Tag Archives: Wichita Eagle opinion watch

Intrust Bank Arena commemorative monument

Intrust Bank Arena: Not accounted for like a business

Proper attention given to the depreciation expense of Intrust Bank Arena in downtown Wichita recognizes and accounts for the sacrifices of the people of Sedgwick County and its visitors to pay for the arena. It’s a business-like way of accounting, but a well-hidden secret.

Sedgwick County Working for YouThe true state of the finances of the Intrust Bank Arena in downtown Wichita are not often a subject of public discussion. Arena boosters promote a revenue-sharing arrangement between the county and the arena operator, referring to this as profit or loss. But this arrangement is not an accurate and complete accounting, and hides the true economics of the arena. What’s missing is depreciation expense.

An example of the incomplete editorializing comes from Rhonda Holman of the Wichita Eagle, who opined “Though great news for taxpayers, that oversize check for $255,678 presented to Sedgwick County last week reflected Intrust Bank Arena’s past, specifically the county’s share of 2013 profits.”

Earlier reporting on this topic in the Eagle did not mention depreciation expense, either.

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

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

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

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

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

Regarding the arena, the CAFR states:

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

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

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

But some don’t recognize this. In years past, Commissioner Dave Unruh made remarks that show the severe misunderstanding that he and almost everyone labor under regarding the nature of the spending on the arena: “I want to underscore the fact that the citizens of Sedgwick County voted to pay for this facility in advance. And so not having debt service on it is just a huge benefit to our government and to the citizens, so we can go forward without having to having to worry about making those payments and still show positive cash flow. So it’s still a great benefit to our community and I’m still pleased with this report.”

Intrust Bank Arena commemorative monument
Intrust Bank Arena commemorative monument
The contention of Unruh and other arena boosters such as the Wichita Eagle editorial board is that the capital investment of $183,625,241 (not including an operating and maintenance reserve) on the arena is merely a historical artifact, something that happened in the past, something that has no bearing today. There is no opportunity cost, according to his view. This attitude, however, disrespects the sacrifices of the people of Sedgwick County and its visitors to raise those funds.

Any honest accounting or reckoning of the performance of Intrust Bank Arena must take depreciation into account. While Unruh is correct in that depreciation expense is not a cash expense that affects cash flow, it is an economic fact that can’t be ignored — except by politicians, apparently.

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

Shame on Legislature - Rhonda Holman

Shame, says Wichita Eagle editorial board

Shame on Legislature - Rhonda HolmanThe Wichita Eagle editorial board, under the byline of Rhonda Holman, issued a stern rebuke to the Kansas Legislature for its passage of HB 2506 over the weekend. (Eagle editorial: Shame on Legislature, April 8, 2014)

Here are some notes on a few of Holman’s points.

She wrote that the legislature should not “undermine teachers’ rights and meddle in education policymaking.” First: There’s controversy over what the bill actually means to the relationship between teachers and their employers. Courts will probably have to intervene. Second: Should the Legislature have a say in policy, or just pay?

Then, she criticized the bill as “passed with only Republican votes” on a “Sunday night.” This reminded me of the passage of the Patient Protection and Affordable Care Act (Obamacare) in the United States Senate. At the time, The Hill reported: “The Senate approved sweeping healthcare reform legislation by the narrowest of partisan margins early Christmas Eve morning” (Senate passes historic healthcare reform legislation in 60-39 vote) That’s right: Votes from only one party, and on Christmas Eve.

Later in her op-ed Holman complained: “With such handling of the various bills, GOP legislative leaders also failed to reflect Brownback’s State of the State assertion that the ‘wonderfully untidy’ business of appropriations is ‘open for all to see.’ They held a conference committee meeting at 3 a.m. Sunday — after media, most legislators and the teachers had left the Statehouse for the night, and with insufficient public notice.” Reading this, I was again reminded of the passage of Obamacare, when Speaker Nancy Pelosi made her famous explanation as reported by Politico:

“You’ve heard about the controversies, the process about the bill .. but I don’t know if you’ve heard that it is legislation for the future — not just about health care for America, but about a healthier America,” she told the National Association of Counties annual legislative conference, which has drawn about 2,000 local officials to Washington. “But we have to pass the bill so that you can find out what is in it — away from the fog of the controversy.”

On the expansion of innovative districts, Holman wrote: “Nobody even knows whether the new ‘innovative districts’ program will work or is constitutional,” calling it an “accountability-free concept.” Well, we know that an important provision of the Patient Protection and Affordable Care Act (Obamacare) was ruled unconstitutional (the expansion of Medicaid), and Chief Justice John Roberts had to torture logic and the plain meaning of words in order to shoehorn the individual mandate into the Constitution.

I’m not saying that I approve of the way the Kansas Legislature approved this bill. But if it worked for Obamacare, and if Rhonda Holman and the Wichita Eagle editorial board like Obamacare (they do), well, you can draw your own conclusions.

Also, Holman complained of “unproven ideological reforms” contained in the Kansas school legislation. Two things: First, we know that the present system of public education in Kansas is not working for many children. For example, if we critically examine the National Assessment of Educational Progress test scores that Kansans are so proud of, we find that for some groups of students, the national public school average beats or ties Kansas.

Or, if we read the National Center for Education Statistics report Mapping State Proficiency Standards Onto the NAEP Scales, we can learn that Kansas has relatively low standards for its schools, and when Kansas was spending more on schools due to the Montoy decision from the Kansas Supreme Court, the state lowered the standards.

ideology-definitionI’m of the opinion that whenever someone criticizes their opponents as ideological — as the Wichita Eagle editorial board has — they don’t have a very good argument. They’re likely confusing ideology with partisanship. The Wikipedia entry for ideology says: “An ideology is a set of conscious and unconscious ideas that constitute one’s goals, expectations, and actions. An ideology is a comprehensive vision, a way of looking at things. … Ideologies are systems of abstract thought applied to public matters and thus make this concept central to politics. Implicitly every political or economic tendency entails an ideology whether or not it is propounded as an explicit system of thought.”

I wish the Eagle editorial board was more ideological. If it firmly believed in economic freedom, free markets, limited government, and individual liberty — that’s an ideology we could live with, and Kansas schoolchildren could thrive under.

Instead, we’re left with the Wichita Eagle editorial board’s ideology of less educational freedom and less accountability to those who pay the bills and parent the students.

apple-chalkboard-books-2

In Kansas, the Blob is worked up

apple-chalkboard-books“Education reformers have a name for the resistance: the education ‘Blob.’ The Blob includes the teachers unions, but also janitors and principals unions, school boards, PTA bureaucrats, local politicians and so on.” (John Stossel, The Blob That Ate Children.)

In Kansas, we’re seeing the Blob at full activation, vigorously protecting its interests. The source of the Blob’s consternation is a bill in the Kansas Legislature that would add charter schools and tax credit scholarships to the educational landscape in Kansas. (Kansas does have charter schools at present, but the law is so stacked in favor of the Blob’s interests that there are very few charter schools.)

An example of a prominent spokesperson for the Blob is the Wichita Eagle’s Rhonda Holman. She recently wrote regarding Kansas school funding: “In the Kansas Speaks survey released last fall by the Docking Institute of Public Affairs at Fort Hays State University, two-thirds said they wanted to see more K-12 state funding.”

I don’t doubt that these results are accurate. The desire for good schools is nearly universal. But when we look at the beliefs of people, we find that they are, largely, uninformed and misinformed about the level of school spending. Kansas Policy Institute commissioned a survey that asked the public a series of questions on schools and spending. (See Citizens generally misinformed on Kansas school spending.) A key finding is that most people think that schools spend much less than actual spending, and by a large margin. Further, most people think spending has declined, when in fact it has risen. These finding are similar to other research commissioned by KPI, and additional surveys by other organizations at the national level.

Not surprisingly, when citizens and taxpayers learn the true level of school spending, their attitude towards school spending changes. That’s dangerous to school spending advocates — the Blob. It diminishes their most compelling arguments for more school spending — “it’s for the kids.”

The Eagle editorial board, along with the Kansas City Star, has been instrumental in misinforming Kansans about school spending. These newspapers continually use base state aid per pupil as the measure of schools spending, when in fact this is just a fraction of total spending on schools. (See Here’s why Kansans are misinformed about schools.)

The survey that Holman relies upon as evidence of the desire for more school spending didn’t ask — as far as I know — questions to see if respondents were informed on the issue. Even worse: Instead of seeking to educate readers on the facts, Holman resorts to demagoguery and demonizing, referring to “education reforms coveted by some conservatives and the American Legislative Exchange Council.” There, the two evils: Conservatives and ALEC, the substance of her argument.

Reform in Kansas

There are two reforms being talked about in Kansas that are popular in other states. Popular except with the Blob, that is.

One is a tax credit scholarship program. This lets corporations make contributions to organizations that would provide scholarships for students to attend private schools. The corporations would then receive credits against their income tax. The Blob opposes programs like this. The Blob says that these programs simply let students that are already in private or church schools have the state pay their tuition.

But the proposed law in Kansas this year, as in years past, contains these provision: For the scholarship program, students must qualify as “at-risk” students and be attending a school that qualifies as “title I,” a program that applies to schools with many students from low-income families.

Further, the student must have been enrolled in a public school before seeking a scholarship, unless the student is less than six years old.

Together these requirements rebut the argument of the Blob: That the scholarships are just a way for children already in private or church schools to get tax funds to pay for their schools. Instead, the law targets these scholarships at students from low-income households.

Another possible reform is charter schools. These are schools that are public schools and receive public funding, but operate outside the present education establishment and local school boards. The Blob objects to this because they say that without government oversight, charter schools aren’t held accountable. The Blob must forget that charter schools are accountable to parents of children, which is a higher standard than the accountability of government bureaucrats. Also, unlike the regular public schools, the government can’t force children to attend a charter school.

The Blob criticizes charter schools because they say they “cherry-pick” the best students, leaving public schools with the worst. Here’s what the proposed Kansas law says: “A public charter school shall enroll all students who wish to attend the school.” If more students apply than the school has space, students will be selected via lottery. In most areas that have charter schools, there are many more aspirants than available spaces, and students are chosen by lottery. That would undoubtedly be the case in Kansas.

The Blob says that charter schools pick only the students they want, and therefore lead to segregation. Here’s the proposed law: “A public charter school shall be subject to all federal and state laws prohibiting discrimination on the basis of disability, race, creed, color, gender, national origin, religion, ancestry or need for special education services.”

Here’s what the Blob really hates: “A public charter school shall be exempt from all laws and rules and regulations that are otherwise applicable to public schools in this state.” And also this: “Teachers in public charter schools shall be exempt from the teacher certification requirements established by the state board.”

The Blob values its rules and regulations that make work for its fleets of bureaucrats. Never mind that these regulations probably don’t increase student learning. That’s not the point.

And the political muscle of the Blob, the teachers unions? Well, charter school teachers usually aren’t unionized. The union is in favor of public schools only if the the teachers are in unions.

What the Blob won’t tell you

The Kansas Blob is proud of Kansas schools, partly because of scores on the National Assessment of Educational Progress (NAEP), known as “The Nation’s Report Card.” Kansas ranks pretty high among the states on this test. It’s important, however, to examine the results from a few different angles to make sure we understand the entire situation. An illustrative video is available here.

Visualization of National Assessment of Educational Progress scores.
Visualization of National Assessment of Educational Progress scores.
Data for the 2013 administration of the test was just released. I’ve gathered scores and made them available in a visualization that you can use at wichitaliberty.org. The most widely available NAEP data is for two subjects: reading and math, and for two grades, fourth and eighth. The video presents data for Kansas, Texas, and the average for national public schools. I choose to compare Kansas with Texas because for several reasons, Kansas has been comparing itself with Texas. So let’s look at these test scores and see if the reality matches what Kansas school leaders have said.

Looking at the data for all students, you can see why Kansas school leaders are proud: The line representing Kansas is almost always the highest.

NAEP makes data available by ethnic subtypes. If we present a chart showing black students only, something different appears. Now Texas is higher than Kansas in all cases in one, where there is a tie.

If we consider Hispanic students only: Texas is higher in some cases, and Kansas and Texas are virtually tied in two others. National public schools is higher than Kansas in some cases.

Considering white students only, Texas is higher than Kansas in three of four cases. In some cases the National public school average beats or ties Kansas.

So we have what seems to be four contradictory statements, but each is true.

  • When considering all students: Kansas scores higher than Texas.
  • Hispanic students only: Kansas is roughly equal to Texas.
  • Black students only: Kansas scores below Texas.
  • White students only: Kansas scores below Texas in most cases.

When you hear the Blob trumpet high Kansas test scores, does it also explain the nuances? No, of course not, But you can examine these test scores in an interactive visualization.

Kansas school standards

Another problem you won’t hear about from the Blob: Kansas has low standards for its schools. Even worse, at a time when Kansas was spending more on schools due to an order from the Kansas Supreme Court, the state lowered its already low standards for schools.

Kansas school standards for grade 4 reading compared to other states.
Kansas school standards for grade 4 reading compared to other states.
This is the conclusion of the National Center for Education Statistics, based on the most recent version of Mapping State Proficiency Standards Onto the NAEP Scales. NCES is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations, and is located within the U.S. Department of Education and the Institute of Education Sciences.

The mapping project establishes a relationship between the tests each state gives to assess its students and the National Assessment of Education Progress, a test that is the same in all states. As explained in Kansas school standards and other states, Kansas standards are relatively low, compared to other states. This video explains. (View below, or click here to view in HD at YouTube.)

For Kansas, here are some key findings. First, NCES asks this question: “How do Kansas’s NAEP scale equivalent scores of reading standards for proficient performance at grades 4 and 8 in 2009 compare with those estimated for 2005 and 2007?”

For Kansas, the two answers are this (emphasis added):

“Although no substantive changes in the reading assessments from 2007 to 2009 were indicated by the state, the NAEP scale equivalent of both its grade 4 and grade 8 standards decreased.

Also: “Kansas made substantive changes to its reading grade 8 assessment between 2005 and 2009, and the NAEP scale equivalent of its grade 8 standards decreased.

In other words, NCES judged that Kansas weakened its standards for reading performance.

What is the import of the farm bill to Kansas?

Wheat combine on farm

Correcting the Wichita Eagle’s facts will place the importance of the farm bill to Kansas in proper perspective.

