Tag Archives: Tim Norton

Intrust Bank Arena, Wichita, KS

Wichita arena sales tax not a model of success

Supporters of a new sales tax in Wichita use the Intrust Bank Arena as an example of successful application of a sales tax.

As Wichita debates the desirability of a sales tax, a former sales tax is used as a model of success. Let’s take a look at a few of the issues.

Ongoing vs. capital expenses

A portion of the proposed sales tax will be used for operational expenses, and the demand for this spending will not end when the sales tax ends.

The sales tax for the Intrust Bank Arena was used to build a capital asset and establish a small reserve fund. Spending on capital assets is characterized by a large expense in a short period of time as the asset is constructed. Then, the spending is over — sort of.

For the proposed Wichita sales tax, 63 percent is scheduled for capital asset spending on an enhanced water supply. The remainder, 37 percent, is for operation of the bus transit system, street repair, and economic development. These three items are operational in nature, meaning they are ongoing expenses. It’s not likely that after five years the bus system will be self-sustaining, or that streets will no longer need repair, or that there will be no more clamoring for economic development.

There is a large difference, then, between the arena sales tax and the proposed Wichita sales tax. While sales tax boosters say the tax will end in five years, the likelihood is that because much of it will have been paying for operational expenses, there will be great pressure to continue the tax and the spending it supports. That’s because the appetite for tax revenue by government and its cronies is insatiable. An example: As the arena sales tax was nearing its end, Sedgwick County Commissioner Tim Norton “wondered … whether a 1 percent sales tax could help the county raise revenue.” (“Norton floats idea of 1 percent county sales tax,” Wichita Eagle, April 4, 2007)

Intrust Bank Arena economics

Having promoted a false and incomplete picture of the economics of the Intrust Bank Arena, civic leaders now use it as a model of success.

The building of a new arena in downtown Wichita was promoted as an economic driver. So far, that hasn’t happened. There have been spurts of development near the arena. But the arena is also surrounded by empty lots and empty retail space, and there have been months where no events took place at the arena.

Regarding the accounting of the profits earned by the arena, we need to realize that civic leaders are not telling citizens the entire truth. If proper attention was given to the depreciation expense of Intrust Bank Arena, that would recognize and account for the sacrifices of the people of Sedgwick County and its visitors to pay for the arena. This would be a business-like way of managing government — something we’re promised. But that hasn’t happened.

Civic leaders and arena boosters promote a revenue-sharing arrangement between the county and the arena operator, referring to this as profit or loss. But this arrangement is not an accurate and complete accounting, and it hides the true economics of the arena. An example of the incomplete editorializing comes from Rhonda Holman of the Wichita Eagle, who earlier this year wrote “Though great news for taxpayers, that oversize check for $255,678 presented to Sedgwick County last week reflected Intrust Bank Arena’s past, specifically the county’s share of 2013 profits.”

There are at least two ways of looking at the finances of the arena. Most attention is given to the “profit” (or loss) earned by the arena for the county according to an operating and management agreement between the county and SMG, a company that operates the arena.

This agreement specifies a revenue sharing mechanism between the county and SMG. For 2103, the accounting method used in this agreement produced a profit of $705,678, to be split (not equally) between SMG and the county. The county’s share, as Holman touted, was $255,678. (Presumably that’s after deducting the cost of producing an oversize check for television cameras.)

The Operations of Intrust Bank ArenaWhile described as “profit” by many, this payment does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “not intended to be a complete presentation of INTRUST Bank Arena’s financial position and results of operations and are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.”

That bears repeating: This is not a reckoning of profit and loss in any recognized sense. It is simply an agreement between Sedgwick County and SMG as to how SMG is to be paid, and how the county participates.

A much better reckoning of the economics of the Intrust Bank Arena can be found in the 2013 Comprehensive Annual Financial Report for Sedgwick County. The CAFR, as described by the county, “… is a review of what occurred financially at Sedgwick County in 2013. In that respect, it is a report card of our ability to manage our financial resources.” Regarding the arena, the CAFR states:

The Arena Fund represents the activity of the INTRUST Bank Arena that opened on January 9, 2010. The facility is operated by a private company; the county incurs expenses only for certain capital improvements or major repairs and depreciation, and receives as revenue only a share of profits earned by the operator, if any. The Arena had an operating loss of $4.7 million. The loss can be attributed to $5.3 million in depreciation expense.

Financial statements in the same document show that $5,295,414 was charged for depreciation in 2013, bringing accumulated depreciation to a total of $21,190,280.

Depreciation expense is not something that is paid out in cash. Sedgwick County didn’t write a check for $5,295,414 in depreciation expense. Instead, depreciation accounting provides a way to recognize the cost of long-lived assets over their lifespan. It provides a way to recognize opportunity costs, that is, what could be done with our resources if not spent on the arena.

Any honest reckoning of the economic performance of Intrust Bank Arena must include depreciation expense. We see our governmental and civic leaders telling us that we must “run government like a business.” Without frank and realistic discussion of numbers like these and the economic facts they represent, we make decisions based on incomplete and false information.

Effect on sales and jobs

Taxes have an impact. Definitely.

Boosters of the proposed Wichita sales tax say that since it is so small — “just one cent,” they say — its effect won’t be noticed. I wonder: If increasing prices by one percent has no effect, why don’t merchants raise their prices by one percent right now and pocket the profit?

Taxes have an impact. The problem with assessing the impact is that the results of the tax are usually concentrated and easy to see — a new arena, water supply, repaved streets, more buses, etc. But the consequences of the tax are usually spread out over a large number of people and collected in small amounts. The costs are dispersed, and therefore more difficult to detect. But there has been an analysis performed of a situation parallel to the Intrust bank Arena tax.

A paper titled “An Assessment of the Economic Impact of a Multipurpose Arena” by Ronald John Hy and R. Lawson Veasey, both of the University of Central Arkansas, (Public Administration & Management: An Interactive Journal 5, 2, 2000, pp. 86-98) looked at the effect of jobs and economic activity during the construction of the Alltel Arena in Pulaski County, Arkansas. This arena cost $50 million. It was funded in part by a one percent increase in the county sales tax for one year (1998). The sales tax generated $20 million.

In the net, considering both jobs lost and jobs gained due to sales tax and construction effects, workers in the wholesale and retail trades lost 60 jobs, and service workers lost 52 jobs. There was a net increase of 198 jobs in construction.

The fact that jobs were lost in retail should not be a surprise. When a sales tax makes nearly everything sold at retail more expensive, less is demanded. It may be difficult to estimate the magnitude of the change in demand, but it is certain that it does change.

The population of Pulaski County in 2000 was 361,474, while Sedgwick County’s population at the same time was 452,869, so Sedgwick County is somewhat larger. The sales tax for the arena lasted 2.5 times as long, and our arena was about three times as expensive. How these factors affected the number of jobs is unknown, but it’s likely that the number of jobs lost in Sedgwick County in retail and services was larger that what Pulaski County experienced.

Wichita not good for small business

The Wichita Business Journal reports today:

When it comes to having good conditions to support small businesses, well, Wichita isn’t exactly at the top of the list, according to a new ranking from The Business Journals.

In fact, the Wichita metro area’s small-business vitality score is nearly at the bottom — 99th out of the 101 U.S. metro areas included in the study. (Wichita near bottom for small-business vitality score, April 2, 2014)

Many in Wichita don’t want to recognize and confront the bad news about the performance of the Wichita-area economy. Last year, when presenting its annual report to local governmental bodies, the leaders of Visioneering Wichita would not present benchmark data to elected officials.

wichita-peer-job-growth-1990-2014-01

So what is the record of the Wichita metropolitan area regarding job creation, that seeming to be the most popular statistic our leaders cite and promote? I’ve prepared statistics from the Bureau of Labor Statistics, U.S. Department of Labor for Wichita and a broad group of peer cities. I included our Visioneering peer cities, cities that Visioneers traveled to on official visits, and a few others. The result, shown nearby, is not pretty. (Click on charts for larger versions, or click here to use the interactive visualization)

wichita-peer-job-growth-2007-2014-01

If we look at job creation starting in 1990, Wichita lags behind our Visioneering peers, but not behind all the peer cities that I selected. Wichita does better than Springfield, Illinois, for example. I chose to include that as a peer metropolitan area because that’s the immediate past city that Gary Plummer worked in. He was president of that city’s Chamber of Commerce, and is now president of the Wichita Chamber. Note the position of Springfield: Last place.

In next-to-last place we see Wichita Falls, Texas. I chose to include it because it is the immediate past home of Tim Chase. He was the head of Wichita Falls Economic Development Corporation. He’s now president of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development for the Wichita area.

In second-to-last place we see Pittsburgh, which I added because Visioneering leaders recently made a visit there.

Then, we come to Wichita.

If we look at job creation since 2007 we find Wichita in a common position: Last place in job creation, and by a wide margin except for two cities. One is Wichita Falls, where our present GWEDC president recently worked. The other city that barely out-performs Wichita is Chattanooga, which I included because Visioneering civic leaders recently traveled there to learn from that city.

Over the decades in which Wichita has performed poorly, there have been a few common threads. Carl Brewer has been council member or mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for decades. At Sedgwick County, manager William Buchanan has held that position for more than two decades. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. It is these officials who have presided over the dismal record of Wichita.

Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But he’s becoming part of the legacy of Wichita’s efforts in economic development.

toolbox-29058_640

These leaders often complain that Wichita does not have enough “tools in the toolbox” to compete with other cities in economic development. Wichita does, however, have and use incentives. The State of Kansas regularly offers incentives so generous that Kansas business leaders told the governor that they value these incentives more than they would value elimination of the state corporate income tax.

Incentives: We have them. They haven’t worked for us.

It is nearly certain that this year Wichitans will be asked to approve a higher sales tax in order to pay for many things, including the more aggressive approach to job creation that Brewer mentioned. Based on the track record of our elected officials and bureaucrats, we need to do this: Before approving the tax and expenditures, Wichitans need to take a long look at the people who have been in charge, and ask what will be different going forward.

For Wichita’s economic development machinery, failure

Delano Clock Tower, WichitaCompared to a broad group of peer metropolitan areas, Wichita performs very poorly. As Wichita embarks upon a new era of economic development, we need to ask who to trust with this important task.

The good news: In a recent op-ed, Wichita Mayor Carl Brewer wrote that the city needs to make a decision regarding “A more aggressive approach to job creation.” (Carl Brewer: Wichita can have a great next year, December 22, 2013 Wichita Eagle)

The bad news: Wichita has performed very poorly in job creation in recent decades, and even if we decide on a more aggressive approach, pretty much the same crew is in charge.

Many in Wichita don’t want to recognize and confront the bad news about the performance of the Wichita-area economy. Last year, when presenting its annual report to local governmental bodies, the leaders of Visioneering Wichita would not present benchmark data to elected officials.

