Tag Archives: Sam Brownback

HB 2615 is a Bi-Partisan Healthcare Solution that Governor Sam Brownback should Support

By Andrew Brown, Foundation for Government Accountability

This site recently published an extensive critique of HB 2615, a bill that would protect doctors and health care professionals providing free charity care and reward them with a minor licensing incentive, and the author encouraged Gov. Brownback to veto the bill. Mr. Weeks has graciously allowed me, as a supporter who worked on behalf of HB 2615, to issue a response to his article. I truly appreciate the opportunity to present another side.

I agree that we do need to reconsider and reform occupational licensure across the board and we absolutely should expect medical professionals to stay current in their field. And while Continuing Medical Education credits are one way, they aren’t the only way to achieve that goal. In fact, Kansas already allows doctors to receive CME credits for a range of non-educational activities.

What’s more important though is the stifling effects abusive medical malpractice lawsuits which often benefit lawyers more than patients can have on the amount of free care doctors and health care professionals are willing to give. This means doctors and others offer less charity than they otherwise would while our low-income neighbors struggle to get access to the health care services they need. HB 2615 seeks to change this by reducing government barriers and freeing medical professionals to provide high-quality care to those who need it most.

HB 2615 doesn’t increase regulations on medical professionals, but eases the burden of existing continuing education regulations and rewards them for giving their time and talents to voluntarily serve those who can’t afford care. It also extends liability protections provided by the Kansas Tort Claims Act to medical professionals who choose to volunteer serving those in need so that the fear of a frivolous lawsuit doesn’t stand in the way of doing good.

Although Kansas currently requires physicians to participate in 50 hours of continuing medical education annually (which they often pay for out of their own pockets), the law divides continuing education hours into two categories.

Category I hours are the kind we typically think of when it comes to continuing education — the structured, academic lectures or workshops where physicians get up to speed on the latest medical research and techniques. 1 Every Kansas physician is required to earn 20 hours of Category I credit each year. 2 This doesn’t change with HB 2615.

The remaining 30 hours, then, may be earned from Category II, which is considerably more flexible. 3 A physician can earn Category II hours in a number of ways like “participating in journal clubs,” having “patient-centered discussions with other health care practitioners,” and (my personal favorite) “using searchable electronic databases in connection with patient care activities.” 4 The hours that physicians would earn for charitable care provided under HB 2615 fall under Category II, meaning that they will still have to earn the same 20 hours of critical Category I hours in order to maintain licensure. If we allow physicians to earn Category II credits for writing journal articles or Googling a patient’s symptoms, why shouldn’t we reward them with a few Category II hours for voluntarily providing a child with an inhaler to provide relief from his asthma symptoms, or treating a mother’s high blood pressure?

HB 2615 is a proven bi-partisan solution that works to provide care to our friends and neighbors in need by reducing regulatory barriers and unleashing the power of charity to immediately improve access to quality medical care. In 1993, the state of Florida instituted the nation’s first volunteer health services program, which served as the model for HB 2615. Since that time, volunteers in the Sunshine State have provided more than $2.8 BILLION in care to those in need. Each year, nearly 500,000 free patient visits are provided by the state’s top medical professionals valued at more than $300 million. 5 All this happened not through a government program, but because the government recognized that the local community was better equipped to handle a problem, so it got out of the way.

While the data is impressive, HB 2615 is about changing lives. Recently, I had the privilege of speaking with a doctor in Orlando who has dedicated her career to providing volunteer medical services. She told me a powerful story of a truck driver who lost his job because of severe diabetes. Since he was unable to work, he did not have insurance to get the care he needed to get his diabetes under control. Fortunately, he lived in the community where this doctor worked and he was able to get the treatment and care he needed. Eventually, his health improved, which allowed him to go back to work. Thanks to the efforts of this doctor and the volunteer health services program, this man is now working, providing for his family, and has health insurance coverage so that he can stay healthy and working. HB 2615 would bring more stories like this to Kansas.

If Governor Brownback wants to chalk up another win for individual liberty, signing HB 2615 is the best way to do it. This action would send a message that Kansas not only trusts its medical professionals to care for the needs of medically indigent citizens, but that they are better able to provide this care than any government program or insurance company could ever dream.

Andrew Brown is an attorney and Senior Fellow with the Foundation for Government Accountability.


Notes

  1. K.A.R. 100-15- 4(b)
  2. K.A.R. 100-15- 5(a)(1)(A)
  3. Id.
  4. K.A.R. 100-15- 4(c)
  5. Patrick Ishmael and Jonathan Ingram, “Volunteer Care: Affordable Health care without Growing Government,” The Foundation for Government Accountability, Oct. 27, 2015, available at thefga.org/download/Volunteer-Care-Research-Paper.pdf.

Another bill Kansas Governor Sam Brownback should veto

Kansas Governor Sam Brownback has another opportunity to promote and protect individual liberty by blocking expansion of an ever-growing regulatory state.

It took a bit of legislative wrangling, but on Sunday May 1 HB 2615 passed the Kansas Senate by a vote of 40 to zero, and the Kansas House of Representatives by 115 to seven. In its final form, the bill allows physicians and dentists to satisfy a portion of their continuing education requirements by providing charity care to medically indigent persons.1

This bill provides an opportunity to examine and reconsider the purpose of occupational licensure. Most fundamentally: In the case of physicians and dentists, we trust them with our health, our very lives. Can’t we trust them to do whatever they believe is necessary to stay up-to-date in their field without the government requiring a specific number of hours of continuing education? By the way, how does the state of Kansas know how many hours of continuing education are necessary to stay current? Is it the same in all branches of medicine and dentistry? That’s what the Kansas regulations imply.

In Kansas, physicians must participate in 50 hours of continuing medical education annually. This education requirement is satisfied by participating in “activity designed to maintain, develop, or increase the knowledge, skills, and professional performance of persons licensed to practice a branch of the healing arts.”2

But HB 2615 will let physicians satisfy 20 hours of this requirement by providing 40 hours of health care to needy people. Having doctors perform routine medical care — doing their daily job, in other words — doesn’t seem likely to advance the “knowledge, skills, and professional performance” of doctors, which is the stated goal of the regulation.

We have, therefore, a regulation that has a plausibly reasonable purpose — ensuring that physicians and dentists are up-to-date in professional knowledge — instead being used by the state to “encourage” them to provide free labor.

Charity is good. It’s wonderful. It’s why I regularly engage in charitable activity. But it isn’t charity when government is forcing you to do something. I have a feeling that many healthcare professionals already provide much charitable care. But now Kansas wants them to enter into an agreement with the Secretary of Health and Environment to provide gratuitous services if they want credit for performing care as a way to avoid continuing education requirements. Again: If continuing medical education is necessary, why let it be avoided by providing charity care? By allowing the performance of routine medical care to substitute for continuing education, isn’t the state creating a risk to physicians’ regular patients?

Governor Brownback has shown by his veto of SB 338 this year that he has the capacity to appreciate individual rights. In 2012 his veto of SB 353 shows he has an appreciation of the harm of burdensome regulation.

Now, Governor Brownback has another opportunity to promote individual liberty and block the expansion of an ever-growing regulatory state.


Notes

  1. “The bill would allow charitable healthcare providers and dentists to fulfill one hour of continuing education credit for performance of two hours of gratuitous service to medically indigent persons if the provider signs an agreement with the Secretary of Health and Environment (Secretary) to provide gratuitous services. Healthcare providers would be allowed to fulfill a maximum of 20 continuing educational credits through gratuitous service per licensure period, and dentists would be allowed to fulfill a maximum of 6 continuing educational credits through gratuitous service per licensure period.” Kansas Legislature. HB 2615, Fourth conference committee report brief, May 1, 2016. Available at www.kslegislature.org/li/b2015_16/measures/documents/ccrb_hb2615_03_may1.pdf.
  2. Kansas State Board of Healing Arts. K.A.R. 100-15. (2016). Ksbha.org. Available at http://www.ksbha.org/regulations/article15.shtml#kar100154.

In Wichita, revealing discussion of property rights

Reaction to the veto of a bill in Kansas reveals the instincts of many government officials, which is to grab more power whenever possible.