In criticizing five of the six members of the Kansas congressional delegation for voting against the farm bill, Rhonda Holman of the Wichita Eagle editorialized this: “Five of the six members of the Kansas delegation just voted against a farm bill — a stunning abdication of leadership in a state in which agriculture is 25 percent of the economy.” (Eagle editorial: AWOL on farm bill, Wednesday, February 5, 2014)

The Eagle editorialist didn’t specify what she meant by “percent of the economy” or where she got these figures. But the most common measure of the size of an economy is gross domestic product (GDP), and it’s easy to find.

Data from the Bureau of Economic Analysis (part of the U.S. Department of Commerce) for 2012 tells us that the category “Agriculture, forestry, fishing, and hunting” contributed $5,428 million towards the total Kansas GDP of $138,953 million. That means agriculture contributed 3.9 percent to Kansas GDP. The Eagle based its argument on a value of 25 percent, a value that’s 6.4 times the actual value.

If you included the category “Food and beverage and tobacco product manufacturing” you’d add a few additional percentage points. But you’d still have a number that is just a fraction of what the Eagle editorial board believes to be the contribution of agriculture to the Kansas economy.

Now that you have the facts that the Wichita Eagle doesn’t have, how important do you think is the farm bill to Kansas?

Besides this, the Eagle praised former U.S. Senator Bob Dole for his “effort to bind rural and urban interests in agricultural policy by including food stamps in the nation’s safety net for farmers.” In political science this is called logrolling. It’s one of the reasons why government continues to grow faster than our willingness to pay for it. I think the Wichita Eagle likes that.

It’s for things like this that Dan Mitchell created the “Bob Dole Award” for Misguided Conservatives. It’s for those who fit this description:

“If you say something about fiscal policy and a statist can respond by saying “I agree, so let’s raise taxes,” then you’ve made the mistake of focusing on red ink rather than the real problem of too much government spending.”

Mitchell explains the naming of the award:

Naming the award after Bob Dole also is appropriate since he was never a sincere advocate of limited government. The Kansas lawmaker was a career politician who said in his farewell speech that his three greatest achievements were a) creating the food stamp program, b) increasing payroll taxes, and c) imposing the Americans with Disabilities Act (no wonder I wanted Clinton to win in 1996).

For all of these reasons, and more, no real conservative should want to win an award linked to Bob Dole.

Joseph Ashby on local news media, anti-conservative bias

Wichita city hall logoLast week KAKE Television news anchor Jeff Herndon addressed the Wichita Pachyderm Club. Today, on the Joseph Ashby Show, the host commented on Herndon’s views on Wichita news media, and drew some conclusions about anti-conservative bias in Wichita news media.

Joseph Ashby Show, May 23, 2013 (excerpt).

The KAKE Television news story referred to is Wichita mayor comes under scrutiny for controversial vote.

Ending the Economic Development Administration

economic-development-administration

If you think a proper function of the federal government is spending your tax dollars to build replicas of the Great Pyramids in Indiana or a gift shop in a winery, you’re not going to like legislation introduced by U.S. Representative Mike Pompeo, a Republican who represents the Kansas fourth district, including the Wichita metropolitan area.

Others, however, will appreciate H.R. 887: To terminate the Economic Development Administration, and for other purposes. In the following article from last year, Pompeo explains the harm of the Economic Development Administration, which he describes as a “politically motivated federal wealth redistribution agency.” Pompeo had introduced similar legislation last year, and this bill keeps the effort alive in the new Congress.

In his article from last year Pompeo mentions the trip by Assistant Secretary of Commerce for Economic Development John Fernandez to Wichita. Since then, Fernandex has moved on to the private sector, working for a law firm in a role that seems something like lobbying.

For more background on this agency, see Economic Development Administration at Downsizing the Federal Government.

End the Economic Development Administration — Now

By U.S. Representative Mike Pompeo, January, 2012

As part of my efforts to reduce the size of government, I have proposed to eliminate the Economic Development Administration (EDA), a politically motivated federal wealth redistribution agency. Unsurprisingly, the current leader of that agency, Assistant Secretary of Commerce for Economic Development John Fernandez, has taken acute personal interest in my bill to shutter his agency.

Last week, Secretary Fernandez invited himself to Wichita at taxpayer expense and met with the Wichita Eagle’s editorial board. Afterwards, the paper accurately noted I am advocating eliminating the EDA even though that agency occasionally awards grant money to projects in South Central Kansas. They just don’t get it. Thanks to decades of this flawed “You take yours, I’ll take mine” Washington logic, our nation now faces a crippling $16 trillion national debt.

I first learned about the EDA when Secretary Fernandez testified in front of my subcommittee that the benefits of EDA projects exceed the costs and cited the absurd example of a $1.4 million award for “infrastructure” that allegedly helped a Minnesota town secure a new $1.6 billion steel mill. As a former CEO, I knew there is no way that a taxpayer subsidy equal to less than one-tenth of one percent (0.1%) of the total capital needed made a difference in launching the project. That mill was getting built whether EDA’s grant came through or not. So, I decided to dig further.

I discovered that the EDA is a federal agency we can do without. Similar to earmarks that gave us the infamous “Bridge to Nowhere” or the Department of Energy loan guarantee scandal that produced Solyndra, the EDA advances local projects that narrowly benefit a particular company or community. To be sure, the EDA occasionally supports a local project here in Kansas. But it takes our tax money every year for projects in 400-plus other congressional districts, many if not most of which are boondoggles. For example: EDA gave $2 million to help construct UNLV’s Harry Reid Research and Technology Park; $2 million for a “culinary amphitheater,” tasting room, and gift shop at a Washington state winery; and $500,000 to construct (never-completed) replicas of the Great Pyramids in rural Indiana.

Several times in recent decades, the Government Accountability Office has questioned the value and efficacy of the EDA. Good-government groups like Citizens Against Government Waste have called for dismantling the agency. In addition, eliminating the EDA was listed among the recommendations of President Obama’s own bipartisan Simpson-Bowles Deficit Reduction Commission.

So why hasn’t it been shut down already? Politics. The EDA spreads taxpayer-funded project money far and wide and attacks congressmen who fail to support EDA grants. Soon after that initial hearing, Secretary Fernandez flew in his regional director — again at taxpayer expense — to show me “all the great things we are doing in your home district” and handed me a list of recent and pending local grants. Hint, hint. You can’t say I wasn’t warned to back off. Indeed, Eagle editors missed the real story here: Secretary Fernandez flew to Wichita because he is a bureaucrat trying to save his high-paying gig. The bureaucracy strikes back when conservatives take on bloated, out-of-control, public spending, so I guess I’m making progress.

Please don’t misunderstand. I am not faulting cities, universities, or companies for having sought “free” federal money from the EDA. The fault lies squarely with a Washington culture that insists every program is sacred and there is no spending left to cut.

A federal agency run at the Assistant Secretary level has not been eliminated in decades. Now is the time. My bill to eliminate the EDA (HR 3090) would take one small step toward restoring fiscal sanity and constitutional government.

Wichita Eagle editorial board on the truth

Wichita Eagle Opinion: Brownback Numbers are Suspect

A recent Wichita Eagle editorial penned by Rhonda Holman took Governor Sam Brownback to task for a mistake made in reporting Kansas spending numbers. (Eagle editorial: Brownback ’s numbers are suspect.)

Specifically, Holman wrote:

What’s going on here is clear: Brownback is embracing and repeating numbers that help promote his agenda, including what he sees as the need to push back against a court order for more state funding of public schools.

But Kansans need to trust that what they hear from their governor, especially again and again, is rooted in truth, not cherry-picked, spun or flat wrong.

So let’s look at the use of numbers by the Wichita Eagle editorial board. When discussing school spending, the editorialists refer to base state aid per pupil and treat that as though it was the totality of school spending.

Base state aid per pupil is just part of school spending, and most schools spend much more than that. Specifically, base state aid per pupil for the last school year was $3,780. But the state spent an average of $6,983 per pupil that year, which is an additional $3,203 or 84.7 percent more than base state aid. Overall spending from all sources was $12,656 per pupil. Both of the latter numbers are higher than the previous year.

Also, base state aid per pupil has declined in recent years. That’s a convenient fact for school spending boosters. They can use a statistic that contains a grain of truth in order to whip up concern among the uninformed over inadequate school spending. They can cite this as an argument for increasing spending, even though spending has been rising.

(By the way, when citizens in Kansas and across the nation are asked questions about school spending, we learn they are totally uninformed. Even worse, several candidates for the Wichita school board are similarly uninformed. See Wichita school board candidates on spending.)

Further, citing only base state aid reduces “sticker shock.” Most people are surprised to learn that our schools spend $12,656 per student. It’s much easier to tell taxpayers that only $3,780 was spent. But that’s not a complete picture. In fact, using base state aid as a measure of school spending defines “cherry-picked,” a practice of which Holman accuses the governor.

Informed readers are left wondering whether the Eagle editorial board is ignorant of these facts, or does it have an agenda to push — just like they accuse Brownback.

Here’s something else from Holman in the editorial:

Plus, Brownback has said that “29 percent of Kansas fourth-graders can’t read at a basic level.” That’s a misuse of the results of the 2011 National Assessment of Educational Progress survey, in which Kansas actually ranked 10th best in the nation. The better measure is the state assessment, which found 10.1 percent of fourth-graders failed to meet the state standard in reading that year.

The high ranking of Kansas on the NAEP can be explained by the demographic composition of Kansas students compared to other states. As I show in Kansas school test scores, in perspective, Kansas students score better than Texas students on the NAEP. This is a fact congruent with Holman’s citing of Kansas’ high ranking among the states.

But it is also true that Texas white students score better than Kansas white students, Texas black students score better than Kansas black students, and Texas Hispanic students score better than or tie Kansas Hispanic students. The same pattern holds true for other ethnic subgroups. If we examine figures for low-income students, we see a similar pattern.

How can this be? You have to look more closely at the figures than the Wichita Eagle editorial board is willing or able. But if you do this, you will understand more about Kansas schools.

As far as relying on Kansas state assessments to gauge our schools’ performance, we need to be careful. When compared to other states, Kansas has low standards, and these standards have declined.

The U.S. Department of Education’s National Center for Education Statistics (NCES) has analyzed state standards, and we can see that Kansas has standards that are below most states. The table of figures is available at Estimated NAEP scale equivalent scores for state proficiency standards, for reading and mathematics in 2009, by grade and state. An analysis of these tables by the Kansas Policy Institute shows that few states have standards below the Kansas standards.

The editorial board might also wonder why scores on the Kansas assessments — the ones under control of Kansas education officials — are rising, while NAEP scores are not.

A reader sent in this comment, which I believe is apt:

To paraphrase a trusted source:

“[The Eagle's] numbers matter because they’re being used by [Democrats] and [government employees' unions] to guide and justify state spending policy decisions, especially in education. The [Eagle] has used [misleading statistics] to drum up public support for plans to [raise] income taxes and to [support] a recent court decision that found the state isn’t meeting its constitutional mandate to provide adequate funding for schools.”

I don’t expect a correction anytime soon.

Wichita Eagle editorial board: When writing that “Kansans need to trust that what they hear from their governor, especially again and again, is rooted in truth, not cherry-picked, spun or flat wrong” please apply this standard to yourself.

Kansans uninformed on school spending

As the Kansas Legislature debates spending on schools, we have to hope that legislators are more knowledgeable about school spending than the average Kansan. Surveys have found that few Kansans have accurate information regarding school spending. Surprisingly, those with children in the public school system are even more likely to be uninformed regarding accurate figures. But when presented with accurate information about changes in school spending, few Kansans are willing to pay increased taxes to support more school spending.

These are some of the findings of a 2010 survey commissioned by Kansas Policy Institute.

Not only did Kansans underestimate school spending levels, they did so for the state portion of school funding, and again for the total of all funding sources — state, federal, and local.

Many people greatly underestimated school funding. For all sources of funding on a per-student basis, 43% of poll respondents chose a number that is less than half the actual number.

On a question asking about the change in Kansas school funding over the past five years, 64% thought that funding had declined. Only 6% knew that funding had increased by over 15% during that period. The five year time period is significant, as it was in 2005 that the Kansas Supreme Court ordered additional school spending as a result of the Montoy case.

When asked about their willingness to pay higher taxes to support mores school funding, 51% said they would, if per-pupil funding was down from five years ago. But when asked whether they would pay more taxes in per-pupil funding had gone up by over 20%, only 11% said yes. According to the Kansas State Department of Education, total funding per pupil increased by 26% over this period.

The survey was conducted by The Research Partnership, Inc., a Wichita-based market research firm. The complete results may be viewed at the Kansas Reporter website at K-12 Public Opinion Survey, or here.

Survey participants were asked if they would like to make comments regarding funding of Kansas public schools. There are 17 pages of these comments.

Analysis

The results of this Kansas poll are similar to recent nationwide results discovered by EducationNext, a project of the Harvard Kennedy School of Government. That study is summarized at Americans uninformed about school spending, study finds. Another study with similar findings is at Kansas school spending: citizens again are uninformed.

It’s not surprising that Kansans are misinformed about the level of school spending and its changes. Even members of the Kansas House of Representatives and the Wichita School Board are sometimes uninformed, misinformed. It’s either that or we have to conclude they are lying to us.

The school spending lobby in Kansas focuses on only one measure of school spending, base state aid per pupil. That number is approximately one-third of total school spending, and it has declined. As this study shows, it is in the best interests of the Kansas school establishment for average Kansans to be uninformed about the true levels of school spending. When presented with accurate information about school spending, Kansans are not willing to pay higher taxes.

We can understand the motivation of schools to lobby for increased spending. But they should be truthful. It’s even worse when newspaper editorial writers don’t recognize the truth. An example is a recent Wichita Eagle editorial written by Rhonda Holman. She repeated the meme of the school spending lobby, writing: “… despite state per-pupil base aid having been slashed to 1999 levels.” Most people don’t know that “base aid” is only one component of Kansas school spending. It’s the starting point for the Kansas school finance formula. After weightings are applied, most school districts receive much more funding than the base aid figure. The Wichita school district, for example, received $6,511 per pupil from the state at a time when base state aid was $4,012. Also, look at the total spending picture: From 1999 to last year, Wichita school spending jumped from $336 million to over $604 million. State aid to this district increased from $200 million to $328 million over the same time.

It’s also likely that the current school year will see record spending on schools in Kansas.