Some, however, have recognized the severity of the problem. In 2008 Harvey Sorensen, who has been chair of Visioneering Wichita, chair of the Wichita Metro Chamber of Commerce, and has held other civic leadership positions, wrote in the pages of the Wichita Eagle: “We are losing ground competitively with our peer communities.” (Community Needs a Common Vision, August 24, 2008 Wichita Eagle)

wichita-peer-job-growth-1990-2014-01

So what is the record of the Wichita metropolitan area regarding job creation, that seeming to be the most popular statistic our leaders cite and promote? I’ve prepared statistics from the Bureau of Labor Statistics, U.S. Department of Labor for Wichita and a broad group of peer cities. I included our Visioneering peer cities, cities that Visioneers traveled to on official visits, and a few others. The result, shown nearby, is not pretty. (Click on charts for larger versions, or click here to use the interactive visualization)

wichita-peer-job-growth-2007-2014-01

If we look at job creation starting in 1990, Wichita lags behind our Visioneering peers, but not behind all the peer cities that I selected. Wichita does better than Springfield, Illinois, for example. I chose to include that as a peer metropolitan area because that’s the immediate past city that Gary Plummer worked in. He was president of that city’s Chamber of Commerce, and is now president of the Wichita Chamber. Note the position of Springfield: Last place.

In next-to-last place we see Wichita Falls, Texas. I chose to include it because it is the immediate past home of Tim Chase. He was the head of Wichita Falls Economic Development Corporation. He’s now president of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development for the Wichita area.

In second-to-last place we see Pittsburgh, which I added because Visioneering leaders recently made a visit there.

Then, we come to Wichita.

If we look at job creation since 2007, the year before Sorensen wrote his op-ed, we find Wichita in a common position: Last place in job creation, and by a wide margin except for two cities. One is Wichita Falls, where our present GWEDC president recently worked. The other city that barely out-performs Wichita is Chattanooga, which I included because Visioneering civic leaders recently traveled there to learn from that city.

Over the decades in which Wichita has performed poorly, there have been a few common threads. Brewer has been council member or mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for decades. At Sedgwick County, manager William Buchanan has held that position for more than two decades. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. It is these officials who have presided over the dismal record of Wichita.

Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But he’s becoming part of the legacy of Wichita’s efforts in economic development.

toolbox-29058_640

These leaders often complain that Wichita does not have enough “tools in the toolbox” to compete with other cities in economic development. Wichita does, however, have and use incentives. The State of Kansas regularly offers incentives so generous that Kansas business leaders told the governor that they value these incentives more than they would value elimination of the state corporate income tax.

Incentives: We have them. They haven’t worked for us.

It is nearly certain that this year Wichitans will be asked to approve a higher sales tax in order to pay for many things, including the more aggressive approach to job creation that Brewer mentioned. Based on the track record of our elected officials and bureaucrats, we need to do this: Before approving the tax and expenditures, Wichitans need to take a long look at the people who have been in charge, and ask what will be different going forward.

Wichita performs a reference check, the video

Citizens of Wichita are rightly concerned about whether our elected officials and bureaucrats are looking out for their interests, or only for the interests and welfare of a small group of city hall insiders. The video below explains, or click here to view in HD on YouTube. For an article on this topic, see Wichita performs a reference check, sort of.

Wichita performs a reference check, sort of

Wichita city hall logo

For a video presentation of this material, click on Wichita performs a reference check, the video.

Citizens of Wichita are rightly concerned about whether our elected officials and bureaucrats are looking out for their interests, or only for the interests and welfare of a small group of city hall insiders. Cronies, if you will.

A recent application filed with Wichita City Hall regarding the West Bank Development Project raises two questions: Did the government officials listed as references give their permission, and were any of the references contacted to learn what they knew about the applicants?

The application filed by the River Vista development team shows this: The team, consisting of George Laham, Dave Wells, Dave Burk, and Bill Warren listed numerous local, state, and federal officials as references. Here’s the list of officials that appeared one or more times:

Wichita city manager Robert Layton
Wichita Mayor Carl Brewer
Wichita City Council Member Jeff Longwell (district 5, west and northwest Wichita)
Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita)
Sedgwick County District Attorney Marc Bennett
Sedgwick County Sheriff Jeff Easter
Sedgwick County Commissioner Dave Unruh
Sedgwick County Commissioner Tim Norton
Kansas Governor Sam Brownback
U.S. Representative Mike Pompeo

Except for Jeff Easter, none of these officials gave permission for their names to be used in this way. (We didn’t get a response regarding Tim Norton.)

Furthermore, none of these officials were contacted by the evaluation committee whose job it is to vet these potential city partners.

A few questions: First, do you think it is appropriate for the city manager to be listed as a reference, given that anyone who reads this document would take it as an endorsement? No, of course it is not appropriate.

Related: Do you think it’s appropriate for the city manager to endorse one of the applicants? We don’t know if the presence of the city manager’s name as a reference implies an endorsement, because George Laham did not ask the city manager if he could be listed as a reference. We know this because we asked.

Further, the committee that evaluated the development teams did not call the city manager to inquire about George Laham. We asked about this, too. But making inquiries of references: Isn’t that what an evaluation committee or vetting team should do? But we know that the evaluation committee did not contact even one of these officials that were listed as references.

These applicants likely knew that the evaluation committee would not contact these references. Therefore, they freely listed these government officials. Which makes us wonder — what is the point of having an evaluation committee?

Even further: Is it appropriate for the city to partner with people who think it’s proper to list the city manager as a reference without asking if that was permissible, knowing that the manager wouldn’t be contacted? Same question regarding the mayor, governor, our U.S. Congressman, and district attorney?

In light of this — numerous government officials listed as references without their permission or knowledge, an evaluation committee that never contacted these officials, and the information that these references could have provided: Do you think the evaluation committee fulfilled its duty to perform due diligence on behalf of the interests of the people of Wichita?

What the evaluation committee might have learned

If the evaluation committee had contacted these references, here’s what might have been learned.

Dave Wells: Wells is president of Key Construction. Last year the Wichita Eagle reported on “city-financed downtown parking garages that spiraled well over budget.” Noting the cost overruns, reporter Bill Wilson wrote: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.” (Wichita city manager proposes eliminating no-bid construction projects.)

Also, two years ago Key Construction proposed — and was awarded by the city council — a no-bid contract for a parking garage. But the city later put the contract to competitive bid. Key, which first bid $6 million, later bid $4.7 million. If the desire of the majority of the city council, including Mayor Carl Brewer, had been realized, Wichita taxpayers would have sent an extra — and unnecessary — $1.3 million to a politically-connected construction company.

By the way, the mayor’s relationship with Wells means he should not have voted on this matter.

Dave Burk, Dave Wells: These two were original partners in WaterWalk, which has received over $40 million in subsidy, with little to show for results.

Dave Burk: He’s received many millions from many levels of government, but still thinks he doesn’t get enough. This is what we can conclude by his appeal of property taxes in a TIF district. Those taxes, even though they are rerouted back to him for his benefit, were still too high for his taste, and he appealed. The Wichita Eagle reported in the article (Developer appealed taxes on city-owned property): “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.”

rebenstorf-quote-dave-burkA number of Wichita city hall officials were not pleased with Burk’s act. According to the Eagle reporting, Burk was not authorized to do what he did: “Officials in the city legal department said that while Burk was within his rights to appeal taxes on another city-supported building in the Cinema Plaza, he did not have authorization to file an appeal on the city-owned parking/retail space he leases. … As for Burk signing documents as the city’s representative, ‘I do have a problem with it,’ said City Attorney Gary Rebenstorf, adding that he intends to investigate further.”

Council member Jeff Longwell was quoted by the Eagle: “‘We should take issue with that,’ he said. ‘If anyone is going to represent the city they obviously have to have, one, the city’s endorsement and … two, someone at the city should have been more aware of what was going on. And if they were, shame on them for not bringing this to the public’s attention.'”

In a separate article by the Eagle on this issue, Wichita city manager Robert Layton said that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.'”

The manager’s quote is most directly damaging. In a tax increment financing (TIF) district, the city borrows money to pay for things that directly enrich the developers, in this case Burk and possibly his partners. Then their increased property taxes — taxes they have to pay anyway — are used to repay the borrowed funds. In essence, a TIF district allows developers to benefit exclusively from their property taxes. For everyone else, their property taxes go to fund the city, county, school district, state, fire district, etc. But not so for property in a TIF district.

This is what is most astonishing about Burk’s action: Having been placed in a rarefied position of receiving many millions in benefits, he still thinks his own taxes are too high. Now he wants more city taxpayer subsidy.

warren-bailout-poses-dilemma

Bill Warren: In 2008 the Old Town Warren Theater was failing and its owners — Bill Warren being one — threatened to close it and leave the city with a huge loss on a tax increment financing (TIF) district formed for the theater’s benefit. Faced with this threat, the city made a no-interest and low-interest loan to the theater. Reported the Wichita Eagle: “Wichita taxpayers will give up as much as $1.2 million if the City Council approves a $6 million loan to bail out the troubled Old Town Warren Theatre this week. That’s because that $6 million, which would pay off the theater’s debt and make it the only fully digital movie theater in Kansas, would otherwise be invested and draw about 3 percent interest a year.”

Besides Warren, you may — or may not — be surprised to learn that the theater’s partners included Dave Wells and Dave Burk, the same two men mentioned above. Also, Mayor Brewer’s relationship with Warren means he should not have voted on this matter.

WichitaLiberty.TV August 11, 2013

WichitaLiberty.TV logo

In this episode of WichitaLiberty.TV, host Bob Weeks asks if shoppers have ever paid extra sales tax in Wichita’s Community Improvement Districts, and describes efforts by the city to avoid disclosure of this tax. Then, are there similarities between Wichita and Detroit? Finally, a Sedgwick County Commissioner is worried about agriculture being driven out of the county, but Bob thinks he doesn’t need to worry. Episode 8, broadcast August 11, 2013. View below, or click here to view on YouTube.

Language makes a difference

No longer is it “Sustainable Communities.” Now it’s “South Central Kansas Prosperity Plan.” Either way, the program is still centralized government planning, with great potential to harm our economy and liberties.

South Central Kansas Prosperity Plan

The newly-renamed planning initiative has a new website set to launch in a few days — Let’s Talk Prosperity.

But no matter how politicians and bureaucrats dress it up, we need to remember the roots of this program. It took from 1987 to 2012, but Sedgwick County actually adopted the language of the United Nations regarding sustainability.

Those critical of sustainability planning are concerned that engaging in the practice has the potential to import harmful policies and practices originating from the United Nations. Critics of these critics say this is nonsense and overreacting. Tin-foil hat stuff, they say. Examples as reported in the Wichita Eagle come from Commissioner Dave Unruh and Commission Chair Tim Norton:

Unruh said he sees the grant simply as an “effort to make decisions about our future for us and our future generations that will save money, conserve resources and be the best solutions for all the folks in our region.” …

Norton said he sees the grant as a way to “look to the future, try to figure out best possible outcomes and make decisions today that will be good for tomorrow.”

“We’re all in this together. You may not like the federal government. You may not like the state government. You may not even like the local government. But I like being at the table and being involved in the future.”

He dismisses any connection to Agenda 21.

“It was a non-binding agreement passed during the first Bush era,” he said of former president George H.W. Bush. “I don’t rail on President Bush because it happened on his watch. I’m not twitchy about it. I’m not worried about it.”