When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it.
— Frederic Bastiat

Kansas Governor Sam Brownback’s veto of a bill that gives cities additional means to take blighted property has produced reaction from local officials in Wichita. The bill is Senate Bill 338.

As has been noted in numerous sources, cities in Kansas have many tools available to address blight. 1 What is the purported need for additional power?

In remarks from the bench, Wichita City Council Member Pete Meitzner (district 2, east Wichita) said there is no intent to be “aggressive in taking people’s property.” 2 But expanding the power of government — aggression, in other words — is what the bill does. Otherwise, why the need for the bill with its new methods and powers of taking property?

And once government is granted new powers, government nearly always finds ways to expand the power and put it to new uses. Even if we believe Meitzner — and we should not — he will not always be in office. Others will follow him who may not claim to be so wise and restrained in the use of government power.

In particular, government finds new ways to expand its powers through enabling concepts like blight. Did you know the entire suburban town of Andover is blighted? 3 Across the country, when governments find they can take property with novel and creative interpretations of blight, they do so. 4

It’s easy to sense the frustration of government officials like Wichita Mayor Jeff Longwell. In his remarks, he asked opponents of SB 338 “what they would do” when confronted with blight. That is a weak argument, but is often advanced nonetheless. Everyone has the right — the duty — to oppose bad legislation even if they do not have an alternate solution. Just because someone doesn’t have a solution, that doesn’t mean their criticism is not valid. This is especially true in this matter, as cities already have many tools to deal with blight.

Proponents of SB 338 also make unfounded accusations about the motivation of opponents of the law. Because someone opposes this law, it doesn’t mean they are in favor of more blight. Those who fight for freedom and liberty are used to this. Advocating for the right to do something doesn’t necessarily mean that one is in favor of actually doing it.

The nature of rights

Much of the discussion this issue concerns the rights of people who live near blighted property. People do have certain rights, but rights have limits. Regarding property, Roger Pilon writes: “Thus, uses that injure a neighbor through various forms of pollution (e.g., by particulate matter, noises, odors, vibrations, etc.) or through exposure to excessive risk count as classic common-law nuisances because they violate the neighbor’s rights. They can be prohibited, with no compensation owing to those who are thus restricted.” 5

Note that Pilon mentions “excessive risk” as something that injures a neighbor. Some of the activities the city wants to control are things like drug dealing, drug usage, and prostitution that may take place on blighted property. And, I suppose it is a risk to have gangs dealing drugs out of the house across the street, blighted or not. But these activities are illegal everywhere, and there are many laws the city can use to control these problems. There is no need for new laws.

It is important to draw a bright line as to where property rights end. Pilon: “By contrast, uses that ‘injure’ one’s neighbor through economic competition, say, or by blocking ‘his’ view (which runs over your property) or offending his aesthetic sensibilities are not nuisances because they violate no rights the neighbor can claim. Nor will it do to simply declare, through positive law, that such goods are ‘rights.'” 6

In today’s world, however, where new rights are seemingly created from thin air, people want to exercise their purported right to control how their neighbor’s property looks. But we have no such right, writes Pilon: “The principle, in fact, is just this: People may use their property in any way they wish, provided only that in the process they do not take what belongs free and clear to others. My neighbor’s view that runs over my property does not belong free and clear to him.” 7

Opposition in the Legislature

When the Kansas House of Representatives and Senate voted on this bill, several House members submitted explanations of their vote. In the Senate, David Haley filed a protest and message explaining his opposition to the bill. These statements follow.

Explanation of vote in the House of Representatives

MR. SPEAKER: I VOTE NO ON SB 338. KANSAS ALREADY HAS SUFFICIENT TOOLS IN PLACE TO ADDRESS BLIGHT. SB 338 circumvents our current eminent domain statutes by redefining “abandoned property” and by allowing our local governments to expeditiously confiscate, seize or destroy law abiding citizens’ private property without compensation, adequate notice, and a legal property title. This is an egregious overreach that deprives some citizens of their private property rights without sufficient due process and it will cause irreparable harm to our most vulnerable citizens that do not have the resources to protect their property.
— GAIL FINNEY, BRODERICK HENDERSON, RODERICK HOUSTON, BEN SCOTT, VALDENIA WINN, JOHN CARMICHAEL, KASHA KELLEY, BILL SUTTON, JERRY LUNN, CHARLES MACHEERS

Protest of Senator David Haley against Senate Bill 338

February 23, 2016

In Accordance with Article 2, Section 10 of the Constitution of Kansas, I, David Haley, a duly elected Senator representing the Fourth District of Kansas, herein PROTEST the action of this Legislature in the promulgation and passage of Senate Bill 338: An Act pertaining to Cities.

In my 23 years as a Kansas Legislator and as but one of only three attorneys in the Senate, this is the first PROTEST I have ever lodged on any measure of the thousands I have considered.

This Chamber now further denigrates real property rights to which every Kansan should be heir.

SB 338 which purports to grant authority to cities and nonprofit organizations to petition courts to possess vacant property for rehabilitation purposes will, simply, but legalize grand theft.

The Senate Commerce committee as is its charge (and not the Senate Local Government committee where, justifiably, similar language as SB 338 had over many years failed time and time again) recognizes and advances business and financial opportunities for our State.

First, the question of a city, redefining definitions of “abandonment” and “blight” as these terms apply to real property, land and or improvements, is the expertise of deliberations of a committee membership dedicated to the auspices of municipalities not the principles of profit.

The principles of real property ownership should always inure to the rights of the citizen not to a developer’s bottom line or even a desire to enhance appraised valuations for tax purposes.

Diabolical in its spawning, methodical and tenacious in its steady lurch forward, SB 338 adheres to two tiered definitions of “abandoned property;” both ingenuous and neither accurate. One definition of “abandoned property”: vacant for 365 days and having a “blighting influence” on surrounding properties; the other definition vacant for 90 days and 2 years tax delinquent.

There are numerous every day scenarios whereby a real property owner has in no way “abandoned” their property though that same property may be vacant for 90 to 365 days, be tax delinquent for 2 years or may have need of rehabilitation to conform to a local standard, real or perceived. But SB 338 alleges “abandonment” and triggers governmental intrusion, harassment and potentially leads to a taking of real property by the government for the benefit of an organization which profits from the taking and kick back higher taxes to the city.

“Commerce,” yes, but a shameful way to run a citizen responsive “Local Government.”

The specious argument in favor of this legislation portends neighborhood beautification, tax viability and repopulation of or demolition and rebuilding of older houses. By eradicating “blight,” the entire community, even the city, is greatly enhanced.

With that premise, I, David Haley, could not agree more.

Today, with no need for warping and putting into statute time-honored definitions of “blight” and “abandonment” or presupposes new postulates for passages of time periods to correlate to real property owners’ interests or genuine concern with their legally owned land(s), there are tools already available to every municipality to address blight. “Code enforcement” departments can post notice and bring to environmental and district court negligent property owners. Subsequent to insufficient response, steep fines and even jail time can be issued now. Today in current statute, a property with two or more years of delinquent property taxes may be sold by the Sheriff of each Kansas County in a “Delinquent Property Tax Sale” also known as a “Sheriff’s” sale or as property “sold on the Courthouse steps.” Again, these are current tools available to curb or cure blight and to put real property into fiscally responsive ownership.

The property rights of legal property owners should not be infringed upon by this Legislature.

Marginal or fragile property owners (traditionally average income or poor property owners attempting to hold on to inherited property or an entrepreneurial hope structure as often found in inner cities) will be set upon by keen-eyed, out of county based developers sheltered by an industrious “not-for-profit” which uses the city and district court as the leverage to harass and ultimately take the land, all in the name of “civic pride” or “community betterment.” Theft.

The late Kansas City, Missouri civil rights leader Bernard Powell (1947-1979) envisioned and warned of the transfer of inner city property back into the same hands of those who fled the same a half century or more ago to the sanctity of the suburbs. Bernard Powell predicted the day would come when government, and the tools they elect and hire, will work hand-in-hand with “robber barons” to turn those out; those who have despaired in neglected, under represented, often high crime, poorly educated neighborhoods, those who have weathered poverty, hard times, civic and civil harassment but yet held a real property interest, a “piece of the pie” … to force them out. Bernard Powell spoke of prosperity returning to the inner city and nothing being tendered to the people who had paid the price for the most sought after of land.

