Tag Archives: Taxation

Wichita City Budget Cover, 2001 b

Commercial property taxes in Wichita are high

An ongoing study reveals that generally, property taxes on commercial and industrial property in Wichita are high. In particular, taxes on commercial property in Wichita are among the highest in the nation.

The study is produced by Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence. It’s titled “50 State Property Tax Comparison Study, March 2014″ and may be read here. It uses a variety of residential, apartment, commercial, and industrial property scenarios to analyze the nature of property taxation across the country. I’ve gathered data from selected tables for Wichita. A pdf version of the table is available here.

A pdf version of this table is available.
A pdf version of this table is available; click here.
In Kansas, residential property is assessed at 11.5 percent of its appraised value. (Appraised value is the market value as determined by the assessor. Assessed value is multiplied by the mill levy rates of taxing jurisdictions in order to compute tax.) Commercial property is assessed at 25 percent of appraised value, and public utility property at 33 percent.

This means that commercial property pays 25 / 11.5 or 2.18 times the property tax rate as residential property. (The study reports a value of 2.263 for Wichita. The difference is likely due to the inclusion on utility property in their calculation.) The U.S. average is 1.716.

Whether higher assessment ratios on commercial property as compared to residential property is good public policy is a subject for debate. But because Wichita’s ratio is high, it leads to high property taxes on commercial property.

For residential property taxes, Wichita ranks below the national average. For a property valued at $150,000, the effective property tax rate in Wichita is 1.324 percent, while the national average is 1.508 percent. The results for a $300,000 property were similar.

Wichita commercial property tax rates compared to national average
Wichita commercial property tax rates compared to national average
Looking at commercial property, the study uses several scenarios with different total values and different values for fixtures. For example, for a $100,000 valued property with $20,000 fixtures (table 25), the study found that the national average for property tax is $2,591 or 2.159 percent of the property value. For Wichita the corresponding values are $3,588 or 2.990 percent, ranking ninth from the top. Wichita property taxes for this scenario are 38.5 percent higher than the national average.

In other scenarios, as the proportion of property value that is machinery and equipment increases, Wichita taxes are lower, compared to other states and cities. This is because Kansas no longer taxes this type of property.

WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: Results of and reflection on the Wichita sales tax election and campaign

In this episode of WichitaLiberty.TV: We’ll look at the results of the Wichita sales tax election and what might happen next. Then, we’ll evaluate the Wichita Eagle’s coverage during the campaign. Also, this election raised issues of the privacy of voter data. View below, or click here to view at YouTube. Episode 65, broadcast November 16, 2014.

Carl Brewer Wichita Mayor press conference 2014-11-05

Wichita Mayor Carl Brewer on citizen engagement

Wichita Mayor Carl Brewer and the city council are proud of their citizen engagement efforts. Should they be proud?

The day after the November 2014 election in which Wichita voters rejected a proposed city sales tax, Mayor Carl Brewer and most members of the Wichita City Council held a press conference to discuss the election. A theme of the mayor is that the city reached out to citizens, gathered feedback, and responded. Here are a few of his remarks:

As elected officials, it’s our duty and responsibility to listen to citizens each and every day. And certainly any and every thing that they have to say, whether we agree or disagree, is important to each and every one of us. Anytime they are able to provide us that, we should continue to try to reach out and try to find ways to be able to talk to them. …

We appreciate the engagement process of talking to citizens, finding out what’s important to them. Last night was part of that process. …

We will certainly be engaging them, the individuals in opposition. As you heard me say, the city of Wichita — the city council members — we represent everyone in the entire city. From that standpoint, everyone’s opinion is important to us. As you heard me say earlier, whether we agree or disagree, or just have a neutral position on whatever issue that may be, it is important to us, and we’re certainly willing to listen, and we certainly want their input.

So just how does Wichita city government rate in citizen involvement and engagement? As it turns out, there is a survey on this topic. Survey respondents were asked to rate “the job Wichita does at welcoming citizen involvement.” The results are shown in the nearby chart created from data in the most recent version of the Wichita Performance Measure Report. The numbers are the percent of respondents giving “excellent” or “good” as their response to the question.

Wichita citizen involvement, percent rating excellent or good 2012

The report says this performance is “much below” a benchmark set by the National Research Center National Citizen Survey. It also tells us that the city expects to re-survey citizens in 2014. For that year, the city has given itself the lofty target of 40 percent of citizens rating the job Wichita does at welcoming citizen involvement as excellent or good.

In the press conference Mayor Brewer also said “We did the Facebook and we did the Twitter.” Except, the city ignored many questions about the sales tax that were posted on its Facebook wall.

Here’s another example of how the mayor and council welcome citizen involvement. Wichita participates in a program designed to produce lower air fares at the Wichita airport. It probably works. But I’ve done research, and there is another effect. As can be seen in the nearby chart, the number of flights and the number of available seats is declining in Wichita. These measures are also declining on a national level, but they are declining faster in Wichita than for the nation. See also Wichita airport statistics: the visualization and Kansas Affordable Airfares program: Benefits and consequences.

wichita-airport-dashboard-2013-07-29About this time Sedgwick County Commissioner Karl Peterjohn had appointed me to serve on the Wichita Airport Advisory Board. That required city council approval. Only one council member vote to approve my appointment. In its reporting, the Wichita Eagle said: “Mayor Carl Brewer was clear after the meeting: The city wants a positive voice on the airport advisory board, which provides advice to the council on airport-related issues. ‘We want someone who will participate, someone who will contribute,’ Brewer said. ‘We want someone who will make Affordable Airfares better, who will make the airport better. You’ve seen what he does here,’ Brewer went on, referencing Weeks’ frequent appearances before the council to question its ethics and spending habits. ‘So the question becomes, ‘Why?'”

As far as I know, I am the only person who has done this research on the rapidly declining availability of flights and seats available in Wichita. You might think the city would be interested in information like this, and would welcome someone with the ability to produce such research on a citizen board. But that doesn’t matter. From this incident, we learn that the city does not welcome those who bring inconvenient facts to the table.

Then there’s this, as Carrie Rengers reported in the Wichita Eagle in October 2013:

“I don’t normally spend this much time having a conversation with you because I know it doesn’t do any good.”

— Wichita Mayor Carl Brewer to conservative blogger Bob Weeks as the two argued over cronyism during Tuesday’s City Council meeting

“I really wasn’t offended today … because the mayor’s been ruder to better people than me.”

— Weeks’ response when asked about the exchange after the meeting

At least Mayor Brewer didn’t threaten to sue me. As we’ve seen, if you ask the mayor to to live up to the policies he himself promotes, he may launch a rant that ends with you being threatened with a lawsuit.

So much for welcoming citizen engagement.

Wichita Mayor Carl Brewer should stand down on tax projects

By Mike Shatz.

Despite the stunning defeat of Wichita Mayor Carl Brewer’s proposed sales tax increase, and the fact that in April, Brewer’s term limit will expire, he and the City Council are determined to take action in financing the projects that the Wichita voters just shot down.

The sales tax increase was defeated by an overwhelming 62-38 percentage margin, signifying very low support for the Mayor’s plan, largely due to a severe lack of transparency in regards to economic development, and the fact that the four proposed projects (water, transit, street maintenance, and job incentives) were bundled together, forcing voters to either approve or deny the entire package.

Continue reading at Kansas Exposed.

Kansas County Property Taxes, Change in Collections, 1997 to 2013

Kansas property tax data, the interactive visualization

(Note: Based on feedback from readers, I’ve made a change in the way the change in tax collections is reported. Instead of showing 179 percent, I now show 79 percent. This expresses the value as a percentage change rather than a change in index value from 100. The meaning of the data is the same, but now it is expressed in a manner that is easier to understand and consistent with other figures in this visualization.)

Here is an interactive visualization that holds property tax data for Kansas counties from 1997 to 2013.

There are several charts, including line charts of trends and maps of data and changes in data. On the line charts, click on any single county or more to highlight. (Use Ctrl+click to add counties.)

Click here to open the visualization in a new window.

Data is from KansasOpenGov, a project of Kansas Policy Institute. Visualization created by myself using Tableau Public.

Kansas County Property Taxes, Change in Collections, 1997 to 2013
Kansas County Property Taxes, Change in Collections, 1997 to 2013
OLYMPUS DIGITAL CAMERA

In election coverage, The Wichita Eagle has fallen short

Citizens want to trust their hometown newspaper as a reliable source of information. The Wichita Eagle has not only fallen short of this goal, it seems to have abandoned it.

The Wichita Eagle last week published a fact-check article titled “Fact check: ‘No’ campaign ad on sales tax misleading.” As of today, the day before the election, I’ve not seen any similar article examining ads from the “Yes Wichita” group that campaigns for the sales tax. Also, there has been little or no material that examined the city’s claims and informational material in a critical manner.

Wichita Eagle Building, detail
Wichita Eagle Building, detail
Someone told me that I should be disappointed that such articles have not appeared. I suppose I am, a little. But that is balanced by the increasing awareness of Wichitans that the Wichita Eagle is simply not doing its job.

It’s one thing for the opinion page to be stocked solely with liberal columnists and cartoonists, considering the content that is locally produced. But newspapers like the Eagle tell us that the newsroom is separate from the opinion page. The opinion page has endorsed passage of the sales tax. As far as the newsroom goes, by printing an article fact-checking one side of an issue and failing to produce similar pieces for the other side — well, readers are free to draw their own conclusions about the reliability of the Wichita Eagle newsroom.