It’s instructive to notice, however, that the language Sedgwick County uses when considering sustainability comes directly from the United Nations. General Assembly Resolution 42/187: Report of the World Commission on Environment and Development holds this language: “Believing that sustainable development, which implies meeting the needs of the present without compromising the ability of future generations to meet their own needs, should become a central guiding principle of the United Nations, Governments and private institutions, organizations and enterprises.” (emphasis added)

Sedgwick County’s Sustainability Page holds this: Definition of Sustainability for Sedgwick County … Meeting the needs of the present without compromising the ability of future generations to meet their needs … (emphasis added)

Sedgwick County left out the word “own,” but otherwise the language is identical. This definition was repeated on the county’s 2012 Employee Sustainability Survey.

The Sedgwick County page — and other county documents — mention economic development, environmental protection, institutional and financial viability, and social equity as “the four core factors that Sedgwick County considers when making community policy and program management decisions.” These goals are often mentioned in Agenda 21 documents, especially social equity.

Government planning, itself, is dangerous

The very existence of a government plan is dangerous, as its construction creates powerful constituencies that have shaped it to fit their needs and are highly motivated to see it implemented.

Planning

In Sunday’s Wichita Eagle, Sedgwick County Commissioner Tim Norton defended the regional community planning initiative underway in south-central Kansas. (Tim Norton: Planning effort helps shape region’s future)

Much of the Commissioner’s article simply described the program and the need for it in vague generalities that are neither correct or incorrect, and which do little to advance understanding of what is really likely to happen.

But Norton did write something useful when he attempted to deflect the fact that this is a government plan, backed by the ability of government to compel compliance (or make it very expensive to avoid). He wrote: “This is not about any one governing body or level of government imposing or mandating what we should do. It is about what we decide collectively is best for our region and then choosing to make it happen.”

When the Sedgwick County Commission voted to participate in this HUD Sustainable Communities Regional Planning Grant, some commissioners justified their votes in favor of the plan because “it’s only a plan.” If we develop a plan, and then we find we don’t like it, we can shelve it. Problem solved.

This meme of “it’s only a plan” that can be shelved is likely to be repeated. Watch for it.

Except: By shelving time, millions will have been invested in the plan. Reputations like Norton’s will depend on adopting the plan. Bureaucratic jobs will be at stake (See Sedgwick County considers a planning grant for an explanation of how planning help make work for bureaucrats and academics.)

Besides boosting the interests of politicians and bureaucrats, the government planning process started in south-central Kansas will likely be captured by special interest groups that see ways to benefit from the plan. The public choice school of economics and political science has taught us how special interest groups seek favors from government at enormous costs to society, and we will see this at play again over the next years.

Once the planning process begins, special interests plot to benefit themselves at the expense of the general public. We saw this at work in the first project to emerge after the Wichita downtown planning process (Project Downtown), where public policy was shaped on the fly to meet the needs of politically-connected special interests, at detriment to the public.

Most importantly: The very existence of a government plan is dangerous, as the plan itself becomes a reason to proceed, contrary to reason and harm to liberty and economic freedom.

An example of how much reverence is given to government plans comes right from the U.S. Supreme Court in the decision Kelo v. New London, in which the Court decided that government could use the power of eminent domain to take one person’s property and transfer it to someone else for the purposes of economic development. In his opinion for the Court, Justice Stevens cited the plan: “The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” Here we see the importance of the plan and due reverence given to it.

Stevens followed up, giving even more weight to the plan: “To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.”

To Stevens, the fact that the plan was comprehensive was a factor in favor of its upholding. The sustainable communities plan, likewise, is nothing but comprehensive, as described by county manager Bill Buchanan in a letter to commissioners: “[the plan will] consist of multi-jurisdictional planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic prosperity, social equity, energy use and climate change, and public health and environmental impact.”

That pretty much covers it all. When you’re charged with promoting economic prosperity, defending earth against climate change, and promoting public health, there is no limit to the types of laws you might consider. This likely to be the argument to follow whatever emerges from Commissioner Norton’s planning process.

In Sedgwick County, misplaced concern for an industry

Wheat harvestExpressing concern about a large industry that he said is important to Sedgwick County and Kansas, Sedgwick County Commissioner Tim Norton spoke in favor of the need for comprehensive government planning. He cited the commonly-held belief that humans, with their desire for large suburban home lots, are depleting the stock of available farmland.

Specifically, Norton said “Agribusiness is the third largest economic driver in our community, in our region.”

But is this true? Using 2010 figures from the Kansas Statistical Abstract, these are the largest industries in Kansas in terms of gross domestic product:

Industry GDP (millions)
State and local government $13,047
Real estate and rental and leasing $11,794
Health care and social assistance $9,898
Durable goods manufacturing $9,620
Finance and insurance $8,426
Retail trade $8,324
Wholesale trade $7,910
Non-durable goods manufacturing $7,750
Professional and technical services $6,652
Information $5,806
Agriculture, forestry, fishing, and hunting $4,612
Transportation and warehousing $4,418
Construction $4,062
Federal military $3,816
Administrative and waste services $3,769
Other services, except government $3,250
Accommodation and food services $3,157
Utilities $2,639
Federal civilian $2,608
Management of companies and enterprises $1,769
Mining $1,472
Educational services $770
Arts, entertainment, and recreation $506

 

Agriculture ranks below many other industries. In most years agriculture would rank even lower, but because of high farm prices in recent years, it ranks higher than it has.

Norton also expressed concern that humans with large home lots would deplete the land available for agriculture. But he need not worry, as I show in Saving farms from people.

Saving farms from people

Wheat combine on farm

Last week at a meeting of the Sedgwick County Commission, Commissioner Tim Norton spoke in favor of the need for comprehensive government planning. In support, he cited the commonly-held belief that humans — especially with their desire for large suburban home lots — are depleting the stock of farmland to the point of being detrimental to agribusiness.

Here’s part of what Norton said (video below):

Now I know people don’t like the idea of sprawl and growth rings and all that, but the truth is there is a balance between where people live and preserving our good agricultural lands and how do you make that work. And that’s being able to sustain part of our economy. Agribusiness is the third largest economic driver in our community, in our region, and to say that we’re okay with every five acre tract being taken up by somebody’s rural residence sounds really good if you’re talking only property rights. But if you’re talking about preserving and sustaining agribusiness you gotta have the land and it’s got to be set aside for that enterprise.

Farms and ranches being driven out of existence by homeowners — that sounds like a problem that might threaten our food supply. But what are the facts?

First, there is an overabundance of farmland in America. There is so much farmland that we pay farmers billions each year to refrain from planting crops. We pay corn farmers billions in subsidies each year and then use their crops for motor fuel, instead of for making fine Kentucky bourbon and taco shells, as God intended.

Considering Sedgwick County, as that is what Norton represents: Despite being the second-most populous county in Kansas and home to its largest city and surrounding suburban communities, Sedgwick County ranks fourth among Kansas counties in the number of farms, thirty-fourth in farmland acres, seventh in total harvested cropland acres, thirty-third in market value of harvested crops, sixty-sixth in market value of livestock, and eighty-seventh in pasture acres. (Data from Kansas Farm Facts 2011, reporting on 2007 farm statistics.)

There’s something else that might ease Commissioner Norton’s concern, if he would only believe in the power of markets over government: That is the price system. If we were truly running short of farmland, crop prices would rise and farmland would become more valuable. Fewer people would be willing to pay the price necessary to have a five-acre home lot.

In fact, if crop prices were high enough, farmers would be buying back the five-acre lots, or perhaps paying homeowners to rent their yards for planting crops or grazing livestock.

In either case, markets — through the price system — provide a solution that doesn’t require politicians and bureaucrats. There are many other areas in which this is true, but government nonetheless insists on regulation and control.

The power of prices, as told by Thomas Sowell: “The last premiere of the Soviet Union, Mikhail Gorbachev, is said to have asked British Prime Minister Margaret Thatcher: How do you see to it that people get food? The answer was that she didn’t. Prices did that. And the British people were better fed than those in the Soviet Union, even though the British have never grown enough food to feed themselves in more than a century. Prices bring them food from other countries.”

Wichita economic development solution, postponed

Recent reporting in the Wichita Business Journal on Wichita’s economic development efforts has many officials saying Wichita doesn’t have enough incentives to compete with other cities. That is, we are not spending enough on incentives.

Whether these incentives are good economic development policy is open for debate. I don’t believe we need them, and that we in Kansas and Wichita can chart another course to increase economic freedom in Kansas. That will make our area appealing to companies. But our local bureaucrats, most business leaders, and nearly all elected officials believe that targeted incentives are the way to attract and retain business.

(Charts at the end of this article illustrate the record in Wichita on jobs.)

Our leaders have identified what they believe is a solution to a problem, but have not implemented that solution effectively, in their own words.

I should say have not implemented the solution on a widespread basis, because Wichita has devoted more tax money to economic development. According to the 2010 City Manager’s Policy Message, page CM-2, “One mill of property tax revenue will be shifted from the Debt Service Fund to the General Fund. In 2011 and 2012, one mill of property tax will be shifted to the General Fund to provide supplemental financing. The shift will last two years, and in 2013, one mill will be shifted back to the Debt Service Fund. The additional millage will provide a combined $5 million for economic development opportunities.”

So the city has decided to spend more tax dollars on economic development, but this allocation is being phased out — at the same time nearly everyone is calling for more to be spent in this area.

Isn’t this a failure of political and bureaucratic leadership? We have a long-standing problem, officials have identified what they believe is a solution, but it is not being implemented. These leaders have the ability to spend more on economic development, as illustrated by Wichita’s shifting of tax revenue.

Even if we believe that an active role for government in economic development is best (and I don’t believe that), we have to conclude that our efforts aren’t working. Several long-serving politicians and bureaucrats that have presided over this failure: Mayor Carl Brewer has been on the city council or served as mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for many years. At Sedgwick County, manager William Buchanan has held that position for 21 years. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. Unruh has said he wants to be Wichita’s next mayor.

Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But as he approaches his fourth anniversary in Wichita, he starts to become part of the legacy of Wichita’s efforts in economic development.

Wichita’s job creation record

Two charts illustrate the record of job growth in Wichita. The first shows Wichita job growth compared to Kansas and the nation. Data is from U.S. Bureau of Economic Analysis, and indexed with values for 2001 set to 1.00.

As you can see, job growth in Wichita trails both Kansas and the nation.

The next chart shows Wichita job growth by sector.

Private sector job growth is prominently lower than government. This is a problem, because more economic activity is directed away from the productive private sector to inefficient government.

Sedgwick County Commission: Let’s not vote today

At the October 31 meeting of the Sedgwick County Commission, Karl Peterjohn introduced a measure that would let the Kansas Legislature know that the commission supports improving the tax climate in Kansas, and specifically would limit property tax growth. But electoral politics forced a delay in a vote.

In response to Peterjohn’s proposal, the coalition of one Democrat and two liberal Republicans that form the working majority on the commission maneuvered to delay voting on the measure until after the November 6 election. With the item appearing on tomorrow’s agenda, it’s very likely that the majority coalition — Commission Chair Tim Norton, Dave Unruh, and Jim Skelton — will vote against the proposal.

Why the rush for delay? Norton was facing a vigorous challenge in the election. He couldn’t afford to cast a vote against property tax reform. With Skelton publicly supporting Norton, and Unruh doing so behind the scenes, the two Republicans supported their liberal Democratic fellow traveler in delaying the vote until after the election.

But after the election, Norton is free to vote against property tax reform. Skelton and Unruh don’t face the voters for another two years, and they’ll be relying on the short memory span of most voters.

