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Wichita Eagle opinion watch

Regulation has not lessened, instead it has harmed us

by Bob Weeks on February 16, 2010

Last week’s Wichita Eagle featured an op-ed by Brad Beachy, who is co-chairman of Wichita Democracy for America. Several of the claims made by Beachy deserve examination. In particular, Beachy blames free markets as the cause of our current economic problems: “The Great Recession we’re in now started in late 2007, after several years of deep tax cuts and major repeals of government regulation in the financial market.”

Let’s look at regulation. Not everyone agrees with Beachy’s claim of major repeals of regulation in recent years. The liberal Time Magazine wrote this assessment of George W. Bush’s regulatory legacy about a year ago:

The only major piece of regulatory legislation enacted during the Bush years was the Sarbanes-Oxley Act, which dramatically increased regulation of corporate financial disclosures. The really big regulatory changes being pointed to now as possible culprits for the crisis date back to Bush’s predecessors: Bill Clinton, Ronald Reagan, even Jimmy Carter and Gerald Ford. So the popular Democratic refrain that “Bush-era deregulation” is to blame for our troubles is a little hard to square with the evidence. What is true is that most Bush-era financial regulators were less than enthusiastic about the very act of regulating, and that Bush’s “ownership society” push glossed over a lot of potential dangers. Bush didn’t cause the financial regulatory breakdown, but he didn’t jump in to fix it either.

The housing crisis played a large, perhaps dominant role in the current recession. So let’s look at what were the causes of that to see if deregulation played a role.

Last October John A. Allison, chairman and former CEO of BB&T Corporation, the nation’s 10th largest financial-holding company, presented a lecture at the 30th annual Economic Outlook Conference at Century II, produced by the Center for Economic Development and Business Research (CEDBR) at Wichita State University. His lecture, titled “The Financial Crisis: Causes and Possible Cures” provided valuable insight into the causes of the problem we’re in.

Allison said “Only government can make a mistake of this magnitude possible.” Government and its regulators, in this case the Federal Reserve System, the Federal Deposit Insurance Corporation, the housing policymakers Freddie Mac and Fannie Mae, and the Securities and Exchange Commission, were the proximate cause of the problem, and prevented natural market corrective forces to work.

At the Federal Reserve, management of our nations’ money supply is a problem. “The huge level of federal debt we have today would not be practical if the government did not own the monetary system,” Allison said.

FDIC insurance of bank deposits leads people to invest in banks without regard to the risk the banks take. It also made the “pick-a-payment” mortgage possible, where each month a homeowner may owe more than the month before.

Freddie Mac and Fannie Mae exist to promote housing ownership, and they promoted it far above the natural rate of home ownership. Their actions also made the subprime mortgage possible.

The credit rating agencies sanctioned by the SEC — S&P, Moody’s, and Fitch — are given a monopoly over the issuance of ratings, and they failed in their duty.

Before the innovations of Freddie Mac and Fannie Mae, savings and loan banks would originate mortgages locally and then hold them locally. Now, the model is “originate and sell,” Allison said. These government regulations made the mortgage broker origination model viable, and led to huge profits, until the bubble burst.

So when Beachy asks “Why does the unseen hand of the marketplace, in its infinite wisdom, give million-dollar bonuses to the CEOs of mortgage institutions who drive their companies into bankruptcy” we have to answer it’s not the marketplace that did this. It was government policy and regulation, developed over the last few decades, that led to this situation. Our financial system operates in nothing resembling a free market environment.

By the way, Beachy starts his op-ed questioning the motives of those he criticizes, in this case the Americans For Prosperity Foundation: “Billionaire David H. Koch presides on the foundation’s board of directors and has funded the organization with millions of dollars.” If motives are reason for criticism, we ought to note that Beachy — an employee at a government-owned and run institution — has a self-interest in keeping the government spending gravy train flowing.

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Kansas fund balances disputed despite evidence of their existence, benefit

by Bob Weeks on January 7, 2010

in Kansas state government

A Wichita Eagle op-ed by Kansas State School Board Member David Dennis (Fund balances won’t save schools) and another by Rhonda Holman dispute evidence that Kansas can make it through the current financial situation by making use of large fund balances in state agency accounts.

In his op-ed, Dennis writes that while he doesn’t disagree that Kansas schools have $700 million in funds excluding capital and bond payments, he writes “That fact by itself is very misleading. Each account must be analyzed separately.” He then proceeds to list some of these funds, their balances as of July 1, and what the fund is used for.

This recitation, however, doesn’t qualify as “analysis.” An analysis would look at the change in fund balances over the course of a budget year, and the trend of the balances over years. Dennis doesn’t do any of this. Of course, that type of material doesn’t make it into most newspapers.

Evidence gathered by the Kansas Policy Institute has found that statewide, these fund balances have grown by 53 percent over the last four years. For the Wichita school district, these balances have grown from $74 million to $94 million over the last four years. These funds grow when more money is added to them than is spent — strong evidence that schools have been receiving more money than they have needed.

So we have a member of the school spending lobby disputing the availability of these funds and calling for more tax revenue to be spent on schools. Not much new here.

What’s more disturbing is Wichita Eagle editorial writer Rhonda Holman’s recent editorial (Work together to solve budget crisis). It doesn’t come right out and say that the idea of using fund balances to make it through a tight spot is bogus. Instead, Holman shades her claims, using phrases like “If that were true” and “But a very different — and more realistic — scenario faces Parkinson and returning legislators.”

This is after slamming the think tank that found these balances and promotes their use as “conservative.” (Believe me, that was meant as an insult.)

It’s neither conservative nor liberal to look at facts.

But the fact that these fund balances are available — and the fact that they’ve been growing in recent years — isn’t comfortable for big-taxing and big-spending liberals in Kansas. First, the growing balances mean that these funds have been stocked with more money than has been necessary.

Second, for agencies to draw down these fund balances means that they’re going to have to be more careful in managing their finances and accounts. It’s easier to operate with large fund balances, no doubt, but many Kansans right now are operating on tight household budgets. We should expect government to do the same.