As a privately-owned publication, the Wichita Eagle is free to do whatever it wants. But when readers see obvious neglect of a newspaper’s duty to inform readers, readers are correct to be concerned about the credibility of our state’s largest newspaper.

Citizens want to trust their hometown newspaper as a reliable source of information. The Wichita Eagle has not only fallen short of this goal, it seems to have abandoned it.

Here are some topics and questions the Eagle could have examined in fact-checking articles on the “Yes Wichita” campaign and the City of Wichita’s informational and educational campaign.

The Wichita Eagle could start with itself and explain why it chose a photograph of an arterial street to illustrate a story on a sales tax that is dedicated solely for neighborhood streets. The caption under the photo read “Road construction, such as on East 13th Street between Oliver and I-135, would be part of the projects paid for by a city sales tax.”

Issues regarding “Yes Wichita”

The “Yes Wichita” campaign uses an image of bursting wooden water pipes to persuade voters. Does Wichita have any wooden water pipes? And isn’t the purpose of the sales tax to build one parallel pipeline, not replace old water pipes? See Fact-checking Yes Wichita: Water pipe(s).

The “Yes Wichita” campaign group claims that the sales tax will replace old rusty pipes that are dangerous. Is that true?

The City and “Yes Wichita” give voters two choices regarding a future water supply: Either vote for the sales tax, or the city will use debt to pay for ASR expansion and it will cost an additional $221 million. But the decision to use debt has not been made, has it? Wouldn’t the city council have to vote to issue those bonds? Is there any guarantee that the council will do that?

The “Yes Wichita” group says that one-third of the sales tax will be paid by visitors to Wichita. But the city’s documents cite the Kansas Department of Revenue which gives the number as 13.5 percent. Which is correct? This is a difference of 2.5 times in the estimate of Wichita sales tax paid by visitors. This is a material difference in something used to persuade voters.

The city’s informational material states “The City has not increased the mill levy rate for 21 years.” In 1994 the Wichita mill levy rate was 31.290, and in 2013 it was 32.509. That’s an increase of 1.219 mills, or 3.9 percent. The Wichita City Council did not take explicit action, such as passing an ordinance, to raise this rate. Instead, the rate is set by the county based on the city’s budgeted spending and the assessed value of taxable property subject to taxation by the city. While the city doesn’t have control over the assessed value of property, it does have control over the amount it decides to spend. Whatever the cause, the mill levy has risen. See Fact-checking Yes Wichita: Tax rates.

“Yes Wichita” says there is a plan for the economic development portion of the sales tax. If the plan for economic development is definite, why did the city decide to participate in the development of another economic development plan just last month? What if that plan recommends something different than what the city has been telling voters? And if the plan is unlikely to recommend anything different, why do we need it?

Citizens have asked to know more about the types of spending records the city will provide. Will the city commit to providing checkbook register-level spending data? Or will the city set up separate agencies to hide the spending of taxpayer funds like it has with the Wichita Downtown Development Corporation, Go Wichita Convention and Visitors Bureau, and Greater Wichita Economic Development Corporation?

Issues regarding the City of Wichita

Mayor Carl Brewer said the city spent $47,000 of taxpayer funds to send a letter and brochure to voters because he was concerned about misinformation. In light of some of the claims made by the “Yes Wichita” group, does the city have plans to inform voters of that misinformation?

Hasn’t the city really been campaigning in favor of the sales tax? Has the city manager been speaking to groups to give them reasons to vote against the tax? Does the city’s website provide any information that would give voters any reason to consider voting other than yes?

The “Yes Wichita” group refers voters to the city’s website and information to learn about the sales tax issue. Since the “Yes Wichita” group campaigns for the sales tax, it doesn’t seem likely it would refer voters to information that would be negative, or even neutral, towards the tax. Is this evidence that the city is, in fact, campaigning for the sales tax?

The “Yes Wichita” group says that one-third of the sales tax will be paid by visitors to Wichita. But the city’s documents cite the Kansas Department of Revenue which gives the number as 13.5%. Which is correct? This is a difference of 2.5 times in the estimate of Wichita sales tax paid by visitors. This is a material difference in something used to persuade voters. If “Yes Wichita” is wrong, will the city send a mailer to correct the misinformation?

The city’s informational material states “The City has not increased the mill levy rate for 21 years.” But the city’s comprehensive annual financial reports show that in 1994 the Wichita mill levy rate was 31.290, and in 2013 it was 32.509. That’s an increase of 1.219 mills, or 3.9 percent. The Wichita City Council did not take explicit action, such as passing an ordinance, to raise this rate. Instead, the rate is set by the county based on the city’s budgeted spending and the assessed value of taxable property subject to taxation by the city. While the city doesn’t have control over the assessed value of property, it does have control over the amount it decides to spend. Whatever the cause, the mill levy has risen. Is this misinformation that needs to be corrected?

The city says that the ASR project is a proven solution that will provide for Wichita’s water needs for a long time. Has the city told voters that the present ASR system had its expected production rate cut in half? Has the city presented to voters that the present ASR system is still in its commissioning phase, and that new things are still being learned about how the system operates?

The City and “Yes Wichita” give voters two choices regarding a future water supply: Either vote for the sales tax, or the city will use debt to pay for ASR expansion and it will cost an additional $221 million. But the decision to use debt has not been made, has it? Wouldn’t the city council have to vote to issue those bonds? Is the any guarantee that the council will do that?

If the plan for economic development is definite, why did the city decide to participate in the development of another economic development plan just last month? What if that plan recommends something different than what the city has been telling voters? And if the plan is unlikely to recommend anything different, why do we need it?

Citizens have asked to know more about the types of spending records the city will provide. Will the city commit to providing checkbook register-level spending data? Or will the city set up separate agencies to hide the spending of taxpayer funds like it has with the Wichita Downtown Development Corporation, Go Wichita Convention and Visitors Bureau, and Greater Wichita Economic Development Corporation?

The “Yes Wichita” campaign uses an image of bursting wooden water pipes to persuade voters. Does Wichita have any wooden water pipes? And isn’t the purpose of the sales tax to build one parallel pipeline, not replace old water pipes? If this advertisement by “Yes Wichita” is misleading, will the city send an educational mailing to correct this?

The Yes Wichita campaign group claims that the sales tax will replace old rusty pipes that are dangerous. Is that true? If not, will the city do anything to correct this misinformation?

Campaign activity at the office of the Wichita Downtown Development Corporation.

Wichita Downtown Development Corporation campaigns for higher taxes, paid for by taxes

Campaign activity by the Wichita Downtown Development Corporation appears to be contrary to several opinions issued by Kansas Attorneys General regarding the use of public funds in elections.

While the Wichita Downtown Development Corporation presents itself as a non-profit organization that is independent of the City of Wichita, it receives 95 percent of its revenue from taxes, according to its most recent IRS Form 990. While Kansas has no statutes or court cases prohibiting the use of public funds for electioneering, there are at least two Kansas Attorney General opinions on this topic.

One, opinion 93-125, states in its synopsis: “The public purpose doctrine does not encompass the use of public funds to promote or advocate a governing body’s position on a matter which is before the electorate. However, public funds may be expended to educate and inform regarding issues to be voted upon by the electorate.”

Campaign activity at the office of the Wichita Downtown Development Corporation.
Campaign activity at the office of the Wichita Downtown Development Corporation.
The “governing body” in this instance is the Wichita City Council.

While some governing bodies spend taxpayer funds to present information about ballot measures, this is not the case with the Wichita Downtown Development Corporation. It explicitly campaigns in favor of the issue. It displays pro-sales tax campaign signs at its office. It publicly endorsed passage of the sales tax.

A more recent Kansas Attorney General opinion, 2001-13, holds this language: “While the Kansas appellate courts have not directly addressed the issue of whether public funds can be used to promote a position during an election, there are a number of cases from other jurisdictions that conclude that a public entity cannot do so.”

The opinion cites a court case: “Underlying this uniform judicial reluctance to sanction the use of public funds for election campaigns rests an implicit recognition that such expenditures raise potentially serious constitutional questions. A fundamental precept of this nation’s democratic electoral process is that the government may not ‘take sides’ in election contests or bestow an unfair advantage on one of several competing factions.”

The opinion reaffirms 93-125, stating: “In Attorney General Opinion No. 93-125, Attorney General Robert T. Stephan concluded that public funds may not be used to promote or advocate a city governing body’s position on a matter that is before the electorate.”

Given these Kansas Attorney General opinions, and considering good public policy, Wichita voters need to ask: Should an organization that is funded 95 percent by taxes be campaigning for a ballot issue?

"Yes Wichita" Facebook post. Click for larger version.

Fact-checking Yes Wichita: Water pipe(s)

The “Yes Wichita” campaign group makes a Facebook post with false information to Wichita voters. Will Wichita Mayor Carl Brewer send a mailer to Wichitans warning them of this misleading information?

"Yes Wichita" Facebook post. Click for larger version.
“Yes Wichita” Facebook post. Click for larger version.
Here’s a post from the “Yes Wichita” Facebook page. This group campaigns in favor of the one cent per dollar Wichita sales tax that is on the November ballot.

