lower in the private sector. But we’re now painfully aware that state government has promised its workers more pension benefits than the state has been willing to pay for.

Performance measures

Another bill that didn’t pass the entire legislature was HB 2158, which would have created performance measures for state agencies and reported that information to the public. The supplemental note says that the bill “as amended, would institute a new process for modifying current performance measures and establishing new standardized performance measures to be used by all state agencies in support of the annual budget requests. State agencies would be required to consult with representatives of the Director of the Budget and the Legislative Research Department to modify each agency’s current performance measures, to standardize such performance measures, and to utilize best practices in all state agencies.” Results of the performance measures would be posted on a public website.

This bill passed the House of Representatives by a nearly unanimous vote of 119 to 2, with Wichita’s Nile Dillmore and Geraldine Flaharty the two nay votes. In the Senate, this bill was stripped of its content using the “gut-and-go” procedure and did not proceed intact to a vote.

Opposition to these bills from Democrats often included remarks on the irony of those who were recently elected on the promise of shrinking government now proposing to enlarge government through the creation of these commissions and councils. These bills, however, proposed to spend modest amounts increasing the manageability of government, not the actual range and scope of government itself. As it turns out, many in the legislature — this includes Senate Republicans who initiated or went along with the legislative maneuvers that killed these bills — are happy with the operations of state government remaining in the shadows.

These proposals to scale back the services that government provides — or to have existing services be delivered by the private sector — mean that there will be fewer government employees, and fewer members of government worker unions. This is another fertile area of gathering support for killing these bills.

State workers and their supporters also argue that fewer state workers mean fewer people paying state and other taxes. Forgotten by them is the fact that the taxes taken to pay these workers means less economic activity and fewer jobs in the private sector. And, in fact, Kansas has seen the number of government workers — at all levels — rise.

As to not wanting performance measures: Supporters of the status quo say that people outside of government don’t understand how to make the decisions that government workers make. In one sense, this may be true. In the private sector, profitability is the benchmark of success. Government has no comparable measure when it decides to, say, spend some $300 million to renovate the Kansas Capitol. But once it decides to do so, the benchmark and measurement of profitability in executing the service can be utilized by private sector operators. Of course, private contractors will be subject to the discipline of the profit and loss system, something again missing from government.

Curiously, Kansas Governor Sam Brownback didn’t use his prestige and influence to support these bills, at not publicly. Perhaps next year, an election year not only for the House but also for the entire membership of the Senate, will be different.

In Kansas Legislature this year, opportunities for saving were lost

This year the Kansas Legislature lost three opportunities to improve the operations and reduce the cost of state government. Three bills, each with this goal, were passed by the House of Representatives, but each failed to make through the Senate, or had its contents stripped and replaced with different legislation.

Each of these bills represents a lost opportunity for state government services to be streamlined, delivered more efficiently, or measured and managed.

Kansas Streamlining Government Act

HB 2120, according to its supplemental note, “would establish the Kansas Streamlining Government Act, which would have the purpose of improving the performance, efficiency, and operations of state government by reviewing certain state agencies, programs, boards, and commissions.” Fee-funded agencies — examples include Kansas dental board and Kansas real estate commission — would be exempt from this bill.

In more detail, the text of the bill explains: “The purposes of the Kansas streamlining government act are to improve the performance, streamline the operations, improve the effectiveness and efficiency, and reduce the operating costs of the executive branch of state government by reviewing state programs, policies, processes, original positions, staffing levels, agencies, boards and commissions, identifying those that should be eliminated, combined, reorganized, downsized or otherwise altered, and recommending proposed executive reorganization orders, executive orders, legislation, rules and regulations, or other actions to accomplish such changes and achieve such results.”

In testimony in support of this legislation, Dave Trabert, President of Kansas Policy Institute offered testimony that echoed findings of the public choice school of economics and politics: “Some people may view a particular expenditure as unnecessary to the fulfillment of a program’s or an agency’s primary mission while others may see it as essential. Absent an independent review, we are expecting government employees to put their own self-interests aside and make completely unbiased decisions on how best to spend taxpayer funds. It’s not that government employees are intentionally wasteful; it’s that they are human beings and setting self-interests aside is challenge we all face.”

On February 25 the bill passed the House of Representatives by a vote of 79 to 40. It was referred to the Senate Committee on Federal and State Affairs, where it did not advance.