From the United Nations to Sedgwick County

It took from 1987 to 2012, but Sedgwick County has adopted the language of the United Nations regarding sustainability.

Those critical of sustainability planning are concerned that engaging in sustainable communities planning has the potential to import harmful policies and practices originating from the United Nations. Critics of these critics say this is nonsense and overreacting. Examples as reported in the Wichita Eagle come from Commissioner Dave Unruh and Commission Chair Tim Norton:

Unruh said he sees the grant simply as an “effort to make decisions about our future for us and our future generations that will save money, conserve resources and be the best solutions for all the folks in our region.” …

Norton said he sees the grant as a way to “look to the future, try to figure out best possible outcomes and make decisions today that will be good for tomorrow.”

“We’re all in this together. You may not like the federal government. You may not like the state government. You may not even like the local government. But I like being at the table and being involved in the future.”

He dismisses any connection to Agenda 21.

“It was a non-binding agreement passed during the first Bush era,” he said of former president George H.W. Bush. “I don’t rail on President Bush because it happened on his watch. I’m not twitchy about it. I’m not worried about it.”

The language Sedgwick County uses when considering sustainability comes directly from the United Nations. General Assembly Resolution 42/187: Report of the World Commission on Environment and Development holds this language: “Believing that sustainable development, which implies meeting the needs of the present without compromising the ability of future generations to meet their own needs, should become a central guiding principle of the United Nations, Governments and private institutions, organizations and enterprises.” (emphasis added)

Sedgwick County’s Sustainability Page holds this: Definition of Sustainability for Sedgwick County … Meeting the needs of the present without compromising the ability of future generations to meet their needs … (emphasis added)

Sedgwick County left out the word “own,” but otherwise the language is identical. This definition was repeated on the county’s 2012 Employee Sustainability Survey.

The Sedgwick County page — and other county documents — mention economic development, environmental protection, institutional and financial viability, and social equity as “the four core factors that Sedgwick County considers when making community policy and program management decisions.” These goals are often mentioned in Agenda 21 documents, especially social equity.

Sedgwick County tower sale was not in citizens’ best interest

The sale of a radio tower owned by Sedgwick County reveals another case of local government not looking out for the interests of citizens and taxpayers, with the realization that the stain of cronyism is alive and well.

As a result of system upgrades, the county no longer needs a radio tower located near 77th Street North and Interstate 135. Pixius Communications, LLC made an offer to purchase the tower and the five acre tower site for $280,000. The county proceeded making arrangements for the sale, preparing a sales agreement contract between Sedgwick County and Pixius with a sales price of $280,000, along with several other legal documents necessary to support the sale. These documents are available at the agenda file for this item.

According to sources, County Manager William Buchanan supported the Pixius offer. So did commissioners Dave Unruh and Jim Skelton.

But commissioners Richard Ranzau and Karl Peterjohn felt that the best way to sell the tower was through an auction.

Commission Chair Tim Norton, because of his receipt of campaign contributions from Pixius, Jay Maxwell (owner of Pixius), and Penny Maxwell (spouse of owner), was going to abstain from voting. (Skelton has accepted contributions from the Maxwells, but he was going to vote nonetheless.)

So there was not a majority of three votes to accept the Pixius offer. Buchanan suggested the auction. All commissioners agreed.

Now we know the results of the auction: A Florida company offered $610,000. After a sales commission ($55,000) and half of closing costs ($1,128), the county will net $553,872. That’s almost twice the price the county manager and two commissioners were willing to sell the tower for.

There’s something else: What will be the appraised value of the tower and site for tax purposes? The selling price of a property is strong evidence of its value. As a result of the auction, therefore, this property is likely to be appraised at $610,000 instead of $280,000. That’s good for those who think it’s good for government to bring in more tax revenue.

This episode is another instance where no-bid contracts and cronyism cost taxpayers. Maxwell, the almost-beneficiary of this sweetheart no-bid contract, has been the recipient of many benefits at taxpayer expense, such as tax increment financing and community improvement district taxes. He’s tried for more, but even the Wichita City Council has a limit to its cronyism, now and then. Although cronyism and no-bid contracts have been a problem at Wichita City Hall.

Interestingly, a recent KSN Television news story characterized Ranzau and Peterjohn as “hardline fiscal conservatives.” The story went on to report “Incumbent Democrat Tim Norton often sides with the two more moderate members of the commission with many votes being decided by a 3-2 margin.” Those moderate members are, of course, Unruh and Skelton.

Norton didn’t have to take sides — at least publicly — on this issue, but I’m confident that if this was not an election year for Norton, he would have voted for the original Pixius deal that we now see was a disaster for taxpayers.

In the KSN story Norton was quoted as saying “I’m a business man of many years in Wichita. I understand the business climate and job retention.”

Unruh and Skelton are also businessmen. I hope these commissioners look after their personal business with more care and concern than they have shown for the business of taxpayers.

Tim Norton commercial: Some context

A television advertisement for Tim Norton, candidate for re-election to the Sedgwick County Board of Commissioners, contains claims that, while probably true, hide the reality of Norton’s record.

Tim Norton television advertisement

One claim in the ad is that “I’ve worked hard to create new jobs, and save what we have.” A graphic in the ad reads “Over 18,000 new & retained jobs.”

I don’t know the source of the job claims, but the numbers provided by Greater Wichita Economic Development Coalition, our area’s economic development organization, must be viewed with caution.

An example is MoJack, a company which had received a forgivable loan from Wichita and Sedgwick County based on promises to create a certain number of jobs.

But later MoJack revised its projections of job creation from 53 down to 26.

A larger example is likely to be reported soon is the case of Hawker Beechcraft. Economic development officials are taking credit for retaining 4,500 jobs there, a dubious claim to begin with. But there have been hundreds of layoffs this year.

Do economic development officials revise their statistics in response to these later events?

We ought to also take a look at Sedgwick County employment since Norton took office in 2001. The following chart shows that the number of people working in Sedgwick County is lower now than in 2001. We’ve endured two recessions during that time, to be sure, and these were not the fault of anyone in Sedgwick County government. And while jobs are created, others are lost due to the dynamic nature of the economy.

But when we talk about creating jobs, we ought to also take a look at the entire employment situation.

Another look at Sedgwick County employment shows that government employment has grown at the expense of private sector jobs.

I’m not saying that Tim Norton is responsible for the growth of federal and state employees in Sedgwick County during his three terms as commissioner. But this information provides context to any claims of job creation or growth.

A recent report from GWEDC shows us that power of government to influence economic development is weak. The organization claimed to have created 1,509 jobs in Sedgwick County during 2011. According to the Bureau of Labor Statistics, the labor force in Sedgwick County in 2011 was 253,940 persons. So the jobs created by GWEDC’s actions amounted to 0.59 percent of the labor force. This is a very small fraction, and other economic events are likely to overwhelm these efforts. See Wichita economic development isn’t working.

Tim Norton television advertisement

Another graphic in the commercial reads “Reduced the mill levy 3 consecutive years.” This is true. But it’s not the entire history of Sedgwick County property taxes while Norton has been on the commission. The chart below illustrates.

Notice how the property tax rate jumps in 2006? It increased from 28.758 to 31.315 mills, according to Sedgwick County Comprehensive Annual Financial Reports. That’s an increase of 8.9 percent. Tim Norton, along with other commissioners, explicitly voted for this tax increase on August 9, 2006. It wasn’t an accidental increase. It was deliberate.

While Norton in later years voted with other commissioners to reduce the mill levy — making the claim in the advertisement true — these reductions were not at his initiative. Instead, his attitude, I believe, is revealed by his opposition to initiatives that would require voter approval for tax increases. He prefers to keep the power to raise taxes.

Wichita economic development initiatives to be announced

Tomorrow the Wichita Metro Chamber of Commerce will announce, according to the Wichita Eagle, new economic development initiatives. Said to be the product of months of discussion, past history suggests that the efforts will not be fruitful for the Wichita area. The inclinations of the parties involved in this effort are for more government intervention and less reliance on economic freedom and free markets.

Do economic development incentives work?

Judging the effectiveness of economic development incentives requires looking for the unseen effects as well as what is easily seen. It’s easy to see groundbreaking and ribbon cutting ceremonies. It’s more difficult to see that the harm that government intervention causes.

That’s assuming that the incentives even work as advertised in the first place. Alan Peters and Peter Fisher, in their paper titled The Failures of Economic Development Incentives published in Journal of the American Planning Association, wrote on the effects of incentives. A few quotes from the study, with emphasis added:

Given the weak effects of incentives on the location choices of businesses at the interstate level, state governments and their local governments in the aggregate probably lose far more revenue, by cutting taxes to firms that would have located in that state anyway than they gain from the few firms induced to change location.

On the three major questions — Do economic development incentives create new jobs? Are those jobs taken by targeted populations in targeted places? Are incentives, at worst, only moderately revenue negative? — traditional economic development incentives do not fare well. It is possible that incentives do induce significant new growth, that the beneficiaries of that growth are mainly those who have greatest difficulty in the labor market, and that both states and local governments benefit fiscally from that growth. But after decades of policy experimentation and literally hundreds of scholarly studies, none of these claims is clearly substantiated. Indeed, as we have argued in this article, there is a good chance that all of these claims are false.

The most fundamental problem is that many public officials appear to believe that they can influence the course of their state or local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering their expectations about their ability to micromanage economic growth and making the case for a more sensible view of the role of government — providing the foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.

Other economists have studied tax increment financing (TIF) and have concluded that it is an overall negative factor for the entire region where it is used. Another study found that TIF districts created for retail use had a negative effect on municipal employment.

Last week Dave Trabert wrote in the Kansas Policy Institute blog: “There’s a very simple reason that these well-intended initiatives haven’t worked: local government and their public-private partners are offering employers what they want them to have instead of what they need to create jobs. The Wichita Chamber’s own survey of business owners said taxes were too high. WIBA’s member survey identified tax and regulatory issues as their top concerns, as did the US Chamber of Commerce. Yet government and their public-private partners ignore what the customer wants because they don’t want the same things.”

Wichita’s record on economic development

Earlier this year Wichita Mayor Carl Brewer said that the city’s efforts in economic development had created “almost 1000 jobs.” While that sounds like a lot of jobs, that number deserves context.

According to estimates from the Kansas Department of Labor, the civilian labor force in the City of Wichita for December 2011 was 192,876, with 178,156 people at work. This means that the 1,000 jobs created accounted for from 0.52 percent to 0.56 percent of our city’s workforce, depending on the denominator used. This miniscule number is dwarfed by the normal ebb and flow of other economic activity.

It’s also likely that the city’s economic development efforts were not responsible for a large proportion of these jobs. But government still takes credit. Also, the mayor did not mention the costs of creating these jobs. These costs have a negative economic impact on those who pay them. This means that economic activity — and jobs — are lost somewhere else in order to pay for the incentives.

The mayor’s plan going forward, in his words, is “We will incentivize new jobs.” But under the mayor’s leadership, this “active investor” policy has produced a very small number of jobs, year after year. Doubling down on the present course is not likely to do much better.

