Tag Archives: Wichita city government

Revolving Door Between Press and Government Turns Again

Mr. Van Williams, Wichita Eagle city hall reporter for the past three years, will become Wichita’s public information coordinator.

I believe there needs to be a tension between the press and the government officials it covers. The press needs to hold officials accountable. It needs to dig deep to uncover facts officials don’t voluntarily concede. It needs to ask them tough questions. It needs to make them angry from time to time.

Would the City of Wichita hire someone who had been doing that?

Wichita City Council Meeting, April 19, 2005

Some quotes and my remarks from the April 19, 2005 meeting of the Wichita City Council, where the AirTran subsidy was considered. Representatives from Delta attended and spoke.

Allen Bell, Economic Development Director for the City of Wichita:

Previous contracts had a dollar amount cap on them. The new contact, we refer to it as a no-cap contract. There is not, in the terms of the agreement, a specific dollar amount that is the not-to-exceed amount. In place of that there is a termination clause that allows the City to terminate its contract with 75 days notice for whatever reason. And the reason, of course, the major reason, would be that we know that within that 75 days, we will deplete the funds that the City believes is appropriate to spend on this.

I was startled to hear this information, that the new contract has no dollar cap, as this has not been, in my memory, reported. It has been reported that AirTran sought a no-cap contract, but that Wichita would not agree to that. But it turns out that the city has agreed to what, in effect, is a no-cap contract. Yes, I believe Mr. Bell when he says that Wichita can cancel the contract, with notice, if the city believes it will spend more than the $2.5 million it has committed to. I would submit, however, that if the City spends the $2.5 million and realizes it needs to spend more to keep AirTran in town, the City Council would vote to do so. Therefore, the no-cap contract is in effect.

Councilmember Schlapp extracted an admission from the Delta representative that Delta is not profitable on the Wichita route now, but they believe they will be soon. Ms. Schlapp concluded that there is no need, then, for a subsidy to Delta.

Mayor Mayans said we have been discriminated against, rate-wise.

Mayor Mayans: “Many of us, actually, are opposed philosophically to government interventions, because we feel that sometimes tilts the playing field.” The Mayor says one thing, but acts in a different way. What good is it to have a philosophical belief if it doesn’t guide your actions?

Mayor Mayans and the Delta representative disagreed on who made telephone calls to whom and at what time. (Mayor Mayans: “So you didn’t call me back!” “Communications is a two way street!” Delta: “My recollection of it differs slightly from yours.” “I don’t recall it was my responsibility to get back to you.”) It is disheartening to realize that major public policy decisions may be made based on incomplete information, because someone didn’t get a telephone message.

Councilmember Martz:

“I guess to me, when I look at competition, if you’re losing money, then you ought to raise your rates enough so that you’re not losing money.”

“I’m a firm believer in competition.”

“I would prefer not having any financial help from the city, but rather through pure competition, all carriers reduce their rates to a level that they number one, can make a profit, at the same time make it economical for the citizens of the whole state of Kansas to be able to fly in and out of Wichita …”

Like the mayor, Mr. Martz says one thing but acts in a different manner. His advice to airlines on how to set their fares is misplaced. We have to assume that businesses act in their best interests, and let it go at that.

Sam Williams, Chairman of Fair Fares, who evidently is so well-known to Council members that he doesn’t introduce himself when he started to speak:

“You know, Kansas in 1861 became a very important state in the history of this country, just before we went into the great dark area of the civil war. You know, we were a key state. What we did at that time had a lot to do with what happened and where we went from there. I would submit that little old Wichita, Kansas is doing that to the airline industry right now. Because of your vision, you are looking at different ways to bring fair pricing in an industry that is kind of broken, in getting them to look at themselves, us to look at ourselves, and how can we partner together to do this. Kansas again is a key, integral part of a change in this country.”

First, to equate our state’s role in the civil war with subsidizing an airline is ludicrous. Second, I feel very sad that Kansas may become the leader in subsidies, and that business leaders applaud this. Mr. Williams, I would ask you if you would welcome a governmental body deciding whether the rates that your business charges are fair, and if not fair, subsidizing your competitor?

AirTran Subsidy Remarks

Following are remarks I am delivering to several groups, including the Wichita City Council, in April 2005.