He called it government assisting the turning of the “ghetto into a goldmine.” How prophetic.

Here I sit, practically alone in my opposition to this expansion of eminent domain targeted at poorer property owners ill equipped to “fight City Hall,” in this Kansas Senate and watch this unfold. Again, SB 338 came out of the Commerce committee as well it should.

Government has redefined terms before to shape shift often dastardly need to justify ill deeds.

I remember efforts to redefine “blight” for economic purposes in another eminent domain taking for use in building the Kansas Speedway and Legends in Wyandotte County. Succinctly, the new definition of “blight” was the ability for exponentially more taxes to be levied against the future use of the land than that which the owner who it was being taken from could be expected to pay in its current use. Remnants of that economically fascist philosophy resonate in SB 338. As more people flee the “golden ghettos” of suburbia, the inner city “ghettos” will be repopulated and turned into “goldmines” at the expense I fear, once again, of the poor and unsuspecting. Ironically, we celebrated and honored some of our Korean and Vietnam War heroes today in the Senate Chamber. Was the freedom to own real property without fear of unwarranted government intrusion something for which they fought?

I protest the passage of Senate Bill 338 as is my Constitutional right as a Kansas State Senator under Article Two, Section 10 of the Kansas Constitution for reasons, beliefs afore-listed as well as others not so and hereby vow to continue to assist unnecessarily embattled real property owners in my home District as we together will face the challenges that this bill, when signed into law, will undoubtedly bring.


Notes

  1. Todd, John. Power of Kansas cities to take property may be expanded. Voice For Liberty in Wichita. Available at wichitaliberty.org/kansas-government/power-kansas-cities-take-property-may-expanded/.
  2. Video. Wichita City Council speaks on blight. Available at wichitaliberty.org/wichita-government/wichita-city-council-speaks-blight/.
  3. Weeks, B. (2012). Andover, a Kansas city overtaken by blight. Voice For Liberty in Wichita. Available at wichitaliberty.org/economics/andover-a-kansas-city-overtaken-by-blight/.
  4. Nicole Gelinas, Eminent Domain as Central Planning. (2015). City Journal. Available at www.city-journal.org/html/eminent-domain-central-planning-13253.html.
  5. Pilon, Roger. Protecting Private Property Rights from Regulatory Takings. (1995). Cato Institute. Available at www.cato.org/publications/congressional-testimony/protecting-private-property-rights-regulatory-takings.
  6. ibid
  7. ibid

Wichita City Council speaks on blight

Wichita City Council members speak in opposition to Kansas Governor Sam Brownback’s veto of Senate Bill 338, which would have given cities additional power to take property. April 12, 2016. View below, or click here to view at YouTube. For more on this issue, see Governor Brownback, please veto this harmful bill.

Governor Brownback steps up for property rights

Today Kansas Governor Sam Brownback vetoed Senate Bill 338. As explained by John Todd, this bill unnecessarily and dangerously increased the power of cities over private property rights. Thank you to the governor for understanding the harm of this bill and acting appropriately. Most of all, thank you to John Todd for recognizing the bill’s danger, for his committee testimony, and for his tireless work in helping inform the governor and his staff about this bill.

Following, the governor’s veto message:

The right to private property serves as a central pillar of the American constitutional tradition. It has long been considered essential to our basic understanding of civil and political rights. Property rights serve as a foundation to our most basic personal liberties. One of government’s primary purposes is to protect the property rights of individuals.

The purpose of Senate Bill 338, to help create safer communities, is laudable. However, in this noble attempt, the statute as written takes a step too far. The broad definition of blighted or abandoned property would grant a nearly unrestrained power to municipalities to craft zoning laws and codes that could unjustly deprive citizens of their property rights. The process of granting private organizations the ability to petition the courts for temporary and then permanent ownership of the property of another is rife with potential problems.

Throughout the country, we have seen serious abuse where government has broadened the scope of eminent domain, especially when private development is involved. The use of eminent domain for private economic development should be limited in use, not expanded. Senate Bill 338 opens the door for serious abuse in Kansas. Governmental authority to take property from one private citizen and give it to another private citizen should be limited, but this bill would have the effect of expanding such authority without adequate safeguards.

Kansans from across the political spectrum contacted me to discuss their concerns that this bill will disparately impact low income and minority neighborhoods. The potential for abuse of this new statutory process cannot be ignored. Government should protect property rights and ensure that the less advantaged are not denied the liberty to which every citizen is entitled.

There is a need to address the ability of municipalities and local communities to effectively maintain neighborhoods for public safety. However, Senate Bill 338 does much more. Though I am vetoing this bill, I would welcome legislation that empowers local communities to respond to blight and abandoned property that does not open the door to abuse of the fundamental rights of free people.

Kansas support for higher education

How does Kansas state support for higher education compare to other states?

In the Wichita Eagle, Chapman Rackaway contributes a satirical look at Kansas Governor Sam Brownback and his handling of Kansas government. And, the governor deserves many of Rackaway’s jabs. But there is something that needs clarification, which is the contention that Kansas is a backwater state when it comes to higher education funding, at least compared to Washington state. (Chapman Rackaway: How about Brownback as K-State president?, April 8, 2016.)

Rackaway writes: “That Washington State could pay [departing Kansas State University president Kirk] Schulz so much more is unsurprising to anyone paying attention to states’ budget priorities.” He goes on to write that Kansas government has not prioritized higher education funding, and that Washington state recently committed to additional higher education support.

There are organizations that collect and present data on this topic. State Higher Education Executive Officers Association publishes a report titled State Higher Education Finance (SHEF) study 1 The figures used below are for the most recent year for which data is available.

According to this report, in fiscal year 2014, Kansas appropriated $5,648 per FTE. Washington’s figure is $5,700, or 0.9 percent more than Kansas. Over the past five years, Kansas appropriations per FTE fell by 15.8 percent. In Washington they fell by 20.6 percent. (Table 5)

For fiscal year 2013, higher education support per capita in Kansas was $342. In Washington, it was $197. The same table also reports higher education support per $1000 of personal income. In Kansas the figure is $7.70, and in Washington, $4.13. For Kansas, these two figures are 132 percent and 133 percent of the national average. (Table 10)

From these two data points — and these are not the only ways to compare — I think we can conclude that Kansas appropriates nearly as much as does Washington, on a per-student basis.

Further, Kansans are much more generous in supporting its public universities, when measured by per-capita contribution. (Calling Kansans generous with their taxes is a falsehood, as taxation has nothing to do with generosity, except the generosity of politicians with money that belongs to other people.)


Notes

  1. State Higher Education Executive Officers Association. State Higher Education Finance (SHEF) study. Available at www.sheeo.org/sites/default/files/project-files/SHEF%20FY%202014-20150410.pdf.

Opinion: GOP economics devastated Kansas

An op-ed on the Kansas economy needs context and correction.

An op-ed about the Kansas economy needs a few corrections before the people of Illinois get a wrong impression of Kansas. The article is Opinion: GOP economics devastated Kansas, published in the Alton (Illinois) Telegraph. The author is John J. Dunphy.

First, Dunphy refers to Sam Brownback as the “Tea Party” governor of Kansas. As far as I know, the tea party favors reducing not only taxation, but spending too. Given the choice, Brownback preferred raising taxes rather than cutting spending. Not very tea party-like.

Dunphy: “Moderate Republicans who voiced objections to such extremist politics were targeted by the Tea Party and voted out of office in 2012. With the legislature now dominated by True Believers, Brownback was able to pass the largest tax cut in Kansas history.” I’ll leave it to others to judge whether the legislators voted into office in 2012 classify as “True Believers.” (My opinion is that True Believers are scarce in the Kansas Legislature.) But I do know this: The tax cuts were passed during the 2012 legislative session, which ended months before the 2012 primary elections. There seems to be a timing issue here.