The claim made in this post is incorrect and misleading.

The sales tax plan regarding water calls for the augmentation of one pipe, as shown in this table from the city’s plan. The plan does not say, or imply, replacing pipes, as this advertisement indicates.

The plan also says that sales tax revenue “Builds an additional pipeline.” Not “Replace 60 year old water pipes” as promoted to voters by “Yes Wichita.” The plan builds an additional parallel pipeline.

Wichita Water Supply Plan Capital Costs
Wichita Water Supply Plan Capital Costs
Plus, the pipe that is the subject of the city’s water plan is 60 years old, but there is no indication that it needs replacement.

This isn’t the first time “Yes Wichita” has tried to mislead Wichita voters on the replacement of water pipes. See Misleading Wichita voters on water pipes.

Dave Trabert WichitaLiberty TV 2014-11-02

WichitaLiberty.TV: Dave Trabert of Kansas Policy Institute on the Kansas budget

In this episode of WichitaLiberty.TV: Dave Trabert of Kansas Policy Institute talks about KPI’s recent policy brief “A Five-Year Budget Plan for the State of Kansas: How to balance the budget and have healthy ending balances without tax increases or service reductions.” View below, or click here to view at YouTube. Episode 64, broadcast November 2, 2014.

The policy brief may be downloaded from KPI at A Five-Year Budget Plan for the State of Kansas: How to balance the budget and have healthy ending balances without tax increases or service reductions or alternatively from Scribd here (may work better on mobile devices). A press release from KPI announcing the policy brief is at 5 Year Budget Plan Outlines Path To Protect Essential Services and Tax Reform.

Wichita property tax mill levy 1994 to 2013 chart

Fact-checking Yes Wichita: Tax rates

At a forum on October 28, “Yes Wichita” co-chair Moji Fanimokun told the audience that “Property taxes haven’t been raised in over 21 years in Wichita.”

Wichita property tax mill levy 1994 to 2013This claim — that the mill levy has not been raised for a long time — is commonly made by the city and “Yes Wichita” supporters. It’s useful to take a look at actual numbers to see what has happened.

In 1994 the Wichita mill levy rate was 31.290, and in 2013 it was 32.509. That’s an increase of 1.219 mills, or 3.9 percent. The Wichita City Council did not take explicit action, such as passing an ordinance, to raise this rate. Instead, the rate is set by the county based on the city’s budgeted spending and the assessed value of taxable property subject to taxation by the city. While the city doesn’t have control over the assessed value of property, it does have control over the amount it decides to spend. Whatever the cause, the mill levy has risen, contrary to the claims of “Yes Wichita.”

Wichita property tax mill levy 1994 to 2013 chartApart from the focus on the mill levy, voters may want to know that the dollars of property tax the city collects has risen. This growth comes from new property being created (although old property disappears, too), and from increases in assessed value of existing property. From 1994 to 2011 property tax revenue increased from $58.672 to $119.745 million, or 104 percent. We didn’t experience anything near that rate of growth in the combination of population or inflation. It’s true that these values have slowed in growth or even declined in recent years. But that’s a symptom of the problem: When tax revenue increases, so to does spending, and we become accustomed to a certain level. When revenue increases don’t keep pace with history, government finds it difficult to make the necessary cuts.

While campaigning for higher sales tax, the Wichita Chamber president seeks an extension of his exemption from that tax

This is awkward.

The material below is from the agenda for the October 28, 2014 Wichita City Council meeting. It appeared on the consent agenda, which means it was handled in bulk with other items. The meeting minutes don’t show that there was any discussion on this item.

Without some background information, it may be difficult to interpret this material, so I’ll do it for you.

High Touch Technologies in downtown Wichita, with sign calling for higher sales tax.
High Touch Technologies in downtown Wichita, with sign calling for higher sales tax.
There is a company in Wichita named High Touch Technologies. Last year it asked the city council for relief from paying property taxes and sales taxes to help pay for the renovation of its headquarters building. Now it has asked for an extension of this tax relief period.

Shortly after receiving the tax exemptions the company CEO — a man named Wayne Chambers — became chair of the Wichita Metro Chamber of Commerce.

This year the Wichita Metro Chamber of Commerce is campaigning for a higher sales tax in Wichita.

Did you know that Kansas is one of only 14 states that apply sales tax to groceries? And that only Mississippi has a higher statewide sales tax rate on groceries than does Kansas?

I told you this is awkward.

Here’s an excerpt from the relevant city document.

On November 19, 2013 the City Council approved a one-year Letter of Intent for the issuance of Industrial Revenue Bonds (“IRBs”) in an amount not to exceed $2,000,000 for the purpose of financing the cost of acquiring and remodeling a 106,000 square foot office building located at 110 S. Main in downtown Wichita, for use as a corporate headquarters for High Touch. One Twenty South Main, LLC is the real estate holding entity that acquired the building and will sublease space to High Touch. One Twenty South Main, LLC originally intended to finance the acquisition and renovation with one bond issue. It is now planning on two bonds issues, one in late 2014 and one in late 2015. The first bond issue will finance the acquisition of the building and repairs to the elevators. The second will finance the cost of tenant improvements to occur in 2015. No additional bonding capacity is being requested. The current Letter of Intent and sales tax exemption expire November 19, 2014. One Twenty South Main, LLC is requesting an extension of the Letter of Intent and the sales tax exemption through December 31, 2015 to accommodate all work contemplated as part of this project.

Wichita proposed sales tax explanation on water

Wichita Mayor Carl Brewer is concerned about misinformation

Wichita Mayor Carl Brewer is concerned about misinformation being spread regarding the proposed Wichita sales tax.

In November Wichita voters will decide whether to create a sales tax of one cent per dollar. The largest intended purpose of the funds is to create a new water supply. Set aside for a moment the question whether Wichita needs a new water source. Set aside the question of whether ASR is the best way to provide a new water source. What’s left is how to pay for it.

In its informational material, the city presents two choices for paying for a new water supply: Either (a) raise funds through the sales tax, or (b) borrow funds that Wichitans will pay back on their water bills, along with a pile of interest.

Wichita proposed sales tax explanation on water

As you can see in the nearby material prepared by the city, the costs are either $250 million (sales tax) or $471 million (borrow and pay interest). The preference of the city is evident: Sales tax. The “Yes Wichita ” group agrees.

Are there other alternatives to these two choices? Could we raise the funds through water bills over the same five-year period as the proposed sales tax? Would this let commercial and industrial water users participate in the costs of a new water supply?

Last week I posed this question at a Wichita water town hall meeting. Wichita Director of Public Works Alan King responded yes, this is possible, adding “I think you’re right. I think that there’s more than one alternative to funding.” A video excerpt of this meeting is available here.

The response of the city’s public works director contradicts the possibilities the city presents to voters. Is this an example of the type of misinformation the mayor wants to clear up?

Last week Mayor Carl Brewer told the Wichita Eagle “We decided to do a mailer because there was a lot of misinformation that was going out where people didn’t quite understand what was going on. By doing the mailer, we’re able to educate everyone.”

The city spent $47,000 sending the mailer. But as we see, it has only contributed to the misinformation.

The city’s threat to voters

Here’s what is happening. City hall gives us two choices. It’s either (a) do what we want (sales tax), or (b) we’ll do something that’s really bad (borrow and pay interest). Wichita voters shouldn’t settle for this array of choices.

Let me emphasize that. The city’s informational material says if voters don’t pass the sales tax, the city will do something unwise. But the city did that very same bad thing to pay for the current ASR project, that is, borrow money and pay interest. But now the city says pass the sales tax or we will do something bad to you. Pass the sales tax or the city will issue long-term debt and you will pay a lot of interest.

Pass the sales tax, or we will do again what we did to pay for the current ASR project. And that would be bad for you and the city.

Are there other alternatives for raising $250 million for a new water source (assuming it is actually needed)? Of course there are. The best way would be to raise water bills by $250 million over five years. In this way, water users pay for the new water supply, and we avoid the long-term debt that city council members and “Yes Wichita” seem determined to avoid.

Water bills would have to rise by quite a bit in order to raise $250 million over five years. The city could decide to raise rates by different amounts for different classes of water users. The city could adjust its tiered residential rate structure to be more in line with the average of other large cities. (See Wichita water rates seen as not encouraging conservation.) But the total cost of the higher water bills would be exactly the same as the cost of the sales tax: $250 million.

It’s important to have water users pay for a new water supply. The benefit is that water users will become acutely aware of the costs of a new water supply. That awareness is difficult to achieve. Many citizens are surprised to learn that the city has spent $247 million over the past decade on a water project, the ASR program. Almost all of that was paid for with long-term debt, the same debt that the city now says is bad.

Paying for a new water supply through water bills would let commercial and industrial users participate in paying the cost of the project. These water users usually don’t pay a lot of sales tax. A restaurant, for example, does not pay sales tax on the food ingredients it purchases. An aircraft manufacturer does not pay sales tax on the raw materials and component parts it buys. But these companies do have a water bill. Yet, the city recommends that low income households pay more sales tax on their groceries. The city says this is the best way to pay for a new water supply to protect our lawns and golf courses during a drought.

Yes Wichita logo

‘Yes Wichita’ co-chairs serve up contradicting plans for sales tax revenue

At two forums on the proposed Wichita sales tax, leaders of the “Yes Wichita” group provided contradicting visions for plans for economic development spending, and for its oversight.