So why don’t Holman and the Wichita Eagle use the total spending figures, or even the total state aid numbers? Focusing on one component of Kansas school finance that is not representative of the entire picture is a disservice to Wichita Eagle readers.

Kansas and Wichita quick takes: Monday April 23, 2012

This week is … Administrative Professionals week in Kansas. Kansas Governor Sam Brownback issued this proclamation, so evidently time spent on things like this is a proper and valid function of government. We ought to end these proclamations by government at all levels. … At Wichita City Council meetings there have been cases where the meaningful business of the council has not started until nearly one hour after the start of the meeting. The hour has been consumed by proclamations, awards, remarks by council members, etc. While this happens, citizens with business before the council wait. And wait. They’re wasting their time and money. Their attorneys, representatives, or employees may be there with them, racking up legal bills and wasting time and money while listening to the mayor or other official read proclamations. … These proclamations are also more about promoting the wholesomeness and goodness of government than anything else.

Taxpayer-funded lobbying. It’s one thing when private citizens or groups ask for more government spending. But when Kansans’ tax dollars are being spent to ask for more spending — that’s another thing, and a practice that should end. Here’s an example from the Kansas Association of School Boards (KASB). According to IRS Form 990 filings, KASB receives over $2 million in membership dues from school boards each year, money raised through taxation. Astonishingly, those same filings indicate that KASB spends no money on political lobbying. Astonishing because Mark Tallman, officially described on the KASB website as “associate executive director/advocacy,” is always described as “lobbyist” everywhere else.

American Exceptionalism to be topic. This Friday (April 27th) the Wichita Pachyderm Club features Dr. Malcolm C. Harris, Sr., Professor of Finance, Friends University, speaking on “The Open Minded Roots of American Exceptionalism, and the Decline of America’s Greatness.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … The club has an exceptional lineup of future speakers as follows: On May 4th: United States Senator Jerry Moran speaking on “A legislative update.” … On May 11th: Gary Oborny, Chairman/CEO Occidental Management and Real Estate Development, CCIM Designated member of the Storm Water Advisory Board to the City of Wichita, speaking on “What is the economic impact of EPA mandates on storm water quality in Wichita?” … On May 18th: Paul Soutar, Reporter for Kansas Watchdog, speaking on “The evolution of journalism and how the new media empowers citizens.” … On May 25th: Ron Estes, State Treasurer of Kansas, speaking on “A report from the Kansas Treasurer.”

Kill the messenger. The Kansas government school establishment rallies: “Last Wednesday, April 18, the Wichita Eagle editorial page made an outrageously false claim about Kansas Policy Institute, saying we were ‘playing fast and loose’ with the truth. Our crime? We have a fact-based opinion with which they disagree! We asked for an immediate meeting to make our case and request a retraction, but the Opinion Page Editor, Phillip Brownlee, said he wasn’t available until next week but didn’t a meeting was really necessary, saying ‘It’s just that The Eagle editorial board (and the Kansas Dept. of Ed., school districts, and many other observers) thinks the ads are misleading.’… The Eagle editorial board, KSDE, local districts and others don’t like the ads because they disclosed that proficiency does not require full comprehension of grade-appropriate material.” More from Kansas Policy Institute at Attempting to Kill the Messenger .

The Kansas Policy Institute advertisement. Since the Wichita Eagle editorial board did not think it necessary to meet with its representatives, on Sunday the Kansas Policy Institute placed an advertisement in response to a Rhonda Holman editorial. An important fact that Kansans need to understand is that school spending is increasing, despite the claims of the Kansas public school establishment: “And while you may have been told that total funding for schools was reduced this year, the truth is that KSDE estimates that 2012 spending will reach a record $5.7 billion. Some people would have you believe that the growth in total spending is deceptive because not all spending goes into the classroom, but the truth is that Instructional spending has increased at an even faster rate than total spending! Instructional spending increased 87% between 1999 and 2011; that is more than double the combined rates of increase in inflation and enrollment.” The advertisement may be viewed here: One Goal — Different Views.

Holman on Kansas school spending. Here’s a sample as to just how bad the Rhonda Holman editorial is on the facts. She writes: “… despite state per-pupil base aid having been slashed to 1999 levels.” Most people don’t know that “base aid” is only one component of Kansas school spending. It’s the starting point for the Kansas school finance formula. After weightings are applied, most school districts receive much more funding than the base aid figure. The Wichita school district, for example, received $6,511 per pupil from the state at a time when base state aid was $4,012. Also, look at the total spending picture: From 1999 to last year, Wichita school spending jumped from $336 million to over $604 million. State aid to this district increased from $200 million to $328 million over the same time. Why doesn’t Holman uses the total spending figures, or even the total state aid numbers? Answer: These facts are inconvenient for her.

TIF and other subsidies harm Wichita

Everyone who cares about Wichita — the entire city, not just special interests — ought to be opposed to the continued use of tax increment financing (TIF) districts and other forms of subsidy that direct benefits to a small group at the expense of everyone else.

Proponents of these programs such as Wichita Eagle editorial writer Rhonda Holman, most elected officials, and nearly all bureaucrats, need to justify these incentives. They make their case, of course, but the case is shallow. We need to look at research that studies these programs. We need to consider the effect of these programs on the city as a whole, and on the civic attitudes of Wichitans. When we do, we find that these programs just don’t deliver what they promise, unless you focus only on the special interest groups that feed off these programs. We also see that these programs contribute to the cynicism that is destructive to a civil society where people exist and trade harmoniously.

What is the purpose? Development? Jobs?

Some people want TIF because it promises development that otherwise would not happen. Others want the jobs that they see TIF create.

The problem is that both promises are false — if you are able to look beyond stage one. There’s no doubt that things happen in TIF districts, usually. Buildings are built or renovated. Businesses open. People go to work.

This simple analysis appeals to elected officials and newspaper editorial writers. But if we are concerned about the overall prosperity of our city, we need to look beyond the borders of the TIF district. When we do that, we come to a different assessment.

Regarding the effect of TIF on overall development, economists Richard F. Dye and David F. Merriman have studied tax increment financing extensively. Their article Tax Increment Financing: A Tool for Local Economic Development states in its conclusion:

TIF districts grow much faster than other areas in their host municipalities. TIF boosters or naive analysts might point to this as evidence of the success of tax increment financing, but they would be wrong. Observing high growth in an area targeted for development is unremarkable.

So TIFs are good for the favored development that receives the subsidy — not a surprising finding. It’s what self-serving elected officials, bureaucrats, and newspaper editorial writers can see and focus on. But what about the rest of the city? Continuing from the same study:

If the use of tax increment financing stimulates economic development, there should be a positive relationship between TIF adoption and overall growth in municipalities. This did not occur. If, on the other hand, TIF merely moves capital around within a municipality, there should be no relationship between TIF adoption and growth. What we find, however, is a negative relationship. Municipalities that use TIF do worse.

We find evidence that the non-TIF areas of municipalities that use TIF grow no more rapidly, and perhaps more slowly, than similar municipalities that do not use TIF. (emphasis added)

So if we are concerned about overall growth in Wichita, we need to realize that TIF simply shifts development from one place to another. The overall impact, according to uncontroverted research, is negative: less growth, not more.

What about jobs? Paul F. Byrne of Washburn University authored a recent report titled Does Tax Increment Financing Deliver on Its Promise of Jobs? The Impact of Tax Increment Financing on Municipal Employment Growth. In its abstract we find this conclusion regarding the impact of TIF on jobs:

Increasingly, municipal leaders justify their use of tax increment financing (TIF) by touting its role in improving municipal employment. However, empirical studies on TIF have primarily examined TIF’s impact on property values, ignoring the claim that serves as the primary justification for its use. This article addresses the claim by examining the impact of TIF adoption on municipal employment growth in Illinois, looking for both general impact and impact specific to the type of development supported. Results find no general impact of TIF use on employment. However, findings suggest that TIF districts supporting industrial development may have a positive effect on municipal employment, whereas TIF districts supporting retail development have a negative effect on municipal employment. These results are consistent with industrial TIF districts capturing employment that would have otherwise occurred outside of the adopting municipality and retail TIF districts shifting employment within the municipality to more labor-efficient retailers within the TIF district. (emphasis added)

While this research might be used to support a TIF district for industrial development, TIF in Wichita is primarily used for retail development. And, when looking at the entire picture, the effect on employment is negative.

Verge of corruption

The ability and willingness of local elected officials to dish out TIF and other forms of subsidy places them, as Randal O’Toole has written, “on the verge of corruption.” In Wichita, David Burk and the principals of Key Construction make extensive use of political campaign contributions, and have benefited handsomely from TIF and other forms of subsidy. A recent analysis of campaign contributions by these parties to Wichita City Council members showed just how prevalent are these contributions.

In Wichita city elections, individuals may contribute up to $500 to candidates, once during the primary election and again during the general election. As you can see in this table complied from Wichita City Council campaign finance reports, spouses often contribute as well. So it’s not uncommon to see the David and DJ Burk family contribute $2,000 to a candidate for their primary and general election campaigns. That’s a significant sum for a city council district election campaign cycle. Click here for a compilation of campaign contributions made by those associated with the Douglas Place project, a recent collaboration between Burk, Key Construction, and others.

Council Member Jeff Longwell (district 5, west and northwest Wichita), in his second term as council member and with his heart set on becoming the next mayor, leads the pack in accepting campaign contributions from parties associated with the Douglas Place project. For his most recent election, he received $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife. Total from parties associated with the Douglas Place project: $6,000.

Lavonta Williams, (district 1, northeast Wichita), who is also vice mayor, received $5,000 from parties associated with Douglas Place: $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

Mayor Carl Brewer received $4,000 from parties associated with Douglas Place: $3,500 from parties associated with Key Construction, and $500 DJ Burk, David Burk’s wife.

Council Member Janet Miller (district 6, north central Wichita) received $3,500 during her 2009 election campaign from parties associated with Douglas Place: $1,500 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

For his 2011 election campaign, newly-elected Council Member Pete Meitzner (district 2, east Wichita) received $2,500 from parties associated with Douglas Place: $1,500 from parties associated with Key Construction, and $1,000 from David Burk and his wife.

The people who make these contributions and the officeholders who receive them deny that they make any difference. That’s hard to believe. These donors don’t often contribute to candidates for the Kansas Legislature or U.S. Congress. That’s because these bodies don’t have the power to dish out the subsidies that the Wichita City Council does. I’d say these donors are acting rationally, in their self-interest.

If you’re still not convinced, consider the case of Reverend Kevass Harding, who wanted to redevelop the Ken-Mar shopping center, and Wichita City Council member Lavonta Williams, (district 1, northeast Wichita), who is presently serving as vice mayor.

As reported in 2009, Harding and his wife made campaign contributions to Williams. These campaign contributions, made in the maximum amount allowable, were out of character for the Hardings. They had made very few contributions to political candidates, and they appear not to have made many since then.

But in June 2008, just before the Ken-Mar TIF district was to be considered for approval, the Hardings made contributions in the maximum allowable amount to Williams, who represents Ken-Mar’s district. Harding would not explain why he made the contributions. Williams offered a vague and general explanation that had no substantive meaning.

The close linkage between these political contributions the awarding of money illustrates the need for pay-to-play laws in Wichita and Kansas. These laws impose various restrictions on the activities of elected officials and the awarding of contracts or other largesse to those who have made political contributions.

Citizens become cynical when they feel there is a group of insiders — commonly called the “good ol’ boy network” — who get whatever they want from city hall at the expense of taxpayers. It’s surprising that the Wichita Eagle editorial board is either not aware of this, or doesn’t see it as a problem. In the meantime, our newspaper, along with those in the network of city hall insiders, continue to contribute to the destruction of civil society in Wichita.

Additional Reading:

  • Wichita property taxes are high, leading to other problems: “An ongoing study by the Minnesota Taxpayers Association tells us that Wichita has high business property taxes. This may be a reason why the Wichita City Council feels it is necessary to offer relief from these taxes, but it is not an effective economic development strategy.”
  • Tax increment financing: The right tool for Wichita jobs?: “Tax Increment Financing (TIF) is an economic development tool that uses the expected growth (or increment) in property tax revenues from a designated geographic area of a municipality to finance bonds used to pay for goods and services calculated to spur growth in the TIF district. The analysis performed for this study found TIF does not tend to produce a net increase in economic activity; favors large businesses over small businesses; often excludes local businesses and residents from the planning process; and operates in a manner that contradicts conventional notions of justice and fairness. We recommend seeking alternatives to TIF and reforms to TIF that make the process more democratic and the distribution of benefits more fair to residents of TIF districts.”

  • Giving away the store to get a store: “Largely because it promises something for nothing — an economic stimulus in exchange for tax revenue that otherwise would not materialize — this tool is becoming increasingly popular across the country. Originally used to help revive blighted or depressed areas, TIFs now appear in affluent neighborhoods, subsidizing high-end housing developments, big-box retailers, and shopping malls. And since most cities are using TIFs, businesses such as Cabela’s can play them off against each other to boost the handouts they receive simply to operate profit-making enterprises.”
  • Wichita’s economic development strategy: rent seeking: “It is wealth, after all, that defines prosperity. Our goal ought to be to create an environment where everyone lives in an environment conducive to creating prosperity and wealth. But in a misguided effort, our city leaders, week after week, take actions that produce just the opposite.”
  • Wichita economic development: And then what will happen?: “Critics of the economic development policies in use by the City of Wichita are often portrayed as not being able to see and appreciate the good things these policies are producing, even though they are unfolding right before our very eyes. The difference is that some look beyond the immediate — what is seen — and ask “And then what will happen?” — looking for the unseen.
  • Wichita and its political class: “Discussion at a Wichita City Council meeting provided an opportunity for citizens to discover the difference in the thinking of the political class and those who value limited government and capitalism.”
  • Wichita on corporate welfare, again: “An award of $2.5 million by the City of Wichita to aircraft manufacturer Hawker Beechcraft to ward off a threatened move to Louisiana stands out as an example of corporate welfare given for its own sake, and not in response to any real threat.”
  • Wichitans mislead on Warren IMAX incentives: “With the possibility of another IMAX theater being built not too far from Wichita, we now know that Wichitans were mislead in awarding economic development incentives.”
  • Wichita again to bet on corporate welfare as economic development: “The Wichita City Council may take action that promotes corporate welfare and the city’s economic development policy.”
  • In Wichita and Kansas, economic development is not working: “The effort of Wichita and Kansas to retain Hawker Beechcraft, one of our leading employers and a Wichita institution, provides a lesson in the futility of corporate welfare as an economic development policy: Someone is usually willing to pay more. We would be much better off if we start transforming Kansas to a state where all companies are nurtured, not by bureaucratic and political oversight and handouts, but by a low taxing and spending environment, and a reasonable regulatory regime.”
  • Tax increment financing is not free money: “Cato Institute Senior Fellow Randal O’Toole has written extensively on the subject of urban planning, development, and tax increment financing (TIF) districts. The following article contains many points that the Wichita City Council may wish to consider as it considers expansion of a downtown Wichita TIF district at tomorrow’s council meeting.”