Dunphy: “With such drastically-reduced revenue, Kansas had to cut social services.” Except Kansas spending has continued to climb, although there have been a few cuts here and there.

Dunphy: “Rather than admit that slashing taxes created a disaster …” Tax cuts allow people to keep more of what is rightfully theirs. That is not a disaster. That is good.

Dunphy: “Trickle-down economics doesn’t work. Although most Republicans choose to ignore it, George H.W. Bush said as much while campaigning for the GOP presidential nomination in 1980.” Contrary to this assertion (made during a political campaign, and we know how much those are worth), the administration and policies of Ronald Reagan ushered in the The Great Moderation, a period of sustained economic growth.

Governor Brownback, please veto this harmful bill

Kansas Governor Sam Brownback should veto a bill that is harmful to property rights, writes John Todd. For more about this issue, see Power of Kansas cities to take property may be expanded.

Senate Bill 338 has been passed by the Legislature and is now on its way for Governor Sam Brownback to consider. The Governor should veto this bill. This bill gives cities, in conjunction with their preferred nonprofit organizations, the ability to take possession of unoccupied residential houses that the property taxes are currently paid in full. This bill will clearly place vulnerable senior citizens and less affluent property owners in the position of being victimized.

Cities in Kansas have all the powers they need to deal with property issues through current law. Over the past few years, the City of Wichita has bulldozed hundreds of houses for housing code violations. Enhancing the power of cities and their appointed nonprofit redevelopment organizations to take privately owned properties they do not own without compensation is wrong.

I urge Governor Brownback to veto this bill!

John Todd
Wichita

Kansas transportation bonds economics worse than told

The economic details of a semi-secret sale of bonds by the State of Kansas are worse than what’s been reported.

The late realization last year that the Kansas Department of Transportation had issued $400 million in long-term bonds — largely under the radar — has been met with appropriate levels of indignation by some editorial writers. An example is Dr. Edward Flentje who wrote:

Right-wing Republican lawmakers have operated under the radar to suspend all statutory limits on highway debt, and that unprecedented authority was recently used to issue record-breaking levels of long-term debt to pay for their reckless income tax cuts this year and next.

Six lines buried deep in a 700-page appropriation bill last spring gave the Kansas Department of Transportation unlimited authority to issue debt, and in early December, without public disclosure, the agency used that authority to issue $400 million in highway bonds. (H. Edward Flentje: Debt limits suspended to pay for tax cuts, Wichita Eagle, December 18, 2015)

A few notes: The Secretary of Transportation has, in the past, been given broad — but maybe not “unlimited” — authority to issue bonds and borrow money. The series 2012C bonds were issued with this statement: “The 2010 Act Amendments authorized the Secretary to issue highway revenue bonds so long as the Secretary certifies that, as of the date of issuance of any such bonds, the maximum annual debt service on all Outstanding Bonds and on such bonds proposed to be issued will not exceed 18% of Revenues projected for the then-current or any future Fiscal Year.”

In 2010 Kansas had a Democrat for a governor, which should caution us to not make this issue too political. As far as borrowing from the “Bank of KDOT,” it’s been done before, as explained in 2015 by KDOT. 1 And, payments on these loans have been deferred or not made.

Instead of politicizing the issue, let’s concentrate on the facts and merits. And when looking at the Series 2015B bonds, there is plenty to criticize.

KDOT outstanding bonds, showing interest-only issues. Click for larger version. Does not include Series 2015B bonds.
KDOT outstanding bonds, showing interest-only issues. Click for larger version. Does not include Series 2015B bonds.
First, the state will not pay any principal on these bonds until 2026. Until then the state will pay only the interest on the $400 million, which is $20 million per year. Then, starting in 2026, the state will make 11 annual payments of various amounts towards the principal. In all, KDOT’s schedule shows the state will pay $282,494,750 in interest on a loan of $400 million.

I don’t think that most Kansans would appreciate the state borrowing so much money for such a long time without making any effort at retiring the principal. But before we politicize: The KDOT Series 2010A bonds ($325 million, dated September 1, 2010) don’t require principal payments until 2032. (These bonds are “Buy America Bonds,” a program of the 2009 American Recovery and Reinvestment Act, and the federal government will pay 35 percent of the interest.) The plan, as outlined in KDOT’s official statement, is that starting in 2032 the state will make five annual payments of between $61 million and $69 million, totaling $325 million, and then the bonds will be retired. 2

There’s even more to criticize about the 2015B bonds. The actual proceeds the state will receive from the bonds (after costs of issuance and the underwriters’ discount) is $488,242,912. How, you may be asking, can the state issue $400 million in bonds but receive $488 million when it sells them? The answer is an “original issue premium” of about $89 million.

To explain: Bonds similar to these ought to yield in the range of 2.00 percent to maybe 2.75 percent. But, KDOT is paying 5.00 percent interest. Therefore, bond buyers are willing to pay more than the face value (the $400 million) for these bonds, because they will be earning higher-than-market interest. 3 In fact, these bonds were sold at premiums ranging from 119 percent to 126 percent. Meaning that for every $1.00 worth of bonds bought (representing money the state must repay), the state actually received from $1.19 to $1.26. 4

That sounds like a good deal for the state, but in exchange for the premiums, the state pays much higher interest. There are several different ways of looking at this, but the upshot is that the state is receiving additional money now in exchange for paying a higher interest rate for many years. About $89 million in extra interest, which increases the actual cost of these bonds beyond what we thought.

(Again, before we politicize, the state under a Democratic governor has done the same.)

The allure of borrowing large sums and spending now is not limited to transportation bonds. The state is currently using the recent $1 billion in proceeds from KPERS bonds as a rationale to skip KPERS contributions this year, and also suspend a rule that most proceeds from the same of surplus property goes to KPERS. See This is why we must eliminate defined-benefit public pensions.


Notes:

  1. FY 2002 Loan to State General Fund. The 2002 Legislature borrowed $94.6 million from the State Highway Fund for the State General Fund and directed that the funds were to be repaid to the State Highway Fund by June 30, 2003. The 2003 Legislature deferred the repayment of the $94.6 million loan into four equal annual installments beginning prior to June 30, 2007. In addition, the 2003 Legislature directed that the State Highway Fund transfer to the State General Fund $30.6 million for activities of the State Highway Patrol and the 2003 Legislature directed that this transfer also be repaid in four equal annual installments beginning prior to June 30, 2007. The first repayment installment was made in June 2007 and the second in June 2008. The 2009 Legislature delayed the June 2009 repayment to June 2011 and the 2010 Legislature eliminated the language authorizing the June 2011 repayment. At this time, there is no authorization for the final two repayments. The Department’s projections included in this Official Statement do not include receiving the final two repayments.
  2. EMMA (Electronic Municipal Market Access), $325,000,000 State of Kansas Department of Transportation Taxable Highway Revenue Bonds, Series 2010A at emma.msrb.org/EA407275-EA318568-EA714328.pdf.
  3. A bond will trade at a premium when it offers a coupon rate that is higher than prevailing interest rates. Investopedia at www.investopedia.com/terms/p/premiumbond.asp.
  4. EMMA (Electronic Municipal Market Access), $400,000,000 State of Kansas Department of Transportation Highway Revenue Bonds Series 2015B at emma.msrb.org/IssueView/IssueDetails.aspx?id=EP369775.

This is why we must eliminate defined-benefit public pensions

Actions considered by the Kansas Legislature demonstrate — again — that governments are not capable of managing defined-benefit pension plans.

The Kansas Legislature is considering a bill that will allow Governor Sam Brownback to defer making payments to KPERS, the state’s defined-benefit pension system for public employees. The deferred payments would be made up in future years, although there is really no mechanism to enforce this.

Also, the bill considers eliminating the requirement that when the state sells surplus property, that 80 percent must be used to reduce the unfunded actuarial pension liability of KPERS. There is also a moratorium on employer contribution to KPERS Death and Disability fund, which is much smaller than the retirement fund.