On Tuesday the League of Women Voters — Wichita Metro sponsored a forum on the proposed one cent per dollar sales tax that appears on the November ballot. I appeared on behalf of the Coalition for a Better Wichita, a group that opposed the proposed sales tax. At the forum, a member of the audience wondered about whether proceeds of the sales tax would be given to Wichita State University. Speaking on behalf of “Yes Wichita,” one of its co-chairs Harvey Sorensen replied “there’s been no ask from Wichita State, there’s been no commitment to Wichita State.” When the questioner pushed back, Sorensen named several infrastructure needs of the WSU innovation campus that might be funded by sales tax revenue. Later, he said “there really have been no commitments” and challenged the questioner to “read me the data.” (For audio of this forum, click here.)

The next day television station KCTU sponsored a debate in which I also participated. Michael Monteferrante represented “Yes Wichita.” He is a co-chair of that campaign. In response to a question, he said of the $80 million of sales tax dollars earmarked for economic development and jobs, “32 million dollars of it will be going to Wichita State University to work on fantastic training for our workforce. Another 32 million will go to just training some of the workforce in terms of our elimination of aerospace jobs. And just 16 million of the 80 million dollars will be going to retention and jobs and areas that will require the oversight that Mr. Weeks is talking about.” (For audio of this event, click here.)

These two co-chairs of the “Yes Wichita” campaign offered contradictory answer to questions about the plans for the economic development aspect of the proposed sales tax. Coupled with Wichita’s hiring two weeks ago of a firm to form an economic development plan for Wichita, citizens are rightly concerned to doubt that the city has a plan for the sales tax.

As far as the promised oversight, citizens might also be alarmed to learn of Monteferrante’s statement that only $16 million of the spending requires oversight.

Wichita proposed sales tax ballot language example

Another Wichita sales tax forum

On Wednesday October 29 KCTU Television held a televised debate on the issue of the proposed one cent per dollar Wichita sales tax. Michael Monteferrante represented “Yes Wichita.” He is a co-chair of that campaign. I represented Coalition for a Better Wichita, substituting for Jennifer Baysinger, who was not able to attend. R.J. Dickens was the moderator.

This is the audio portion of the broadcast. It is about one hour in length. It represents the complete program.

Wichita proposed sales tax background example

Wichita sales tax forum

Voice for Liberty Radio 150x150On Tuesday October 28 the League of Women Voters — Wichita Metro held a lunchtime forum on the issue of the proposed one cent per dollar Wichita sales tax. Harvey Sorensen and Moji Fanimokun represented “Yes Wichita.” Both are co-chairs of that campaign. I represented Coalition for a Better Wichita, substituting for Jennifer Baysinger, who was not able to attend. Paul Babich was the moderator.

The audio presentation is about 53 minutes long. It represents the complete forum.

In Wichita, the public deserves and should demand answers

Following, from Kansas Senator Michael O’Donnell, a discussion of issues surrounding the proposed Wichita one cent per dollar sales tax. O’Donnell served on the Wichita City Council for nearly two years before resigning to serve in the senate.

Kansas Senator Michael O'Donnell
Kansas Senator Michael O’Donnell
We are less than one week from an incredibly important election cycle where those of us in Wichita will vote for our future in a 4, 5 or 6 year timeframe; Governor for 4, Sales tax for 5 and Senator for 6. Before we go to the polls, the Wichita City Council needs to level with the public and answer critical questions, if not, they continue the “politics-as-usual” game that has been exhaustingly prevalent during the all-too-disappointing Brewer administration. Is City Hall hoping to “run out the clock,” praying the public will become so disengaged with the election that somehow Wichitans will think the city has been straight-forward? Maybe I am being too critical, but it’s hard not to be critical when I experienced the “you can’t fight City Hall” realities directly. I saw first-hand how City Hall can be a barrier to quality of life instead of helping to enable it. Here are a list of 5 questions — one for each year of the tax — we need to have answered (and should have had answered long ago):

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ASR website as it appeared in January 2012. Click for larger version.

Wichita wants to expand water project, but abandons its website

As the City of Wichita recommends voters spend $250 million on the expansion of a water project, the project’s accompanying website was abandoned, and has now disappeared.

ASR website as it appeared in January 2012. Click for larger version.
ASR website as it appeared in January 2012. Click for larger version.
The Aquifer Storage and Recovery (ASR) project is a Wichita water utility system. So far its cost has been $247 million. As part of the proposed Wichita one cent per dollar sales tax, another $250 million is earmarked to be spent on its expansion.

To help Wichitans learn about the ASR system, the city built a website at wichitawaterproject.org. Nearby is how the front page of that website appeared in January 2012. As you can see, it’s an attractive design. It holds much information about how ASR works and why the city says we need it.

ASR website as it appears today. Click for larger version.
ASR website as it appears today. Click for larger version.
Here’s how the same website looks today. Around the middle of October the website went “dark.” Prior to this shutdown, it appears that the last time the website was significantly updated was December 2011.

What has happened since January 2012 and now? First, a major city investment was completed. That’s Phase II of the ASR project. The ASR website says Phase II is expected to cost $220 million. But the ASR website was not updated to track the progress of Phase II during its completion and commissioning stages.

The second thing that’s happened since the ASR website was abandoned is that the city has decided that expansion of the ASR system is the best way to provide for future Wichita water supply. In November voters will decide whether a one cent per dollar sales tax will be implemented, with 63 percent of the funds used to pay for ASR expansion.

So the ASR system is important. If the city proceeds with its plan, about one-half billion dollars will have been spent on the project, plus an unknown amount of financing charges from the city’s decision to pay for the current system with long-term debt. ($500 million is about $1,300 for each Wichita resident.)

Here’s an indication of the city’s priorities. The city’s communication staff has time to produce videos about something called “Ghoulish Gala.” (It’s a fundraising event for Botanica.) The city has the time and capability to produce and post news releases on items like a Beatles tribute concert coming to Century II.

But what about something really important, like the spending of half a billion dollars on a water project? That website has been abandoned.

City Government Relations Director Dale Goter explained to me that a staff person had been updating the ASR website, but that person is no longer available.

The handling of the ASR website represents a management failure. The ASR website was attractive. It had a lot of functionality. Sites like that are somewhat complex and may require people with experience and training for their creation and updating.

But citizens need basic information about their government. Websites that are simple and functional are easy to build, maintain, and update. There are systems like wordpress.com where websites can be hosted at no charge. It takes about five minutes to take a press release or budget document and post it on a WordPress site.

But that’s not what the city decided to do. It went with a fancy design instead of a simple and functional design that could be maintained and updated by city communications or public works staff. Now, that website has disappeared, right at the time the ASR system is in the center of the news.

I wonder: Was the ASR website really needed, if the city did not care that it was abandoned?

Proposed Wichita sales tax won’t satisfy needs, appetites

The proposed Wichita sales tax does little to address the city’s delinquent infrastructure maintenance gap. Despite this, there are rumors of another sales tax next year for quality of life items.

Earlier this year the steering committee for the Wichita/Sedgwick County Community Investments Plan delivered a report to the Wichita City Council. The report contains facts that are relevant to the proposed Wichita one cent per dollar sales tax. Voters will decide on this in November.

Community Investments Plan document, February 2014
Community Investments Plan document, February 2014. Click for larger version.
The most important thing Wichita voters need to know that the city is delinquent in maintaining the assets that taxpayers have purchased. The cost to remedy this lack of maintenance is substantial. On an annual basis, Wichita needs to spend $180 million on infrastructure depreciation/replacement costs. Currently the city spends $78 million on this, the presentation indicates.

The “cost to bring existing deficient infrastructure up to standards” is given as an additional $45 to $55 million per year.

How does this relate to the proposed sales tax? Of the funds the sales tax is projected to raise over five years, $27.8 million is allocated for street maintenance and repairs. That’s $5.6 million per year.

Wichita/Sedgwick County Community Investment PlanSubtract that from what the Community Investments Plan says we need to spend on deficient infrastructure, and we’re left with (roughly) $40 to $50 million per year in additional spending on deficient infrastructure. Remember, that’s on top of ongoing infrastructure depreciation/replacement costs.

Does the proposed sales tax do anything to address those needs? Possibly. Part of the sales tax would be used to augment the large water pipeline from the Equus Beds. That pipeline is 60 years old, but there is no indication that it needs replacement. But other than that, the proposed sales tax does not address deficient maintenance.

What will the city do about this deficiency? Is it likely that Wichitans will be asked to provide additional tax revenue to address the city’s deficient infrastructure? So far, city hall hasn’t asked for that, except for recommending that Wichita voters approve $5.6 million per year for streets from a sales tax.

But if we believe the numbers in the Community Investments Plan, we should be prepared for city hall to ask for much more tax revenue. That is, if the city is to adequately maintain the things that taxpayers have paid to provide.

Besides this maintenance backlog, there are other calls for new city spending.

Wichita has unmet maintenance requirements, and many wants on top of that.
Wichita has unmet maintenance requirements, and many wants on top of that.
Earlier this year the city council considered various proposals for spending a new source of tax money. Four survived the discussion and will be the recipient of sales tax funds, if Wichita voters approve. Those needs are a new water supply, jobs and economic development, transit, and street maintenance and repair.