AirTran Subsidy is Moving in Wrong Direction

We were persuaded to accept the AirTran subsidy in 2002 as a temporary measure, to allow AirTran to build a presence here, and that the subsidy would no longer be needed at some time. But now we see that the situation is moving in the opposite direction, as AirTran asks for even a larger subsidy.

Economic Impact Overstated

The argument that many Fair Fares supporters make is flawed. They are grossly — I would say even speciously — overstating the importance of the airport to our local economy.

As an example, Mr. Troy Carlson, then Chairman of Fair Fares, wrote a letter that was published on September 16, 2004 in the Wichita Eagle. In that letter he claimed $2.4 billion economic benefit from the Fair Fares program ($4.8 billion for the entire state). I was curious about how these figures were derived. Through correspondence With Mr. Steve Flesher, air service development director for the city of Wichita, I learned that the basis for them is a study by the Center for Economic Development and Business Research at Wichita State University that estimates the economic impact of the airport at $1.6 billion annually. In this study, the salaries of the employees of Cessna and Bombardier, because these companies use the airport’s facilities, are counted as economic impact dollars that the airport is responsible for generating.

To me, this accounting doesn’t make sense on several levels. For one thing, if we count the economic impact of the income of these employees as belonging to the airport, what then do we say about the economic impact of Cessna and Bombardier? We would have to count it as very little, because the impact of their employees’ earnings has been assigned to the airport.

Or suppose that Cessna tires of being on the west side of town, so it moves east and starts using Jabara Airport. Would Cessna’s economic impact on Sedgwick County be any different? I think it wouldn’t. But its impact on the Wichita airport would now be zero. Similar reasoning would apply if Cessna built its own runway.

Or it may be that someday Cessna or Bombardier will ask Sedgwick County for some type of economic subsidy, and they will use these same economic impact dollars in their justification. But these dollars will have already been used, as they were attributed to the airport.

It is a convenient circumstance that these two manufacturers happen to be located near the airport. To credit the airport with the economic impact of these companies — as though the airport was involved in the actual manufacture of airplanes instead of providing an incidental (but important) service — is to grossly overstate the airport’s role and its economic importance.

To its credit, the WSU CEDBR study does provide some figures with the manufacturing employees excluded. The impact without the manufacturing employees included is estimated at $183 million, or about 11 percent of the $1.6 billion claimed earlier.

Structural Changes in Airfares

In the past few months, most American airlines have simplified their fare structures. Notably they have dramatically cut last-minute walk-up fares, which are the type of high fares that AirTran was supposed to provide an alternative to. In light of these structural changes in airfares, we do not know what would happen to airfares in Wichita if AirTran left.

Fares to the West May Hold Clue

Since AirTran doesn’t fly to the west, it may be that looking at westbound fares could give us a clue as to what eastbound fares would be in AirTran’s absence. I took three eastern cities (all served by AirTran) and three western cities and compared airfares for a Tuesday through Thursday trip booked two days in advance. The westbound tickets averaged $74 higher than eastbound — an increase, but not anywhere near the magnitude that subsidy supporters claim fares would rise by if AirTran leaves. I would welcome someone with more experience than me researching this.

Subsidies Distort Markets

The subsidy distorts the market process through which individuals and businesses decide how to most productively allocate capital.

Subsidies Create Dependence on Government

When government pays a subsidy to one company or industry, it creates an environment where others expect a subsidy, too. For example, we shouldn’t expect any other airline to start service to Wichita unless they receive a subsidy like AirTran does.

Companies in other industries see local government as a source of subsidy, so they ask for subsidies to locate to Wichita. Even local established companies threaten to leave Wichita unless they receive subsidies. This creates an environment where, year after year, local governments make investment decisions for us instead of relying on the collective judgment of free market allocation of resources. This corporate welfare — which is what the AirTran subsidy is, plain and simple — is very harmful.