Then, if we find that Kansas can make it through this tight spot without tax increases, that deprives Kansas government spenders of future tax revenue. After all, if new taxes are implemented now, they’ll probably be around after the economy recovers, providing even more tax revenue for Kansas government to spend.

Tough economic times ought to provide an incentive to look for ways that government can become more efficient. But hardly anyone in Kansas government is looking for savings. In the case of Kansas schools, planned performance audits were canceled last year because school administers were too busy working on budget cuts. School districts could voluntarily participate in the audit — Derby did — but the Wichita school district didn’t participate.

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Lutz, Hanson, Fahnestock owe Wichita an apology

by Bob Weeks on September 24, 2009

in Sedgwick county government

In the campaign for the sales tax to build the downtown Wichita arena (Intrust Bank Arena), the idea of hosting NCAA men’s basketball games was promoted as something that would happen if voters approved the arena.

This week we learned that for this event, our arena has been rejected for the next three years.

Three arena boosters in particular — Bob Hanson of the Greater Wichita Area Sports Commission, businessman George Fahnestock, and Wichita Eagle sports columnist Bob Lutz — owe Wichita and Sedgwick County voters an apology.

As it turns out, Lutz was quite the visionary in a June 18, 2004 Wichita Eagle column, in which he wrote: “Imagine our city bidding for an NCAA Tournament subregional or the Big 12 Tournament.”

We don’t have to imagine anymore.

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To sway opinion, basic facts must be correct

by Bob Weeks on August 30, 2009

in Wichita Eagle opinion watch

A Vince Corbett of Wichita makes the case for riding an electric bicycle to work instead of driving a car. (“Biking saves,” August 30, 2009 Wichita Eagle) Unfortunately, the letter contains a mistaken fact and an unreasonable assumption.

To make his case, he outlines a commuting trip that someone might make: ” … from 29th Street North and Woodlawn to Douglas and Main to work and to return — a distance of about 32 miles …”

Google maps reports the one-way distance between these two intersections as 7.7 miles. Bing maps found a shorter route at 7.2 miles. Mr. Corbett’s one-way distance of 16 miles is over twice as large as these two numbers. Taking the freeway route is longer at 10.3 miles (according to Bing) but still not anywhere near Corbett’s one-way distance of 16 miles.

Corbett then makes a claim that driving these 32 miles requires three gallons of gasoline, implying a car that gets 10.7 miles per gallon. (I don’t know if we should interpret this as city or highway driving.)

But according to the EPA, a mid-size car like a Chevrolet Malibu gets 22 mpg in the city. A large car like a Buick Lucerne gets 17 mpg. Even a large SUV like a Chevrolet Suburban gets 14 mpg, still quite a bit above Corbett’s illustration.

(A Toyota Prius gets 48 mpg in the city, 4.5 times the figure used by Corbett.)

Letters to the editor of a newspaper are a place for people to express their opinions and attempt to sway public opinion. These letters, however, need to be based on facts that are correct and assumptions that are reasonable. Newspapers do their readers a disservice when letters are not fact-checked in even a very basic way. This letter is such a case.

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Wichita Eagle reporting, headlining discussed by commissioners

by Bob Weeks on August 26, 2009

in Sedgwick county government

In today’s meeting of the Sedgwick County Commission, Wichita Eagle reporting and editorializing was the subject of an off-agenda item.

Commissioner Gwen Welshimer used this opportunity to read into the record part of a press release she issued yesterday. The entire press release, as well as video, is at the end of this article.

Commissioner and Chairman Kelly Parks mentioned that he has been disturbed with some headlines in the Wichita Eagle recently, and that the media has “not checked out some of the headlines they’ve put out.”

Commissioner Karl Peterjohn shared his concerns with misleading Wichita Eagle headlines, referring to a headline that appeared after the county approved its budget, as covered in my post Wichita Child Advocacy Center still in business, despite headline.

I spoke to Wichita Eagle reporter Bill Wilson, and he had no comment other than his reporting speaks for itself.

It should be noted that reporters generally don’t write the headlines for their stories.

Regarding this matter, it may be that the parties are quarreling over relatively minor details of events and the meaning of words.

For example, Welshimer’s press release states “Reporter Bill Wilson’s latest article stated that the City of Wichita knew nothing about the County’s plans.” The article referred to (“County scouting locations for site to ease jail crowding” August 20, 2009 Wichita Eagle) states, in part: “The county’s search is unwelcome news to city officials …” (emphasis added)

Editorialist Rhonda Holman’s August 21 piece repeats this idea: “It reportedly was news to city officials and downtown leaders that county commissioners were discussing the possibility of locating such a facility and hadn’t ruled out the core.” (emphasis added)

Does this all boil down to what the meaning of “news” is? Does “unwelcome news” mean that someone has never heard of an item before, or does it mean “Yes, I am aware of this item, and I don’t like it?”

Following is the full text of the press release issued by Gwen Welshimer on August 25, 2009.

Either the Wichita Eagle knew they were putting out false information on their jail annex stories or they didn’t know for sure and printed their stories recklessly. Their August 20, 21, and 23 articles and editorial, claiming the County Commission had been reviewing properties in Downtown Wichita for a jail annex, were not true. The Eagle’s actions caused considerable concern for Downtown business owners. No commissioner has looked at any Downtown buildings with any real estate agent for the purpose of housing detainees. A retraction and an apology are due to the county from the Eagle.

The Eagle reporter who wrote the stories quoted me erroneously and had not interviewed me. Eagle editorialist, Rhonda Holman committed an egregious act with her August 21 editorial in which she scolded the commission for having the intent to put jail detainees Downtown. Reporter Deb Gruver showed a lack of professionalism by her participation in this deed.