There were proposals that did not make the, generally in the category of “quality of life” facilities. These include a new convention center, new performing arts center, new central library, newly renovated Lawrence-Dumont Stadium, renovation of the Dunbar Theater, renovation of O.J. Watson Park, and help for the homeless.

Evidently there are many who are not happy that these proposals will not receive sales tax money. Rumors afloat that groups — including city officials — are plotting for another sales tax increase to fund these items.

People are rightly concerned that even though the proposed Wichita sales tax ordinance specifies an end to the tax in five years, these taxes have a way of continuing. The State of Kansas recently had a temporary sales tax. It went away, but only partly. The Kansas state sales tax rate we pay today is higher than it was before the start of the “temporary” sales tax.

But the people who want to spend your tax dollars on these “quality of life” items aren’t content to wait five years for the proposed sales tax to end before asking for their share of sales tax revenue. They are plotting to have it start perhaps one year from now.

These are things that Wichita voters need to consider: There is a backlog of maintenance, and there is appetite for more tax revenue so there may be more government spending. Even if the sales tax passes, these remain unfulfilled.

To pay for a new Wichita water supply, are there other choices?

To pay for a new Wichita water supply, the city gives voters two choices. Either (a) vote for a sales tax, or (b) the city will issue long-term debt and the city will have to pay an additional $221 million in interest expense.

Are there alternatives, such as raising the funds through water bills over the same five-year period as the proposed sales tax? Would this let commercial and industrial water users participate in the costs of a new water supply?

In this excerpt from a water town hall meeting, Wichita Director of Public Works Alan King responds. View below, or click here to view at YouTube.

What is the purpose of a new Wichita water supply?

What is Wichita gaining with a new water supply? Is a new supply needed for basic uses such as household, commercial, and industrial? At a town hall meeting on water issues, Wichita Director of Public Works Alan King explains.

The expansion of the Aquifer Storage and Recovery project, or ASR, is the largest planned use of the proposed one cent per dollar Wichita sales tax.

Of note, the proposed water supply provides protection for what is called a one percent drought. There is debate as to whether the city should prepare for a two percent drought instead.

View a video excerpt of the meeting below, or click here to view at YouTube.

Has the Wichita ASR system proven its worth in production?

Last week the City of Wichita held a town hall meeting on water issues. The issue is ripe because the city has placed a one cent per dollar sales tax on the November ballot. The largest share of the revenue, 63 percent, is earmarked for expansion of the Aquifer Storage and Recovery project, or ASR.

I appeared at the meeting and expressed my concerns regarding things I had recently learned, which is that we’ve cut expectations for ASR production in half. Also, ASR is still in commissioning stage.

Alan King, Director of Public Works for the City of Wichita, said the individual components of the ASR systems have been tested, and that the tests have been successful. He confirmed that the original estimates of production were too high.

We also learned that there have been days where there was sufficient water in the Little Arkansas River to draw from it, but that sometimes the levels of bromide or atrazine have been too high, and the water could not be used.

View a video excerpt of the meeting below, or click here to view at YouTube.

"Yes Wichita" television advertisement.

Examining claims in favor of the proposed Wichita sales tax

In an advertisement in the Wichita Eagle and in a mailer sent to Wichita voters, the “Yes Wichita” group makes a series of statements regarding plans for a new water supply. It’s important that Wichita voters be aware of the complete facts and context of these claims so that they make an informed decision on how to vote.

The city has proposed a one cent per dollar sales tax. The largest portion — 63 percent or $250 million — is earmarked for a new water supply. Voters will see this question on the ballots for the November 4, 2014 election.

Advertisement from "Yes Wichita."
Advertisement from “Yes Wichita.” Click for larger version.
Here’s what the “Yes Wichita” group has stated under the heading “The Plan For Affordable Long-term Water Supply” along with what voters also need to know.

Save taxpayers $221 million over 20 years in costs. This statement is true only if the Wichita city council decides to pay for ASR expansion by using long-term debt. That decision has not been made. Besides that, there are other ways to raise this money. And if using debt for water projects is bad, why did the city borrow over $200 million for the current ASR project, and hundreds of millions for other water projects? See By threatening an unwise alternative, Wichita campaigns for the sales tax.

Wichita Water Supply Plan Capital Costs
Wichita Water Supply Plan Capital Costs
Replace 60 year old aging pipelines so water is transported safely. The sales tax plan for water calls for the augmentation of one pipe, as shown in the city’s plan. Not replacing pipes plural, as this advertisement indicates. Plus, the pipe that is the subject of the city’s water plan is 60 years old, but there is no indication that it needs replacement.

Tourists, visitors and renters help pay for our water. This is true. It is also true that if funds were raised through higher water bills, these people would also pay. Also, city documents regarding the sales tax state: “The State of Kansas estimates that 13% of sales taxes paid in the Wichita area are paid by non-residents based on a report at www.ksrevenue.org/pullfactor.html.” But at the “Yes Wichita” website, there is a different claim: “If we fund a new water source through a sales tax instead of water bills or property taxes, visitors and tourists will pay the sales tax, reducing the burden of this cost to Wichitans by about one-third.” Which is it? 13 percent, or 33 percent? Will “Yes Wichita” show us their figures or provide a reference for the basis of this claim?

Prevent future high water rate increases. This is true. If we experience a prolonged drought, water rates would have to rise to cover the fixed costs of the water utility. That is, if we have such a drought. That may not happen, or it may not happen for many years.

Fund ASR improvements which would provide new wells and a water storage site. This is true. What’s left is to decide whether making these additional investments in the ASR project is wise. We’ve learned that the expectations of ASR have been cut in half. We’ve learned that the ASR project is still in its commissioning phase, and it has not been turned loose for actual production for any significant period. I do not believe we have enough knowledge and experience to judge the success or failure of ASR. See Should Wichita expand a water system that is still in commissioning stage?

Downtown Wichita campaigns for higher taxes on groceries and no taxes on downtown

This is the Wichita Downtown Development Corporation. It routinely advocates for special deals whereby downtown developers don’t have to pay property taxes or sales taxes. Or if they do pay property taxes, they might be routed back to them for their exclusive benefit. But as you can see, WDDC campaigns for low-income households to pay more sales tax on groceries.

Say, did you know that WDDC is funded almost entirely with tax money? And that it wants to spend that money in secret?

Wichita Downtown Development Corporation 10-26-2014

Wichita Chamber campaigns for higher taxes on those least able to pay

This is the Wichita Metro Chamber of Commerce. It routinely advocates for special deals whereby businesses don’t have to pay taxes. Sometimes it arranges cash grants and tax credits for companies. But as you can see by the Yes Wichita sign in the window, the Wichita Chamber campaigns for low-income households to pay more sales tax on groceries.

Wichita Metro Chamber of Commerce 10-26-2014 16'36'26

Misleading Wichita voters on water pipes

"Yes Wichita" television advertisement.
“Yes Wichita” television advertisement.
Here’s a still image from a “Yes Wichita” television advertisement. This group campaigns in favor of the one cent per dollar Wichita sales tax that is on the November ballot.

This image misleads voters in two ways, one which is significant.

First, Wichita doesn’t have wooden water pipes, as shown in this advertisement.

Wichita Water Supply Plan Capital Costs
Wichita Water Supply Plan Capital Costs
Second, the sales tax plan calls for the augmentation of one pipe, as shown in the city’s plan. Not replacing pipes plural, as this advertisement indicates.

Plus, the pipe that is the subject of the city’s water plan is 60 years old, but there is no indication that it needs replacement.

Selective editing?

Here’s a snippet from a recent “Yes Wichita” advertisement and mailer. This group campaigns in favor of the one cent per dollar Wichita sales tax that is on the November ballot.

Yes Wichita advertisement Wichita Eagle 2014-10-26 excerpt 1

Following is the entire quote from the Wichita Eagle story. I’ve used bold type for the parts that the advertisement used. Everything else was discarded. Do you think it is misleading to leave out the part about how a significant portion of the rate increase will happen regardless of the sales tax vote?

Without the sales tax, water rates would have to increase 32 percent over the next four years to pay for expansion at the city’s Aquifer Storage and Recovery (ASR) facility northwest of Wichita. That would set the rates high enough so the city could start making bond payments in 2018, Public Works and Utilities Director Alan King said.

That increase would be on top of projected water rate increases totaling nearly 20 percent over the next four years to meet regular maintenance needs of the existing infrastructure.

So the total rate increase for the water base charge would be nearly 52 percent by 2018.”

Envelope of sales tax mailer sent by Wichita Mayor Carl Brewer to Bel Aire resident. Click for larger version.

Wichita sends educational mailer to non-Wichitans, using Wichita taxes

Why is the City of Wichita spending taxpayer money mailing to voters who don’t live in the city and can’t vote on the issue?

A resident of Bel Aire thought it was curious that she received an informational mailing regarding an issue she can’t vote on. The issue is the proposed one cent per dollar Wichita city sales tax that is on the November ballot.

Envelope of sales tax mailer sent by Wichita Mayor Carl Brewer to Bel Aire resident. Click for larger version.
Envelope of sales tax mailer sent by Wichita Mayor Carl Brewer to Bel Aire resident. Click for larger version.
What is curious about her receiving this mail about the Wichita sales tax? She can’t vote on this issue because she lives in Bel Aire, not in Wichita. Only those voters who live in Wichita will have the question on their ballots. Bel Aire is a nice town, but it is not Wichita.