There’s even confusion over whether our efforts are working. In 2005, a Wichita Eagle editorial commented on a GWEDC report: “Among the points in Thursday’s report worthy of pride was this: the observation by coalition president J.V. Lentell that he’s never seen the cooperation on economic development between the public and private sectors as good as it is now. ‘I’m here to tell you, I think it’s on track,’ Lentell said, emphatically.” (July 29, 2005)

But in January of this year, an Eagle article listed several things Wichita needs, such as free land and buildings, money for closing deals, and a larger promotions budget. The reporter concluded “The missing pieces have been obvious for years, but haven’t materialized for one reason or another.”

So even if we believe that an active role for government is best, we have to conclude that our efforts aren’t working. Several long-serving politicians and bureaucrats that have presided over this failure: Mayor Carl Brewer has been on the city council or served as mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for many years. At Sedgwick County, manager William Buchanan has held that position for 21 years. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. (Unruh has said he wants to be Wichita’s next mayor.)

These people all believe in government-directed economic development. We need to hold them accountable.

Finally, consider Wichita job growth. As shown in the accompanying chart, the growth in government employees has outstripped private sector job growth. The increase in local government employees is particularly striking.

Wichita job growthWichita job growth. Data is indexed, with 1990 equal to 1. Source: Bureau of Labor Statistics.

What our leaders want

I don’t know what will be in the economic development plan, but it is possible — likely, even — that there will be a call for a tax revenue stream for economic development. In February a company location consultant told Wichita leaders “Successful communities need a dedicated stream of money for economic development.” The news story reported “He was preaching to the choir. GWEDC leaders have been saying for some time that now is the time to go to the business community and the public to make the case for more money and resources.” (Consultant: Wichita needs sites, closing fund to lure business, Wichita Eagle February 16, 2012.)

Wichita leaders continually call for more “tools in the toolbox” for economic development. They have spoken approvingly of a sales tax for such purposes. Money, of course, is what funds the tools.

At one time local chambers of commerce would oppose tax increases. They would promote free market principles as the way to create a positive business environment. But this year it was the official position of the Wichita Chamber that eight government subsidy programs was not enough for a downtown hotel, and that there should be a ninth.

A few years ago Stephen Moore wrote a piece for the Wall Street Journal that that shows how very often, local chambers of commerce support principles of crony capitalism instead of pro-growth policies that support free enterprise and genuine capitalism: “The Chamber of Commerce, long a supporter of limited government and low taxes, was part of the coalition backing the Reagan revolution in the 1980s. On the national level, the organization still follows a pro-growth agenda — but thanks to an astonishing political transformation, many chambers of commerce on the state and local level have been abandoning these goals. They’re becoming, in effect, lobbyists for big government. … In as many as half the states, state taxpayer organizations, free market think tanks and small business leaders now complain bitterly that, on a wide range of issues, chambers of commerce deploy their financial resources and lobbying clout to expand the taxing, spending and regulatory authorities of government. This behavior, they note, erodes the very pro-growth climate necessary for businesses — at least those not connected at the hip with government — to prosper. Journalist Tim Carney agrees: All too often, he notes in his recent book, ‘Rip-Off,’ ‘state and local chambers have become corrupted by the lure of big dollar corporate welfare schemes.'”

Does Wichita have the will?

Dr. Art Hall, who is Director of the Center for Applied Economics at the Kansas University School of Business has made a convincing case that less government involvement, not more, is needed. He argues that a dynamic economy is what Kansas needs, not one where government directs taxpayer investment for economic growth.

Hall writes this regarding “benchmarking” — the bidding wars for large employers that are the foundation of Wichita economic development, and the battle for which Wichita is likely preparing: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

Hall’s paper on this topic is Embracing Dynamism: The Next Phase in Kansas Economic Development Policy.

We need to recognize that government as active investor doesn’t work. A serious problem with a plan for increased economic interventionism by government is the very nature of knowledge. In a recent issue of Cato Policy Report, Arnold King wrote:

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

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

Relying on economic freedom and free market solutions for economic growth and prosperity means trusting in the concept of spontaneous order. That takes courage. It requires faith in the values of human freedom and ingenuity rather than government control. It requires that government officials let go rather than grabbing tighter the reins of power, as will probably be the key feature of Wichita’s new economic development plan.

But Wichita’s mayor is openly dismissive of economic freedom, free markets, and limited government, calling these principles “simplistic.” Instead, he and most others prefer cronyism and corporate welfare. That hasn’t worked very well so far, and is not likely to work in the future.

Open records again an issue in Kansas

Responses to records requests made by Kansas Policy Institute are bringing attention to shortcomings in the Kansas Open Records Act.

Those who have made records requests in Kansas are probably not surprised that KPI has had difficulty in having its records requests respected and filled. In 2007 Better Government Association and National Freedom of Information Coalition gave Kansas a letter grade of “F” for its open records law. Last year State Integrity Investigation looked at the states, and Kansas did not rank well there, either. See Kansas rates low in access to records.

This week KPI president Dave Trabert appeared before the Sedgwick County Commission to express his concerns regarding the failure of Greater Wichita Economic Development Coalition to fulfill a records request made under the provisions of the Kansas Open Records Act. Video is at Open government in Sedgwick County Kansas.

While commissioners Karl Peterjohn and Richard Ranzau spoke in favor of government transparency and compliance with records requests, not all their colleagues agreed.

Dave Unruh asked Trabert if GWEDC had responded to his records request. Trabert said yes, and the response from GWEDC is that the agency believes it has complied with the open records law. This, he explained, is a common response from agencies.

Commission Chair Tim Norton expressed concern that any non-profit the commission gives money to would have to hire legal help, which he termed an unintended consequence. He made a motion to receive and file Trabert’s remarks, which is routine. His motion also included taking this matter under advisement, which is what politicians do in order to bury something. Unruh seconded the motion.

Peterjohn made a substitute motion that a representative from GWEDC would appear before the commission and discuss the open records act. This motion passed four to one, with Unruh in the minority. Even though Norton voted in favor of Peterjohn’s motion, it’s evident that he isn’t in favor of more government transparency. Unruh’s vote against government transparency was explicit.

Wichita school district records request

USD 259, the Wichita public school district, also declined to fulfill a records request submitted by KPI. In a press release, KPI details the overly-legalistic interpretation of the KORA statute that the Wichita school district uses to claim that the records are exempt from disclosure.

In a news report on KSN Television, school board president Lynn Rogers explained the district’s reason for denying the records request: “But some school board members with USD 259 in Wichita say, the numbers brought up in court are preliminary numbers. That’s the reason they are not handing them over to KPI. ‘We have worked very hard over the years to be very forthright and we’ve tried to disclose the information when we have it,’ says Lynn Rogers.'”

This claim by Rogers — if sincere — is a break from the past. In 2008 Rogers told me that it is a burden when citizens make requests for records.

Until recently the Wichita school district had placed its monthly checkbook register on its website each month, and then removed it after a month had passed. Rogers explained that the district didn’t have space on its servers to hold these documents. That explanation is total nonsense, as the pdf check register documents are a very small fraction of the size of video files that the district hosted on its servers. Video files, by the way, not related to instruction, but holding coverage of groundbreaking ceremonies.

City of Wichita

KPI has made records requests to other local governmental agencies. Some have refused to comply on the basis that they are not public agencies as defined in Kansas statutes. This was the case when I made records requests to Wichita Downtown Development Corporation, Greater Wichita Economic Development Coalition, and Go Wichita Convention and Visitors Bureau.

In 2009 I addressed the Wichita City Council and asked that the city direct that WDDC follow the law and fulfill my records requests. (Video is at Video: City of Wichita and the Kansas Open Records Act.)

In my remarks, I told Mayor Carl Brewer and the council this:

The Kansas Open Records Act (KORA), in KSA 45-216 (a) states: “It is declared to be the public policy of the state that public records shall be open for inspection by any person unless otherwise provided by this act, and this act shall be liberally construed and applied to promote such policy.”

But in my recent experience, our city’s legal staff has decided to act contrary to this policy. It’s not only the spirit of this law that the city is violating, but also the letter of the law as well.

Recently I requested some records from the Wichita Downtown Development Corporation. Although the WDDC cooperated and gave me the records I requested, the city denies that the WDDC is a public agency as defined in the Kansas Open Records Act.

This is an important issue to resolve.

In the future, requests may be made for records for which the WDDC may not be willing to cooperate. In this case, citizens will have to rely on compliance with the law, not voluntary cooperation. Or, other people may make records requests and may not be as willing as I have been to pursue the matter. Additionally, citizens may want to attend WDDC’s meetings under the provisions of the Kansas Open Meetings Act.

Furthermore, there are other organizations similarly situated. These include the Greater Wichita Economic Development Coalition and the Go Wichita Convention and Visitors Bureau. These organizations should properly be ruled public agencies as defined in the Kansas Open Records Act so that citizens and journalists may freely request their records and attend their meetings.

Here’s why the WDDC is a public agency subject to the Open Records Act. KSA 45-217 (f)(1) states: “‘Public agency’ means the state or any political or taxing subdivision of the state or any office, officer, agency or instrumentality thereof, or any other entity receiving or expending and supported in whole or in part by the public funds appropriated by the state or by public funds of any political or taxing subdivision of the state.”

The Kansas Attorney General’s office offers additional guidance: “A public agency is the state or any political or taxing subdivision, or any office, officer, or agency thereof, or any other entity, receiving or expending and supported in whole or part by public funds. It is some office or agency that is connected with state or local government.

The WDDC is wholly supported by a special property tax district. Plain and simple. That is the entire source of their funding, except for some private fundraising done this year.

The city cites an exception under which organizations are not subject to the Kansas Open Records Act: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.”

The purpose of this exception is so that every vendor that sells goods and services to government agencies is not subject to the Kansas Open Records Act. For example, if a city buys an automobile, the dealer is not subject simply because it sold a car to the city.

But this statute contains an important qualifier: the word “solely.” In this case, the relationship between the City of Wichita and the WDDC is not that of solely customer and vendor. Instead, the city created a special tax district that is the source of substantially all WDDC’s revenue, and the existence of the district must be renewed by the city soon. The WDDC performs a governmental function that some cities decide to keep in-house. The WDDC has only one “customer,” to my knowledge, that being the City of Wichita.

Furthermore, the revenue that the WDDC receives each year is dependent on the property tax collected in the special taxing district.

The only reasonable conclusion to draw is that in terms of both funding and function, the WDDC is effectively a branch of Wichita city government.

The refusal of the city’s legal department to acknowledge these facts and concede that the WDDC is a public agency stands reason on its head. It’s also contrary to the expressly stated public policy of the state of Kansas. It’s an intolerable situation that cannot be allowed to exist.

Mr. Mayor and members of the council, it doesn’t take a liberal application of the Kansas Open Records Act to correct this situation. All that is required is to read the law and follow it. That’s what I’m asking this body to do: ask the city legal department to comply with the clear language and intent of the Kansas Open Records Act.

The following year when WDDC’s contract was before the council for renewal, I asked that the city, as part of the contract, agree that WDDC is a public agency as defined in Kansas law. (Video is at Kansas Open Records Act at Wichita City Council.) Then-council member Paul Gray, after noting that he had heard all council members speak in favor of government transparency, said that even if WDDC is not a public agency under the law, why can’t it still proceed and fulfill records requests? This is an important point. The Kansas Open Records Act contains many exclusions that agencies use to avoid releasing records. But agencies may release the records if they want.