Kansas school spending facts ignored by many

A recent Lawrence Journal-World editorial that was repeated in the Wichita Eagle made several claims about Kansas schools that don’t hold up under scrutiny. Unfortunately, the editorial is an example of how difficult it is to have a reasoned discussion of Kansas school issues.

School spending

The editorial makes this claim: “In the last four years, per-pupil state funding for public schools has declined by about 14 percent, from $4,400 per student to $3,780. Districts have cut the fat in their budgets and then some. It’s time to correct this dangerous trend.”

This statement about base state aid per pupil is true. But using only that figure to describe spending on schools in Kansas is disingenuous. It hides facts that are contrary. The truth is that Kansas school spending has fallen only slightly in recent years. Charts at the end of this article that are based on figures from Kansas State Department of Education (KSDE) tell the story.

The first chart shows total spending per student in Kansas schools. Statewide, spending has declined the past two years. But while school spending advocates describe spending cuts in terms like “falling off a cliff,” the actual decline is quite mild. Using figures adjusted for inflation, per-pupil spending is $331 higher than in the 2005 – 2006 school year.

A second chart shows spending on Kansas schools considering state aid only. The drop in spending, considering only state aid, is more pronounced than when looking at funding from all sources. School spending advocates emphasize this fact, but state aid is only part of total school spending. Note also that for the most recent school year, spending per pupil rose.

The third chart illustrates the relationship between base state aid per pupil and total spending. This is important to realize, as the Journal-World editorial notes the large drop. It’s true. Base state aid has decreased. But total state spending, as noted in the previous chart, has not fallen by near as much, and rose for the most recent year. And the line for total school spending has declined only slightly.

Because base state aid has fallen, school spending advocates concentrate on this number. As reported in Kansas school spending: the deception, Mark Desetti, the lobbyist for the Kansas National Education Association (KNEA), our state’s teachers union, uses this argument when he makes the case for more school spending. He’s not alone in using deception to argue for more school spending. The Lawrence Journal-World, only of our state’s largest newspapers, is helping.

Teacher quality

The Journal-World editorial also states: “There is no higher priority than recruiting and retaining high quality teachers and giving them classes that are small enough to manage and teach effectively.”

This sentence is partially correct. It’s becoming clear that teacher quality is the most important factor that schools have under their control that influences student achievement. Unfortunately, Kansas schools have policies that work against teacher quality. An example are union pay scales that pay all teachers the same regardless of how good a job they do.

Class size

The Journal-World editorial also makes the case for small class sizes: “How can Kansas schools preserve the quality of instruction they offer students with so many fewer teachers in the classrooms? Research has repeatedly documented the positive effect that smaller class size has on educational achievement. There is no doubt that the classroom teachers who have direct contact with students on a day-to-day basis are a critical part of individual students’ academic success.”

The editorial doesn’t cite the research it relies on. If it had to produce a citation, it might find that difficult. Research shows that class size makes a difference for very young children (below third grade), when class size can be reduced to 11 or 12 students. For everyone else, there is no evidence that class size makes a difference. Even the left-wing Center for America progress agrees that small class size is not effective, and summarizes the current research in its article The False Promise of Class-Size Reduction.

But class size reduction remains popular, mostly because it has an intuitive appeal. It seems like it should work. We can understand parents being seduced by its appeal, and we can understand politicians pandering for their votes by supporting class size reduction. We can understand the teachers union advocating for more teachers at any cost, not matter how ineffective they may be. But newspaper editorial writers ought to know better.

Total spending per student in Kansas schools. Spending has increased much faster than inflation.
Kansas school spending, state aid only.
Kansas school spending and base state aid per pupil. While bsapp has declined, other spending has not declined as much, or has held nearly steady. Focusing only on bsapp is misleading, and school spending advocates do just that.

Wichita Eagle on KPERS misses the mark

A recent Wichita Eagle editorial by Phillip Brownlee misses understates the magnitude of the problem with Kansas Public Employee Retirement System, or KPERS, and fails to recognize problems with possible solutions. ($8.3 billion question, November 4, 2011 Wichita Eagle)

The first problem is stating the magnitude of the problem. Brownlee, like most sources, states the funding shortfall at $8.3 billion. Using that number is nothing short of fraudulent. KPERS acknowledges that there are about $600 million in market losses that aren’t included in the $8.3 billion figure because government accounting rules don’t require such reporting. Plus, this valuation relies on assumed rates of return that are higher than the private sector uses. Adjusting for these factors, and using a realistic assumed rate of return of six percent, Kansas Policy Institute says the shortfall would be $14.1 billion.

More shocking is an evaluation of state pension funds conducted by the American Enterprise Institute which uses market valuation methods. This evaluation puts the shortfall for Kansas at $21.8 billion.

Either way, the magnitude of the problem is far larger than Brownlee acknowledges.

Brownlee also writes that moving to a defined-contribution plan isn’t the solution. He says that “future contributions would be diverted to the new plan,” but these contributions are needed to prop up the current system. The teachers union and organizations that advocate for state employees have made similar claims, with the KNEA writing: “If all new employees came in under a defined contribution or 401(k) plan, their investments would be essentially personal investments and not used to contribute to benefit payments to current or future defined benefit members. This means that each person who retires will be replaced by someone who is not paying into the defined benefit system.” (emphasis added)

These admissions that the contributions of young workers are used to fund the benefits of retirees is admission of a Ponzi scheme. Instead of new members’ contributions being invested to provide for their own retirement, their contributions are needed to pay for current retirees. This is a system that guarantees being perpetually under-funded. It must be stopped.

Very troubling is Brownlee’s discussion of a proposal to borrow $5 billion to prop up KPERS. The only objection Brownlee finds is that it could be risky if the stock market falls. Yes, part of the problem with KPERS is that the stock market is down and there have been losses in recent years. Although we can’t predict when the market will fall and by how much, we know that there will be ups and downs over long periods of time, and that’s the domain of pension funds — long periods of time.

That the state might even consider borrowing $5 billion to fund KPERS is an admission that the state has been running deficits for some years, despite a requirement for a balanced budget. We are left with the realization that the legislature has committed itself to obligations that it chose not to fund. $5 billion is nearly one year’s general fund spending. It’s a lot of money in Kansas, and even this much would not close the gap in KPERS.

This deficit has not appeared in any budget. The legislature and governors have said we’ve balanced the budget. But when the liabilities the state has incurred, but not paid for, are added, we realize that we’ve not been told the truth. Mr. Brownlee’s editorial does nothing to advance this truth to Kansans.

The first thing Kansas must do is realize that the state has not shown responsibility in running a defined-benefit pension plan, and it must stop admitting new employees.

The Wichita Eagle on naysayers: a disservice to Wichita

Yesterday’s op-ed by Rhonda Holman in The Wichita Eagle reveals a crucial need for a newspaper with at least one conservative voice on its editorial board (Say ‘no’ to naysayers, October 9, 2011). Here are a few ways in which Holman and her newspaper’s editorial section are wrong about downtown Wichita development and a few other issues, and how the op-ed is a disservice to the people of Wichita:

The real world, according to Holman

While Holman cites the “real world” as the need to pour massive subsidy into downtown Wichita, I might ask this question: Why is downtown Wichita such an unattractive investment that lavish subsidy must be heaped upon those who invest there?

Actually, the broader question needs to be asked, as the city often subsidizes development all over town. An example is the new Cabela’s store, an example of “greenfield” development that supposedly sucks away all the money from downtown, and which the elitists despise. In that case the city lent its taxing authority to Cabela’s to be used for its own purposes. A more direct example was when the city granted, through a forgivable loan, $48,000 to The Golf Warehouse, located in a suburban office park.

So what is it about Wichita? Won’t anyone invest in Wichita without subsidy?

It turns out, fortunately, that many do.

In the “real world,” there’s a lot of development going on. It just isn’t always taking place where Holman and other elites think it should be taking place.

Interestingly, when the elites advocate for public funding of their goals, their own actions often belie their true preferences. For example, a lot of development in Wichita is taking place near Holman’s suburban home. Many other supporters of subsidized downtown development don’t live anywhere near downtown — or even in Wichita, in at least two examples.

Why this building?

There’s much more in Holman’s article that deserves discussion. For example, Holman writes: “The Union National Bank building is a prime example: If it could be developed without the use of public tools, it wouldn’t still be empty after 12 years.” Underlying this statement is the assumption that this property should be developed. I don’t know where she and the supporters of subsidized downtown development get these ideas. What is it about this property that gives it priority over other properties in the city or downtown?

If Holman makes the case that this small piece of land deserves massive public spending to support its development, can’t the same argument be made for every other vacant building or empty plot of land in downtown Wichita? We can anticipate that it will be.

Scrutiny, by cheerleaders only

Holman praises the scrutiny that the project has undergone, writing that the project has been “vetted by a public-private evaluation team.” By my reckoning, the committee that performs this function doesn’t have a single member who is skeptical of subsidies for downtown development. Can’t these people tolerate even one person who might voice dissent?

Further, that committee decided to approve the project despite the involvement of David Burk of Marketplace Properties. Holman’s own newspaper reported this last year: “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney. … Officials in the city legal department said that while Burk was within his rights to appeal taxes on another city-supported building in the Cinema Plaza, he did not have authorization to file an appeal on the city-owned parking/retail space he leases. … As for Burk signing documents as the city’s representative, ‘I do have a problem with it,’ said City Attorney Gary Rebenstorf, adding that he intends to investigate further.”

The development agreement for the current project contains restrictions on the type of behavior that Burk has exhibited in the past. Call it the “Burk clause.”

Election as referendum?

Holman claims that the recent spring city elections were a referendum on downtown, and that subsidized downtown development won. (Here again Holman doesn’t make a distinction between “development” and “subsidized development.”)

But elections are a decidedly poor way to make these decisions. For one thing, policy regarding subsidized downtown development is just one issue that candidates ran on. Voters have to vote for the entire package. They can’t pick and choose among issues, and it’s a reason why we need to leave more economic activity in the realm of markets — where people can pick and choose what they want — rather than turning it over to politics.

Then, there’s the low turnout for these elections. In the past, Holman described the turnout for the spring primary as “depressingly low.” But now — since the results largely fit her ideology — she describes the election is a “referendum.”

Then, there’s this: A recent Rasmussen poll carried the headline: “Just 6% Think Most Politicians Keep Their Campaign Promises.” Elaborating, the pollster explained: “Voters remain overwhelmingly convinced that most politicians won’t keep their campaign promises, but they’re a little less convinced that their elected officials deliberately lie.”

As shown in my reporting of one of the first times two new city council members faced a test, they didn’t fare well at all (Wichita forgivable loan action raises and illustrates issues):

Politically, Wichitans learned today the value of promises or statements made by most candidates while campaigning. Most candidates’ promises along with $3.75 will get you a small cappuccino at Starbucks — if you don’t ask for whipped cream.

Particularly interesting is the inability of politicians to admit they were wrong, or that they made a mistake, or that they were simply uninformed or misinformed when they made a campaign promise or statement. … City council members Clendenin and Meitzner could not bring themselves to admit that their votes today were at odds with their statements made while campaigning. This lack of honesty is one of the reasons that citizens tune out politics, why they have such a cynical attitude towards politicians, and perhaps why voter turnout in city elections is so low.

As one young Wichitan said on her Facebook page after sharing video of the three new council members today, obviously referring to city council district 2′s Pete Meitzner: “How to use your mouth: 1. Campaign under the guise that you are a fiscal conservative. 2. Insert foot.

Finally, there are the out-sized campaign contributions made by those who ask the city council for money. See Wichita City Council campaign contributions and Douglas Place for details on the campaign contributions made by these developers.

One more thing: If Holman is advocating using the results of elections as a measure of city sentiment, why oppose this election, where the ballot question addresses one issue, and there can be no confusion as to what the voters mean?

The naysayers

Holman, as do many downtown supporters, falsely frames the issue. She writes: “To oppose the Ambassador project is, in effect, to oppose downtown redevelopment.” She uses, as does Mayor Carl Brewer, the term “naysayer.” They don’t mean it as a compliment.

What I — and the people I ally myself with — oppose is subsidized development. We oppose this whether it is downtown, suburban, or elsewhere. As it turns out, we can’t even have an honest assessment of the level of public involvement in the current project under consideration. While the City of Wichita employs a very narrow definition of public involvement, a more realistic look shows that the hotel benefits from $15,470,000 in public money to get started, and then $321,499 per year for the first five years, with smaller amounts for 22 years.

Saying no to government intervention doesn’t mean saying no to progress. It does mean saying “no” to the self-serving plans of politicians and bureaucrats and the crony capitalists who seek to profit from political entrepreneurship.

It means saying “no” to Wichita’s political entrepreneurs, who seek to earn profits through government coercion rather than meeting the needs of customers in the marketplace. It means saying “no” to the public-private partnership, where all too often it is the risk that is public and the profit that is private.

So yes, I guess I and Wichita’s other naysayers are saying “no” to a lot of things.

But what we’re saying “yes” to is liberty and freedom. We’re saying “yes” to a civil society that respects the rich diversity of human individuality instead of government planning and bureaucracy. We’re saying “yes” to free people cooperating voluntarily through free markets rather than forced government transfers from taxpayers to politically-favored individuals and programs.

We’re saying “yes” to consumers choosing which businesses in Wichita thrive, rather than politicians on the city council — and their elitist sycophants — choosing. We’re saying “yes” to people making their own choices, rather than government “incentivizing” the behavior it desires through TIF districts and tax abatements, those incentives being paid for by taxpayers.