So why did the City of Wichita spend tax dollars informing residents of Bel Aire about an issue on which they may not vote?

Many Wichitans question whether the city should have spent tax dollars on this mailer. Especially when it’s pretty clear that the material is designed to encourage citizens to vote in favor of the tax.

(If you doubt whether the city’s educational material is advocating for passage of the sales tax, consider this: The “Yes Wichita” group campaigns for passage of the tax. This group refers voters to the city’s website to learn about the issue. “Yes Wichita” would not do that if the city’s material contained anything that might discourage a “Yes” vote.)

I’ve been involved in political campaigns. I’ve always been quite careful to send mail only to those voters who live in the relevant jurisdiction. That is, I don’t waste donors’ money mailing to people who are not able to vote for my candidate.

The return address on this envelope indicates the mail came from the Office of the Mayor. So may I ask, Mayor Carl Brewer, why are you wasting taxpayer money sending mail to people who can’t vote on this issue?

Tax your food, but not his

Here’s a large sign that urges Wichita voters to approve a higher sales tax. This sign is located on the property of a restaurant that’s part of a chain. Its president actively campaigns for the higher sales tax. Say, did you know that restaurants do not pay sales tax on the food they purchase? But low-income Wichitans pay sales tax on their groceries, and at a rate that is nearly the highest in the nation. (Only 14 states have sales tax for groceries, and Kansas has the second-highest rate.)

Does this seem fair and just, that the president of a restaurant chain would campaign for higher sales tax on groceries? On top of this, almost two-thirds of the sales tax revenue would fund a project that protects wealthy neighborhoods from lawn irrigation restrictions during an extended drought. For this, low-income households are asked to pay higher sales taxes on their food.

Carlos O'Kelly's Yes Wichita 2014-10-24 03'08'41 PM

Tax not me, but food for the poor

This is Union Station in downtown Wichita. Its owner has secured a deal whereby future property taxes will be diverted to him rather than funding the costs of government like fixing streets, running the buses, and paying schoolteachers. This project may also receive a sales tax exemption. But as you can see, the owner wants low-income households in Wichita to pay more sales tax on their groceries.

Union Station Downtown Wichita 2014-10-24 02'46'19 PM

Cash register old

Wichita sales tax hike harms low income families most severely

Analysis of household expenditure data shows that a proposed sales tax in Wichita affects low income families in greatest proportion, confirming the regressive nature of sales taxes.

One of the criticisms of a sales tax is that it is regressive. That is, it affects low-income families in greatest proportion. This is an important consideration to explore, because in November Wichita voters will decide whether to create a new city sales tax of one cent per dollar. If enacted, the sales tax in Wichita would rise from 7.15 percent to 8.15 percent.

It’s an important issue because to hear some people talk, it seems as though they are saying the proposed tax is “one penny.” Anyone can afford that, they say. But the tax is an extra penny on each dollar spent, meaning that the cost of, say, fifty dollars of food at the grocery store increases by fifty cents, not one penny.

Further, we hear the sales tax spoken of as being a one percent increase. That’s true, if we mean a one percent increase in the cost of most things we buy. And one percent, after all, is just one percent. Not a big deal, people say. But considering the sales tax we pay, a relevant calculation is this: (8.15 – 7.15) / 7.15 = 14 percent. Which is to say, the amount of sales tax we pay will rise by 14 percent.

Click the table for a larger version.
Click the table for a larger version.
To explore the effect of the proposed sales tax on families of different incomes, I gathered data from the U.S. Census Bureau, specifically table 1101, which is “Quintiles of income before taxes: Annual expenditure means, shares, standard errors, and coefficient of variation, Consumer Expenditure Survey, 2012, (Selected Values).” This table divides families into five quintiles. It gives annual expenditures for each quintile in various categories. For each category, I judged whether it is subject to sales tax. For example, for housing, I indicated it is not subject to sales tax. This is not totally accurate, as some of the spending in this category may be for taxable items like maintenance and repair supplies. Food is subject to sales tax in Kansas, although low-income families may apply for a rebate of the tax. Despite these shortcomings, I feel this data gives us an approximation of the effect of the sales tax. (Click on the table to view a larger version, or see below for how to obtain the data.)

As you might imagine, as income rises, so does total taxable expenditures. Of interest, the percent of expenditures that are taxable is relatively constant across income levels.

Additional cost of proposed Wichita sales tax as percent of after-tax income, by income quintile. Click for larger version.
Additional cost of proposed Wichita sales tax as percent of after-tax income, by income quintile. Click for larger version.
An important finding is the bottom line of the table, which shows the increase in cost due to the proposed sales tax as percent of income after taxes. This calculates the relative impact of the proposed sales tax increase as a percent of income. It is here that we expect to see the regressive nature of a sales tax appear. For all consumers, the increase in cost is 0.35 percent. For the lowest class of income, the increase in cost is 0.97 percent of income. It falls to 0.26 percent for the highest income class.

This means that the lowest income class of families experience an increase nearly four times the magnitude as do the highest income families, as a percentage of after-tax income. This is the regressive nature of sales taxes illustrated in numbers, and is something that Wichita policy makers and voters should consider.

I’ve made the data available as a Google Docs spreadsheet. Click here for access.

WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: The proposed one cent per dollar Wichita sales tax

In this episode of WichitaLiberty.TV: We’ll talk about the proposed Wichita sales tax, including who pays it, and who gets special exemptions from paying it. Then, can we believe the promises the city makes about accountability and transparency? Finally, has the chosen solution for a future water supply proven itself as viable, and why are we asking low-income households to pay more sales tax on groceries for drought protection? View below, or click here to view at YouTube. Episode 63, broadcast October 26, 2014.

Voting machine old style levers

By threatening an unwise alternative, Wichita campaigns for the sales tax

To pay for a new water supply, Wichita gives voters two choices and portrays one as exceptionally unwise. In creating this either-or fallacy, the city is effectively campaigning for the sales tax.

In November Wichita voters will decide whether to create a sales tax of one cent per dollar. The largest intended purpose of the funds is to create a new water supply.

Set aside for a moment the question whether Wichita needs a new water source. Set aside the question of whether ASR is the best way to provide a new water source. What’s left is how to pay for it.

City of Wichita information on proposed sales tax
City of Wichita information on proposed sales tax
To pay for a new water source, the city gives us two choices: Either (a) raise funds through the sales tax, or (b) borrow funds that Wichitans will pay back on their water bills, along with a pile of interest.

As you can see in the nearby chart prepared by the city, the costs are either $250 million (sales tax) or $471 million (borrow and pay interest). The preference of the city is evident: Sales tax. The “Yes Wichita ” group agrees.

Here’s what is happening. City hall gives us two choices. It’s either (a) do what we want (sales tax), or (b) we’ll do something that’s really bad (borrow and pay interest). Wichita voters shouldn’t settle for this array of choices.

Let me emphasize that. The city’s informational material says if voters don’t pass the sales tax, the city will do something unwise. But the city did that very same bad thing to pay for the current ASR project, that is, borrow money and pay interest. But now the city says pass the sales tax or we will do something bad to you. Pass the sales tax or the city will issue long-term debt and you will pay a lot of interest.

Pass the sales tax, or we will do again what we did to pay for the current ASR project. And that would be bad for you and the city.

Wichita Outstanding Gross General Obligation Debt per Capita
Wichita Outstanding Gross General Obligation Debt per Capita
Are there other alternatives for raising $250 million for a new water source (assuming it is actually needed)? Of course there are. The best way would be to raise water bills by $250 million over five years. In this way, water users pay for the new water supply, and we avoid the long-term debt that city council members and “Yes Wichita” seem determined to avoid.

Water bills would have to rise by quite a bit in order to raise $250 million over five years. The city could decide to raise rates by different amounts for different classes of water users. The city could adjust its tiered residential rate structure to be more in line with the average of other large cities. (See Wichita water rates seen as not encouraging conservation.) But the total cost of the higher water bills would be exactly the same as the cost of the sales tax: $250 million.

It’s important to have water users pay for a new water supply. The benefit is that water users will become acutely aware of the costs of a new water supply. That awareness is difficult to achieve. Many citizens are surprised to learn that the city has spent $247 million over the past decade on a water project, the ASR program. Almost all of that was paid for with long-term debt, the same debt that the city now says is bad.

Paying for a new water supply through water bills would let commercial and industrial users participate in paying the cost of the project. These water users usually don’t pay a lot of sales tax. A restaurant, for example, does not pay sales tax on the food ingredients it purchases. An aircraft manufacturer does not pay sales tax on the raw materials and component parts it buys. But these companies do have a water bill. Yet, the city recommends that low income households pay more sales tax on their groceries. The city says this is the best way to pay for a new water supply to protect our lawns and golf courses during a drought.

water fountain gargoyles fountain-197334_640

Should Wichita expand a water system that is still in commissioning stage?

In this script from the next episode of WichitaLiberty.TV, I report my concerns about rushing a decision to expand a water production system that has not yet proven itself.

Wichita plans and background sales tax coverFor the proposed Wichita sales tax, the largest share will go towards a new water supply. 63 percent of the tax revenue — that’s $250 million over five years — will go towards what the city has decided will satisfy our water needs. This is expansion of the Aquifer Storage and Recovery program, or ASR.