Reporter Bill Wilson’s latest article stated that the City of Wichita knew nothing about the County’s plans. That was also not true. On July 29, the Wichita Mayor, Vice Mayor, and Sedgwick County Commission Chairman and I met at City Hall. The topic of conversation was that the County’s prison farm on McLean and Harry would need to be replaced in the future. This facility is currently being used to house work release detainees who go to their jobs and return there for the duration of their sentence. The Mayor said he would see if the City had a building that could be used for this purpose.

The truth is that Chairman Parks and I took one short afternoon to see two buildings with a real estate agent. We were shown warehouse properties, one off south Southeast Boulevard and one off north I-135. These properties had no potential of filling our needs. The next day the Eagle reported that we were scouting for a site in Downtown Wichita and attempting to do harm to Downtown redevelopment plans. Nothing could have been further from the truth.

I believe the Eagle is angry because of the county’s decision not to continue funding the needs of Downtown and give more consideration to the future of Sedgwick County. County commissioners did put their political careers on the line to raise the money and build a $210 million economic tool for Downtown. I have not witnessed appreciation for this effort. What I have witnessed is a constant demand for more. It appears that we will continue to be harassed by the Eagle, until we bring out the checkbook.

Gwen Welshimer
Chairman Pro-Tem
Sedgwick County Commission

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Wichita downtown arena parking problem

by Bob Weeks on August 8, 2009

in Sedgwick county government

This week the Wichita Eagle printed a letter submitted by Sedgwick County Commissioner Karl Peterjohn. The printed letter is quite a bit shorter than what Peterjohn submitted. The unabridged letter follows.

The Wichita Eagle editorial written by Rhonda Holman on June 29, 2009 now claims that the new Intrust Bank Arena in downtown Wichita lacks adequate parking. This is a major change by the Eagle editorial board’s position. I have repeatedly asked county staff about the available parking in and around this soon-to-open facility since I became a commissioner in January. I have been repeatedly told by county staff that adequate parking will be available when the Intrust Arena opens next year. The most recent public assurance I have received was only a few days ago.

In 2004, while I led the opposition to the proposed downtown arena in my role as the executive director of the Kansas Taxpayers Network, I repeatedly raised the parking availability issue. In 2004 the arena advocates claimed that arena parking would not become a problem and that the critics were wrong.

Voters were repeatedly assured that there was plenty of parking that would be available downtown for the arena. The Wichita Eagle editorial page was among the leading advocates for this project and ignored opponents arguments concerning this $206 million (back then it was described as a $185 million) project. At that time there was only a general area for this new facility’s location so this argument lacked specificity. The exact location was unknown when voters cast their ballots.

The Friday before the 2004 election I held a news conference pointing out the dimensions of the parking problem downtown in particular and the related location and capacity issues in great detail. At this news conference I provided a map of the Kansas Coliseum’s Britt Brown Arena and adjacent parking area available for comparison purposes with the existing 3,500 parking spaces for this 12,000 seat facility along I-135. I still have a few extra copies of this Britt Brown Arena aerial view. Arena proponents attended this 2004 news conference and claimed that the arena opponents concerns were invalid because of existing downtown parking. The Eagle editorial page repeatedly backed these arena proponents’ claims.

The 2004 election is now political history. I want the Intrust Arena to be a success because this project has now become very important to the entire community. The reservations I expressed in 2004 have not disappeared just because of time. The decision to eliminate some of the one-way streets with two-way streets will not be an improvement in traffic flow in my opinion. There will be challenges for people to become comfortable with access into and out of this new facility while participating in high attendance events when the arena opens in a few months. To get beyond this challenge for any new facility, the county staff and parking consultant need to be correct about the adequacy of parking for the Intrust Arena and I believe are working to accomplish this objective.

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Paygo rule meaningless, harmful

by Bob Weeks on August 6, 2009

in United States government

In a letter printed in yesterday’s Wichita Eagle, Doug Ittner of Wichita promotes the benefit of a rule known as “paygo.” The purpose of this rule is to force budget discipline on Congress. As the Washington Post’s David Broder wrote in that newspaper in June: “[Paygo's] key provision requires that any new tax cut or entitlement increase be paid for by an offsetting reduction in other programs or a tax increase. If, for example, you want to guarantee child care for every working mother or provide her with a payroll tax cut, you would have to find savings or revenue elsewhere of equal size.”

It sounds like Congress has suddenly been overtaken by reason, doesn’t it?

If only it were so.

The reality is that the paygo rule is so feckless as to be meaningless. In fact, the rule causes great harm. By sounding tough, the existence of the rule leaves apparently naive citizens like Mr. Ittner to conclude that things are under control in Washington. But things are far from under control, and this illusion of control is quite harmful.

A good article to read to understand how paygo works is the Wall Street Journal article The ‘Paygo’ Coverup from June. Here are some of the points it makes.

When Democrats took over Congress in 2006, Speaker Nancy Pelosi imposed paygo rules. What happened? “By 2008, Speaker Pelosi had let those rules lapse no fewer than 12 times, to make way for $400 billion in deficit spending.”
President Obama campaigned on paygo, and the deficit has exploded by an unprecedented amount since he took office.
“Paygo only applies to new or expanded entitlement programs, not to existing programs such as Medicare.” Existing entitlements consume the lion’s share of federal spending, so paygo doesn’t apply to much of the problem.
Paygo doesn’t apply to discretionary spending.
Congress classifies spending to circumvent paygo. “… the 2010 budget resolution included a $2 billion increase for low-income heating assistance as an entitlement change that should be subject to paygo. But Congressional Democrats simply classified it as discretionary spending, thereby avoiding the need for $2 billion in cuts elsewhere.
“The other goal of this new paygo campaign is to make it easier to raise taxes in 2011, and impossible to cut taxes for years after that.”

Even the liberal David Broder, in his Washington Post piece, recognizes that the current law is “full of loopholes,” as the title of his article indicates.

We’d be better off without this meaningless rule, so full of loopholes, that lets politicians promote the illusion of controlling the federal budget.

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World Health Organization ranking biased, not reliable

by Bob Weeks on July 13, 2009

in Health care

A letter in the Wichita Eagle written by Brad Beachy of Wichita makes the case for “so-called socialized medicine” to be brought to the United States. Part of Beachy’s argument relies on a ranking produced by the World Health Organization. That ranking has a number of problems.