KPERS funded ratio through 2014That unfunded liability is a big problem. It refers to the difference between what KPERS expects to pay compared to the revenue it expects to receive. In recent years the Kansas pension fund has been among the worst in the country, based on the funded ratio. The nearby charts shows the trend of this funded ratio through 2014, the latest date for KPERS valuation reports.

Last year the state issued $1 billion in bonds to address a portion of the unfunded liability. While this helps KPERS, it simply means that the state owes another billion dollars on a different balance sheet. But it’s the same taxpayers that will eventually pay.

Barry Poulson, Ph.D., Emeritus Professor at the University of Colorado — Boulder has written on the danger of borrowing to shore up state pension funds. As explained below, there is the “lack of nexus between the investment of the bond proceeds and payments for unfunded liabilities in the plan.” This means that the borrowed funds may be used for current spending rather than for correcting the KPERS unfunded liability.

He further explains: “If legislators see that additional funds are available to pay off unfunded liabilities in the pension plan they may choose to allocate less general fund money to meet these pension obligations.”

This is what is happening in Kansas. The borrowing of a billion dollars has let legislators and the governor feel — incorrectly — that there is breathing room, and that the state can slack off making the contributions it should be making this year. This is highly irresponsible and reckless.

Following, from Dr. Paulson:

A major flaw in the proposed issuance of pension obligation bonds is the lack of nexus between the investment of the bond proceeds and payments for unfunded liabilities in the plan. The experience in other states is that sometimes bond proceeds are earmarked for other state expenditures. The most egregious example of this problem is the state of Illinois which issued $10 billion in pension obligation bonds and then used the proceeds to meet current expenditures rather than to pay off unfunded liabilities in the pension plan.

Even if the state of Kansas would not commit this form of fraud on the taxpayers the fungible nature of state funding makes it impossible to guarantee the nexus between bond proceeds and the payment for unfunded liabilities in the pension plan. If legislators see that additional funds are available to pay off unfunded liabilities in the pension plan they may choose to allocate less general fund money to meet these pension obligations. The state has not allocated the annual required contribution (ARC) to KPERS for several decades and is not projected to do so for the foreseeable future. Legislators continue to promise pension benefits without allocating the funds required to meet these obligations. We should expect this moral hazard to be even greater with the issuance of pension obligation bonds.

Even if the proceeds of pension obligation bonds could be set aside in a lock box and earmarked to pay off unfunded liabilities in the pension plan the state must still address the accumulation of unfunded liabilities in the defined benefit plan. Without fundamental structural change, including shifting public employees to some form of defined contribution pension plan, these unfunded liabilities will continue to accumulate. Legislators should not be diverted from this difficult task by non-reforms, such as the issuance of pension obligation bonds.

Spending and taxing in Kansas

Difficulty balancing the Kansas budget is different from, and has not caused, widespread spending cuts.

Across the state Kansas newspapers declare Governor Sam Brownback’s tax cuts a failure. There are two prongs of criticism. One is that the budget is not balanced; that is, the state is spending more than it has received in revenue. That has been true, especially for fiscal years 2014 and 2015. That problem can be fixed by either collecting more revenue, or by cutting spending. Last year the Governor and the Legislature decided to balance the budget by relying, almost entirely, on collecting more revenue. Raising taxes, in other words.

The second prong of attack on the tax cuts is to hold them responsible for spending cuts. This is what really upsets the state’s liberals and moderates. Here’s an example. Former Kansas State Budget Director Duane Goossen recently wrote “The Brownback tax cuts brought the revenue stream down so significantly that truly damaging expense cuts coupled with a sales tax increase have not repaired the budgetary mess.” (emphasis added) (I will agree with Goossen that we have a problem with the budget, a problem that could be fixed with relatively small reforms in spending. But Goossen wants more revenue.)

But have there been severe spending cuts in Kansas? “Truly damaging” cuts? While some programs have been trimmed, overall state spending continues on a largely upward trend (for all funds spending) or remains mostly flat (for general fund spending).

Kansas General Fund spending, showing large deficits of revenue compared to spending in 2014 and 2015.
Kansas General Fund spending, showing large deficits of revenue compared to spending in 2014 and 2015.

So why are Kansas liberals and moderates upset? It is the spending of money by government that is important when considering how well the state is providing the services liberals and moderates (conservatives, too) look for government to provide. Taxation is merely one way to pay for government spending. And spending isn’t declining.

Is this an important distinction?

For the years when Kansas was spending down its bank balance, the state was experiencing the benefit of Washington-style deficit spending. That is, the state was spending more than it collected in revenue. The difference is that Kansas made up the revenue deficit by using savings rather than debt. (At least mostly so.)

(Another difference between Kansas and federal spending is that Kansas can’t continue to borrow to support spending unless it engages in extraordinary measures, some of which may have happened. The federal budget, however, has been in a permanent state of deficit spending since 2000 and appears to remain in deficit for as far as anyone can project.)

The takeaway is that problems with balancing the budget is not the same as spending cuts. We’ve had the former, but not the latter, when considering the entire budget.

Nearby charts show Kansas government spending, from both the general fund and all funds spending. One chart shows total dollars spent, and one shows per-capita spending. Both are adjusted for inflation. On these charts it’s difficult to see where total spending has been cut or slashed in recent years. All funds spending continues its upward trend, with a few exceptions. General fund spending remains level or trending slightly upwards.

Kansas Spending Adjusted for CPI 2016-01

Kansas Spending, Per Capita, Adjusted for CPI 2016-01

Notes for charts:
Data is from Kansas Fiscal Facts 2015
2015 through 2017 are approved figures, not actual spending
2015 and beyond population are my estimates
CPI is Consumer Price Index – All Urban Consumers, CUUR0000AA0

Brownback and Obama stimulus plans

There are useful lessons we can learn from the criticism of Kansas Governor Sam Brownback, including how easy it is to ignore inconvenient lessons of history.

It’s been three years since the tax cuts in Kansas took effect; tax cuts said by Governor Brownback to be a “shot in the arm” for the Kansas economy. Opponents of the governor and the tax cuts take great delight in reporting the generally anemic growth of the Kansas economy since then. Month after month, the tax cuts are condemned by Kansas newspaper editorial writers and the governor’s detractors.

I don’t think it’s a particularly strong form of argument to defend someone by showing how someone else is equally as bad — or worse. Similarly, criticizing someone for their fixation on A while they ignore the equally bad B: We need to know why they ignore B. Have they forgotten B? Do they not have time to write about B? Or do they ignore B because the fact of B is inconvenient to their ideology or their criticism of A? But I see that not everyone shares these ideals, and even so, perhaps we can learn something.

Many people remember that President Barack Obama promised that the unemployment rate would not top eight percent if the stimulus was passed. In January 2009 two Obama administration officials, including Christina Romer (who would become chair of the Council of Economic Advisers) wrote a paper estimating what the national unemployment rate would be with, and without, the American Recovery and Reinvestment Plan, commonly known as the stimulus. That plan passed.

The Romer paper included a graph of projected unemployment rates. The nearby chart from e21 took the Romer chart and added
actual unemployment rates. (The accompanying article is Revisiting unemployment projections. That chart and article were created in 2011. I’ve updated the chart to show the actual unemployment rate since then, as black dots. The data shows that the actual unemployment rate was above the Obama administration projections — with or without the stimulus plan — for the entire period of projections.

The purpose of this is not to defend Brownback by showing how Obama is even worse. (Disclosure: Although I am a Republican, I didn’t vote for Brownback for governor.) Instead, we ought to take away two lessons: First, let’s learn to place an appropriately low value on the promises and boasts made by politicians. Then, let’s recognize the weak power government has to manage the economy for positive effect. Indeed, the lesson of the Obama stimulus is that it made the unemployment rate worse than if there had been no stimulus — at least according to the administration projections.

And, there is one more lesson to learn about our state’s newspaper reporters and editorial writers, but I think you’ve discovered that already.

Unemployment with and without stimulus through 2014-01

Kansas NAEP scores for 2015

Reactions to the release of National Assessment of Educational Progress scores for Kansas and the nation. Also, an interactive visualization.

Results for the 2015 administration of the National Assessment of Educational Progress became available October 28. The test, sometimes called the “nation’s report card,” is described as “the largest nationally representative and continuing assessment of what America’s students know and can do in various subject areas.”