People have told me that I should take a look at the production of the ASR system. Many people have told me that. So I took a look. Now, I realize that I am not a geologist. I am not a civil engineer with experience in public utilities like water systems. But what I found is more than a little alarming.

As a result of my research, I’m concerned that we don’t have a track record of success for the ASR program, but we’re thinking about putting all our eggs in that basket. Here is some history. ASR is a system north of Wichita. It draws water from the Little Arkansas River, treats it, and injects it into the Equus Beds aquifer. That’s the recharge process. That water is then available for use in the future. (Wichita already gets 40 percent of its water from the Equus beds.) There was ASR Phase 1, and now there is Phase 2. Cost so far is $247 million.

In April, Wichita Public Works Director Alan King told the city council that based on experience, we now believe we will get half the production from ASR as we originally thought. By production, we mean the amount of water that is treated and injected into the aquifer. So I did the research and I found that the ASR program has not come close to meeting this goal. This is the goal that was cut in half from the original goal.

I understand that ASR phase 2 came online during a drought. I understand that there was a learning curve. But since July 2013 — remember that’s when it started raining so much it flooded — ASR has not been performing anywhere near expectations.

Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative from July 2013. Click for larger version.
Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative from July 2013. Click for larger version.
In this chart, I start the horizontal axis with July 2013. The red line on top is what production was originally planned to be. Production will not necessarily be smooth, as production happens only on days when there is sufficient water in the river. But over time, this should be the trend.

The blue line is the expectations for production after being revised downwards.

In purple is actual production. Considering the 12 month stretch starting with July 2013, ASR produced 431 million gallons of recharged water. That is 23 percent of expectations, even after expectations were cut in half.

When I presented this information to the Wichita City Council this week, Alan King, the public works director, said “The information Mr. Weeks presented is accurate.” But he said my conclusions are not correct.

King told the council that during the timeframe of this chart, we weren’t looking to run the ASR system at maximum production levels. We were operating the facility in the most efficient manner possible. We were testing the individual components. We are still in a commissioning phase.

So based on this — we are still in a commissioning phase, we have not been running at maximum production levels — I believe we do not have enough experience to conclude that ASR is working. Couldn’t we wait until the ASR project is working at even half its design goal before making a decision to proceed with its expansion? This is too big a decision to make based on the scant evidence we have. Especially when we are asking low income and fixed income households to pay more sales tax on groceries to fund this project. Especially when Cheney Reservoir is full and there is no immediate crisis.

Additional cost of proposed Wichita sales tax as percent of after-tax income, by income quintile. Click for larger version.
Additional cost of proposed Wichita sales tax as percent of after-tax income, by income quintile. Click for larger version.
I did research on how an increase in sales tax affects households of different levels of income. Later the Wichita Eagle produced similar results. I showed that as a percentage of after-tax income, the proposed sales tax increase is four times as costly for low-income households as it is for high-income households. Remember, regarding a new water supply, we’re not worried about running out of drinking water, or even running out of water for industry and commercial users. We’re talking about restricting the watering of golf courses and lawns during an extended drought. We’re talking about not washing cars during a drought. Stripped to its essence, the city is asking low-income households to pay more sales tax on food so that lawns in wealthy neighborhoods may remain green at reasonable cost during a drought.

Here’s something else that troubles me regarding the water portion of the proposed sales tax. In the city’s informational material — the material that is meant to educate us on the issues — it’s said that if the sales tax does not pass, the city will use long-term debt to pay for ASR expansion, and that will cost an extra $221 million in interest expense. That course of action — using debt to pay for ASR expansion — is presented as a bad choice.

I want to remind you that the city borrowed over $200 million in long-term debt to pay for the present ASR system. That’s almost as much as the cost of the proposed ASR expansion.

City of Wichita information on proposed sales tax
City of Wichita information on proposed sales tax
Let me emphasize that. The city’s informational material says if voters don’t pass the sales tax, the city will do something unwise. But the city did that very same bad thing to pay for the current ASR project, that is, borrow money and pay interest. But now the city says pass the sales tax or we will do something bad to you. Pass the sales tax or the city will issue long-term debt and you will pay a lot of interest. Pass the sales tax, or we will do again what we did to pay for the current ASR project. And that would be bad for you and the city.

These are the choices the city gives voters. But others alternatives are available. If the city is concerned about the cost of debt financing, why not raise the money for ASR through a period of higher water bills for five years? This has the obvious benefit of having the people who actually use water pay for it. The cost of ASR expansion could be a separate line item on water bills so that we are acutely aware of how much this system costs. It’s important that we be aware of these costs. When paid through a sales tax, it’s difficult to track the money and know the total cost of the system to you. That’s something the city and the “Yes Wichita” group counts on. In fact, they say the sales tax is just one cent. Just one penny for every dollar you spend. You won’t even notice its impact.

Paying for a new water supply through water bills would let commercial and industrial users participate in paying the cost of the project. These water users generally don’t pay a lot of sales tax. A restaurant, for example, does not pay sales tax on the food ingredients it purchases. An aircraft manufacturer does not pay sales tax on the raw materials and component parts it buys. But these companies do have a water bill. Yet, the city recommends that low income households pay more sales tax on their groceries. The city says this is the best way to pay for a new water supply to protect our lawns and golf courses during a drought.

Here’s a thought. Sedgwick County Government is in a beneficial position regarding the water supply issue. The city is too wrapped up, too invested in advancing the ASR project. There are some big egos and political careers involved. There is an engineering firm that sees a big contract in its future.

Since county government is not in the business of providing water, it does not have these distractions and distortions. I think this places the county in the position of a referee, as an unbiased observer. The county is a governmental body that sincerely wants a secure water future for its largest city and for many of the smaller cities and residents that get their water from the Wichita system. Remember, many cities like Derby rely on the Wichita water system for their water. Collecting funds through water bills lets these customers help pay for the cost of a new water supply.

If city voters decide against the sales tax, which I hope is the outcome of the election, then the county commission could take the lead. It could commission a study of water issues. Since the county is not in the business of providing water, the study could be free of the biases and ambitions that infect whatever Wichita does. It could be conducted by an engineering firm that is not advocating for its own interests, as I fear is happening with Wichita.

I realize this would cost money and take time. But the city is on the verge of rushing into what I fear will be a costly mistake. Remember, Cheney Lake is full. There is no immediate water crisis. We do not have to rush to make a decision about expanding a system that has not yet entered full production, a system that is still in the commissioning stage. Wichita voters should not accept the false choices our city government is giving us.

Wichita Chamber of Commerce 2013-07-09 004

For Wichita Chamber of Commerce chair, it’s sales tax for you, but not for me

A Wichita company CEO applied for a sales tax exemption. Now as chair of the Wichita Metro Chamber of Commerce, he wants you to pay more sales tax, even on the food you buy in grocery stores.

High Touch Technologies in downtown Wichita.
High Touch Technologies in downtown Wichita.
When High Touch Technologies wanted to purchase and improve the building that houses its headquarters in downtown Wichita, the company asked for and received property tax relief and an exemption from paying sales taxes.

So far this story is not unusual. Many companies receive this type of tax relief. Some get it year after year, to the tune of some $658 million in the case of Boeing.

High Touch Technologies campaigns for higher sales taxes, even though it received a sales tax exemption.
High Touch Technologies campaigns for higher sales taxes, even though it received a sales tax exemption.
But the case of High Touch Technologies is of more than usual interest. At the time of the request in November 2013 the company’s CEO, Wayne Chambers, had just been selected as chair of the Wichita Metro Chamber of Commerce. The Chamber, along with its subsidiary Greater Wichita Economic Development Coalition, are the main agencies in charge of economic development for the Wichita area. Under Chambers’ leadership, these organizations recommended that the city council authorize a vote on raising the Wichita sales tax for the purposes of economic development. The council did that, and in November Wichita voters will decide whether to create a city sales tax of one cent per dollar. Twenty percent of the proceeds are earmarked for job creation.

To summarize: A Wichita company CEO applied for a sales tax exemption. Now he wants you to pay more sales tax, even on the food you buy in grocery stores.

Groceries vegetables

Kansas sales tax on groceries is among the highest

Kansas has nearly the highest statewide sales tax rate for groceries. Cities and counties often add even more tax on food.

Additional cost of proposed Wichita sales tax as percent of after-tax income, by income quintile. Click for larger version.
Additional cost of proposed Wichita sales tax as percent of after-tax income, by income quintile. Click for larger version.
Only 14 states apply sales tax to food purchased at grocery stores for home consumption. This is generally in recognition that sales taxes are highly regressive. My research shows that the lowest income class of families experience a cost nearly four times the magnitude as do the highest income families, as a percentage of after-tax income. See Wichita sales tax hike would hit low income families hardest.

When we look at statewide sales tax rates applied to food, we see that Mississippi has the highest sales tax rate for food at 7.00 percent. Kansas is next at 6.15 percent, then Idaho at 6.00 percent.

Cities and counties often have additional sales taxes. Sedgwick County adds one percent for a total sales tax rate of 7.15 percent. If the proposed Wichita sales tax succeeds, the sales tax in Wichita, including on groceries, will be 8.15 percent.