Privatization and public-private partnerships

Another bill that did not advance was HB 2194, which in its original form would have created the Kansas Advisory Council on Privatization and Public-Private Partnerships.

According to the supplemental note for the bill, “The purpose of the Council would be to ensure that certain state agencies, including the Board of Regents and postsecondary educational institutions, would: 1) focus on the core mission and provide goods and services efficiently and effectively; 2) develop a process to analyze opportunities to improve efficiency, cost-effectiveness and provide quality services, operations, functions, and activities; and 3) evaluate for feasibility, cost-effectiveness, and efficiency opportunities that could be outsourced. Excluded from the state agencies covered by the bill would be any entity not receiving State General Fund or federal funds appropriation.”

This bill passed by a vote of 68 to 51 in the House of Representatives. It did not advance in the Senate, falling victim to a “gut-and-go” maneuver where its contents were replaced with legislation on an entirely different topic.

Opposing this bill was Kansas Organization of State Employees (KOSE), a union for executive branch state employees. It advised its “brothers and sisters” that the bill “… establishes a partisan commission of big-business interests to privatize state services putting a wolf in charge of the hen house. To be clear, this bill allows for future privatization of nearly all services provided by state workers. Make no mistake, this proposal is a privatization scheme that will begin the process of outsourcing our work to private contractors. Under a privatization scheme for any state agency or service, the employees involved will lose their rights under our MOA and will be forced to adhere to the whims of a private contractor who typically provides less pay and poor benefits. Most workers affected by privatization schemes are not guaranteed to keep their jobs once an agency or service is outsourced.”

Note the use of “outsourcing our work.” This underscores the sense of entitlement of many government workers: It is not work done for the benefit of Kansans, it is our work.

Then, there’s the warning that private industry pays less. Most of the time representatives of state workers like KOSE make the case that it is they who are underpaid, but here the argument is turned around when it supports the case they want to make. One thing is probably true: Benefits — at least pension plans — may be lower in the private sector. But we’re now painfully aware that state government has promised its workers more pension benefits than the state has been willing to pay for.

Performance measures

Another bill that didn’t pass the entire legislature was HB 2158, which would have created performance measures for state agencies and reported that information to the public. The supplemental note says that the bill “as amended, would institute a new process for modifying current performance measures and establishing new standardized performance measures to be used by all state agencies in support of the annual budget requests. State agencies would be required to consult with representatives of the Director of the Budget and the Legislative Research Department to modify each agency’s current performance measures, to standardize such performance measures, and to utilize best practices in all state agencies.” Results of the performance measures would be posted on a public website.

This bill passed the House of Representatives by a nearly unanimous vote of 119 to 2, with Wichita’s Nile Dillmore and Geraldine Flaharty the two nay votes. In the Senate, this bill was stripped of its content using the “gut-and-go” procedure and did not proceed intact to a vote.

Opposition to these bills from Democrats often included remarks on the irony of those who were recently elected on the promise of shrinking government now proposing to enlarge government through the creation of these commissions and councils. These bills, however, proposed to spend modest amounts increasing the manageability of government, not the actual range and scope of government itself. As it turns out, many in the legislature — this includes Senate Republicans who initiated or went along with the legislative maneuvers that killed these bills — are happy with the operations of state government remaining in the shadows.

These proposals to scale back the services that government provides — or to have existing services be delivered by the private sector — mean that there will be fewer government employees, and fewer members of government worker unions. This is another fertile area of gathering support for killing these bills.

State workers and their supporters also argue that fewer state workers mean fewer people paying state and other taxes. Forgotten by them is the fact that the taxes taken to pay these workers means less economic activity and fewer jobs in the private sector. And, in fact, Kansas has seen the number of government workers — at all levels — rise.

As to not wanting performance measures: Supporters of the status quo say that people outside of government don’t understand how to make the decisions that government workers make. In one sense, this may be true. In the private sector, profitability is the benchmark of success. Government has no comparable measure when it decides to, say, spend some $300 million to renovate the Kansas Capitol. But once it decides to do so, the benchmark and measurement of profitability in executing the service can be utilized by private sector operators. Of course, private contractors will be subject to the discipline of the profit and loss system, something again missing from government.

Curiously, Kansas Governor Sam Brownback didn’t use his prestige and influence to support these bills, at not publicly. Perhaps next year, an election year not only for the House but also for the entire membership of the Senate, will be different.