The Wichita Eagle didn’t have much to say on this, reporting “Results from the latest National Assessment of Educational Progress show that Kansas scores dropped in most areas since 2013, state education officials announced Wednesday. The decreases echo a downward trend in scores nationwide on the NAEP exam, also known as the Nation’s Report Card.”

The Kansas State Department of Education reported “Results from the 2015 National Assessment of Educational Progress (NAEP) exams, also known as the Nation’s Report Card, show that Kansas followed the national trend of decreasing scores. Across the nation this year, both fourth- and eighth-grade mathematic scores, as well as eighth-grade reading scores, are lower in 2015 than in 2013. Fourth-grade reading scores aren’t significantly different from 2013.”

The Lawrence Journal-World used the Associated Press story: “Kansas schoolchildren are faring worse on a test known as the nation’s report card. The state’s performance dip follows a national trend of falling scores on the National Assessment of Educational progress.” So too did the Topeka Capital-Journal.

The Kansas Association of School Boards noted “State and national education leaders, including KASB, are currently researching the latest National Assessment of Educational Progress scores, which were released earlier this week. Both nationally and in Kansas the 2015 NAEP results decreased slightly. … While Kansas results decreased slightly, Kansas student achievement remained above the national average in 4th- and 8th grade math and 8th grade reading and was the same as the national average in 4th grade reading. KASB is currently doing an in-depth analysis of the NAEP results and release its findings as soon as possible.”

Kansas Governor Sam Brownback issued a statement: “Today’s NAEP scores reflect the need for real education reform to benefit our students. This is a complex issue with no single cause or solution and today’s results confirm a trend showing that even though education funding has increased by more than $1 billion over the past decade, NAEP scores have remained largely flat. … While our Kansas schools remain above the national average, we can and should do more. We want our students to excel and have the skills they need to succeed in school and life in the 21st century. To do that, we must work to get more dollars into the classroom and into the infrastructure our teachers need to improve student performance, particularly in math. We need flexibility at the local level to address students’ needs, and we should support the great efforts of the thousands of teachers who work every day to help give our students opportunity for a brighter future.”

Some of these statements compared Kansas scores to the national average. That is not appropriate if there are subgroups that score at different levels, and if the composition of these subgroups varies significantly between states or the national average. That is the case with Kansas, which has significantly lower minority populations than the nation and some states. Care must be used when making comparisons.

To assist in understanding NAEP scores, I’ve updated two interactive visualizations with 2015 data. One visualization shows subgroups based on race/ethnicity, and the other shows subgroups based on national school lunch program eligibility, which is a commonly-used surrogate for income.

Each visualization has a number of tabs that display data in different ways. Most tabs allow for filtering of data in several ways.

Click here for the visualization based on race/ethnicity, and here for lunch eligibility.

Example from the visualization. Click for larger.
Example from the visualization. Click for larger.
Example from the visualization. Click for larger.
Example from the visualization. Click for larger.

The Kansas economy and agriculture

There’s no need for Kansas state government to exaggerate the value of agriculture to the Kansas economy.

A recent press release from the office of Kansas Governor Sam Brownback quoted the governor thusly: “Agriculture is our largest economic driver, bringing more than $63 billion into the Kansas economy.” (Governor Sam Brownback visits will reinforce the importance of Kansas agriculture, August 17, 2015.)

$63 billion is a lot of output. It’s about 43 percent of the Kansas economy. A document supplied by the Kansas Department of Agriculture provides more detail: “As shown in the above table, agriculture, food, and food processing supports 229,934.1 jobs, or 12% of the entire workforce in the county [sic]. These industries provide a total economic contribution of approximately $62.8 billion, roughly 43% of Gross Region Product (GRP).” (Estimated Economic Impact of Agriculture, Food, and Food Processing Sectors, May 7, 2015.)

The document explains how such a large number is obtained. It includes three components, explained here: “Direct, indirect, and induced effects sum together to estimate the total economic contribution in the state. Direct effects capture the contribution from agricultural and food products. Indirect effects capture the economic benefit from farms and agricultural businesses purchasing inputs from supporting industries within the state. Induced effects capture the benefits created when employees of farms, agricultural businesses, and the supporting industries spend their wages on goods and services within the state.”

This method of reckoning economic impact is from a model called IMPLAN. It is a proprietary system with methodology and assumptions not open to inspection. It often used by those who are asking government for money or tax breaks. IMPLAN comes up with some real whoppers as to how important an industry is to the economy. When shown these figures, government officials are usually swayed to grant incentives.

There’s a problem, however. Agriculture cannot possibly be responsible for 43 percent of Kansas GDP. The U.S. Bureau of Economic Analysis (BEA) has figures for each state showing the contribution to GDP for industry categories. I’ve gathered the data and calculated percentages for each industry. As you can see, the category “Agriculture, forestry, fishing, and hunting” accounts for $8,136 million or 5.5 percent of Kansas GDP. There are seven other industry categories that rank above agriculture.

Gross Domestic Product for Kansas by Industry.
Gross Domestic Product for Kansas by Industry.

5.5 percent is a long way from the governor’s claim of 43 percent. It is true that the title of the paper is “Estimated Economic Impact of Agriculture, Food, and Food Processing Sectors.” So consider these industry subsectors:

Food and beverage and tobacco products manufacturing of $3,463 million (2013 value; 2104 not available)
Food services and drinking places $2,776 million (Also 2013 value)

If we add these to agriculture, we have production worth 9.8 percent of Kansas GDP. This is being overly generous to agriculture. It counts all bars and restaurants as part of the agriculture industry, something that makes no sense.

So how do we take these numbers and pump them up to 43 percent? IMPLAN, that’s how. It’s true that when an industry causes economic activity to occur, it spawns other economic activity. These are the indirect and induced effects that IMPLAN produces. But these numbers are hugely inflated. And when we take all industries, economic activity is counted more than once.

Recall there are seven industry categories ranking above agriculture. When it suits its needs, each of these uses IMPLAN to boost its importance to the state. Consider manufacturing, which at 13.1 percent of GDP is the third-largest industry in Kansas. When manufacturing companies appeal to state or local government for subsidies, they use IMPLAN or related mechanisms to inflate their importance. Almost everyone does this. It’s standard procedure.

Except: When everyone claims the same indirect and induced economic activity, such analysis becomes meaningless. If we added up the IMPLAN-calculated value of each industry to the Kansas economy, we’d end up with a value several times larger than the actual value.

This is what the Kansas Department of Agriculture and Governor Sam Brownback have done. We expect this behavior from companies or local economic development agencies when they appeal for economic development incentives. They need to inflate their importance to gullible government bureaucrats and elected officials. But Governor Brownback doesn’t need to do this, and neither does the Kansas Department of Agriculture. From them, all we want is the truth, and nothing more.

WichitaLiberty.TV: Radio show host Joseph Ashby

In this episode of WichitaLiberty.TV: Radio talk show host Joseph Ashby joins host Bob Weeks to discuss his interview with Kansas Governor Sam Brownback, the end of the legislative session, and Republican presidential candidates. Episode 87, broadcast June 21, 2015. View below, or click here to view at YouTube.

Kansas public school establishment ought to thank Sam Brownback

Kansas public schools ought to thank the governor and legislature for failing to give parents the power of school choice.

The public school establishment in Kansas is angry with the governor and legislature over school finance. Really, the public schools ought to be grateful for Governor Sam Brownback. In many states with conservative Republican governors, school choice programs have grown. In the summer of 2011 the Wall Street Journal reported on what it called “The Year of School Choice.”

Some governors have been warriors for school choice. Not Kansas Governor Sam Brownback, however. He signed a small school choice bill when it landed on his desk. But he has not vocally advocated for expanded school choice. There are several Kansas legislators who are in favor of school choice, but not enough, certainly not in leadership.

As public schools and their unions despise any form of school choice and the accountability it provides, they should be grateful for our governor and legislature. Kansas public schools operate without much competition, and that’s the way public schools and their unions like it.