Any council member could have made the motion that I asked for. But no one, including Gray, former council member Sue Schlapp, former member Jim Skelton (now on the Sedgwick County Commission), Mayor Carl Brewer, and council members Jeff Longwell (district 5, west and northwest Wichita), Janet Miller (district 6, north central Wichita), and Lavonta Williams (district 1, northeast Wichita) would make a motion to increase government transparency and citizens’ right to know. Wichita city manager Robert Layton offered no recommendation to the council.

Last year I appeared again before the council to ask that Go Wichita agree that it is a public agency as defined in the open records act. Randy Brown, who is chair of the Kansas Sunshine Coalition for Open Government and former opinion page editor of the Wichita Eagle was at the meeting and spoke on this matter. In his remarks, Brown said “It may not be the obligation of the City of Wichita to enforce the Kansas Open Records Act legally, but certainly morally you guys have that obligation. To keep something cloudy when it should be transparent I think is foolishness on the part of any public body, and a slap in the face of the citizens of Kansas. By every definition that we’ve discovered, organizations such as Go Wichita are subject to the Kansas Open Records Act.”

Brown said that he’s amazed when public officials don’t realize that transparency helps build trust in government, thereby helping public officials themselves. He added “Open government is essential to a democracy. It’s the only way citizens know what’s going on. … But the Kansas Open Records Act is clear: Public records are to be made public, and that law is to be construed liberally, not by some facile legal arguments that keep these records secret.”

He recommended to the council, as I did, that the contract be contingent on Go Wichita following the Kansas Open Records Act.

Discussion on this matter revealed a serious lack of knowledge by some council members regarding the Kansas Open Records Act. In remarks from the bench James Clendenin (district 3, southeast and south Wichita) asked the city manager a series of questions aimed at determining whether the city was satisfied with the level of service that Go Wichita has provided. He then extended that argument, wondering if any company the city contracts with that is providing satisfactory products or service would be subject to “government intrusion” through records requests. Would this discourage companies from wanting to be contractors?

First, the Kansas Open Records Act does not say anything about whether a company is providing satisfactory service to government. That simply isn’t a factor, and is not a basis for my records request to Go Wichita. Additionally, the Kansas Open Records Act contains a large exception, which excepts: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.” So companies that sell to government in the ordinary course of business are not subject to the open records law. Go Wichita is distinguished, since it is almost entirely funded by taxes and has, I believe, just a single client: the City of Wichita.

Finally, we should note that the open records law does not represent government intrusion, as Clendenin claimed. Open records laws offer citizens the ability to get an inside look at the working of government. That’s oversight, not intrusion.

Pete Meitzner (district 2, east Wichita) asked that there might be a workshop to develop a policy on records requests. He expressed concern that departments might be overwhelmed with requests from me that they have to respond to in a timely fashion, accusing me of “attempt to bury any of our departments in freedom of information acts [sic].” Such a workshop would probably be presented by Wichita City Attorney Gary Rebenstorf. His attitude towards the open records law is that of hostility, and is not on the side of citizens.

In making this argument, Mr. Meitzner might have taken the time to learn how many records requests I’ve made to the city. The answer, to the best of my recollection, is that I made no requests that year to the city citing the open records act. I have made perhaps a half-dozen informal requests, most of which I believe were fulfilled consuming just a few moments of someone’s time.

As to Meitzner’s concern over the costs of fulfilling records requests: The law allows for government and agencies to charge fees to fulfill requests. They often do this, and I have paid these fees. But more important than this, the attitude of council member Meitzner is troubling. Government should be responsive to citizens. As Randy Brown told the council, government should welcome opportunities to share information and be open and transparent.

Michael O’Donnell (district 4, south and southwest Wichita) made a motion that the contract be approved, but amended that Go Wichita will comply with the Kansas Open Records Act. That motion didn’t receive a second.

Brown and I appeared on the KAKE Television public affairs program This Week in Kansas to discuss this matter. Video is at In Wichita, disdain for open records and government transparency.

Enforcement of Kansas Open Records Act

In Kansas, when citizens believe that agencies are not complying with the Kansas Open Records Act, they have three options. One is to ask the Kansas Attorney General for help. But the policy of the Attorney General is to refer all cases to the local District Attorney, which is what I did. The other way to proceed is for a citizen to pursue legal action at their own expense.

After 14 months, Sedgwick County DA Nola Foulston’s office decided in favor of the governmental agencies. See Sedgwick County DA Response to KORA Request to Wichita Downtown Development Corporation.

When newspapers have their records requests refused, they usually give publicity to this. The Wichita Eagle is aware of my difficulties with records requests in Wichita, as their reporters have attended a number of meetings where my records requests were discussed, sometimes at length. But so far no coverage of an issue that, were the newspaper in my shoes, would undoubtedly covered on the front page. Something tells me that KPI won’t get any coverage, either.

Additional information on this topic is at:

Wichita voters reject cronyism — again

Tuesday’s primary election in Kansas was notable for the large number of victories by conservative challengers over Republican senate incumbents. Also important is that voters in Wichita and the surrounding area rejected, for the second time this year, the culture of political cronyism that passes for economic development in Wichita.

On Tuesday incumbent Sedgwick County Commissioner Karl Peterjohn defeated a challenge by Wichita City Council Member Jeff Longwell. The contrast was clear: Peterjohn with his long-time, outspoken advocacy for limited government and free market principles, although perhaps tempered a bit based on some votes he’s made. Longwell, however, advocates for “more tools in the toolbox.” In other words, a larger role for government in economic development and centralized planning.

The result: Peterjohn won, 57 percent to 43 percent.

Longwell had the endorsements of many Wichita-area politicians, including Wichita Mayor Carl Brewer and all other Wichita City Council members except Michael O’Donnell (district 4, south and southwest Wichita): Vice Mayor Janet Miller (district 6, north central Wichita) and council members Lavonta Williams (district 1, northeast Wichita), James Clendenin (district 3, southeast and south Wichita), and Pete Meitzner (district 2, east Wichita).

Sedgwick County Commission members Tim Norton, Jim Skelton, and Dave Unruh also endorsed Longwell.

In addition to these endorsements, Longwell had a large money advantage over Peterjohn. According to campaign finance reports filed July 30, Longwell had raised nearly $62,000.

Peterjohn’s July 30 report showed about $20,000 raised, so as of that date Longwell had over three times as much campaign money at his disposal than Peterjohn.

The money advantage and the endorsements are linked. On Longwell’s July 30 campaign finance report we learned that executives of a Michigan construction company made campaign contributions immediately before and after Longwell participated in a city council voted that benefited them. Key Construction, a heavy contributor to Longwell’s campaign, also benefited from Longwell’s vote that day. This was just another episode in Longwell’s history of voting for overpriced no-bid contracts and no-interest city loans for his large campaign contributors.

The day after Peterjohn held a news conference questioning Longwell’s Michigan contributions, Longwell held the news conference that announced the above-mentioned endorsements. Many of those endorsers also receive campaign money from those they award with no-bid contracts and other taxpayer-funded largesse.

Despite the advantage in campaign funds and the endorsements, voters in west Wichita and west Sedgwick County rejected the political cronyism that is Jeff Longwell’s legacy in government service.

It’s the second time this year voters have rejected cronyism. In February Wichita voters voted down a tax giveaway to the Ambassador Hotel by a margin of 62 percent to 38 percent.

Longwell played a role in that election, too. When citizens exercised their constitutional right to challenge the taxpayer-funded giveaway to the hotel, Jeff Longwell said it was “disappointing,” and a “stunt.” He said that using this fundamental aspect of democracy causes citizens to “lose credibility.”

When it came time for the council to set the date for the special election on the hotel tax, Longwell attempted to have the election commissioner set the date as early as possible, obviously thinking that a short campaign would benefit the hotel developers.

Those hotel developers, by the way, included many of Longwell’s long-time campaign contributors.

After Wichita voters rejected this special tax deal, the Wall Street Journal in a column titled “A Wichita Shocker: You can beat city hall” wrote: “Local politicians like to get in bed with local business, and taxpayers are usually the losers. So three cheers for a voter revolt in Wichita, Kansas last week that shows such sweetheart deals can be defeated.”

It’s no wonder Longwell was disappointed when citizens petitioned their government. Voters soundly rejected the political cronyism and sweetheart deals that are Longwell’s legacy.

Skelton, Sedgwick County Commissioner, censured by party

Yesterday evening the Sedgwick County Republican Party censured a Sedgwick County Commissioner for supporting a Democrat in an upcoming election.

Treatha Brown-Foster, who is chair of Kansas Black Republican Council, offered a resolution critical of Jim Skelton.

The resolution read: “Whereas, Jim Skelton, an elected Republican official in Sedgwick County, who has benefited from the support of the Sedgwick County Republican Party, has publicly supported a Democratic candidate over a Republican candidate for election to the Sedgwick County Commission. Be it resolved that Jim Skelton be censured for this action.”

The resolution was met with applause. The motion was seconded and the vote to approve it was unanimous.

In June Skelton expressed his support in a Wichita Eagle article for incumbent Tim Norton over challenger Ben Sauceda. Norton is a Democrat; Sauceda is a Republican. The two face no primary challenges, and will meet in the November 6th general election.

In January Skelton joined with fellow Republican Commissioner Dave Unruh to elect Norton as commission chair. Despite Republicans holding a four to one majority, the commission is chaired by a Democrat.

Sedgwick County will hold Southfork TIF hearing

Since the Wichita City Council passed a resolution authorizing the formation of the Southfork tax increment financing district, the affected county (Sedgwick) and school district (Wichita) have an opportunity to veto the district’s formation. They don’t have to take action to approve the district — only silent assent is required. But they can take action, as Sedgwick County did in January, to cancel the formation of the district.

At Tuesday’s commission staff meeting, commission chair Tim Norton along with commissioners Dave Unruh and Jim Skelton didn’t believe a public hearing was necessary the matter should not be placed on the agenda. That would mean the county gave its silent consent to the district’s formation.

But after learning of that action, myself and at least two others contacted the county manager’s office and asked to be placed on the public agenda portion of the meeting, where citizens may address any topic.

Whether we would be allowed to speak was touch-and-go. County policy is that speakers must “provide your request in writing to the Sedgwick County Manager’s Office at least nine days prior to the meeting date.” The emphasis is in the original. (I wonder if email counts as writing?)

(That lengthy nine day lead time is a problem in itself. I believe that good public policy requires that the lead time be at least one day less than the period between meetings of the body, which is case of this commission, is normally seven days.)

But late Tuesday someone at the courthouse had a change of heart or mind, and now there will be a public hearing on Wednesday May 9th on this matter. Strictly speaking, it’s not a public hearing, but the item will be on the agenda, and it’s anticipated that chairman Norton will allow the public to address the commissioners on this issue.

I can understand (but not approve of) the motives of the three commissioners who approve of this district not wanting to hear members of the public speak against this item and their policies. Especially when the public has shown their skepticism on these matters, an example being the vote turning down an incentive for the Wichita Ambassador Hotel. In that election, voters repudiated the big-spending, big-government programs of the liberal Republicans on the Wichita City Council. If citizens could vote on the formation of this TIF ddistrict, commissioners Skelton and Unruh might find themselves in the same situation.