The ranking Beachy refers to was produced in 2000, and hasn’t been updated since then. So it’s getting a little old. Worse than that, it contains a number of techniques and biases that work against countries that rely on markets instead of government to provide health care.

A recent paper from the Cato Institute provides some useful analysis of the World Health Organization rankings. (See WHO’s FoolingWho? TheWorld Health Organization’s Problematic Ranking of Health Care Systems)

For example, there are two sets of rankings. As the Cato report explains: “One ranking claims to measure “overall attainment” (OA) while another claims to measure “overall performance” (OP). These two indices are constructed from the same underlying data, but the OP index is adjusted to reflect a country’s performance relative to how well it theoretically could have performed.”

Using the OP rankings, the United States is number 37. But using the OA rankings, the United States is 15.

25% of a country’s ranking is based on “financial fairness,” which is determined by looking at the “dispersion in the percentage of household income spent on health care.” As the reports says “The FF factor is not an objective measure of health attainment, but rather reflects a value judgment that rich people should pay more for health care, even if they consume the same amount.”

The report notes this introduces a bias against countries that rely on market mechanisms for paying for health care.

There’s another problem with FF, too: “Put more simply, the FF penalizes a country because some households are especially likely to become impoverished from health costs—but it also penalizes a country because some households are especially unlikely to become impoverished from health costs. In short, the FF factor can cause a country’s rank to suffer because of desirable outcomes.”

The Cato study goes on to document additional problems with the WHO ranking. Problems with the rankings were noticed earlier, too. An earlier analysis of this report from Cato (We’re Number 37 in Health Care! concluded this:

Overall, the WHO rankings’ mathematical formulations serve only to distract attention from the authors’ underlying distaste for individual choice in health care. The report largely ignores the extraordinary benefits the American marketplace brings to health care worldwide, such as new drugs, advanced diagnostic instruments such as MRIs and CAT scans, and lifesaving therapies for cancer and heart-disease patients. Under a WHO-style health care system, lifesaving research and innovation would be stifled and individual choice would be discarded in favor of collective control. Bureaucrats would decide who receives care — and who does not — on the basis of statistical tallies that devalue the lives of the elderly, the disabled and the chronically ill.

By contrast, a free-market health care system upholds the right of every person to make his own decisions. Patients are given choices, not issued numbers, and doctors are freed from impersonal “expert panels” dictating what care they can and cannot provide. The WHO’s idea of government-provided universal health care is a fantasy that masks a system of dangerous, formula-based rationing. If you value your health, don’t trust the WHO.

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Wichita Eagle’s school cheerleading isn’t helpful

by Bob Weeks on June 29, 2009

in Wichita and Kansas schools

Now that Mark McCormick is no longer with the Wichita Eagle, I think we can say that Rhonda Holman has taken over the role of chief cheerleader for USD 259, the Wichita public school district.

Not that she needed much of a push in that direction. But claims made in a recent opinion piece of hers (Hard times forcing hard choices) deserve some examination.

After praising President Obama’s stimulus spending — claiming that it will keep things from becoming worse — she writes this: “And thank goodness that school district voters had the foresight in November to approve a well-timed local economic stimulus plan — the $370 million bond issue for athletics and fine arts facilities, technical education and new schools.”

There’s so many untruths in this statement that it’s hard to know where to start. But let’s try.

First, did the school district know that we’d be in a recession this year? If so, they foresaw something that no one else did.

Second, does government spending stimulate anything except the school system? It’s true that there will be spending going on that probably wouldn’t have happened had the bond issue not passed. But right now Wichitans pay millions of dollars each year to retire the bonds from a past school bond, and soon we’ll have to start paying for this bond. These payments are a drag on the local economy. See Wichita school bond issue economic fallacy and Wichita school district economic impact for more.

The future tax burden is worse than the Wichita school district would admit to, and Holman doesn’t either. That’s because besides the capital expense of building new schools and more classrooms, there’s the ongoing cost of running the new classrooms. The bond issue doesn’t pay those expenses. Wichitans can expect the school district to propose tax increases as these new classrooms and schools come online.

Third, if we were getting something truly worthwhile from this extra spending, that might be one thing. But the Wichita school district’s goal — smaller class sizes — is not a goal worth pursuing. Well, it is if you’re part of the public school bureaucracy or the teachers union. But the narrow self-interest of these groups shouldn’t count in this debate.

If you’re interested in improving the prospects of Wichita’s schoolchildren, this extra spending is a distraction.

I wonder if Holman has read research like this: “Surprisingly, the data show that academic achievement cannot be accounted for by any of the measures of public investment used in this study (pupil-teacher ratio, per pupil expenditures, teacher salaries, and funds received from the federal government), either singly or as a blend.” It’s in the post Wichita-area school superintendents make flawed case.

Here’s some reporting by Malcolm Gladwell on what education researches are starting to realize about the effectiveness of class size, one of the goals of the bond issue:

What’s more — and this is the finding that has galvanized the educational world — the difference between good teachers and poor teachers turns out to be vast. … Teacher effects are also much stronger than class-size effects. You’d have to cut the average class almost in half to get the same boost that you’d get if you switched from an average teacher to a teacher in the eighty-fifth percentile. And remember that a good teacher costs as much as an average one, whereas halving class size would require that you build twice as many classrooms and hire twice as many teachers.

That’s reported in my post Wichita public school district’s path: not fruitful. In that post, you can also read that the current ways that teachers can advance their careers and salaries (longevity and obtaining extra education) aren’t relevant to their teaching effectiveness:

The problem is that the current standards for teachers don’t “track what we care about.” The path to increased pay as a teacher — longevity and more education credentials — doesn’t produce better teachers. But because of union contracts that govern pay, that’s the only way to earn more as a teacher. This is one of the reasons why teachers unions are harmful to schools.

Yet according to the contract with the teachers union in Wichita, longevity and more education credentials are the ways to earn a higher salary.