Other Articles

“The Downside of Being the Air Cap” by Harry R. Clements at wichitaliberty.org/wichita-government/the-downside-of-being-the-air-cap/. Mr. Clements’s article makes a striking conclusion as to why airfares in Wichita were so high.
“Stretching Figures Strains Credibility” at wichitaliberty.org/wichita-news-media/stretching-figures-strains-credibility/. This article contains a link to the WSU CEDBR study.
“Letter to County Commissioners Regarding AirTran Subsidy” at wichitaliberty.org/sedgwick-county-government/letter-to-county-commissioners-regarding-airtran-subsidy/
“End Corporate Welfare, Starting with Industrial Revenue Bonds” at wichitaliberty.org/role-of-government/end-corporate-welfare-starting-with-industrial-revenue-bonds/

Poetry: Welcome New Council Members

Contributed by Kenneth Kindler


WELCOME NEW COUNCIL MEMBERS

I AM OLD AND SICK AND GETTING GRAY
I DON’T KNOW WHERE I WILL GET THE MONEY THAT THE CITY WANTS ME TO PAY.

I WONDER ABOUT THIS TOWN THAT WE LIVE IN.
WHERE THE MAYOR SPENDS HIS TIME DOWN IN OLD TOWN FIGHTING SIN.

WE SUBSUDIZE A AIRLINE THAT MANY OF US CANNOT AFFORD TO FLY.
WE HAVE SPENT MILLIONS DOWNTOWN, I WONDER WHY.

HOW MANY OF US CAN AFFORD TO PAY
FOR PLACES THAT ONLY A FEW CAN PLAY.

DO WE NEED A DOWNTOWN ARENA?
A WATER WALK.
NOW WE ARE GOING TO SELL CENTURY II OR IS THAT JUST TALK.

OUR LEADERS HAVE HAD MANY MONEY LOSING SCEMES IN THE PAST.
EXPLORATION PLACE AND THE ICE RINK WERE A COUPLE
BUT THEY WERN’T THE LAST.

WHEN WILL IT STOP THIS INSANE PLAN
TO EMPTY OUR POCKETS AS FAST AS THEY CAN.

WE HAVE BEEN BULLYED, LIED TO AND RAN INTO THE GROUND.
NOW IS THE TIME FOR US TO REBOUND.

SO COUNCIL MEMBERS WE WANT YOU TO KNOW
IF THIS KEEPS UP YOU ARE GOING TO GO.

SO NEW MEMBERS WE HOPE THAT YOU WILL TAKE HEED
AND PUT YOUR COMMUNITY AHEAD OF YOUR GREED.

Kenneth Kindler

The downside of Being the Air Cap

Harry R. Clements of Wichita contributed this article, which is a summary of a larger study he performed. Click here to read the full study in pdf format.

Mr. Clements’s article makes a striking conclusion as to why airfares in Wichita were so high. I would be curious as to whether any of our government leaders have read the study. We should also ask why our government leaders are not performing research like this when they propose to spend large sums of taxpayer money.


Wichita State’s Center for Economic Development and Business Research recently placed a guest article of mine on their website. It concerns a statistical study based on the level of air travel generated at Wichita’s Mid-Continent Airport compared to five other cities in the region, in which the data shows Wichita is ranked dead last, and an attempt to figure out why we do so poorly in this type of “competition.” It further questions whether our city’s substantial airline subsidy is worth the money spent. Since the article was written for consumption by professionals and is based on what might be considered obscure econometric techniques, it isn’t very suitable for reading by the lay readers of this paper. But I think the results are important enough that they should be seen by our town’s citizens, the decision making politicians that represent them, and the local media that should air such issues.

The cities compared are Des Moines, Oklahoma City, Kansas City, Omaha, Tulsa and our own, over a recent six year period. The important factors affecting airline traffic generation were determined by slimming down a list obtained from the airline industry’s primary trade organization, the Airline Transport Association, with a couple of additions that together with theirs explain the greatest part of the differences in passenger results among these cities. These most important factors are population and per capita income (the more the better for these two) and a novel one, the number of pilots in the city’s population (in this case the lower the better). Wichita not only ranks next to last in population and income among the six — not favorable — but has an astounding more than twice the number of pilots, per capita, than the other cities’ which is really unfavorable. If Wichita were, so to speak, more like these other cities we could expect our airline passenger traffic to double. This is certainly a reason why other cities in our region do not have to rely on subsidies to generate their traffic.

Wichita’s effort to maintain its aircraft industry and attract other high income new businesses — for instance bio-technology, but not call centers and specialty retailers — will tend to increase per capita income, and population, but is it possible for an airline subsidy to overcome that which comes with being the Air Capital of the World — a high concentration of pilots, with charter and corporate fleets available, able to fly people wherever they need to go? Should we, if we could figure out how, have a policy to decrease the number of pilots? That problem is the downside of being the Air Cap.