School choice in Kansas

How little school choice exists in Kansas? One implementation of school choice that is popular in some states is the charter school. According to National Alliance for Public Charter Schools, Kansas has a poor charter school law. That is, Kansas law makes it difficult to start and maintain a charter school. Of the 43 states that have charter schools, Kansas ranked 42. Kansas public schools are effectively shielded from the diversity and competition that charter schools provide.

Others have also found the Kansas charter school law to be very restrictive. The Center for Education Reform found the Kansas charter school law to be the worst in the nation.

Governor Brownback signed a tax credit scholarship program. The Kansas program is small and restrictive, earning the grade of “D” from Center for Education Reform. Kansas has no school voucher program.

Altogether, Kansas parents have little power to choose schools for their children. The primary power Kansas parents have is to choose where they live. If a family can afford to, it can live in a district where the public schools are not as bad as they are in other districts. Given that these desirable districts almost always cover higher-income areas, poor parents don’t have this possibility.

School choice won’t fix everything, but it goes a long way. Here’s a portion of the 2011 Wall Street Journal article “The Year of School Choice.”

Choice by itself won’t lift U.S. K-12 education to where it needs to be. Eliminating teacher tenure and measuring teachers against student performance are also critical. Standards must be higher than they are.

But choice is essential to driving reform because it erodes the union-dominated monopoly that assigns children to schools based on where they live. Unions defend the monopoly to protect jobs for their members, but education should above all serve students and the larger goal of a society in which everyone has an opportunity to prosper.

This year’s choice gains are a major step forward, and they are due in large part to Republican gains in last fall’s elections combined with growing recognition by many Democrats that the unions are a reactionary force that is denying opportunity to millions. The ultimate goal should be to let the money follow the children to whatever school their parents want them to attend.

Brownback derangement syndrome on display

A newspaper op-ed illustrates some of the muddled thinking of Kansas newspaper editorialists, not to mention Brownback derangement syndrome.

Recent discussion about restricting the ability to spend welfare benefits has lead one newspaper editorialist to compare elected politicians with welfare recipients. The writer is Dave Helling of the Kansas City Star, and his target is Kansas Governor Sam Brownback. Attempting to paint the governor as a government-paid freeloader, Helling wrote: “He’s earned his living from taxpayers almost all his life. He’s worked in state government, the U.S. House and U.S. Senate and now as governor, where he earns around $100,000 a year.” (Dave Helling: It’s time to break lawmakers’ ‘cycle of dependency’)

Except: Helling’s own words undermine his point. He wrote that Brownback earned his living. Welfare recipients are not earning their benefits.

Helling also wrote that Brownback worked in government. Welfare recipients aren’t working for their benefits.

Also: “Taxpayers long have provided Brownback money to buy shelter, food, health care, safety and transportation.” I don’t know how this is relevant. If Brownback worked and earned his pay, it’s of concern to no one how he spends it.

Helling also wrote: “Brownback’s long ride on the public dime is supposed to come to an end in 2019, when term limits force him to finally find a private-sector job.” He follows with speculation that Brownback may run again for the U.S. Senate. Of interest is that Sam Brownback is a rare example of a politician who self-imposed term limits on himself and actually kept the promise, leaving the U.S. Senate after two full terms. As far as serving in the Senate again, most advocates of term limits agree that if officeholders sit out a term, they may run again.

This op-ed was mentioned by the Wichita Eagle, where editorialist Rhonda Holman added “Brownback has held a government job since he became state agriculture secretary in 1986, at age 30.” It’s curious that the Eagle editorial board would criticize someone for working for government. Its usual stance is that there should be more government workers doing more things and spending more money.

There is legitimate criticism of governor Brownback. He has not been an advocate for school choice. He has not been interested in setting Kansas on a path to controlling state spending. (These are some of the reasons why I did not vote for Browback.) But these are not the goals of the Star or Eagle editorial boards, or for that of most newspapers. Instead they pick at the governor with nonsensical arguments. That’s derangement syndrome.

Kansas school employees, the trend

The trend in Kansas public school employment and teacher/pupil ratios may surprise you, given the narrative presented by public schools.

“More students, but fewer teachers — Since 2009, Kansas schools have gained more than 19,000 students but have 665 fewer teachers.” (Quality at Risk: Impact of Education Cuts, Kansas Center for Economic Growth)

“Class sizes have increased, teachers and staff members have been laid off.” (What’s the Matter With Kansas’ Schools?, New York Times)

This is typical of the sentiment in Kansas — that there are fewer teachers since Sam Brownback became governor, and that class sizes have exploded.

Kansas school enrollment and employment data. Click for the interactive visualization of this data.
Kansas school enrollment and employment data. Click for the interactive visualization of this data.
Below is a chart of data from Kansas State Department of Education. This data shows that for the past four years employment is rising, both for teachers and certified employees. Also, the ratio of these employees to students is falling, meaning fewer pupils per employee.

Class size is not the same as pupil-teacher ratio. But if there are proportionally more teachers than students, we have to wonder why class sizes are growing. What are the teachers doing?

The story is not the same in each school district. I’ve created an interactive visualization that lets you examine the employment levels and ratios in individual Kansas school districts. Click here to open the visualization in a new window.

Kansas School Enrollment and Employment
Kansas School Enrollment and Employment
Kansas School Employment
Kansas School Employment
Kansas School Pupil-Teacher Ratio
Kansas School Pupil-Teacher Ratio

STAR bonds in Kansas

The Kansas STAR bonds program provides a mechanism for spending by autopilot, without specific appropriation by the legislature.

Under the State of Kansas STAR bonds program, cities sell bonds and turn over the proceeds to a developer of a project. As bond payments become due, incremental sales tax revenue make the payments.

STAR bonds in Kansas. Click for larger version.
STAR bonds in Kansas. Click for larger version.
It’s only the increment in sales tax that is eligible to be diverted to bond payments. This increment is calculated by first determining a base level of sales for the district. Then, as new development comes online — or as sales rise at existing merchants — the increased sales tax over the base is diverted to pay the STAR bonds.

Often the STAR bonds district, before formation, is vacant land, and therefore has produced no sales tax revenue. Further, the district often has the same boundaries as the proposed development. Thus, advocates often argue that the bonds pay for themselves. Advocates often make the additional case that without the STAR bonds, there would be no development, and therefore no sales tax revenue. Diverting sales tax revenue back to the development really has no cost, they say, as nothing was going to happen but for the bonds.

This is not always the case, For a STAR bonds district in northeast Wichita, the time period used to determine the base level of sales tax was February 2011 through January 2012. A new Cabela’s store opened in March 2012, and it’s located in the boundaries of STAR bonds district, even though it is not part of the new development. Since Cabela’s sales during the period used to calculate the base period was $0, the store’s entire sales tax collections will be used to benefit the STAR bonds developer.

(There are a few minor exceptions, such as the special CID tax Cabela’s collects for its own benefit.)

Which begs the question: Why is the Cabela’s store included in the boundaries of the STAR bonds district?

With sales estimated at $35 million per year at this Cabela’s store, the state has been receiving around $2 million per year in sales tax from it. But after the STAR bonds are sold, that money won’t be flowing to the state. Instead, it will be used to pay off bonds that benefit the STAR bond project’s developer — the project across the street.

Taxation for public or private benefit?
STAR bonds should be opposed as they turn over taxation to the private sector. We should look at taxation as a way for government to raise funds to pay for services that all people benefit from. An example is police and fire protection. Even people who are opposed to taxation rationalize paying taxes that way.

But STAR bonds turn tax policy over to the private sector for personal benefit. The money is collected under the pretense of government authority, but it is collected for the exclusive benefit of the owners of property in the STAR bonds district.

Citizens should be asking this: Why do we need taxation, if we excuse some from participating in the system?

Another question: In the words of the Kansas Department of Commerce, the STAR bonds program offers “municipalities the opportunity to issue bonds to finance the development of major commercial, entertainment and tourism areas and use the sales tax revenue generated by the development to pay off the bonds.” This description, while generally true, is not accurate. The northeast Wichita STAR bonds district includes much area beyond the borders of the proposed development, including a Super Target store, a new Cabela’s store, and much vacant ground that will probably be developed as retail. The increment in sales taxes from these stores — present and future — goes to the STAR bond developer. As we’ve seen, since the Cabela’s store did not exist during the time the base level of sales was determined, all of its sales count towards the increment.