Innovations such as differential teacher pay and charter schools are being promoted by President Obama and Education Secretary Arne Duncan as a way to improve our nation’s schools. But in Wichita, the existing public education bureaucracy and teachers unions are firmly opposed to these reforms. It’s too bad we don’t have opinion writers at the Wichita Eagle who are willing to look past these entrenched interests and consider what’s best for Wichita schoolchildren.

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Kansas’ tax system is broken, according to spending advocates

by Bob Weeks on June 29, 2009

in Kansas state government

According to Gary Brunk, executive director of Kansas Action for Children, the Kansas tax system is broken. It’s the same message you hear from other organizations that depend on state funding, such as the public school spending lobby. In their eyes, the problem that needs fixing is that Kansans aren’t taxed enough to support their spending goals.

(State needs tax system that is efficient, fair, July 28, 2009 Wichita Eagle.)

Brunk writes: “We all rely on services paid for in the state budget, so it’s common sense that we should all contribute fairly toward the costs of providing those services.” He then mentions the public school system as one such service. I wonder what parents who have decided they can’t use the product that Kansas public schools produce think about that statement. They pay doubly: once in tuition to a private or parochial school, and then again to support the public schools.

Brunk complains that “sales-tax loopholes alone drain more than $4 billion from state revenues.” I think the Wichita Eagle needs to ask Brunk the basis for this claim. According to the Governor’s Budget Report, in fiscal year 2008 the state collected $1.7 billion in retail sales tax. For Brunk to claim that loopholes cost the state 2.4 times the amount of actual collections is absurd.

Or, you can look at Brunk’s complaint another way: He wants to raise taxes by $4 billion. The state collected (in 2008) just short of $6 billion in taxes, so Brunk thinks taxes need to be raised by 50%. That’s what is necessary to fix the tax system, according to him.

There’s also the perverse idea that letting people keep more of their money “costs” the state. I guess it depends on who you think has first claim on the money that Kansans earn. If you believe that it first belongs to the state, then yes, tax breaks are a cost to the state. I view taxes as a cost that we have to pay, and tax breaks help reduce that cost.

Here’s another of Brunk’s complaints: “… the level of spending in Kansas has changed very little in comparison with personal income trends. In fact, in 1960, our taxes were equal to 10.5 percent of personal income. Nearly six decades later, taxes in Kansas are roughly 12 percent of personal income.”

If you’re not thinking as you read this, you might be persuaded to believe that spending in Kansas has increased by only 1.5 percentage points over a long period of time. But he’s using a clever ruse of expressing taxes as a percent of income instead of in actual dollars.

The truth is that since 1960, personal income has grown rapidly, even after adjusting for inflation. That’s a good thing. Government, according to Brunk’s analysis, has grown even faster, consuming a larger portion of what the people of Kansas produce. That’s not good. Then, according to Brunk, Kansans need to pay more, because the tax system is broken.

At the start of this piece, Brunk complained of “rhetoric and half-truths,” presumably referring to claims made by taxpayer advocates. He wants a “fiscally responsible, commonsense approach.” After reading this piece — full of its own brand of nonsense and doubletalk — I wish that Brunk and other state spending advocates would just say what they really want: more taxes and more spending. Then we could at least have an honest discussion.

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Faust-Goudeau’s concern selective

by Bob Weeks on June 22, 2009

in Politics

In today’s Wichita Eagle, Oletha Faust-Goudeau, a Democratic member of the Kansas Senate representing parts of north-central and northeast Wichita, writes this in a letter to the editor:

I would like to commend Mayor Carl Brewer and the Wichita City Council for having the courage to vote down a rate increase for water and sewer charges for customers in our city (“Water rates to hold steady,” June 17 Local & State). As we continue to face economic down times, I am very concerned about our senior citizens and people with disabilities who are on fixed incomes and struggling to make ends meet. This increase would have certainly added an additional financial burden for them in paying utility bills.

The proposed rate increase Faust-Goudeau refers to was in the amount of $2.00 per month.

I suppose it’s admirable that she’s looking out for the interests of her constituents in this matter. But her concern is selective.

The problem is that Faust-Goudeau voted against the expansion of the Holcomb Station coal-fired electricity generating plant. Her votes mean that Kansas would have to rely on wind power backed by natural gas, which is much more expensive than relying on electricity generated by coal.

Wind power is very expensive, despite being heavily subsidized by the federal government through the production tax credit.

It’s so expensive that Westar, the electrical utility that serves Wichita and Faust-Goudeau’s constituents, has had to ask for several rate increases recently. The cost of wind power was cited in some of the requests.

One of these rate increases was estimated to add $10 per month to the cost of electricity for the average house.

Part of the reason for the water department’s rate increase request is to fund capital improvements the department needs to make sure it can continue to deliver water now and well into the future.

Paying much higher electric bills just so we can build more windmills to solve a problem that doesn’t exist, and even if it did exist, can’t be solved with windmills in Kansas: that’s a burden that no one should have to pay.

Not even Faust-Goudeau herself, no matter how she votes in the Kansas Senate.

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Sedgwick County solid waste fee criticized

by Bob Weeks on June 19, 2009

in Sedgwick county government

Today’s Wichita Eagle column by Rhonda Holman is a two-fer. Two issues for the price of one column, and two issues she’s wrong on. The first issue is explained in Wichita water economics.

She criticizes Commissioner Karl Peterjohn and Board Chairman Kelly Parks for the opposition of a solid waste management fee that would add a relatively small amount to property tax bills.

(When writing about Peterjohn, do I need to disclose that he and I are friends, and that I helped manage his campaign last year? I’d feel more compelled to do so if Holman would start writing editorials using her entire name.)

Holman pokes fun at Peterjohn and Parks for “operating on anti-tax autopilot” and at Peterjohn specifically for fulfilling a campaign pledge.