Let free markets determine downtown Wichita’s viability

“Wichita’s been an east/west town for as long as I can remember. Obviously, we’re trying to change that,” says Tom Johnson, president of the upcoming downtown project, WaterWalk. (Wichita Business Journal, March 4, 2005)

A healthy community needs a healthy downtown. … In Downtown, public investment has a proven track record of generating new, private investment. Since 1990, the government’s investment of $165 million has stimulated $248 million in private investment. (Voteyea.com website.)

“Anything downtown seems to be off-limits for criticism or analysis. I don’t know why it is,” Lambke said. (Council member Phil Lambke, Wichita Eagle, November 14, 2004)

If you listen to local Wichita news media, our local politicians, and various community advocates, the desirability of downtown development over other development is accepted as a given. But what people actually do with their own money is different.

Free markets, since they represent people voluntarily entering into transactions that they believe will benefit them, lead to the most equitable and efficient allocation of scarce resources. When left to their own free will, most people and businesses in Wichita have decided to purchase property somewhere other than downtown. I don’t know why people have made this choice, and that’s really not important to me. What is important to me is that people and businesses make the choice of where to invest voluntarily. By investing in parts of town other than downtown, they are assigning a higher value to non-downtown property. As far as I know, no one is forcing this decision. People and businesses make it of their own free will.

As it happens, some people don’t agree with the choices that most people and businesses have made. They believe that people and businesses should have purchased property downtown. They are, in effect, telling us that we have made a poor decision. They propose, and are in the process of doing just this, to trump the decisions of individuals and businesses with their own. They do this through the political process and the tax system. They take tax money and give it to businesses to induce them to locate downtown.

Why don’t businesses voluntarily locate downtown, using their own money? There can only be one answer to this question: When spending their own money, most businesses have decided that the most productive use of it is to invest it somewhere other than downtown Wichita.

It is adding insult to injury when we realize that the tax money given away comes largely from people who have voted — with their own dollars — not to do what these tax dollars are used to promote. It is a further blow when we realize that the money given to downtown businesses in the form of incentives makes our town poorer as a whole. Why is that? It’s because that most people and businesses, when exercising their own best judgment, have decided that investing in downtown Wichita is not the most productive use of their resources. When the government, using its power to tax, makes a different decision for us, resources are not allocated as efficiently and productively. Therefore, we are poorer.

The result of all this is that we have the spectacle of the people of Wichita, voting with their own dollars, making one choice. Then the politicians and various quasi-public organizations say, “No, citizens of Wichita, you are wrong,” and impose their will on the people of Wichita through their power to tax. How arrogant is that?

Open letter to Wichita City Council regarding AirTran subsidy

January 24, 2005

Dear Councilmember:

I am writing to express my concern about the upcoming renewal of the subsidy being paid to AirTran Airways. You may recall that I appeared before the Council last May and spoke in opposition to the subsidy. Since then I have learned more about the Fair Fares program.

As an example, Mr. Troy Carlson, then Chairman of Fair Fares, wrote a letter that was published on September 16, 2004 in the Wichita Eagle. In that letter he claimed $2.4 billion economic benefit from the Fair Fares program ($4.8 billion for the entire state). I was curious about how these figures were derived. I learned that the basis for them is a study by the Center for Economic Development and Business Research at Wichita State University that estimates the economic impact of the airport at $1.6 billion annually. In this study, the salaries of the employees of Cessna and Bombardier, because these companies use the airport’s facilities, are counted as economic impact dollars that the airport is responsible for generating.

To me, this accounting doesn’t make sense on several levels. For one thing, if we count the economic impact of the income of these employees as belonging to the airport, what then do we say about the economic impact of Cessna and Bombardier? We would have to count it as very little, because the impact of their employees’ earnings has been assigned to the airport.

Or it may be that someday Cessna or Bombardier will ask the City of Wichita for some type of economic subsidy, and they will use these same economic impact dollars in their justification. But these dollars will have already been used, as they were attributed to the airport.