The resolve of the Wichita City Council

The Wichita Eagle’s Rhonda Holman concedes that opponents of subsidy for Wichita hotel developers may prevail in a petition drive and possible special election, and remarks: “If so, they will have made an ideological point most people already agree with — that it would be best if developers paid for downtown development.” (Press ahead downtown, September 18, 2011 Wichita Eagle)

Holman is referring to a refund of 75 percent of the transient guest tax that the hotel is seeking. This subsidy is estimated to be worth $134,000 per year for 15 years, or $2,010,000 in total.

Despite her recognition of the will of the people, editorialist Holman encourages the Wichita City Council to proceed in a direction opposite. Settling for something other than the best, by her own admission.

It’s the “reality,” Holman says. She trusts the arguments of developers who have a $15 million motive to gain various forms of taxpayer subsidy. She says there is presently “tight financing,” her contention being that developers can’t get loans for their projects.

She may not be reading the reporting in her own newspaper. Recently the Eagle reported on the local lending situation: “Bankers said they want to make loans and would gladly do so, if companies wanted them. … Borrowers still have to have a business plan and creditworthiness. Demand has been way down.”

Bankers will loan to creditworthy borrowers, says the Eagle. The reasonable conclusion is that the Douglas Place developers are not creditworthy. So, Holman wants the Wichita taxpayer to provide financing, and most of the city council is willing to buy these flimsy arguments.

On Sunday evening, Council Member Michael O’Donnell (district 4, south and southwest Wichita) called into the Gene Countryman radio program. He said: “With the editorial that was in the paper today from Rhonda Holman, I was just shocked that she thinks that it would prevail, that Americans for Prosperity — their argument would prevail on the ballot. To me, that seems counter-intuitive, that means that the elected officials aren’t following what the will of the people is. And that’s why we’re sent to city council.”

O’Donnell said that the Eagle “should be picking up on that part of this equation: that we are electing people that aren’t going with the mood of the voters.”

He further explained that the Douglas Place developers now have a problem. If they proceed with the hotel project without receiving one of the subsidies they insisted they need — what does that say about their honesty and integrity? Were they asking for the subsidy simply because they thought the city would grant it?

And if they can proceed without this subsidy, what about the other subsides? Are they truly necessary?

If the city grants subsidies that turn out not to be necessary — as if any subsidy is really ever necessary — what does that say about our city bureaucratic staff, our mayor, and our city council?

I think we know what it says. The campaign contributions given by these developers are a stain upon the reputation of Wichita.

By the way, when someone says their opponents are “ideological,” immediately you know their arguments are weak. Merriam-Webster defines “ideology” as “1: visionary theorizing; 2a : a systematic body of concepts especially about human life or culture b: a manner or the content of thinking characteristic of an individual, group, or culture c: the integrated assertions, theories and aims that constitute a sociopolitical program.”

The use of the term “ideological” is almost always used in a negative way, as Holman has done when referring to Americans for Prosperity. None of these things, however, are negative — unless they describe your political opponents. When Holman and most city council members believe that downtown development can happen only when propped up by taxpayer spending and subsidy, and believe that this is a good thing and a proper use of government: isn’t that an ideology?

Wichita City Council bows to special interests

Yesterday’s meeting of the Wichita City Council revealed a council — except for one member — totally captured by special interests, to the point where the council, aided by city staff, used a narrow legal interpretation in order to circumvent a statutorily required public hearing process.

The issue was a downtown hotel to be developed by a team lead by David Burk of Marketplace Properties. The subsidies Burk wants, specifically tax increment financing (TIF), require a public hearing to be held. The city scheduled the hearing for September 13th.

That schedule, however, didn’t suit Burk. In order to provide him a certain comfort level, the council agreed to issue a letter of intent stating that the council intends to do the things that the public hearing is supposed to provide an opportunity for deliberation.

I, along with others, contend that this action reduces the September 13th public hearing to a meaningless exercise. This action is not good government, and it’s not open and transparent government, despite the claims of Mayor Carl Brewer. It goes against our country’s principle of the rule of law, part of which holds that our laws are more important than any single person.

Several times council members — and once city attorney Gary Rebenstorf — explained that the letter of intent is non-binding on either party. But: No matter what information is presented at the September public hearing, no matter how strong public opinion might be against the incentives involved, is there any real likelihood that the council would not proceed with this plan and its incentives, having already passed a letter of intent to do so? I think there is very little possibility of that.

Persuasive arguments will be made that since the city issued a letter of intent, and since the developers may have already taken action based on that letter, it follows that the city is obligated to pass the plan. Otherwise, who would ever vest any meaning in a future letter of intent from this city?

During the discussion, no one was able to explain adequately why a letter of intent — if it is non-binding and therefore does not commit the city — was asked for by the developers. Despite the lawyerly explanation of Rebenstorf and council members — including the mayor — the letter does have meaning. Practically, it has such a powerful meaning that it makes the holding of the public hearing on September 13th a mere charade, a meaningless exercise in futility.

It’s not just me and a handful of others who contend this. The Wichita Eagle’s Rhonda Holman, who is usually in favor of all forms of public spending on downtown, wrote: “Even though the letter of intent will be nonbinding, it risks making the Sept. 13 public hearing on tax-increment financing seem like a pointless afterthought.”

In his remarks, City Manager Bob Layton explained that the meeting was the first time for council members to “formally vet this project and all of the incentives.”

He added: “If the council were to say, for instance, there were two or three pieces of that that you had discomfort with, that would then put everyone on notice that the deal may not go forward.” He said this is the purpose of today’s action, and he added that the action is non-binding.

I would suggest that since the council, with the exception of Council Member Michael O’Donnell (district 4, south and southwest Wichita), found no problems with issuing the letter of intent, it has no problems with the deal, and this is what makes the September public hearing, as Holman said, a “pointless afterthought.”

Astonishingly, the manger said while this is “not intended to be the normal process,” he said that he “kind of like it” as it gave an initial opportunity to gauge the sentiment of council members.

I’m glad the manager didn’t mention the sentiment of the public, as with little notice as to the content of the deal and its incentives, citizens had no meaningful opportunity to prepare.

An example of the contorted logic council members use to justify their action: Council Member Jeff Longwell (district 5, west and northwest Wichita) explained that issuing letters of intent is a common practice in real estate deals. He confused, however, agreements made between private parties and those where government is a party. Private parties can voluntarily enter into whatever agreements they want. But agreements with government are governed by laws. Yesterday, the city council announced its intent to do something for which it is required to hold a public hearing. That didn’t violate the letter of the law, but it certainly goes against its spirit and meaning. Longwell said he has no problem with that.

Their bureaucratic enablers helped out, too. Wichita Downtown Development Corporation President Jeff Fluhr, in his testimony, said we are working towards becoming a “city of distinction.” That we are, indeed — a city distinguished by lack of respect for the rule of law and its disregard for citizens in favor of special interests.

A few observations from the meeting follow.

Public investment

In response to a question from the mayor, Allen Bell, Wichita’s Director of Urban Development, said that the ratio of private dollars to public dollars for this project is about 2.2 to 1. Whether these numbers are correct is doubtful. It will take an analysis of the deal to determine the true numbers, and the details have been available for only a short time. But if correct, this ratio falls well short of the stated goals. Two years ago, when agitation for a new round of downtown planing started, boosters spoke of a ratio of 15 to 1. Eventually planners promised a ratio of 5 to 1 private to public investment for downtown. This project, while of course is just a single project and not the entirety of downtown development, doesn’t reach half that goal.

Order of events and media coverage

During the meeting, Council Member Pete Meitzner (district 2, east Wichita) conceded that “the order of events is confusing.”

Before that, Council Member Janet Miller (district 6, north central Wichita) claimed that there had been much media coverage of the proposed hotel, and that the public was actually getting two opportunities to talk about this project. She said that the media had published information about today’s meeting and the public hearing on September 13th.

Miller is gravely mistaken. Until a Wichita Eagle article on Saturday, I saw no mention of the letter of intent, and no detail of the form of subsidies to be considered for this project. The city’s list of legal notices contains no mention of the action that was taken at this meeting.

Questions not answered

During my remarks to the council, I related how last year the Wichita Eagle alleged that David Burk, the managing member of this project — and I quote here: “Downtown Wichita’s leading developer, David Burk, represented himself as an agent of the city — without the city’s knowledge or consent — to cut his taxes on publicly owned property he leases in the Old Town Cinema Plaza, according to court records and the city attorney.”

This Eagle article and a companion article went on to quote these people as having trouble with and being concerned, to varying degrees, with Burk’s acts: City Attorney Gary Rebenstorf; City Council member Jeff Longwell; City Council Member Lavonta Williams, now serving as vice mayor; then-Vice Mayor Jim Skelton, now on the Sedgwick County Commission; and City Manager Robert Layton.

In particular, the manager said, according to the Eagle, that anyone has the right to appeal their taxes, but he added that ‘no doubt that defeats the purpose of the TIF.’”

The manager’s quote is most directly damaging. Despite the fact that nearly all the property taxes Burk pays directly enriches himself and only him, he still doesn’t want to pay them. And according to the Wichita Eagle — not me — he engaged in deception in order to reduce them.

None of the four people in the council chambers — Rebenstorf, Longwell, Williams, and Layton — explained their apparent change of mind with regard to Burk’s acts.

Burk, who addressed the council immediately after I asked if he cared to explain his actions, decided to avoid the issue. In his shoes, I probably would have done the same, as there is no justification for the acts the Eagle accused him of doing. He, and his political and bureaucratic enablers in Wichita city hall, have to hope this issue fades.

Campaign contributions

Council member O’Donnell asked about a parking garage to be built at a cost of $6 million to the city: Will the city be putting this project out to competitive bid? Bell replied no, that is the developer’s request. City attorney Rebenstorf added that there is a charter ordinance that exempts these types of projects from bidding requirements.

O’Donnell said that awarding the construction contract to a company that has made campaign contributions to all council members (except him) “seems a little questionable.”

The company in question is Key Construction. Its principals regularly appear on campaign finance reports, making the maximum allowed contribution to a wide variety of candidates. Similarly, Burke and his wife also frequently make the maximum contribution to city hall candidates.

O’Donnell is correct to publicize these contributions. They emit a foul odor. In our political system, many people make contributions to candidates whose ideology they agree with, be it conservative, liberal, or something else.

But Burk and others routinely make the maximum contribution to all — or nearly all — candidates, even those with widely varying political stances. How can someone explain Burk’s (and his wife’s) contributions to liberals like Miller and Williams, and also to conservatives like Longwell, Meitzner, and former council member Sue Schlapp?

The answer is that Schlapp and Longwell, despite their proclamations of fiscal conservatism, have shown themselves to be willing to vote for any form of developer welfare Burk and others have asked for. They create tangled webs of tortured logic to explain their votes. Meitzner, along with his fellow new council member James Clendenin (district 3, south and southeast Wichita), seems to be following the same path.

Several council members and the mayor took exception to O’Donnell’s raising of this matter. Clendenin, for his part, objected and said that the public has had over 30 days to consider and take exception with this project. This contention, like Miller’s, isn’t supported by any facts that I am aware of. It appears that the first mention of any of the details of the plan and the subsidies is contained in a MAPC agenda that appears to have been created on July 29. Besides not being 30 days in advance, the MAPC agenda is an obscure place to release what Clendenin believes is adequate public notice.

Regarding the issue of campaign contributions, the mayor — without mentioning his name — strongly criticized O’Donnell for bringing up this matter. Many people watching this meeting felt that the extreme reaction of Brewer and others to O’Donnell’s observation reveals a certain uneasiness regarding these contributions. I don’t believe the mayor and council members are taking illegal bribes, although when any city is enriching people with millions of dollars of developer welfare there is always that threat, and in some cities and states such practices are commonplace.

The fact remains, however, that there is a small group of campaign contributors who — over and over — ask for and receive largess from city hall.

The mayor’s criticisms

In his comments, Mayor Brewer accused opponents of providing only partial facts about matters, because the full facts did not support their case. He was referring to my remarks that a lawsuit brought against the city by a party who felt the city had reneged on a letter of intent was litigated all the way to the Kansas Supreme Court. In my remarks I didn’t mention who won that case — the city did — and the mayor believes this is an example of slanting the facts.

The mayor went on to make accusations of “grandstanding” from some of the public and “some council members” because there are cameras in the council chambers. He mentioned that news media are present at every meeting and that council meetings are broadcast on television.

The mayor should take notice, however, that most people who care about public affairs and policy are severely disappointed with news media coverage of city hall events. The resources of news gathering agencies, especially newspapers, are severely depleted as compared to the past. In my coverage of a talk given by former Wichita Eagle editor Davis Merritt, I wrote this: “A question that I asked is whether the declining resources of the Wichita Eagle might create the danger that local government officials feel they can act under less scrutiny, or is this already happening? Merritt replied that this has been going on for some time. ‘The watchdog job of journalism is incredibly important and is terribly threatened.’ When all resources go to cover what must be covered — police, accidents, etc. — there isn’t anything left over to cover what should be covered. There are many important stories that aren’t being covered because the ‘boots aren’t on the street anymore,’ he said.” See Former Wichita Eagle editor addresses journalism, democracy, May 11, 2009.

In addition, Bill Wilson, the reporter the Wichita Eagle sent to cover the meeting, has a documented bias against the concept of free markets, and against those who believe in them.

The mayor, when delivering his criticism, does not use the names of those he criticizes. It would be useful if he did, but it would mean he has to take greater accountability for his remarks.

Following are links to excerpts of testimony from the meeting — perhaps examples of the “grandstanding” the mayor complained about: John Todd, Shirley Koehn, and Bob Weeks.

Balanced budget amendment is needed

Despite claims made in a Wichita Eagle op-ed by its former editor Davis Merritt, we desperately need a balanced budget amendment to the United States Constitution. (Balanced-budget amendment is unworkable, August 2, 2001)

Merritt calls the promise of a balanced budget amendment a “cruel deception” that “limits imagination and progress.” He gives three reasons as to why we should not adopt such an amendment:

First: “It would need to define exactly and in detail what constitutes a balanced budget, and that’s unwieldy and impossible.” He cites the gimmickry that is often used to hide the reality of what’s in a budget. This, no doubt, would be a difficult problem to solve — but it’s not a reason to fail to try. Some things we could do would be to reduce the complexity of the budget so that we actually understand how much and on what we’re spending. Requiring a high hurdle for the treasury to borrow funds would also be a signal that spending is being hidden in the budget.