Anti-tax ought to be the first instinct of politicians. To me, that’s axiomatic and not a basis for criticism. There are always plenty of people in government like Commissioner Dave Unruh who are nuanced enough to recognize — as Holman reports — “with an admirable lack of exasperation: ‘It’s 69 cents.’”

The problem is that little amounts here and there add up to real money. I think that’s something like the argument Wichita City Council members used in rejecting a $2.00 per month increase in water and sewer bills. Holman supported that action.

Then, keeping a campaign pledge — what a novel concept! How refreshing!

We should also look at the public policy aspects of this waste management fee. One of the things it was used for is to fund a Christmas tree recycling program. Here’s a few questions: Is it wise economics to fund recycling projects? Specifically, if natural Christmas trees as such an environmental nuisance that they must be recycled, shouldn’t people who buy them pay for their recycling? Perhaps through a tax — wait, let’s call it a “surcharge” or a “pre-paid environmental mitigation fee” — levied at the corner tree lot?

Here are comments left to this post that were lost and then reconstructed:

Wichitatator: What is Rhonda Holman’s legal name? Why doesn’t she use it when she signs her editorials? The Eagle should not have mystery editorial writers without fully disclosing this salient fact.

Ms. “Holman” could be married to an attorney who is suing the state over school finance or some other public issue. Ms. “Holman” is a public person who wants to enjoy the perks of her editorial position in influencing public policy in this community without assuming the responsibility of publicly disclosing her name.

For an editorial board that regularly fulminates about “full disclosure” this is an odd position to take. The Eagle regularly criticizes folks who do not fully disclose a lot more than their names in their paper.

LonnythePlumber: What is her entire name? You imply mystery and wrong motivation if revealed.

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Wichita water economics

by Bob Weeks on June 19, 2009

in Wichita city government

This week the Wichita City Council declined to raise the fixed portion of customers water bills by $2.00 per month. Today, Wichita Eagle editorial writer Rhonda Holman praises the council for avoiding an illogical water-rate increase. Is she and the city council right on this matter?

The problem Wichita faces lies in the cost structure of water treatment and delivery. One source estimated that 70 to 80 percent of the costs of a city’s water supply system were fixed, or quasi-fixed, costs.

These fixed costs don’t vary with the amount of water demanded by customers, at least not in the short run. But the city charges for water based primarily on the amount that customers use. So when demand is low, revenue drops rapidly, but the water department’s costs decrease very little. That’s the source of the problem.

There is a fixed component to customer’s water bills. One solution would be to increase that fixed charge and drop the cost of a gallon of water. That would make the water department’s revenue less variable. This pricing formula would more accurately reflect the department’s cost structure.

In retrospect, it appears that the city’s campaign to get people to conserve water has been, to put it kindly, a waste of resources. We’ve conserved — although nature has been the primary force behind this — but we still have to pay. Just because the city council doesn’t want to raise water bills now, someone is still going to have to pay.

The water department is in control of its fixed costs over the long term, however. The growing demand for water over the long term is what leads it to make capital investment in its plant. Paying for these projects (fixed costs) by relying on revenue from the usage of water (variable revenue), as we now see, is problematic. The solution is to realize that these capital investments are not driven by daily or even yearly usage. Customers should pay for these capital improvements, then, through a fixed charge.

An alternative would be to charge new connections to the water system a fee that helps pay for the capital investment necessary to expand the water supply. As a matter of fact, the department charges a “Water Plant Equity Fee” just for this purpose. Currently this fee is $1,520. (This is in addition to a fee of $850 for tapping into a water main and installing a meter.) Perhaps the equity fee needs to be raised.

It appears that it is the desire of the city council to pay for capital improvements to the water system through a way other than raising the fixed portion of water bills. The net effect, whatever the city does, will still be felt by citizens as an increase in the cost of providing water. It would be best if this cost was realized as close as possible to its source, which is the water bill.

Hopefully the city council will do something to recognize this, regardless of whether Rhonda Holman will support them.

Here are comments left to this post that were lost and then reconstructed:

Charlotte: You don’t fully understand. The city water dept. needs this money coming in to pay for their ASR project–which is located up by Burrton along the Arkansas River. They did one part of the project and now they want to do more. ASR, Aquafier S—? Recovery is taking the dirty water out of the Arkansas River when it gets up after a rain, running it through a big above ground filter that creates sludge (which they sell) and then pumping that (supposedly clean water) down into the Halstead Equas Bed. I am not thoroughly convinced that the water they are putting into the clean Equas Bed is all that clean. They say we are drawing water out of the Equas Bed faster than this ASR is putting it back in. They say the city needs to do this for economic development.

I replied that the aquifer recharge project is an example of the type of capital improvements to plant that I was referring to.

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Opinion line makes me wonder again

by Bob Weeks on May 14, 2009

in Wichita Eagle opinion watch

Sometimes the Wichita Eagle Opinion Line makes me wonder. Here’s something from today’s collection:

“Wanda Sykes should be given a $400 million contract and radio airtime opposite Rush Limbaugh. Let the free market and capitalism work, and we’ll see which one America really supports.”

The writer wants the free market to work. At the same time, the writer seems to be saying that someone should give the subject Wanda Sykes $400 million. (I think that’s the same amount as Limbaugh’s recent contract.)

Where I think this writer is confused is that Limbaugh was not given anything. He earns his pay, as far as I know. No one is forced to listen to or sponsor his show. Should the tastes of his listeners change, his show would fold.

The writer doesn’t say this, but I suspect the point is that the government should give Sykes this contract, giving her the chance to compete with Limbaugh. This has nothing to do with free markets and capitalism. It is just the opposite.

In reality, the fact that Sykes has no such contract is evidence of the free market working just perfectly.

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At Wichita city council, citizens are frustrated

by Bob Weeks on May 6, 2009

in Wichita city government

Yesterday’s meeting of the Wichita City Council provided a lesson in how frustrating it can be for citizens to interact with city government.

You might even have to endure a slight insult from our mayor.

The matter in question involved real estate developer Dave Burk and the city’s economic development office.