My primary opposition to the AirTran subsidy is based on the superiority of free markets to government subsidies. But I believe that if the Council should consider a subsidy, it should have sensible information at its disposal. The arguments the Fair Fares supporters make seem to be based on an overextended assessment of the airport’s economic impact.

I have written more about this in on my website “Voice for Liberty in Wichita” at wichitaliberty.org.

Sincerely,

Bob Weeks

The motivations of politicians

Presently Mr. Bob Knight of Wichita, a private citizen, is promoting the building of a casino in Park City, Kansas. These articles from The Wichita Eagle have reported Mr. Knight’s position on casino gambling in Kansas when he was the mayor of Wichita:

GOP governor hopefuls stake their positions (July 3, 2002) “Knight and Kerr said they oppose gambling but would consider voter approval.”

Trump has no plans for local casino (May 9, 2003) “Last year, Ruffin said, he approached former Mayor Bob Knight about the possibility of relocating the track to downtown and adding a casino if lawmakers approved. Knight was not interested, he said.”

Gambling on the slots (May 22, 2002) “Wichita Mayor Bob Knight, seeking the Republican nomination, said gambling is an unreliable source of revenue. ‘I don’t think it fits my sense of how you build and sustain a strong state,’ he said.”

The cynic in me imagines Executive Assistant District Attorney Jack McCoy of the television show Law and Order with Mr. Knight on the witness stand asking — justifiably indignant — “Were you lying then, or are you lying now?”

But I do not know Mr. Knight, and there may be other explanations. It may be that as mayor of Wichita, he wasn’t being very careful or thorough in forming his opinions. A Wichita Eagle editorial Plan requires serious look states in part: “He [Knight] acknowledged that as mayor he had opposed an earlier casino plan for Wichita. But after studying this project, he said, he became convinced that a true destination casino could pay off handsomely for the Wichita area and region.” Mr. Knight has been out of the mayor’s office for less than two years. What about the Wichita area has changed in that time that makes a casino a good bet (so to speak) now?

Or, has a casino always been a good idea, but Mr. Knight either didn’t know that when he was mayor, or he just didn’t want the citizens of Wichita gambling on his watch?

I do not know the answer to these questions, and given our collective experience with politicians, I probably wouldn’t believe Mr. Knight if he answered them. Such is the credibility of the motivations of politicians.

Links referred to:
GOP governor hopefuls stake their positions http://www.kansas.com/mld/kansas/news/politics/3590300.htm
Trump has no plans for local casino http://www.kansas.com/mld/kansas/5820055.htm
Gambling on the slots http://www.kansas.com/mld/eagle/3310716.htm
Plan requires serious look http://www.kansas.com/mld/eagle/news/editorial/10648925.htm

Stretching figures strains credibility

I recently read that the Wichita Airport’s economic impact was estimated at $1.6 billion per year. I thought this seemed high, so I investigated further.

I became aware of this study prepared by the Center for Economic Development and Business Research at Wichita State University, available here: Wichita Mid-Continent Airport Economic Impact.

By reading this study I learned that the employees of Cessna and Bombardier — 12,134 in total — are counted in determining the economic impact of the airport. Why? To quote the study: “While it might appear that manufacturing businesses could be based anywhere in the area, both Cessna and Bombardier require a location with runways and instrumentation structures that allow for flights and flight testing of business jet airplanes.” This is true, but it is quite a stretch to attribute the economic impact of these employees to the airport.

For one thing, if we count the economic impact of the income of these employees as belonging to the airport, what then do we say about the economic impact of Cessna and Bombardier? We would have to count it as very little, because the impact of their employees’ earnings has been assigned to the airport. This is, of course, assuming that we count the impact of these employees only once.

Or suppose that Cessna tires of being on the west side of town, so it moves east and starts using Jabara Airport. Would Cessna’s economic impact on Sedgwick County be any different? I think it wouldn’t. But its impact on the Wichita airport would now be zero. Similar reasoning would apply if Cessna built its own runway.

Or it may be that someday Cessna or Bombardier will ask Sedgwick County for some type of economic subsidy, and they will use these same economic impact dollars in their justification. But these dollars will have already been used, as they were attributed to the airport.

To its credit, the WSU study does provide some figures with the manufacturing employees excluded. The impact without the manufacturing employees included is estimated at $183 million, or about 11 percent of the $1.6 billion claimed earlier.