STAR bonds versus capitalism
In economic impact and effect, the STAR bonds program is a government spending program. Except: Like many spending programs implemented through the tax system, legislative appropriations are not required. No one has to vote to spend on a specific project. Can you imagine the legislature voting to grant $5 million per year to a proposed development in northeast Wichita? That doesn’t seem likely. Few members would want to withstand the scrutiny of having voted in favor of such blatant cronyism.

But under tax expenditure programs like STAR bonds, that’s exactly what happens — except for the legislative voting part, and the accountability that (sometimes) follows.

Government spending programs like STAR bonds are sold to legislators and city council members as jobs programs. Development and jobs, it is said, will not appear unless project developers receive incentives through these spending programs. Since no politician wants to be seen voting against jobs, many are susceptible to the seductive promise of jobs.

But often these same legislators are in favor of tax cuts to create jobs. This is the case in the Kansas House, where most Republican members voted to reducing the state’s income tax as a way of creating economic growth and jobs. On this issue, these members are correct.

But many of the same members voted in favor of tax expenditure programs like the STAR bonds program. These two positions cannot be reconciled. If government taxing and spending is bad, it is especially bad when part of tax expenditure programs like STAR bonds. And there’s plenty of evidence that government spending and taxation is a drag on the economy.

It’s not just legislators that are holding these incongruous views. Secretary of Commerce Pat George promoted the STAR bonds program to legislators. Governor Sam Brownback supported the program.

When Brownback and a new, purportedly more conservative Kansas House took office, I wondered whether Kansas would pursue a business-friendly or capitalism-friendly path: “Plans for the Kansas Republican Party to make Kansas government more friendly to business run the risk of creating false, or crony capitalism instead of an environment of genuine growth opportunity for all business.” I quoted John Stossel:

The word “capitalism” is used in two contradictory ways. Sometimes it’s used to mean the free market, or laissez faire. Other times it’s used to mean today’s government-guided economy. Logically, “capitalism” can’t be both things. Either markets are free or government controls them. We can’t have it both ways.

The truth is that we don’t have a free market — government regulation and management are pervasive — so it’s misleading to say that “capitalism” caused today’s problems. The free market is innocent.

But it’s fair to say that crony capitalism created the economic mess.

But wait, you may say: Isn’t business and free-market capitalism the same thing? Not at all. Here’s what Milton Friedman had to say: “There’s a widespread belief and common conception that somehow or other business and economics are the same, that those people who are in favor of a free market are also in favor of everything that big business does. And those of us who have defended a free market have, over a long period of time, become accustomed to being called apologists for big business. But nothing could be farther from the truth. There’s a real distinction between being in favor of free markets and being in favor of whatever business does.” (emphasis added.)

Friedman also knew very well of the discipline of free markets and how business will try to avoid it: “The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.”

The danger of Kansas government having a friendly relationship with Kansas business is that the state will circumvent free markets and promote crony, or false, capitalism in Kansas. It’s something that we need to be on the watch for. The existence of the STAR bonds program lets us know that a majority of Kansas legislators — including many purported fiscal conservatives — prefer crony capitalism over free enterprise and genuine capitalism.

The problem

Government bureaucrats and politicians promote programs like STAR bonds as targeted investment in our economic future. They believe that they have the ability to select which companies are worthy of public investment, and which are not. It’s a form of centralized planning by the state that shapes the future direction of the Kansas economy.

Arnold King has written about the ability of government experts to decide what investments should be made with public funds. There’s a problem with knowledge and power:

As Hayek pointed out, knowledge that is important in the economy is dispersed. Consumers understand their own wants and business managers understand their technological opportunities and constraints to a greater degree than they can articulate and to a far greater degree than experts can understand and absorb.

When knowledge is dispersed but power is concentrated, I call this the knowledge-power discrepancy. Such discrepancies can arise in large firms, where CEOs can fail to appreciate the significance of what is known by some of their subordinates. … With government experts, the knowledge-power discrepancy is particularly acute.

Despite this knowledge problem, Kansas legislators are willing to give power to bureaucrats in the Department of Commerce and politicians on city councils who feel they have the necessary knowledge to direct the investment of public funds. One thing is for sure: the state and its bureaucrats and politicians have the power to make these investments. They just don’t have — they can’t have — the knowledge as to whether these are wise.

What to do
The STAR bonds program is an “active investor” approach to economic development. Its government spending on business leads to taxes that others have to pay. That has a harmful effect on other business, both existing and those that wish to form.

Professor Art Hall of the Center for Applied Economics at the Kansas University School of Business is critical of this approach to economic development. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”

In the same paper, Hall writes this regarding “benchmarking” — the bidding wars for large employers that Kansas and many of its cities employ: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

In making his argument, Hall cites research on the futility of chasing large employers as an economic development strategy: “Large-employer businesses have no measurable net economic effect on local economies when properly measured. To quote from the most comprehensive study: ‘The primary finding is that the location of a large firm has no measurable net economic effect on local economies when the entire dynamic of location effects is taken into account. Thus, the siting of large firms that are the target of aggressive recruitment efforts fails to create positive private sector gains and likely does not generate significant public revenue gains either.'”

There is also substantial research that is it young firms — distinguished from small business in general — that are the engine of economic growth for the future. We can’t detect which of the young firms will blossom into major success — or even small-scale successes. The only way to nurture them is through economic policies that all companies can benefit from. Reducing tax rates is an example of such a policy. Government spending on specific companies through programs like STAR bonds is an example of precisely the wrong policy.

We need to move away from economic development based on this active investor approach. We need to advocate for policies at all levels of government that lead to sustainable economic development. We need political leaders who have the wisdom to realize this, and the courage to act appropriately. Which is to say, to not act in most circumstances.

Kansas Democratic Party income tax reckoning

A story told to generate sympathy for working mothers at the expense of Kansas Governor Sam Brownback is based on arithmetic that is not plausible.

In the response to the State of the State Address, Senator Anthony Hensley told a tale of woe.

He said, according to the printed remarks “Take for example the single mother who works full time and lives within her means, but still struggles to provide for her family.”

That’s someone we can empathize with. And, someone who is a key Democratic Party constituent. Here’s the burden she faced under Brownback’s tax plan, according to Hensley:

“She paid $4,000 more in income taxes due to the Governor’s plan,”

When I heard him say that on television, I thought surely he had misread or misspoke. $4,000 in state income taxes is a lot of taxes. You have to have a pretty good income to have to pay $4,000 in Kansas state income taxes, much less to pay $4,000 more, as Hensely said. But $4,000 is in the prepared remarks as made available by the Kansas Democratic Party. You’d have to think that someone proofread and checked the senator’s arithmetic, wouldn’t you?

Here’s the arithmetic. According to the Kansas income tax tables for 2013, in order to owe $4,000 in tax, a person filing as single or head of household would have to have “Kansas taxable income” of $87,451. That number is after subtracting $2,250 for each exemption. Let’s say there are three exemptions, allowing for the mother and two children. That means that the person’s “Federal adjusted gross income” would be $94,201. When computing this figure, there are some “above the line” deductions from total income on the federal form 1040, but the most common deductions are after this.

So we can be quite sure that Hensley’s “single mother who works full time and lives within her means, but still struggles,” and who owes $4,000 in Kansas income tax, earns at least $94,201. In all likelihood she earned much more than that, because Hensley said she paid “$4,000 more” this year. If this fictional person saw her Kansas income tax bill rise to $6,000 from $2,000 — that’s an increase of $4,000 that Hensely used — her income would need to be $128,265. That’s before we increase it even more to account for deductions.

Of note, a justice on the Kansas Supreme Court earns $135,905. The U.S. Census Bureau has a statistic named “Median household income, 2009-2013.” For Kansas, the value is $51,332.

I’m not an income tax expert. I could be off by a little. But I’m pretty sure Anthony Hensley and the Kansas Democrats are way wrong on this.