Second: “It would destroy the constitutional tripartite balance of powers, the core of our system, and would strip citizens of their only leverage, their votes.” Here Davis raises problems with enforcement of such an amendment, noting the delay in bringing court cases and giving judges too much power to decide how to balance the budget. But cases can be fast-tracked to the Supreme Court, and a judicial remedy could be to simply refuse to let the government spend any money until Congress and the president produce a balanced budget.

Third: “It would leave the most crucial fiscal decisions in the hands of congressional minorities, a profoundly undemocratic idea.” Davis mentions the need to spend for national emergencies like Hurricane Katrina. Also: “… less than 15 percent of the House of Representatives paralyzed that body while the nation hurtled toward default and collapse.” I would counter that our nation is hurtling towards collapse precisely because of spending and resultant debt that politicians of both parties have approved for decades. Without the opposition of this small group, it would have likely been business as usual, and that business has been harmful.

(At least Davis didn’t mention war as justification for deficit spending. Forcing politicians to pay for wars now rather than later might help keep peace.)

As for national emergencies, a few thoughts: First, people might decide to take care of themselves through advance planning and the purchase of insurance. Second, along with a balanced budget the government could establish “rainy day” or contingency funds for these types of disasters, should the federal government decide to still have a role in these matters. Or, the federal government might buy insurance to cover its costs for handling these disasters. Then, that expense becomes an annual budget item that is known in advance.

Davis also mentioned a recession cutting into revenues. Again, a rainy day fund can help. While not Davis’ argument, many opponents of a balanced budget amendment cite the need for the federal government to engage in counter-cyclical spending to manage the economy. This, of course, is the Keynesian formula that has been proven many times to be a failure. A policy that prevents our government from engaging in Keynesianism is a plus, not a minus.

Unless restrained by constitutional rules, legislators will run budget deficits and spend excessively

One of the best arguments for a balanced budget amendment is found in the book Common Sense Economics: What Everyone Should Know About Wealth and Prosperity by James D. Gwartney, Richard L. Stroup, Dwight R. Lee, and Tawni H. Ferrarini, in a section titled “Unless restrained by constitutional rules, legislators will run budget deficits and spend excessively.” That title says it all, and it is exactly what has been happening. Despite the debt ceiling deal reached this week — a deal denounced by liberals as one that will ruin the country and its economy — huge deficits will still happen, and debt will increase.

Before 1960, the authors tell us, there was “widespread implicit agreement” that the budget should be balanced, except in times of war. And, the deficits and surpluses that did occur were small relative to the economy. But enter Keynes:

The Keynesian revolution changed all of this. Keynesians — those accepting the views of English economist John Maynard Keynes — believed that changes in government spending and budget deficits could help promote a more stable economy. They argued that, rather than balancing the budget, the government should run a budget deficit during periods of recession and shift toward a budget surplus when there was concern about inflation. In short, the Keynesian revolution released political decision makers from the discipline imposed by a balanced budget. Freed from this constraint, politicians consistently spent more than they were willing to tax.

Imagine if Lord Keynes had called upon politicians to fix the economy by doing something other than what they like to do: He would be merely a curiosity of economic history. But Keynes calls for government deficit spending to fix the economy, and spending is what nearly all politicians and bureaucrats like to do. They just don’t like to pay for it, as Common Sense Economics explains:

The political attractiveness of spending financed by borrowing rather than taxation is not surprising. It reflects what economists call the short-sightedness effect: the tendency of elected political officials to favor projects that generate immediate, highly visible benefits at the expense of costs that can be cast into the future and are difficult to identify. Legislators have a strong incentive to spend money on programs that benefit the voters in their district and special-interest groups that will help them win reelection. They do not like to tax, since taxes impose a visible cost on voters. Debt is an alternative to current taxes; it pushes the visible cost of government into the future. Budget deficits and borrowing allow politicians to supply voters with immediate benefits without having to impose a parallel visible cost in the form of higher taxes. Thus, deficits are a natural outgrowth of unrestrained democratic politics.

Then, the realities of public choice economics are cited: the well-known problem of concentrated benefits and dispersed costs:

The unconstrained political process plays into the hands of well-organized interest groups and encourages government spending to gain rich patronage benefits for a few at the expense of many. Each representative has a strong incentive to fight hard for expenditures beneficial to his or her constituents and has little incentive to oppose spending by others. In contrast, there is little incentive for a legislator to be a spending “watchdog.” A legislative watchdog would incur the wrath of colleagues who find it more difficult to deliver special programs for their districts and retaliate by providing little support for spending in the watchdog’s district. More important, the benefits of spending cuts and deficit reductions that the watchdog is trying to attain (for example, lower taxes and lower interest rates) will be spread so thinly among all voters that the legislator’s constituents will reap only a small part of these benefits.

This is another reason why earmark spending, while a small part of the total federal budget, is harmful. We need to watch to make sure the promised earmark reform is meaningful and lasts.

A numerical example helps illustrate what happens when there’s a disconnect between receiving something and paying for it in a collective manner:

Perhaps the following illustration will help explain why it is so difficult for the 415 representatives and 100 senators to bring federal spending and the budget deficit under control. Suppose these 535 individuals go out to dinner knowing that after the meal each will receive a bill for l/535th of the cost. No one feels compelled to order less because his or her restraint will exert little impact on the total bill. Why not order shrimp for an appetizer, entrees of steak and lobster, and a large piece of cheesecake for dessert? After all, the extra spending will add only a few pennies to each person’s share of the total bill. For example, if one member of the dinner party orders expensive items that push up the total bill by $10, his share of the cost will be less than 2 cents. What a bargain! Of course, he will have to pay extra for the extravagant orders of the other 534 diners. But that’s true no matter what he orders. The result is that everyone ends up ordering extravagantly and paying more for extras that provide little value relative to cost.

The section goes on to explain how large debt leads to higher borrowing costs, which make it even more difficult to control spending. Eventually the result is a financial crisis.

The authors conclude that spending must be controlled, and that rule changes are needed: “It is vitally important for the federal government to control its spending and borrowing in the years ahead. This is unlikely to happen without a change in the political rules. The rules need to be changed so it will be more difficult for politicians to spend more than they are willing to tax.”

As for rule changes that would work, the authors mention a balanced budget amendment or requirement for supermajorities for spending proposals and increases in the debt ceiling.

While I’m encouraged about some of the new members elected to Congress last year, there are still many members — and their constituents — who believe more spending and more debt is the way to go. Relying on people to do the right thing is different from relying on systems to be correct. This is why we must have a balanced budget amendment to the U.S. Consitution.

Despite subsidy program, Wichita flights are declining

Supporters of the Kansas Affordable Airfares Program are proud of the program’s success. But looking at the statistics uncovers a troubling trend that is obscured by the facts used to promote the program.

The program provides taxpayer-funded grants to airlines so that they will provide low-cost service to cities in Kansas. The thought is that by propping up a discount carrier, other airlines will be forced to reduce their fares. By far the largest consumer of these subsidies is Airtran Airways in Wichita. For this goal, the program has worked, probably. We have to say “probably” because we can never know what would have happened in the absence of this program. But it is quite likely that fares are at least somewhat lower than would they would be otherwise.

But lower fares is not the only measure of success. The number of available flights is a measure, too, and a very important one for many people.

The problem is that subsidy boosters state that the number of flights has increased. For example, on a page that is part of the Sedgwick County official website, the claim is made that the affordable airfares program “offers more flights to both east and west coasts.”

In the agenda packet for the July meeting of the Regional Economic Area Partnership of South Central Kansas — that’s the body that administers the affordable airfares program — board members were presented this information: “In presenting its proposal Sedgwick County provided evidence documenting that low-fare air service to eastern and western U.S. destinations through Wichita Mid-Continent Airport had been successful in providing more air flight options, more competition for air travel, and affordable air fares for Kansas.”

Later that document describes selection criteria for deciding which airlines will receive grants. The first goal listed is “more air flight options,” which is further described as the number of scheduled, daily nonstop and one-stop flights.

Certainly enticing a new airline carrier to town by paying them a subsidy increases the number of flights that carrier will offer, as before the subsidy, they offered none. But the experience of Wichita shows that the affordable airfares program is causing an overall loss of flight options in Wichita.

It’s true that when the airline subsidy started, funded at first only by the City of Wichita, the number of flights departing from Wichita increased. That’s not remarkable. That was the stated goal of the program, and if we paid AirTran a subsidy and they didn’t provide flights, that would have been a problem.

But the history of flights before the subsidy program is not the only important measure, although supporters of the program like the Wichita Eagle’s Rhonda Holman make use of it when she recently wrote this about the program and an audit of it conducted by Kansas Legislative Division of Post Audit: “Even so, the audit put the return on the state’s investment at $2.32-to-$1, cited 38 percent growth in passenger counts between 2000 and 2009, and said ‘fares have decreased, while the number of passengers and the number of available flights have increased.’”

Yes, the number of available flights increased upon the arrival of AirTran and the start of the subsidy payments. But the trend since 2005 — about the time the state got involved in the funding and the program matured — is not encouraging. As shown in the accompanying charts, that trend is continually on a downward trajectory. (The charts show two different sets of data for the number of departures from Wichita.)

The decline in the number of available flights is important, because for some travelers, particularly business travelers, the availability of a seat on an airplane at any price is more important than being able to book a cheap flight a month in advance.

People may disagree about the wisdom of the airline subsidy program. But we need to recognize that the availability of flights to and from Wichita is declining, and has been declining for a number of years.

We often hear of the unintended consequences of government intervention. This is such an example. Compounding the problem is the refusal of the program’s supporters — both within and outside of government — to recognize it, at least publicly.

Monthly departures from WichitaMonthly departures from the Wichita airport
Number of daily departures from the Wichita airport by air carriers (excluding weekends)Number of daily departures from the Wichita airport by air carriers (excluding weekends)

Kansas job growth — or lack of it

The lack of job growth in Kansas should be in the news, as the figures are quite startling and reveal a stagnant Kansas economy when compared to nearby states. It’s also the one-year anniversary of the increase in the state-wide sales tax of one cent per dollar.

But some want to stick their heads in the sand when it comes to the harmful effect of tax increases and the dismal performance of the Kansas economy. An example is from yesterday, when Wichita Eagle opinion page chief Phillip Brownlee editorialized that “Apparently last year’s sales-tax increase didn’t wreck the Kansas economy, as some predicted.”

Perhaps Brownlee hasn’t been listening to what others have said. The most startling fact, and one that should be a wake-up call to anyone who cares about the future of Kansas, is the uncovering by the Kansas Policy Institute that Kansas is the only state to have a loss in private sector jobs over the past year.

All the spending on schools, highways, and other government programs that are supposed to spur our economy to greatness have lead to this: last place. The only state with private-sector job loss. We couldn’t have done worse.

Here are some charts based on data from the Bureau of Labor Statistics that illustrate. First, here’s the trend in Kansas employment, using January 2009 as the base. Other months are indexed from that number. The chart separately shows the trends in government and private sector employment.

The effect of the recession on private sector employment has been severe, while government employment has fared much better. But government employees don’t create the wealth necessary to create prosperity for Kansans. Instead, the government jobs are a burden to our economy as they drain resources from the productive private sector.

Of particular interest is the relative flatness of the curve over the past year. Around that time we’re told the recovery was taking place — it was on June 17, 2010 that President Barack Obama announced the “Summer of Recovery.” But Kansas private sector employment has remained largely unchanged since then.

Kansas employment trendsKansas employment trends, government and private sector

Comparing Kansas private sector employment to other states near Kansas produces a grimmer picture. All these states suffered from the recession, but many of these states did not suffer job losses as large as Kansas (on a relative basis).

Then about a year ago, the trend in most of these states started to improve. But not Kansas.

Kansas private sector employment trendsKansas private sector employment trends, compared to other states

Even if one believes that government jobs create prosperity, Kansas has lagged here, too. It should be noted that Kansas has a very large number of government employees compared to its population. Kansas has 717.4 public employees per 10,000 population, which is number 48 in the nation. Only two states have more government employees, compared to population, than Kansas.

Starting from such a high level of government employment may explain the following chart, where Kansas, when compared to neighboring states, has lagged behind in the change in the number of government jobs.

Kansas government sector employment trends, compared to other statesKansas government sector employment trends, compared to other states

Last year supporters of the increase in the sales tax made the case that more government revenue was necessary to avoid decreases in government employment. Judging by the record since then, the cost of the sales tax has been a stagnant Kansas private sector economy at the same time our neighbors are starting to grow employment. This is a policy that must be reversed. We know how to do this — the Rich States, Poor States: The ALEC-Laffer Economic Competitiveness Index report has evidence of polices that work to produce economic growth and those that don’t work. We simply need the will to implement them.

Arts won’t go away in Kansas

Supporters of government-funded art in Kansas are lashing out at Kansas Governor Sam Brownback for his decision to cancel funding for the Kansas Arts Commission. An example is the Wichita Eagle’s Rhonda Holman in her editorial A state for the arts?

In her editorial Holman makes the claim that eliminating the Kansas Arts Commission exposes Kansas to the risk of losing federal and other funds. Many government art supporters state that the loss of funds in a certainty. But as I wrote earlier this year when I covered a hearing before a Kansas Senate committee, Kansas Legislative Research Department made inquiries to the Arts Alliance and the NEA. The answers from both agencies indicate that it is unclear as to whether the new Kansas Arts Foundation would be eligible to receive grants. In particular, the NEA answered, according to Legislative Research, “the potential exists for Kansas to forfeit its ability to receive National Endowment for the Arts funding depending on how the new entity in structured …”

A related — and more important to public policy — question is why do we send tax money to Washington, only to have to jump through federally-designed hoops to get it back? We shouldn’t argue for the perpetuation of such a system just so we can receive matching grants.

Holman and others make the case that the arts funding that Brownback canceled is small — “minuscule in the context of the state’s $13.8 billion budget,” she wrote. It’s not only a financial matter, although this factor alone is reason enough to cancel this funding. The arguments of supporters of this funding, small amount that it is, illustrate some of the worse aspects of government and public policy.

Government funded arts supporters promote the government funding as an investment that pays off for Kansas taxpayers. They have studies that say it does. But these studies have little credibility, as shown in Arts funding in Kansas. These studies purportedly show that spending on the arts has a magic power that is not present when people spend their own money on the things they value most highly. But these studies, like most, rely on several economic fallacies. Henry Hazlitt, writing in Economics in One Lesson, explains.

Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine — the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for then plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

The proposed funding for the arts commission is a clear illustration of the problem with many pleas for public funding. A small group of people will benefit powerfully from this spending. What about the rest of us? Government-funded arts supporters make the case that the cost of the funding is just 29 cents per person in Kansas. Who of us will get worked up over such a small cost?

The Public Choice school of economics calls this the problem of concentrated benefits and dispersed costs. It’s a huge problem.

Besides the financial aspects of government funding of arts, there’s the artistic issue itself. There are very important reasons to keep government away from art. Lawrence W. Reed wrote in What’s Wrong with Government Funding of the Arts? of the harm of turning over responsibility to the government for things we value and find worthwhile:

I can think of an endless list of desirable, enriching things in life, of which very few carry an automatic tag that says, “Must be provided by taxes and politicians.” Such things include good books, nice lawns, nutritious food, and smiling faces. A rich culture consists, as you know, of so many good things that have nothing to do with government, and thank God they don’t. We should seek to nurture those things privately and voluntarily because “private” and “voluntary” are key indicators that people are awake to them and believe in them. The surest way I know to sap the vitality of almost any worthwhile endeavor is to send a message that says, “You can slack off of that; the government will now do it.” That sort of “flight from responsibility,” frankly, is at the source of many societal ills today: many people don’t take care of their parents in their old age because a federal program will do it; others have abandoned their children because until recent welfare reforms, they’d get a bigger check if they did.

The boosters of government arts funding in Kansas make the case that arts are important. Therefore, they say, government must be involved.

But actually, the opposite is true. The more important to our culture we believe the arts to be, the stronger the case for getting government out of its funding. Here’s why. In a statement opposing the elimination of the Kansas Arts Commission, former executive director Llewellyn Crain explained that “The Kansas Arts Commission provides valuable seed money that leverages private funds …”

This “seed money” effect is precisely why government should not be funding arts. David Boaz explains:

Defenders of arts funding seem blithely unaware of this danger when they praise the role of the national endowments as an imprimatur or seal of approval on artists and arts groups. Jane Alexander says, “The Federal role is small but very vital. We are a stimulus for leveraging state, local and private money. We are a linchpin for the puzzle of arts funding, a remarkably efficient way of stimulating private money.” Drama critic Robert Brustein asks, “How could the [National Endowment for the Arts] be ‘privatized’ and still retain its purpose as a funding agency functioning as a stamp of approval for deserving art?” … I suggest that that is just the kind of power no government in a free society should have.

We give up a lot when we turn over this power to government bureaucrats and arts commission cronies. Again I turn to David Boaz, who in his book The Politics of Freedom: Taking on The Left, The Right and Threats to Our Liberties wrote this in a chapter titled “The Separation of Art and State”:

It is precisely because art has power, because it deals with basic human truths, that it must be kept separate from government. Government, as I noted earlier, involves the organization of coercion. In a free society coercion should be reserved only for such essential functions of government as protecting rights and punishing criminals. People should not be forced to contribute money to artistic endeavors that they may not approve, nor should artists be forced to trim their sails to meet government standards.

Government funding of anything involves government control. That insight, of course, is part of our folk wisdom: “He who pays the piper calls the tune.” “Who takes the king’s shilling sings the king’s song.”

Around the country Kansas is being portrayed by government arts supporters as having taken a giant step backwards. For those who value the tenets of classical liberalism — liberty, individualism, skepticism about power, spontaneous order, free markets, limited government, and peace, to name a few — Kansas has moved forward, although I don’t imagine for a moment that all these attributes were motivators for Brownback’s decision. It’s sad and telling that arts supporters, who often claim to express the human soul and condition through their art — a viewpoint that ought to be sympathetic to classical liberalism — are not able to grasp the importance of this decision.

KPERS editorial a disservice to Kansans

A recent Wichita Eagle editorial written by Phillip Brownlee urges caution in proceeding with changes to KPERS, the Kansas Public Employees Retirement System. The editorial has two areas that we should be concerned about, as the facts Brownlee provides leave time for proceeding cautiously. The actual facts leave no such margin for maneuvering.

Brownlee cites $7.7 billion as the shortfall or unfunded liability in KPERS. This is highly misleading. It’s true on a certain technical level, but on an economic level — meaning what really counts — it is dangerously misleading. Neither Brownlee or the KPERS Fiscal Impact Report he refers to mention $1.7 billion in asset value losses that don’t have to be included in reports. (It’s possible with recent rises in financial markets that some of theses loses have been recouped, but we don’t know that at this time.)

Additionally, the $7.7 billion figure is based on an unrealistic assumption: that KPERS investments can earn an annual return of 8.0 percent. Since most calculations involving retirement plans involve long periods of time, even a small change in the rate of return can produce some large changes in values. KPERS actuaries say that if the rate of return was 7.5 percent instead of 8.0 percent, that small change would cause an additional unfunded liability of $1.3 billion.

Adding these factors together — the reported unfunded liability, the unrecognized losses, and a more realistic rate of return — and we come up with an unfunded liability of $10.7 billion. And some would say a 7.5 percent assumed rate of return is too high, which adds even more unfunded liability. For example, the Employees Retirement Income Security Act (ERISA) recommends that private employers assume a 6.1 percent return on assets in private pension plans. And with a note of irony, in illustrations of what benefits from a defined contribution plan would look like, the KPERS report uses 7.0 percent return prior to retirement and 5.0 percent return following retirement.

Growth over time of contributions at different rates of returnIllustration of how the rate of return impacts the growth of a stream of contributions over time: Small changes in rates produce large differences in ending balances. KPERS uses 8.0 percent in its assumptions, while some authorities recommend 6.1 percent.

What we’re not facing is the fact that the KPERS unfunded liability is much larger than reported by Brownlee and by most of the other news media in Kansas.

A second problem is the largely successful attempt by state employee unions to convince Kansans that the KPERS unfunded liability can be paid off only if the present defined-benefit system is maintained. Supporters of the present system say that if a defined-contribution plan is established for new employees, it will be too expensive to pay off the unfunded liability.

But the fact is that unless the state wishes to renege on its promises, the unfunded liability must be paid off. It doesn’t matter whether it’s paid off as part of a reformed defined-benefit or new defined-contribution plan, or even if the state were to appropriate funds apart from payroll contributions. The bill must be paid.

And since the Kansas Legislature has shown itself incapable or unwilling to funding the promises it has made, its vital that we stop enrolling new employees in the present defined-benefit plan.

While the present legislature seems intent on solving the problem, it’s hard to place much faith and trust in their seriousness. Consider the motives and incentives of legislators: If legislators were to give state employees raises, that would require them to raise taxes or cut services. But granting generous retirement benefits is another matter. The bill for these benefits doesn’t come due until many years later — as we are now painfully aware. Except, of course, that the legislature should be paying, on an annual basis, the amount necessary to provide the promised benefits. The Kansas Legislature hasn’t done this for a long time, and that’s part of the reason why KPERS is in a mess.

Promises by lawmakers to behave well in the future must be discounted. The present defined-benefit retirement plan allows them to make promises they don’t have to pay for. With the discipline of a defined-contribution plan — the 401(k)-type plans that almost all private sector workers have — we don’t have to worry about present legislators heaping debt on yet another future generation.

Note: Today’s editorial by Brownlee holds this conclusion: “The state may also need to make additional reforms to limit future liabilities for new employees, such as reducing plan benefits or possibly switching to a 401(k)-like plan. Climbing out of this hole will be a struggle. But the sooner the state starts, the better. At the very least, it needs to stop digging the hole even deeper.” Canceling the defined-benefit plan for new employees is the best way to “stop digging.”

Kansas and Wichita quick takes: Friday April 8, 2011

Kansas Meadowlark blog recast. Earl Glynn of Overland Park has reformed his Kansas Meadowlark site from a blog to a news site along the lines of the Drudge Report. Glynn’s full-time job is working for Kansas Watchdog.

Economics in one lesson next week. On Monday, four videos based on Henry Hazlitt’s class work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Lesson, The Broken Window, Public Works Means Taxes, and Credit Diverts Production. The event is Monday (April 11) at 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

Government shutdown guide. Americans for Limited Government reports on What happens if the government shuts down? :Well, nothing really, and the consequences of a shutdown are really rather mundane. The worst part of it all, Congress would still be working, oh, and all government museums and tourist sites will close.” Tourist sites closing: that’s the “Washington Monument Strategy,” where any threatened cuts to the National Park Service will first cause a closing of the Washington Monument. Instead of looking for the ways to save money with the least impact, agencies propose cuts with the most impact first. … The Washington Post has more, noting that only essential government employees would work during the shutdown. Which causes me to ask: Why do we have non-essential government employees?

Halve the deficit by doing nothing. Writes Ezra Klein: “Just let the Bush tax cuts expire in 2012, as they’re currently scheduled to do.” But this is not “doing nothing.” It’s government taxation at a higher level than present, which is far from nothing. It’s redirecting resources from the productive private sector to government, which almost always means less effective application of these resources. The Wichita Eagle editorial board approved enough of this that they mentioned it — favorably, I think — on their blog.

State debt worse than federal. While many are aware that the U.S. federal government is awash in debt and that any plan to forcefully deal with this problem is denounced by liberals, the states, collectively, are in worse shape. Washington Examiner explains: “House Budget Committee Chairman Paul Ryan of Wisconsin talked Tuesday about cutting federal spending by a staggering $6 trillion in the next decade and in the process eliminating the $14.3 trillion national debt. As incredible as these numbers are, all 50 states face perilous fiscal times as well, but they are less able to cope than the federal government. States can’t print money, as the federal government can, and they are far more limited in whom and how much they can tax. There is one common factor here, though: Washington and the state capitals are drowning in red ink largely because professional politicians promised excessive entitlement benefits without making provisions to pay for them. … These liabilities are coming due as the baby boomers begin to retire, which means entitlement reform — at the federal and state levels — is likely to be the defining political issue for the next decade.”

This Week in Kansas. On “This Week in Kansas” Chapman Rackaway, Kenneth N. Ciboski, and myself discuss local elections in Kansas, and then the Kansas Legislature. Tim Brown is the host. “This Week in Kansas” airs on KAKE TV 10 Sundays at 9:00 am in Wichita, and 11:30 am Saturdays on WIBW in Topeka.

Kansas and Wichita quick takes: Monday March 28, 2011

Wichita Eagle endorsements. Yesterday the Wichita Eagle released its endorsements for Mayor, Wichita City Council, and Wichita school board. It is no surprise that in each case the newspaper editorial board recommended that voters select the candidate most likely to support the board’s big-government interventionist policies, thereby (unwittingly?) providing a guide as to who not to vote for, if you value limited government and economic freedom.

Wichita City Council this week. As it is the fifth Tuesday of the month, the Wichita City Council will not meet. While some might say the mayor and council members need to get to work and do their jobs, I’m more aligned with Will Rogers when he quipped: “Be thankful we’re not getting all the government we’re paying for.”

Sedgwick County commission this week. At Wednesday’s meeting, the Sedgwick County Commission has two economic development incentives to consider. These are forgivable loans, essentially grants of money, to be made to MoJack Distributors, LLC and Apex Engineering International LLC. Each has already received a forgivable loan from the City of Wichita, as well as other subsidy of various forms from governments state and local. More discussion is at Wichita again to bet on corporate welfare as economic development. The commission’s agenda is available at Board of Sedgwick County Commissioners, March 30, 2011.

Kansas judicial selection. A legislative maneuver could force the Kansas Senate to debate and possibly vote on the method of selecting judges for the Kansas Court of Appeals. This is despite the efforts of Senator Tim Owens, an attorney and Republican from Overland Park, to block the bill in his committee. See Method of choosing judges could see debate.

Kansas Department of Labor computer system. From Kansas Reporter: “A $50 million, six year project to upgrade unemployment claims technology within the Kansas Department of Labor was grossly mismanaged, resulting in massive system flaws according to Labor Secretary Karin Brownlee.” Brownlee took office earlier this year after being appointed by Kansas Governor Sam Brownback. More at Massive waste, inefficiency in Labor Department technology upgrade, secretary says .

General Electric: no taxes for me. Competitive Enterprise Institute explains how General Electric, one of the largest companies in the world, earns large profits and manages to pay no income tax.

Freeloaders come in all types. This weekend John Stossel had an hour-long special show that focused on freeloaders. Not just panhandlers, although Stossel did work in disguise as a panhandler and discovered he could make over $90 a day. Tax free, he added. One segment of the show uncovered farmers who received $50,000 because they were discriminated against by lenders. But — some of these farmers merely grew potted plants or fertilized their lawn to qualify as a farmer. Another reported on homeowners who stopped paying their mortgages on advice of a website. The homeowners and the website operator said there is no moral obligation to pay their mortgage loans. Corporate freeloaders didn’t escape, as General Electric was mentioned as a large recipient of government handouts. And, they won’t pay taxes: “Despite billions in profit, they’ll pay no taxes this year,” reported Stossel. … The severe poverty of American Indian tribes that live on government-managed reservations and living on government handouts is contrasted with a tribe that accepts no handouts and has no casinos. … Stossel covered his own beach house, which was covered by low-cost subsidized federal fund insurance. It suffered losses twice. … Standing in front of the U.S. Capitol, Stossel said “We rich people freeload off you taxpayers all the time, because the over-promisers in there keep churning out special deals for politically-favored groups. And they tend to be rich people, because the rich can afford lobbyists. … Think about how much money we could save if these guys just didn’t pass so many laws that encourage freeloading. But they do, year after year. They micromanage life with subsidies. And the winners are not so much the needy, but people like Bon Jovi, Ted Turner, Maurice Wilder, and — me. So let’s hope for an end to all this freeloading.”

New York City may seek waiver from ObamaCare. One of the strongest advocates for ObamaCare may seek an exemption for the city he represents. Politico reports in Anthony Weiner: Waiver might work for New York. … So far over 1,000 waviers have been issued, exempting businesses, labor groups and a handful of states from at least some of the requirements of the Affordable Health Care Act.