It could be that some cities in other states have combined sales tax rates higher than what Wichita currently has, and what Wichita will have if the proposed sales tax passes. As an example, Oklahoma has a statewide sales tax of 4.5 percent that applies to groceries. With city and county taxes added, the rate in Oklahoma City is 8.375 percent. If the proposed sales tax passes, Wichita would be right behind at 8.15 percent.

Of note, those in Kansas have the possibility of receiving a food sales tax credit of $125. But this is something that must be applied for, and qualifying conditions must be met. Also, the credit is nonrefundable, meaning that applicants must have income tax liability of at least $125 to receive the full credit.

The following table shows the sales tax rate for states that apply sales tax to food. All other states have either no sales tax, or no sales tax on groceries. View below, or click here to open in a new window.

Wichita Old Town Square

Old Town Cinema TIF update

A Wichita city report provides a somber look at the finances of a tax increment financing district.

The City of Wichita Department of Finance has prepared an update on the financial performance of the Old Town Cinema Tax Increment Financing (TIF) District. There’s not much good news in this document. The financial performance would be worse if the city had included the costs of the no-interest and low-interest loan made to the owners of property in this TIF district. But it doesn’t appear that those costs are included. Here’s an excerpt from the report:

In 2000, the appraised value of the southeast retail building and the Warren Theatre declined 12% (from $4.5 to $3.9 million) and 33% from ($4.4 to $2.9 million), respectively. These declines occurred as a result of property tax appeals, which were made by the TIF District’s primary developer. In addition, the total appraised value of the northeast and southeast retail buildings and the Warren Theatre remains more than $3.6 million below estimates in the project plan and overall values have not yet recovered to pre-2009 levels.

The “property tax appeals” referred to in this paragraph are the doing of David Burk. The Wichita Eagle reported at the time: “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

Several city officials expressed varying degrees of outrage with Burk’s action, with the city manager telling the Eagle that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

Since then the city has granted several forms of subsidy to Burk and his partners.

The report from the finance department also told of problems with parking revenue:

Parking Revenue – The project plan assumed sufficient parking revenue cash flow over a fifteen-year period to provide $1.1 million towards principal debt obligations, assuming an interest rate of 4.5%. The Old Town Cinema TIF Fund has received substantially less parking revenue than was expected in the project plan. In some years, the TIF Fund has received no revenue from parking, and the highest amount received in any year was $51,130 (in 2008). From 2007, when the District first began receiving parking revenue, through 2013, a total of $153,130 in parking revenue has been transferred to the TIF Fund. Based on historical experience, additional parking revenue is not assumed and total parking revenue from 2004 to 2019 is conservatively projected at $153,130.

Later on, the report holds this:

Parking revenue collections are also substantially less than projected, because fees have not been increased as originally planned. The City’s general parking fee, which predates the Old Town Cinema TIF District, started at $7.50 per parking space per month. The fee was to increase to $25 per month over an eighteen-year period, with increases starting in approximately1996, according to Property Management. Fee increases never occurred, which were needed to pay for City parking activities. The general City fee differed slightly from that originally charged in the Old Town Cinema District, because the District initially charged a $10 per month fee, but this was reduced in about 2009 to $7.50 per month consistent with the parking fee charged elsewhere in the City, again according to Property Management.

The report also contains several financial statements. These statements do not contain a form of off-the-books support given to this TIF district. That was the no-interest and low-interest loan made to the Warren Theater, estimated to cost the city $1.2 million.

Click here to open the city’s report in a new window.

Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative from July 2013. Click for larger version.

Wichita ASR water recharge project: The statistics

As Wichita voters consider spending $250 million expanding a water project, we should look at the project’s history. So far, the ASR program has not performed near expectations, even after revising goals downward.

In November Wichita voters will consider approval of a one cent per dollar sales tax. Of the $400 expected to be collected over five years, $250 million is earmarked for a new water source. The city has decided that the new water supply will be implemented through expansion of the Aquifer Storage and Recovery program or ASR. This is a program whereby water is taken from the Little Arkansas River, treated, and injected in the Equus Beds aquifer. That water is then available in the future as is other Equus Beds water.

The city believes that ASR is a proven technology that will provide water and drought protection for many years and recommends that voters approve $250 million for its expansion, although there is possibility that the cost may be $200 million.

According to city documents, the original capacity of the ASR phase II project to process water and pump it into the ground (the “recharge” process) was given as “Expected volume: 30 MGD for 120 days.” That translates to 3,600,000,000 (3.6 billion or 3,600 million) gallons per year. ASR phase II was completed in 2011.

At a city council workshop in April 2014, Director of Public Works and Utilities Alan King briefed the council on the history of ASR, mentioning the original belief that ASR would recharge 11,000 acre feet of water per year. But he gave a new estimate for production, telling the council that “What we’re finding is, we’re thinking we’re going to actually get 5,800 acre feet. Somewhere close to half of the original estimates.” The new estimate translates to 1,889,935,800 (1.9 billion or 1,900 million) gallons per year.

Based on experience, the city has produced a revised estimate of ASR production capability. What has been the actual experience of ASR? The U.S. Geological Survey has ASR figures available here. I’ve gathered the data and performed an analysis.

Annual production

In 2013 ASR recharged 366 million gallons, or 19 percent of the newly revised estimate of production capacity. In 2014 through September, ASR recharged 275 million gallons, or 14 percent of capacity. Extrapolating this nine months of production to a full year results in 367 million gallons produced for 2014, or 19 percent of capacity, the same value as in 2013. This may or may not be valid, but it gives an idea of how 2014 is proceeding.

So for the two most recent years, the ASR system has not operated near its designed capacity, even after revising that capacity downwards by half.

To place these production figures in context, the city uses 56 million gallons per day, on average. So the annual production of the ASR project is about 6.5 days of water usage.

Monthly production

Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 1 and phase 2, monthly. Click for larger version.
Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 1 and phase 2, monthly. Click for larger version.
The ASR system is able to draw water from the river only when the flow is above a certain level, which is not every day of the year. So we may want to take a look at how the ASR system performs for shorter periods of time. Monthly data is available.

For a 30-day month, if the plant could be run at full design capacity each day, the production would be 900,000,000 (900 million) gallons. The best month ever for actual production was 192 million gallons, with the second best at 120 million gallons.

If we take the 12 best months for production, including before ASR Phase II started operations, the amount of water recharged is 924 million gallons. That’s 49 percent of the revised expected annual production of 1.9 billion gallons.

The cumulative deficit

Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative. Click for larger version.
Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative. Click for larger version.
I’ve produced a chart of the cumulative production of the Wichita ASR project compared with the original projections and the lower revised projections. The lines for projections rise smoothly, although it is expected that actual production is not smooth. The second phase of ASR was completed sometime in 2011, but no water was produced and recharged that year. So I started this chart with January 2012. Data is from U.S. Geological Survey.

Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative from July 2013. Click for larger version.
Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative from July 2013. Click for larger version.
Some have said that since 2013 was a drought year, it isn’t fair to evaluate the production of ASR during a drought. So to present ASR in the best possible light, I’ve prepared a chart starting in July 2013. That was when it started raining so much we had floods, and data from USGS shows that the flow in the Little Arkansas River was much greater. Still, the ASR project is not keeping up with projections, even after goals were lowered.

The city and the “Yes Wichita” campaign say the ASR project is proven and is working. The available data, however, does not support this claim.

Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR phase 2, cumulative. Click for larger version.

Has the Wichita ASR water project been working?

Here is the cumulative production of the Wichita ASR project compared with the original projections and the lower revised projections. The second phase of ASR came online sometime in 2011, but no water was recharged that year. So I started this chart with January 2012. Data is from U.S. Geological Survey. (Click chart for larger version.)

The city and the “Yes Wichita” campaign say the ASR project is proven and is working. Do you agree?

Gallons of Water Recharged Through Recharge Basins and Wells during Wichita ASR Phase 2, Cumulative

ASR Phase II Program Overview Map

Wichita geologist sees problems with city water plan

The following was written by local geologist Karma Mason, who also serves on the State Water Board. What are the implications of moving forward with a rushed, poor plan? Mason explains what Wichita voters should consider as they vote in the proposed one cent per dollar sales tax. $250 million of the projected $400 million five-year sales tax is earmarked for a new water supply.

Over the past year, the city of Wichita has evaluated potential new water supply options. Recently, the city revealed enhancement of the aquifer storage and recovery project (ASR) as the preferred new supply. Although ASR enhancement may ultimately prove a viable option, there are still significant uncertainties.

First, a current state-level requirement prohibits the city from using any ASR-stored water should the Equus Beds become stressed during a drought.

Second, we have already spent more than $200 million on the ASR, and it has yet to significantly affect the amount of water stored in the Equus Beds.

Third, in a drought scenario (i.e., dust bowl), the Equus Beds will be over-utilized, resulting in accelerating the migration of the chloride plume to city supply wells. This likely will result in additional costs, beyond the proposed $250 million, to treat the chloride-containing water.

Fourth, there have been recent discussions at the state level about working with irrigators to lease their water rights to the city in a drought scenario, or even establishing a water bank for the area. These options could result in providing needed water in a dust bowl scenario at a much-reduced cost.

Finally, city representatives state that when using existing state guidelines for drought planning, Wichita already has adequate water for another 20-plus years.

Our community has an opportunity to work together to solve its long-term water needs. Fortunately, our current supply is adequate to allow more time for full evaluation of our options.