It is a convenient circumstance that these two manufacturers happen to be located near the airport. To credit the airport with the economic impact of these companies — as though the airport was involved in the actual manufacture of airplanes instead of providing an incidental (but important) service — is to grossly overstate the airport’s role and its economic importance.

Of course the airport is important to Wichita. We should seek to measure its impact sensibly instead of stretching to attribute every dollar possible to it. When advocates of any cause manufacture figures like the $1.6 billion economic impact, it casts doubt on other arguments they advance.

Links referred to: Wichita Mid-Continent Airport Economic Impact

The Real Scandal at City Hall

In 2003, local Wichita news media devoted extensive news coverage to two officials in the City of Wichita’s finance department. They were accused of improperly spending between $52,000 and $73,800 on travel. While I don’t condone this waste and I’m glad that our local news media uncovered it, the amount involved is relatively small. Furthermore, the people who wasted this money are no longer in a position to repeat.

The real scandal, however, is the ongoing lack of care exercised when spending our money. Time and time again we read in the newspaper how the mayor or city council members are surprised by facts and circumstances arising after a decision has been made.

For example, in an article titled “Kolb goal: full facts in future city deals” (Wichita Eagle, September 26, 2004) we read this:

“Due diligence should have been done,” Mayor Carlos Mayans said when he learned of the losses: “We expect the staff to provide us with information that helps us make sound decisions.”

In the same article, council member Paul Gray, upon hearing of bad financial news at the city-owned ice rink, is quoted as saying “Why is it just now coming to us?”

Continuing in the same article, council members were described as being surprised upon learning that the industrial revenue bonds and property tax abatement awarded to a local business also included a sales tax break. How could they be surprised? The City of Wichita website contains a nicely-done page titled “Industrial Revenue Bonds” (located at http://www.wichitagov.org/Business/EconomicDevelopment/IRB) (This is the first result that appears when you use the wildly popular Google search engine and search for “Wichita IRB.”) The first link on this page is titled “IRB Overview: Industrial Revenue Bond Issuance in the State of Kansas,” and you don’t have to read very far before you come to the sentence reading “Generally, property and services acquired with the proceeds of IRBs are eligible for sales tax exemption.”

Is it asking too much that someone at City Hall read the City’s own website? Or, is it possible that they knew this, but decided to overlook inconvenient facts?

Recently, in an article titled “Plaza falls short” (Wichita Eagle, November 14, 2004), we read this:

The cinema plaza is the latest in a series of public and public-private projects that have underperformed compared with projections. Others include the Hyatt Regency Wichita, Ice Sports Wichita and Auburn Hills Golf Course.

Mayans said he’s getting tired of such surprises and is working with City Manager George Kolb to make changes.

“We need to find out why we have so many projects (from) previous years that are having financial difficulties,” he said. “From now on, we have to make sure that we are not using anyone else’s numbers and we are doing our own due diligence.”

In fairness to Mayor Mayans, I emphasize that these decisions were made before he took office.

Now as we undertake spending even more money on projects such as the Waterwalk and the downtown Wichita arena, how can we restore confidence in our local government officials?

The best thing to do would be to stop spending on projects that are better handled by the private sector. It seems like the City of Wichita, when partnering with private developers, often assumes most of the risk but is not in position to received the rewards the private developers earn (and rightly deserve to earn) if the project succeeds.

A recent editorial by Phillip Brownlee in the November 21, 2004 Wichita Eagle illustrates the risk involved in these dealings. The editorial, when recommending how to avoid future mistakes like the Old Town Square tax shortfall, states there should be “Better communication between the developers and the city, especially if the project changes.” The key idea in this sentence is change. Things always seem to change. Private developers, being close to the ground and having their own money at risk, sense the need for change earliest. If they are spending their own money, they have the perfect right to change as they see fit. But if they have agreed with the government on a course of action, and now that course needs correction, they have to go back to the government and ask permission to change. That can take a long time — maybe too long to respond adequately to the changing markets.

The editorial also recommends “Clearer expectations (and in writing) about what the developers will build and what occupancy rates likely will be.” First, this sentence illustrates the element of risk again, what the rates likely will be. No one knows. There is risk in developing a business of any type. It seems like the City assumes the risk, however. Also, I am wondering why Mr. Brownlee seems to imply that expectations have not been given in writing. Furthermore, what recourse does the City have if expectations are not met?