Federal, United Nations planning imported to Wichita

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

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

Local Planning Initiative Has Federal Strings, UN Roots

by Paul Soutar, Kansas Watchdog

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

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

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

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

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

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

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

Sedgwick County commissioners vote Democratic

This morning the Sedgwick County Commission voted to select member Tim Norton of Haysville as chairman for the upcoming year. Norton, a Democrat, received the votes of two of the board’s four Republican members: Those of outgoing Chairman Dave Unruh and Jim Skelton.

Commissioner Karl Peterjohn nominated Richard Ranzau for the position, but he received only two votes.

It may be remarkable that a board with a four to one majority in one party elected a member of the minority party to serve as chair, or it may simply be a reflection of the actual ideological makeup of the board. Peterjohn and Ranzau consistently take stances and make votes that favor limited government and free markets, while Unruh and Skelton generally join with the politically-liberal Norton on most issues. The chairman is more than just a ceremonial position, as the chairman presides over commission meetings. On many agenda items, the commission is not obligated to hear testimony from citizens, although it must when there are items that have public hearings required by law. It was the practice of Kelly Parks and Peterjohn, when they served as chair, to allow anyone who appeared at meetings to speak. In his term as chair, Unruh was seen as less accommodating, although I think that anyone who really cared to was allowed to speak, sometimes with a gentle admonition to hurry along. It is unknown in what manner Norton will run the meetings while he is chair. A hint: He’s objected to the term “ObamaCare” as pejorative, so I wouldn’t use that word around the courthouse.

For Chairman Pro Tem, the commissioners selected Skelton. Ranzau’s name was placed into nomination by Peterjohn, and he received the same two votes as he did for chairman. The votes for Skelton by Norton and Unruh are surprising. Skelton’s recent behavior has been erratic, even bizarre at times. His recent appearance at the Wichita City Council (video here) brought laughter and guffaws from both the bench and the public. I got the sense, however, the people were laughing at Skelton, not with him.

Unruh’s selection for 2011 Chairman’s award

Chairman Unruh selected Visioneering Wichita as the recipient of the annual Chairman’s award. This organization is in favor of government intervention into the economy — and people’s lives — on a large and increasing scale. Most of the items on its legislative agenda involve more government spending. While Visioneering — its chair Jon Rolph, anyway — denies advocating for increased taxes, Milton Friedman has taught us that it is the level of spending that is the true measure of the size of government. The size of that Visioneering seeks to expand.

Kansas and Wichita quick takes: Friday July 1, 2011

This Week in Kansas. On this week’s edition of the KAKE Television public affairs program This Week in Kansas, Ken Ciboski (Associate Professor of Political Science at Wichita State University), John D’Angelo (Arts & Cultural Services Manager for the City of Wichita), and myself join host Tim Brown for a discussion of arts and government funding in Kansas. This Week in Kansas airs in Wichita and western Kansas at 9:00 am Sundays on KAKE channel 10.

Kansas taxes. A short report produced by Americans for Prosperity, Kansas shows some of the reasons why economic growth in Kansas has been sluggish: “Kansas’ state and local tax burden continues to be amongst the highest in the region.” Kansas has fewer private sector jobs than it did ten years ago. And in what should be a grave cause for alarm, Kansas was the only state to have a net loss of private sector jobs over the last year. … A table of figures illustrates that although Oklahoma kept its sales tax rate low and constant while Kansas increased its rate, tax revenue increased much more in Oklahoma. Download the report at AFP-Kansas Income Tax Policy Primer.

Wichita sales tax. Speaking of sales tax and its harmful effect, Wichita seems to want to raise its rate. Proposals have been floated for a sales tax for economic development in general, for increased transit (bus) service, for drainage projects, and for downtown projects. Boosters cite the Intrust Bank Arena as an example of a successful project paid for by a sales tax that disappeared as promised. That’s despite the dreams of Sedgwick County Commissioner Tim Norton: “Then, as that tax was nearing its end, Norton ‘wondered … whether a 1 percent sales tax could help the county raise revenue.’ (‘Norton floats idea of 1 percent county sales tax,’ Wichita Eagle, April 4, 2007)” … Boosters of the arena promote it as a financial success, and there was the presentation to the county of a check for $1,116,442 as its share of the arena’s earnings. This figure, however, does not represent any sort of “profit” or “earnings” in the usual sense. In fact, the introductory letter that accompanies these calculations warns readers that these are “special-purpose financial statements” and “are not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America.” In particular, Commissioner Karl Peterjohn has warned that these figures — and the monthly “profit” figures presented to commissioners — do not include depreciation expense. That expense is a method of recognizing and accounting for the large capital cost of the arena. In April the County released that number, and I believe it has not been reported by any news media. That may be because the number is pretty big — $4.4 million, some four times the purported “earnings” of the arena. … Without honest discussion of numbers like these, we make decisions based on incomplete and false information. Don’t look for many local government leaders and officials to talk about this number, and certainly not the Wichita Eagle editorial page.

Koch criticism backfires — again. For those who follow the issue, it’s no surprise that Lee Fang, a reporter for the liberal think tank Canter for American Progress has come out with another attack on Charles and David Koch. Mark Hemingway of the Weekly Standard reports on this effort: “Think Progress reporter Lee Fang has a long history of being spectacularly wrong. However, there’s a seemingly unending thirst for his breathless demonization of the Koch brothers and other rants about corporate greed among the low IQ end of the liberal spectrum.” Fang disagrees with a recent U.S. Supreme Court decision, and he lambasts the litigators who brought the suit as “heavily financed by right-wing corporate money, particularly from Koch Industries and Walmart.” He also criticizes organizations for not dislosing their donors. Hemingway notes this: “In the case of the Koch brothers, they have been outspoken philosophical libertarians for decades. Their support of free speech over onerous campaign laws is entirely consistent and should not be surprising. However, in the case of Wal-Mart Fang is also astoundingly hypocritical. Because you know who else is a ‘Walton-Funded Group’? Lee Fang’s employer.” And the secret donations that Fang rails against so passionately? Hemingway again: “You know who else accepts ‘secret donations from individuals and corporations’? That’s right — the Center for American Progress.” … For another example of Fang’s reporting, see ThinkProgress and Lee Fang: wrong again.

Tension on debt ceiling issue. In The Wall Street Journal Kimberly Strassel writes that the current debt and spending crisis may lead to an end to farm subsidies, something she described as a “sacred federal spending cow:” “For decades, the House and Senate agriculture committees have been the last redoubts of congressional bipartisanship, liberals and conservatives united in beating back any outside attempts to cut off tens of billions annually for price supports, crop insurance, weather assistance, conservation handouts and nutrition programs. The last real stab at reform was the mid-1990s Freedom to Farm bill. Most of the changes were obliterated by subsequent bailouts and new spending.” … She describes how Arizona Congressman Jeff Flake got a limit of farm subsidies through the Appropriations Committee, but House Agriculture Committee Chairman Frank Lucas used a maneuver to block Flake’s proposal. So much for that effort at reform, blocked by a Republican. Lucas’ website promotes a conservative message, with one post criticizing bailouts. But not for farmers, it seems. … Wichita’s Mike Pompeo is mentioned: “Mr. Pompeo is waiting to see what debt package emerges and says his vote will depend on whether it contains real ‘structural’ reform. But he also tells me he doesn’t intend to let parochial interests cloud his decision. ‘I came here to be a small-government guy every day, and not just when it is spending cuts in somebody else’s district,’ he says.” … Although not mentioned in this article, Tim Huelskamp, who represents the Kansas first district, has been upfront in discussing the need to reduce or eliminate farm subsides, and so far, many farmers seem to be accepting of that. Huelskamp’s district, which covers all of western Kansas (and more), is usually second on the list of congressional districts in terms of total farm subsidies received. For 2009, that figure was $369 million.

Stossel: The Money Hole. A recent episode of John Stossel’s television program is now available on the free hulu service by clicking on The Money Hole. Writes Stossel in his introduction to the show: “We will soon spend ourselves into oblivion. But finally … movement! Budget slashing proposals from Paul Ryan, the Republican Study Committee, Ron Paul, Rand Paul and even Tim Pawlenty! But politicians and real people across the spectrum still resist change. What should government do? What’s its role? What have other countries done? The Money Hole tackles that.”

In Wichita, start of a solution to federal spending

At the Sedgwick County Commission, newly-elected commissioner Richard Ranzau voted three times against the county applying for grants of federal funds, showing a possible way that federal spending might be brought under control.

During the meeting, Ranzau asked staff questions about where the funding for the grant programs was coming from, which, of course, is the federal government, sometimes routed through the Kansas Department of Commerce. Sometimes local spending is required by these grants.

In opposing the programs, Ranzau said that federal government spending is too high. Also, our level of debt is too high, and that the cost of these spending programs is passed on to future generations. He also didn’t see where the U.S. Constitution authorizes activity like the commission — in partnership with the federal government — is considering undertaking.

Ranzau offered an alternative: if the commission believes these projects are important to us as a community, we could pay for them ourselves and pay for them now.

Commissioner Jim Skelton argued that if we don’t apply for and receive this money, the federal government will spend it anyway, and someone else will receive it. “I think we can end up screwing our constituency by opposing this on the philosophy that our government is too big.”

He said he doesn’t agree with the “rampant spending of stimulus money” and would like to see it end, but he didn’t see how refusing this money would make a difference.

Constitutional basis questioned

During discussion, Skelton asked county counselor Richard Euson a question: “Can you tell me about the constitutionality of this issue? How on earth can this happen if it’s not constitutional?”

Euson was flummoxed by the question, and admitted that he was not prepared to answer the question. This is not to be held against the county’s attorney, as questions like this are rarely asked — an indication of the novelty of Ranzau’s position and how infrequently elected officials and staff consider questions such as the fundamental role of government and its level of involvement.

The job of a commissioner, according to Norton

In discussion about one grant program, Commissioner Tim Norton asked a question designed to make sure that Ranzau knew that the project was located in his district. On a grant for a transportation plan, Norton again asked a question designed to make sure that Ranzau knew whose district this plan would serve, referring to former commissioner Kelly Parks’ support of the program.

These questions by Norton highlight the problem with district-based representation, where representatives of districts are expected to bring as much government largess as possible back to their districts. At the federal level this problem is illustrated by the earmarking process. Locally, we see that Sedgwick County Commissioners are assumed to be in favor of any project that benefits their districts, regardless of the overall worth of the project or its cost.

A bottom-up solution to federal spending?

At a town hall meeting on Saturday, I asked Kansas fourth district Congressman Mike Pompeo, who represents all of Sedgwick County, about his opinion of ground-up opposition to federal spending and debt, rather than waiting for Congress and the President to solve the problem from the top down.

Pompeo didn’t answer the question directly, but said that from now on, each law passed by Congress will have a section that states the constitutional authority for the legislation. He also said that the federal government is involved in many areas that it should not be involved in, adding “So many times the question is ‘should we reduce this agency’s budget by three percent,’ and the proper question is ‘why does this agency exist?'”

While the new U.S. House of Representatives is full of enthusiasm for cutting spending, here we see an example of just how difficult cutting spending will be. Local governments are addicted to grants like the three discussed above. A congressman who voted to cut programs like these will hear from the affected constituents, and would also likely hear from the Sedgwick County staff who are advocates for these projects and spending. If more elected officials would vote against these programs, that would make it easier for Congress to cut off the flow of spending.