Regarding this matter, I wrote Mr. Burk by email early Monday morning with a question. He didn’t reply. I should have followed-up with a telephone call, but I didn’t have time.

Monday afternoon I called the city’s economic development office with a few questions. The person I talked to was confused by the questions I asked, and suggested that I make records requests to get what I was asking for. There wasn’t time for that.

So I wrote by email to Allen Bell the city’s economic development director. He didn’t reply. I don’t necessarily fault him for that, as it was around 3:00 Monday afternoon when I wrote. But he still hasn’t replied, and it’s Wednesday afternoon now.

In my questions before the council, which you can read by clicking on Wichita facade improvement loan program: questions to answer, I asked if Burk had been investigated through background checks by the city, as the city has pledged to conduct thorough background investigations of its partners. Bell replied that he had been through checks in the past with regard to other deals.

But we now know, based on events from last December, that the checks the city conducted were cursory, and failed to uncover important facts about a developer. At that meeting, the mayor sternly scolded city staff for their lack of diligence in performing these checks.

Bell said that Burk is “well known in the community.” It hardly bears mentioning that sitting in the Sedgwick County jail at this moment is another developer who was very well known and very highly regarded in his time. So having a familiar face is not sufficient.

Bell also revealed that now Burk has equity partners, and the city will be vetting them. That’s too late, however. The ordinance has been passed.

Bell said that the risk analysis has been performed. That was subject of the inquiry I made in my email to Bell. But there was no mention of that in the agenda materials, and Bell didn’t answer my email.

Mr. Burk then spoke. He said that the fee being paid to the developer ($39,277) is not being paid to him personally, but is instead “overhead and profit for the contractor doing the work.”

This is hair-splitting at its finest. If that money wasn’t supplied by this loan, Burk would have to pay it himself.

He also questioned a figure of 6.5% for an interest rate that I used. That figure is from the agenda material Bell’s office prepared. If citizens can’t rely on that — and remember I contacted Burk and Bell’s office too — what can they rely on?

Burk said that in today’s market it’s difficult to borrow adequate funds from commercial banks. There’s a reason for that, I would submit.

He mentioned also that he’d been vetted. Again, this would have been from the time when the vetting process wasn’t rigorous enough to be meaningful.

Additionally, any vetting process of Burk should take into account his involvement as part of the development team for Waterwalk. This highly-subsidized development in downtown Wichita is recognized as a failure by even the Wichita Eagle editorial board.

Mayor Carl Brewer thanked Burk for answering questions, because “sometimes information is put out there that’s inaccurate and that’s the way it’s left, as being inaccurate.”

To the extent that my questions were based on inaccurate information — and that something that’s far from true — some things could have been cleared up if my inquiries the day before had been successful. While it may seem that inquiring the day before a meeting is waiting until the last minute, the agenda and accompanying material for the Tuesday meetings of the council isn’t available until the Thursday or Friday before. So there’s not a lot of time for citizens to act.

In the end, anything I might have said or questions I might have raised probably would have made little difference in the council’s action. Burk and his wife have made generous campaign contributions to most members of the council, including a total of $2,000 to Janet Miller’s recent successful campaign (that’s the maximum amount it’s possible for two people to contribute). If I’d paid that much, I’d probably feel like I didn’t have to answer questions from pesky citizens.

A question to raise, and one that needs answering, is if this is a new strategy the city will use in the future: Don’t answer questions from citizens. Provide incomplete or erroneous information in the material you make available. Then, if citizens ask questions, you get to point out all the ways they’re wrong — and on television, too.

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Fraud, deceit, and misinformation regarding carbon dioxide

April 21, 2009

EPA declares greenhouse gases a threat, (Renee Shoof, McClatchy Newspapers, 4/18/09). This pronouncement follows a U.S. Supreme Court conclusion that carbon dioxide (CO2) is a pollutant, with a directive to the EPA to study whether this gas posed a threat to our health and welfare, or whether the science was too uncertain to make a judgment.

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Share in the green-energy boom and quit fighting

April 15, 2009

Share in the green-energy boom. That’s the title of Rhonda Holman’s editorial in Sunday’s Wichita Eagle.

It’s backed up in today’s paper by Enough fighting over coal plants. This editorial is notable for a few points.

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Articles of Interest

March 27, 2009

Wichita real estate development, redistricting, newspapers, free markets.

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Articles of Interest

March 22, 2009

Education reform, downtown Wichita arena, Kansas smoking ban, downtown developers.

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Barb Fuller: Feds should pay, and leave us alone

March 22, 2009

In an op-ed piece printed in the Wichita Eagle (“Barb Fuller: Feds should facilitate, not dictate, on education,” February 20, 2009 Wichita Eagle, no longer available online), Wichita school board vice president Barb Fuller makes, indirectly, the case that the U.S. Federal government should fund education, but keep its nose out of how local school boards spend the money.

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Wichita Eagle letter: coal and recycling

March 17, 2009

A letter in the Wichita Eagle by a Mr. Steve Otto of Wichita (March 16, 2009) makes a few claims that require critical examination.

The letter claims that “the rest of the nation is staying away from coal-burning plants.” Actual figures present a different story.

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Editorial Board Pen Names at the Wichita Eagle

February 27, 2009

Some comment-writers to this blog make very good points that deserve more visibility. This is the case with the following comment left anonymously to the post In Wichita, let’s disclose everything. I mean everything.

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In Wichita, let’s disclose everything. I mean everything.

February 23, 2009

In an Wichita Eagle Editorial Blog post, Rhonda Holman calls for more disclosure for groups that send mailings that “dodge campaign finance disclosure law by deftly telling people how to vote without using the words ‘vote for’ or ‘vote against.’” (Treat campaign ads the same)

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Should Wichita Identify Superintendent Finalists?

February 19, 2009

When USD 259, the Wichita public school district, draws criticism from the Wichita Eagle’s Rhonda Holman, you know they’ve really done something wrong.
Her column of today (Identify finalists for superintendent) requests that the Wichita school district make public the names of the finalists in its search for superintendent. Her request is likely to remain [...]