Finally, the editorial reads “Closer City Council scrutiny before projects are approved (members at the time now say they didn’t know who all the Old Town development partners were, and they seemed to accept on faith the assurances by city staff that the project would exceed revenue projections).” I first note that it seems like city staff are acting as cheerleaders for these projects, when they should provide a sober assessment. Furthermore, if the project would exceed revenue projections, why not adjust the projections so that they accurately reflect what we believe the future will hold?

The City of Wichita can do a better job. At one time it seemed like our mayor would be better. From an article titled “Mayans takes on WaterWalk” (May 30, 2003 Wichita Business Journal):

One area Mayans says he’s concerned about is a “leasehold mortgage” referred to in the agreement. That means the city is allowing the developer to place a first lien on the ground owned by the city and leased to the developers for the project, Mayans says. Later, the agreement specifies that the city agrees that their ownership of the ground is to be “subordinated” to a loan obtained by the developer to build the improvements.

“If the project is unsuccessful, the lender then has the right to take not only the improvements, but also the city’s land,” Mayans says.

This is the type of thorough analysis and due diligence needed before the City enters into agreements of any type. Why is the city staff not providing this, and why are the Mayor and City Council members not demanding it?

Remarks to City Council, May 11, 2004, Regarding AirTran Airways Subsidy

I delivered these remarks to the Wichita City Council as they were preparing to vote on extending AirTran Airway’s subsidy for another two years. The extension passed with only one dissenting vote.

Mr. Mayor, Members of the Council:

I speak today in opposition to the continuation of the subsidy the City is paying to AirTran Airways.

There are several reasons why I believe this subsidy should not be continued. The primary reason is that the subsidy, since it is paid to one company and one company only, is not fair to the other companies. Yes, it is true that fares are lower. But is that a legitimate reason to enrich one company at the expense of others?

If creating an environment of unfair competition is good and correct, why should we not do this in other markets?

If we feel that gasoline prices are too high, why not select a chain of gasoline stations and pay it a subsidy so that it could lower its prices?

If we feel that a chain of grocery stores has too much market power and their prices are too high, why not create and subsidize stores to compete with them?

If we feel that the commissions that real estate companies charge are too high, why not pay one of Wichita’s major firms a subsidy so that they could reduce their commissions?

Let us all hope, then, that we do not find ourselves running, or being an employee of, a business whose prices the City believes are too high.

But the situation is even worse. Through the Fair Fares program, the City has organized the potential customers of the subsidized business to ensure that they purchase from it. For the companies that pledged to Fair Fares: How would they feel if the government started a public body for the purpose of organizing their customers, and then used its powers of persuasion to compel them to buy from a competitor at the same time the City is subsidizing the competitor?

All of this is in direct opposition to the American principles of limited government, individual liberty, and fair markets.

The distortion of the market that the subsidy creates has another aspect: By creating an environment of unfair competition, we make it unlikely that any airline will consider starting service to Wichita unless they too receive a subsidy.

If the Council feels that we must subsidize an airline, consider this alternative: why not subsidize one of the other established airlines, one that that flies to many destinations? Or, why not rotate the subsidy every year to a different airline? After all, if fares can be lowered if any airline reduces their fares, it shouldn’t matter which airline does it.

The leadership of our local government officials regarding the downtown Wichita arena

It is clear that our local government leaders want a downtown arena in Wichita. Just read their remarks in the Wichita Eaglenewspaper. Since the Sedgwick County Commission has promised that they will proceed with renovation of the Kansas Coliseum if the downtown arena vote fails, it is in their interest to make the Coliseum renovation option look as bad as possible. In my opinion, they’ve done a pretty good job of this.

If you do the math on what it costs to borrow $55 million, paying it back at $6.1 million a year for 20 years, the interest rate is 9.17%, which is a terribly high interest rate for a government to pay. Yet, if we believe the county commissioners, they are ready to pay this much if we don’t agree to the arena.

Arena supporters cite economic benefit to the community as a reason to build the downtown arena, and they concede no such benefit is likely near a renovated Coliseum. Yet they are willing to spend millions there if we don’t give them a downtown arena.