We should also remember that Ranzau offered an alternative: fund the programs ourselves. The problem is that we are funding them ourselves, through the roundabout trip of tax dollars going to Washington, which then sends them back, in this case in the form of grants with many conditions and restrictions on the way the money can be spent. So Skelton is correct: the federal government will spend the money anyway. But to go along means that the hole is dug deeper. More crudely, the federal government says: implement this program in our way, because you’ve already paid for it, and you don’t want to piss away your taxes somewhere else.

Perhaps a coalition of forward-thinking local government officeholders like Ranzau and U.S. Congressmen like Pompeo can join together to bring the spending under control. It will take courage, especially from the local officeholders.

Peterjohn presses taxpayer protection platform through Sedgwick County Commission

At today’s meeting of the Sedgwick County Commission, commissioners revised the county’s 2010 legislative platform, adding important and groundbreaking taxpayer protection to the platform. The split vote lets voters know without a doubt where commissioners stand on taxpayer protection issues.

The legislative platform is Sedgwick County’s “wish list” for the legislature. The items in the platform are not laws, but instead indicate the desires of the county commission.

Commissioner Karl Peterjohn proposed new language to add to the legislative platform: “All local sales tax increases must be approved by voters under Kansas law. All property tax increases that raise the mill levy should also be required to receive voter approval.”

Kansas has no such provision, and this is a defect, Peterjohn said. Kansas is one of the few states that have property taxes at the city, county, school district, and state levels. Most states did away with state-wide property taxes in the 1930s, he said, but Kansas did not.

Peterjohn made a motion that this language be included in the legislative platform, and Chairman Kelly Parks seconded.

Peterjohn noted that three of the four states surrounding Kansas have such limitations.

Commissioner Tim Norton asked a question that revealed that cities have more authority than counties to raise sales tax. He said this is an issue of equity, of rebalancing the ways that counties can fund their government. “Counties don’t have the ability to have more tools in their toolbox other than just property tax. … We’re very restricted.” He added that he doesn’t like the idea of artificial ceilings being placed on the county.

Commissioner Dave Unruh agreed with Norton, saying local officials are elected to carry out the responsibility of making responsible budget decisions. A limitation from the state makes no sense, he said.

Norton made the point that the state can place a lid on the ability of counties to raise funds through taxation, and may still place mandates on what counties must do. This compresses the decisions that the commission gets to make, and goes against representative government.

Peterjohn’s motion passed three to two, with Commissioner Gwen Welshimer and Parks joining Peterjohn in the majority, with Unruh and Norton in the minority.

After the meeting, Peterjohn said this platform language represents a major change in the county’s position, a reversal of the county’s historic position on property tax policy. This action is also at odds with the Kansas Association of Counties. It’s a major change, he said.

“Traditionally the local government lobby has been in lockstep opposition to any requirement that property tax hikes get voter approval. Sedgwick County’s shift today is extremely significant for the second-most populous county in the state, the county that contains the largest city in the state, to support voter approval for any increase in property taxes.”

Analysis

Requiring voter approval of tax increases was one the “Five Reasons to Back Karl Peterjohn” that Peterjohn used in his successful campaign for the county commission last year. His action today represents a move towards fulfilling that pledge.

It’s important to remember what the commission passed was simply their desire — and a split decision at that — for the legislature to pass a law requiring voter approval of tax increases. Whether the legislature acts on this request is anyone’s guess. For such a law to have any chance, it will take a determined advocate to press for it. The commission’s action today created no such advocate. As it stands now, the county will not have a lobbyist in Topeka next year, as the budget passed in August provided no funding for a lobbyist.

Officeholders who are in favor of more government spending are generally opposed to giving voters the right approve or refuse tax rate increases, for the simple reason that voters often refuse to approve the tax hikes. Often the argument is given that the elections that are now necessary are expensive, and there may be emergencies that require the rapid raising of funds. There may be small amounts of validity in these arguments. But tax revenues, through the natural forces of economic growth and rising property tax appraisals, rise on their own without any help from officeholders. Anything that restrains the growth of tax rates, which is what today’s proposal does, is welcome relief as a restraint on the runaway growth of government.

Wichita sales tax likely to be proposed

Two recent events have led me to suspect that as part of the plan for the revitalization of downtown Wichita, we’re going to see a sales tax proposed.

The first is Phillip Brownlee’s editorial in last Friday’s Wichita Eagle, which carried the title Taxes are lower than many think. While this editorial focused on property taxes, it’s easy to see this as an argument that Wichitans can bear the burden of more taxation. Softening up the electorate, so to speak.

Then, there’s this email sent to the Wichita city council and Sedgwick county commission members:

I recently received the attached information on Oklahoma City’s next plan for their downtown area. This is their MAPS program that spurred their downtown developed. I thought you might find this of interest.

http://www.okc.gov/maps3/

Sincerely,

John Rolfe
President and CEO
Go Wichita Convention & Visitors Bureau

MAPS — that’s the program that funded Oklahoma City’s downtown improvements through a sales tax, with a second version funding school projects — will be voted on in December. If approved, a 1% sales tax will raise funds for more downtown projects. This email, without saying so directly, endorses the idea of a sales tax for downtown development.

What’s the sales tax in Oklahoma City, you may be wondering? It’s 8.375%. It won’t change if the new MAPS plan is approved by the voters, as a current 1% tax will expire.

That sales tax was billed as “temporary,” and it does appear that it will expire as planned. But, city leaders are recommending approval of the new sales tax. This is similar to the sales tax for the downtown Wichita arena, when as that tax was nearing its end, Sedgwick County Commissioner Tim Norton “wondered … whether a 1 percent sales tax could help the county raise revenue.” (“Norton floats idea of 1 percent county sales tax,” Wichita Eagle, April 4, 2007)

The sales tax for Wichita is 6.3%.

City leaders are likely to use the the Intrust Bank Arena in downtown Wichita as an example of a successful project funded through a sales tax. But any assessment of the success of this project is about two years away. The fact that the arena exists is evidence of a minimum level of competence. It will be some time before we know whether the arena can support itself without being a drain on taxpayers, despite the provisions of the SMG management contract.

In Wichita, we’re going to have to be watchful. The drumbeats of new taxation have started.

Lack of information clouds Sedgwick County industrial park plans

At yesterday’s meeting of the Board of Sedgwick County Commissioners, questions about a proposed industrial park development reveal that there’s still a long way to go before all issues are uncovered, much less understood.

At the meeting, Chris Chronis, Chief Financial Officer for Sedgwick County, presented information and responded to questions. While Mr. Chronis was thorough in some areas, even some basic information and understanding is missing.

For example, questioning by Board Chairman Kelly Parks revealed that it is unknown at this time who owns the mineral rights to the property.

Commissioner Karl Peterjohn asked Chronis about the relationship between the county and the city of Bel Aire, if the land is not deannexed from that city. Chronis said there is a “complete understanding” about the role each governmental unit would play. Peterjohn then asked if that agreement was in writing. Chronis replied no.

Peterjohn asked about the costs of other things besides land acquisition, citing a figure of $.50 to $2.00 per square foot for specific streets, landscaping, telephone and communications lines, natural gas, and other items. This could amount, Peterjohn said, to $9 to $35 million in costs that aren’t included at this point.

Chronis said “It has not been our plan, nor our intent, to do any infrastructure development within this industrial park. What we are committed to do is to provide site-ready land, build-ready land, to the industrial prospects. They have to make that land serve their purposes.”

Chronis also said it’s not his plan to spend any money on the interior of this land for these things. But sources in the real estate industry tell me that prospective tenants will expect these things to be done. Somehow government will have to provide incentives to cover these costs, and these costs are not being recognized by the county at this time.

The deannexation of the land from Bel Aire is an issue that may be difficult to resolve. Remarks by Commissioner Tim Norton brought up the scenario that platting the land, if it remains in Bel Aire, would go through that city’s planning commission. That could be problematic, said Norton, if that commission wouldn’t allow the types of things the county wants to do.

The commissioners voted unanimously to defer this matter for 30 days and to have a public workshop on this issue. The date for the workshop was not set.

Wichita downtown arena open records failure

Yesterday, the company that manages the Intrust Bank Arena (the downtown Wichita arena) announced a lease with the arena’s flagship tenant, the Wichita Thunder hockey team. But we don’t know the details of the lease. Unbelievably, some Sedgwick County Commissioners and managers are okay with that.

The Wichita Eagle article Details of Intrust Bank Arena contract with Thunder are a secret reports the details.

I believe that the Eagle will be successful in pursuing a copy of the lease agreement from SMG (the company managing the arena for Sedgwick County) under the Kansas Open Records Act. Here’s why:

The KORA states that “‘Public agency’ means the state or any political or taxing subdivision of the state or any office, officer, agency or instrumentality thereof, or any other entity receiving or expending and supported in whole or in part by the public funds appropriated by the state or by public funds of any political or taxing subdivision of the state.”

Although immediately next comes an exception, excluding “Any entity solely by reason of payment from public funds for property, goods or services of such entity.”

I believe the exception is meant to prevent a company who, say, sells pencils to the county from being subject to KORA.

But the relationship between SMG and the county is different. Sedgwick County has outsourced the management of the arena to SMG. The county is paying SMG, too. According to the contract, $8,000 per month at this time.

The county and SMG have a broad nondisclosure agreement in their contract, although this can’t override the KORA.

Besides the legalities of this, SMG and Sedgwick County need to find a way where this lease agreement can be made available to the public. I recently obtained a copy of the existing lease agreement between the Thunder and the county in anticipation of comparing it with the new agreement, the one shrouded in secrecy.

If SMG decides to keep this contract secret, it will be a public relations disaster for them.

It’s also a strike against the Sedgwick County managers who negotiated the contract with SMG that contains this provision, and against the commissioners who voted for it. Sedgwick County Commissioner Tim Norton seems to be the prime apologist for the secret contract.

Let’s hope that SMG changes their mind soon and releases the contract.

Sedgwick County Commission fails citizens

At yesterday’s meeting of the Sedgwick County Commission, Commissioners Tom Winters, Tim Norton, and Dave Unruh failed to take an opportunity to stand up for good government.

By ratifying the City of Wichita’s defective public hearing, notice is given that it’s open season on citizens. Their concerns are shoved aside. Commissioners say they were constrained by a very narrow range of action permitted by law. The reasons they voted against this TIF district in August are still there, though present in smaller measure.

The problem is that these politicians want something so badly that they’re willing to overlook major problems in procedures that are designed to give citizens a voice. Newspaper editorial writers aren’t helping. They’re usually at the forefront of “good government” efforts. But not the Wichita Eagle’s Rhonda Holman, who wrote this in today’s lead editorial: “Yes, as some argue, the city should have done a better job of allowing public input on the arena TIF district. The late changes to the Dec. 2 City Council agenda left the public and at least one council member unfamiliar with the plan to add $10 million for future parking needs, arming critics and fueling public distrust of local government generally.” But, she’ll go along with this action anyway.

Nothing that this TIF district can build is as important as destroying citizen confidence and procedures designed to give them a voice.

Thank you to Commissioners Gwen Welshimer and Kelly Parks for voting for the interests of citizens instead of those of Wichita’s political entrepreneurs.