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In Wichita, let’s have economic development for all

February 18, 2009

There’s probably little doubt that offering incentives to companies to move to Wichita results in some that do. And, as we’ve seen, some Wichita companies are adept at inciting rumors they might move or locate new facilities somewhere else in order to gain some advantage or incentive from local or state (or sometimes both) government.

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Kansas Budget Problems Threaten School Bond Aid

January 16, 2009

Oops. When I wrote this article, I proceeded as though it was Rhonda Holman who penned the Wichita Eagle editorial I refer to. But the author is Phillip Brownlee. It just seemed like a Rhonda Holman editorial.
Because the State of Kansas is short on money this year and the next few years, lawmakers are looking [...]

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Tax Collections Rise Without Taxes Rising

January 9, 2009

A letter printed in the January 1, 2009 Wichita Eagle, written by a Christopher Brooks of Wichita, argues that political advocacy groups that ask legislators to sign a pledge to not raise taxes are engaging in “economic blackmail.” This process, Mr. Brooks writes, is “unfair to those who have a different viewpoint on spending but [...]

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The Process Should Be Most Important

December 8, 2008

A confusing move last week by the Wichita City Council didn’t help build public trust, unfortunately. Without time for public consideration, city leaders added up to $10 million for parking structures to the proposed tax-increment financing plan for the 16-block area around the arena; the council unanimously approved the plan Tuesday.

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Just Say It: We Need to Raise Taxes in Kansas

November 25, 2008

Rhonda Holman’s Wichita Eagle editorial today (State budget pain must be shared) makes the case for raising Kansas taxes without directly saying so. It’s actually quite artful the way she dodges actually saying what she wants Kansas legislators to do.
Using language like “Nobody ever wants to raise taxes …” and “Lawmakers also must not [...]

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Bryan Derreberry and the Chamber’s goals for Wichita

November 21, 2008

When the head of a chamber of commerce speaks or writes, it pays to listen or read carefully. While chambers are nominally pro-business, that’s a long way from saying they’re pro-liberty. Instead, they increasingly exist to serve a narrow interest. Using words and language like “pride,” “community,” “investment,” and “economic development” — all words that people can agree with, their flowery messages hide their real agenda.

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On the Wichita Eagle editorial board, partisanship reigns

October 31, 2008

The Wichita Eagle’s Rhonda Holman, writing for the editorial board in today’s lead editorial (Where do city, county stand on bond?) makes a few points that illustrate the highly partisan nature of this board.

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Wichita Eagle’s Bob Lutz and the Wichita School Bond Issue

October 29, 2008

In his column Cochran has succeeded in spreading anti-bond message, Wichita Eagle sports columnist Bob Lutz argues for the passage of the Wichita school bond issue. This is the same Bob Lutz who, on learning that the Wichita school board might cut some spending on athletic facilities from the bond issue, became “flustered now about how to vote.” (Will Bob Lutz Follow Jeff Davis on the Wichita School Bond Issue?)

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Wichita Eagle Political Contributions: This Year?

October 28, 2008

A Wichita Eagle editorial argues for voluntary disclosure of ballot issue campaign donations, stating: “The groups on both sides of USD 259’s bond election should voluntarily disclose their donations before Nov. 4, rather than hide behind the state’s ridiculous disclosure laws applying to ballot questions.” (“Bond groups should declare donors,” August 28, 2008.)
If the Eagle’s [...]

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The Facts the Wichita Eagle’s Mark McCormick Overlooks — Or Twists

October 23, 2008

In a recent column (Facts hurt bond issue opponents’ arguments), the Wichita Eagle’s Mark McCormick shows that he’s as adept at overlooking facts and reason and twisting an argument as is anyone.
For example, McCormick takes some bond opponents to task because they admitted they haven’t been to schools to observe overcrowding. But if opponents don’t [...]

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The Cartoon The Wichita Eagle Wouldn’t Print

October 22, 2008

Helen Cochran of Citizens for Better Education commissioned a series of political cartoons concerning the Wichita school bond issue. She’s paid to have them printed in the Wichita Eagle each Monday for the past month or so. They’re also carried on her group’s web site.
But the Wichita Eagle refused to run this week’s cartoon. Here [...]

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Wichita Eagle’s Rhonda Holman on Wichita school bond issue

October 13, 2008

The Wichita Eagle’s Rhonda Holman, in her recent editorial Business should get off fence on bond, urges voters to get educated about the proposed Wichita School bond issue. It would be helpful if she’d do the same.

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Wichita School Bond: Is Opposing It Punishing Kids?

October 8, 2008

In a letter to the Wichita Eagle, Angela Sader of Wichita says “Don’t punish kids.” (See Letters to the Editor, October 8, 2008)
One criticism Ms. Sader makes of myself and another school bond issue opponent in her letter is “A primary complaint has been that the Wichita school district and state generally are not [...]

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Earmarks are (not) OK

October 7, 2008

In a Wichita Eagle letter, writer Prem N. Bajaj of Wichita makes the case that Earmarks are OK. But only by tortured reasoning, in my opinion.
First, he states: “Earmarks finance local projects that the community is unable to support.” I ask Mr. Bajaj this question: Where, if not from community, does money for earmarks come [...]

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Should a Beat Journalist be a Layman?

October 1, 2008

Keeping TIFs from a public tiff by Wichita Eagle business reporter Bill Wilson on the Eagle’s Business Casual blog contains some comments that are troubling to me.
In these comments, reporter Wilson wrote this: “Instead, a TIF, to this layman, actually is a government bet on the success of a development.” (emphasis added)
Now I believe that [...]

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Do We Know if Enrollment Numbers Support Wichita School Bond Issue?

September 29, 2008

Writing in the Wichita Eagle Editorial Blog, Phillip Brownlee writes “Some opponents of the USD 259 bond issue have argued that the district shouldn’t need more classroom space because its enrollment has been fairly flat since the 2000 bond issue.” He then goes on to make the case for the district needing more schools and [...]

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