Arena supporters cast the Coliseum renovation in the worst possible light. Consider a homebuyer who just bought a $100,000 home, financing it at 5% for 30 years. The total payments would be about $193,000. Do these people, having just bought the $100,000 home, go about saying they just moved into a $193,000 home? Of course they don’t. The total financed cost, to be sure, is an important fact, and a bad financing decision is a handy fact for arena supporters to use as they portray the Coliseum renovations in the worst possible light.

Arena supporters claim that there are only two decisions, the new downtown arena or the renovation of the Coliseum. Framing the debate this way, especially when one decision outcome is so distasteful, is a good strategy for downtown arena supporters to use, but not good public policy.

The Sedgwick County Commission has said that if the downtown arena fails, Coliseum renovation will start. We, as the citizens of Sedgwick County, should not allow this coercion to affect our decision on the downtown arena. We do not have to stand for this type of bad government.

Local government officials as downtown Wichita arena advocates

Kansas Attorney General Opinion 93-125 deals with “the use of public funds to promote or advocate a governing body’s position on a matter which is before the electorate.” In its summary, it states “However, public funds may be expended to educate and inform regarding issues to be voted on by the electorate.”

Our local government leaders, especially the Sedgwick County Commission and the Mayor of Wichita, are leading what they term the “educational effort” to get out the facts about the proposed downtown arena. I would suggest, however, that their effort is hardly educational, as they readily admit their preference, and little or no information about criticism or alternatives is to be found. On the Sedgwick County website, for example, there are no opposing viewpoints to be found. The only alternative to the downtown arena is the renovation of the Kansas Coliseum, which is portrayed as an unwise choice.

On two television shows, Sedgwick County Commissioner Ben Sciortino wore a “Vote Yea” polo shirt.

From an editorial by Phillip Brownlee, published in the Wichita Eagle on September 5, 2004: “If the plan is to pass, city and county elected officials — supported by business leaders — must continue their strong leadership and high-profile support for the arena.”

It has also been shown that some of the financial contributors to the “Vote Yea” campaign are funded by taxpayers.

A public or private arena in downtown Wichita, which is desirable?

Image what our town could be like if the downtown arena in Wichita vote fails and the county commissioners put aside for a moment their plans for the renovation of the Kansas Coliseum.

Suppose, instead, that arena supporters, along with those who would vote yes for the sales tax and anyone else who wants to, formed a corporation to build and own an arena.

Instead of having paid taxes to government, arena supporters would be investors. They would own something: their shares in the arena. They would have the pride and responsibility that comes with ownership. They would have a financial stake in its success. Even taxpayer-funded arena opponents might see merit in investing in a local business rather than paying taxes.

Instead of politicians and bureaucrats deciding what the people of our town want and need, a privately owned arena would be subject to the guidance and discipline of markets. It would either provide a valuable service to its customers and stay in business, or it would fail to do that and it would go out of business. Governments do not have such a powerful incentive to meet the needs of their constituents.

Instead of the bitter feelings dividing this town over the issue of a taxpayer-funded arena and other perceived governmental missteps, the arena corporation would act in the best interests of its shareholders and customers. Even if it didn’t, it wouldn’t be the public’s business, because after all, the corporation is formed of private individuals investing their own money.

When individuals invest in an arena they are nurturing the virtues of investment, thrift, industry, risk-taking, and entrepreneurship, Wichita having an especially proud tradition of the last. There is nothing noble about politicians spending someone else’s money on projects like a downtown arena, or a renovated Kansas Coliseum for that matter.

At this time in our town we have a chance to let private initiative and free markets work, or we can allow government to continue to provide for us in ways that few seem truly satisfied with. Writing about a public utility in England that was transferred to private enterprise, economist John Blundell observed:

When it was “public” it was very private. Indeed, it was totally captured by a small band of bureaucrats. Even members of Parliament struggled to find out what was going on. No proper accounts were produced, and with a complete lack of market signals, managers were clueless as to the correct course to take. The greatest casualty was a lack of long-term capital investment.

Now it is “private” and very public. Not just public in the sense of open, but also in the sense of accountable directly to its shareholders and customers. Copious reports and accounts are available and questioning citizens will find their concerns taken very seriously indeed.

If we allow the government instead of private enterprise to build a new arena or to renovate the Kansas Coliseum, this is the opportunity we lose.