Economic freedom and a better life. Economics professor Josh Hall explains that economic freedom leads to greater human well-being. If we look at average income, life expectancy, income of the poorest 10%, and other factors, we see that when governments let citizens make economic decisions for themselves, this leads to greater human flourishing. This video refers to the Economic Freedom of the World index, which was the subject of a lecture delivered last year in Wichita by Robert Lawson. In that lecture, Lawson warned of the path of the United States in terms of economic freedom, as I reported: “Speaking about the United States, Lawson said that the numbers are likely to go down in the future. While the U.S. ranks above the world average, its measurement of freedom has been declining since 2000. At the same time, the rest of the world is on an upward trend. ‘It’s no longer accurate to say the United States is among the very top tier in the economic freedom index,’ Lawson said, adding that he blames George Bush for this. The decline is partly due to the increasing size of government, but the largest cause of the decline is in the area of property rights. This area is measured largely by surveys asking people how they feel about property rights in America. The perception, Lawson, said, is that the security of property rights are on the decline.”

Government investment specialty. Gene Callahan, in his book Economics for Real People: An Introduction to the Austrian School, explains some of the problems inherent in government acting as investor. Writing about a plan to build a sports stadium in Hartford: “The Public Choice School has pointed out another force weakening that incentive, indeed, in most cases, completely negating it. Strong incentives exist for politicians to favor special-interest groups at the expense of the general public. Those upon whom benefits are concentrated are motivated to campaign hard for those benefits. As the costs of most political actions are spread across the public as a whole, the average person has little motivation to become involved. In the context of the stadium project, we can see that, even at a total cost of $374 million, the cost to each Connecticut resident is only about $100. It is simply not worth much of any individual citizen’s time to become devoted to the cause of stopping the stadium. However, for the construction companies who hope to get work on the stadium and the owners of businesses and land nearby, the potential benefits are enormous. They have a strong incentive to lobby hard for the project, to donate to the campaigns of politicians who support it, and to sponsor studies that will make the project look good. In fact, if there were a profit to be made in some particular investment, private investors would be likely to act quickly to take advantage of the opportunity with their own funds. … Private investors will turn to the risky business of lobbying the government to support a project only when it is not clear to them that it is profitable without taxpayer subsidies. Thus, the government is likely to specialize in money-losing projects.”

Wichita Eagle editorial page: arm of Democratic Party?

Today’s letters section of the Wichita Eagle carries a letter from the executive director of the Sedgwick County Democratic Party promoting an event that will poke fun at Kansas Secretary of State Kris Kobach.

A letter to the editor of any newspaper that discusses public policy, including Kobach’s agenda, is relevant. But this letter is a promotion — an advertisement — for a partisan political party event. It’s not billed as a fundraiser, but it has all the characteristics of one, including tickets selling for as much as $100.

Printing letters like this harms the image of Eagle, if it wishes to retain credibility as a neutral arbitrator of public opinion and policy.

Wichita Eagle endorsements out of step with Wichita

Yesterday’s primary election for Wichita city and school board races revealed a Wichita Eagle editorial board increasingly out of step with voters, who followed several of the board’s recommendations but also voted strongly against several Eagle-endorsed candidates. It’s not the first time this has happened.

The endorsements are not the Eagle’s prediction of who will win, but instead are “recommendations as information to consider as you make up your own minds about the candidates.”

For the race for Wichita mayor, voters strongly followed the Eagle’s endorsement of incumbent Carl Brewer. That contest attracted several challengers, but none with the stature to raise the money necessary to seriously challenge an incumbent in a city-wide election.

For city council district 2, the Eagle editorial board strongly endorsed Steve Harris, calling him “best choice by far.” Pete Meitzner was mentioned as a credible candidate. But the winner of the election was Charlie Stevens, who the Eagle dismissed as an also-ran. The Eagle’s recommended candidate Harris finished in third place behind Meitzner, although the margin is small at 1,302 votes to 1,292 votes.

For city council district 3, the editorial board recommended James Clendenin, and he won. Its second choice of Hoyt Hillman finished in third place behind Mark Geitzen, who will advance to the general election with Clendenin. Geitzen, too, was characterized by the Eagle as an also-ran.

In city council district 4, the Eagle named June Bailey the “standout candidate.” She finished in third place behind Joshua Blick and Michael O’Donnell, the latter placed by the Eagle in the also-ran category.

For the at-large seat for USD 259, the Wichita public school district, the Eagle recommend Sheril Logan, and she won.

A distinguishing feature of the candidates the Eagle endorsed for city offices is their support for government intervention in the local economy through the use of economic development incentives and outright subsidy. (But always to be used prudently, of course, with scrutiny and discretion.) In particular, district 2 council candidate Harris embraced government intervention and was endorsed by several of Wichita’s most prominent crony capitalists. Other candidates like Clendenin and Bailey look favorably on big government, too.

While Clendenin won in his district, voters preferred other candidates to Harris and Bailey. In particular, Stevens in district 2, Gietzen in district 3, and O’Donnell in district 4 have an explicit free-market perspective in their messages. The Wichita Eagle editorial board believes in all things opposite — crony capitalism, large-scale interventionism in the name of social engineering, and reliance on government rather than free people to solve problems and create prosperity — so it’s no surprise the names of these three candidates and their positions were buried. The Eagle’s political and economic preferences, however, are increasingly out of step with what Wichita voters want.

Kansas and Wichita quick takes: Sunday December 12, 2010

This week at Wichita City Council. This Tuesday, six speakers have signed up to appear on the public agenda. This is a portion of the meeting where citizens may speak on nearly any topic. Five are speaking on the city’s proposed trash plan, while one is speaking on a city-wide recycling project. … Approval of the city’s legislative agenda will be considered. Probably the greatest threat to economic freedom is this plank: “City of Wichita supports continued use of effective private-public partnerships and the appropriate intervention of state and local governments to spur economic development.” Also the city expresses support for highly subsidized, expensive, and little-used passenger rail service. … Also the council will consider amending the Wichita-Sedgwick County Comprehensive Plan to include Project Downtown: The Master Plan for Wichita. This is the plan that consulting firm Goody Clancy developed for the revitalization of downtown Wichita. The complete agenda report is at Wichita City Council, December 14, 2010.

Sedgwick County Commission this week. On Wednesday the Sedgwick County Commission will vote on its legislative agenda. The agenda, or platform, is not law, but expresses the sentiment or desire of the commission. Last year Commissioner Karl Peterjohn shepherded through the requirement that voters approve all tax rate increases. This year the same language is proposed, but it may not pass. (The proposed language is this: “All local sales tax increases must be approved by voters under Kansas law. All property tax increases that raise the mill levy should also be required to receive voter approval.”) Some commissioners believe that voters elect them to use their judgment to make decisions on taxes, while other commissioners believe voters should have the final say on something as important as this. The agenda and backup material for Wednesday’s meeting is at Sedgwick County Commission, December 15, 2010.

Wichita Eagle: Adopt downtown plan. Today’s Wichita Eagle editorial calls for passage of the downtown master plan recently developed by planning firm Goody Clancy. Rhonda Holman argues that a “busier, richer core” will benefit the town economically, adding that “downtown matters too much to be left to chance.” The idea that the core is essential to progress is taken as a given, but when downtown supporters are questioned, no evidence to support this nostrum is given. Also, this concept of “chance” that Holman doesn’t trust could also be described as a dynamic marketplace of ideas and capital, with many diverse players with dispersed knowledge acting to advance their own self-interest by creating things people will freely buy, all coordinated through the magic of the price system. What Wichita — with Holman’s support — plans to do is to replace this with the bureaucratic and political system.

City planning by “Those Who Know Best.” “While the fixations of trendy planners might not register on the list of things that average Americans think about, these new utopian land-use ideals are filtering down into government agencies and city councils, and might eventually impact the way we all live.” Writing in the Orange County Register, Steven Greenhut quotes the definition of New Urbanism: “New Urbanism is the most important planning movement this century, and is about creating a better future for us all. It is an international movement to reform the design of the built environment, and is about raising our quality of life and standard of living by creating better places to live. New Urbanism is the revival of our lost art of place-making, and is essentially a reordering of the built environment into the form of complete cities, towns, villages and neighborhoods …” He warns: “Whenever some ideologue claims to offer the most important thing since sliced bread and then promises to reorder my life around it, we should all get nervous.” (The downtown Wichita planners do not use the term “New Urbanism,” but they share the same characteristics and goals.) And even more strongly: “The New Urbanists claim to want to give our lives meaning by creating superior urban forms of living, yet they miss the most meaningful things in life because they emphasize architecture over people. Like all totalitarians, they assume that what they prefer is so good and noble that they have the moral right to impose it on everybody else. The rest of us need to take notice now, so there is still time to oppose it.”

Anderson appointment criticized. KU political science professor Burdett Loomis criticizes the appointment of Steven J. Anderson to be the new Kansas budget director, branding him an “ideologue” that has made “broadside attacks on public education.” Anderson believes in limited government, and his “attacks” on public — let’s be clear here — government schools are advocating school choice through vouchers. In states where vouchers are used, evidence is that public schools improve in response to the competition from private schools that parents can now actually afford. Plus, the state saves money, too. Loomis also criticizes Anderson for uncovering the large unspent fund balances in many Kansas agencies, balances that Loomis seems to doubt exist. Overall, Loomis presents an argument for the status quo in Kansas government, and the potential for change in the direction of restraining its growth has Loomis — in his own words — “concerned — worried, even.”

Kansas schools cut, yet fail to spend

According to an Associated Press article as printed in the Wichita Eagle, Kansas schools cut 816 certified staff this year, including 653 teachers. The article cites school spending advocates who warn that without additional revenue for schools, further cuts — even school closings — may happen.

But in spite of this dreary picture, Kansas schools have failed to spend all the funds at their disposal.

Kansas school carryover fundsKansas school carryover funds. Click for a larger view.

According to figures supplied by the Kansas State Department of Education as presented at KansasOpenGov.org, carryover cash balances have increased at the same time schools have laid off teachers and threatened to cut programs and close schools.

From 2009 to 2010, for all school districts in Kansas, carryover funds increased from $699,150,812 to $774,648,615. That’s an increase of 9.7 percent. These numbers exclude debt service and capital outlay funds. Those funds have been mostly increasing, too.

School spending advocates argue that these carryover, or unencumbered, funds are necessary for various reasons, and they’re correct. Most businesses or organizations need a cushion in the bank to pay bills before revenue comes in.

But the only way the balances in these funds can grow — year after year as they have — is that schools simply aren’t spending all the money they’ve been given. (Schools did spend some of these funds, however, in spite of claiming these funds couldn’t be spent.)

School districts, aided by a sympathetic Wichita Eagle editorial board, argue that outsiders simply can’t understand the intricacies of Kansas school finance.

If that’s true, we have to wonder how the Wichita Eagle editorial board can claim to understand Kansas school finance. And how can journalists, legislators, the governor, school board members, parents, and taxpayers understand well enough to provide oversight and accountability?

Instead, we are to be left at the mercy of a handful of experts who are the only people who understand Kansas school finance. All of them, of course, employed by the public school bureaucracy, with a vested interest in seeing it grow at the exclusion of everything else.

That’s nonsense. But it’s the way schools like it. The less that ordinary Kansans know about schools, their financing, and their operations, the better for school spending advocates.

Kansas and Wichita quick takes: Sunday November 7, 2010

Wichita City Council this week. Spirit AeroSystems asks for $7.5 million in Industrial Revenue Bonds (IRB). IRBs are not loans made by the city. In fact, in this case the bonds will be purchased by Spirit itself, says the agenda report: “Spirit AeroSystems, Inc. intends to purchase the bonds itself, through direct placement, and the bonds will not be reoffered for sale to the public.” The reason for the bonds is the property tax exemption on property purchased with the bond proceeds. Additionally, Spirit may not have to pay sales tax on the purchases. This is a public hearing designed to solicit citizen input on this matter. … Then POET Ethanol, Inc. asks for an additional five years of property tax exemption. Five years ago POET — then known as Ethanol Products, LLC — received a “five-plus-five-year” exemption, meaning that exemptions were granted for five years, with a review to take place to see if the company met the goals it agreed to as a condition of receiving the exemption. At this five year review, city staff says POET has met the goals and recommends that the property tax exemptions be granted for another five years. … The Finance Department will also present a quarterly financial report. The agenda and accompanying material is at Wichita City Council Meeting, November 9, 2010.

The election means something. “Elections have consequences,” writes Burdett Loomis, professor of Political Science at the University of Kansas in an Insight Kansas editorial available at State of the State KS. He writes: “The broad and deep GOP set of victories means that conservatives have the opportunity to put forward an agenda of social, fiscal, and tax issues that have been built up over the past two decades. Unquestionably, many of those items will quickly find their way into law.” But Loomis thinks things are pretty good already in Kansas: “In general, things may need some tinkering, but there’s very little that’s broken in Kansas. Governor Brownback should understand his power, and the need to act responsibly as he works on behalf of all Kansans to better their health, education, and quality of life.”

Wichita Eagle publisher at Pachyderm. This week’s meeting (November 12) meeting of the Wichita Pachyderm Club features as the presenter William “Skip” Hidlay, President and Publisher of The Wichita Eagle. His topic will be “The Eagle’s transformation in the digital age.” Hidlay is new to Wichita, having started at the Eagle in March after working at newspapers in New Jersey. The public is welcome at Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

Property rights experiment to be conducted. This Monday Americans for Prosperity, Wichita Chapter, presents “I, City: An Exercise.” Presenters will be John Todd and Susan Estes. Todd says: “You are invited to participate in an experimental exercise involving private property rights, and experience the impact of taxes, regulations, and economic incentive programs mandated by government on those property rights.” Todd says that suggested reading prior to the meeting is “I, Pencil” an essay by Leonard E. Read of the Foundation For Economic Education. You may click here to read this short essay. This event is on Monday November 8, from 7:00 pm to 8:30 pm, at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

Kansas taxes in perspective. Governor elect Sam Brownback wants to take a look at the tax structure in Kansas. Possible actions could include eliminating the corporate income tax. Context: The one cent per dollar increase in the statewide sales tax is expected to bring in an additional $300 million per year. According to the Kansas Legislature Briefing Book, in fiscal year 2009 the corporate income tax brought in $294.2 million, just about the same as the increase in the sales tax. Personal income taxes brought in $2,755.3 million. Excise taxes — sales and compensating use taxes, alcohol and cigarette taxes, and severance taxes — brought in $2,286.7 million.

Huelskamp to Washington. Mark Reagan of the Dodge City Daily Globe interviews Tim Huelskamp, the new congressman for the first district of Kansas. Some of the matters Huelskamp has to deal with include orientation, hiring a staff in Washington and in the home district, his hope to serve on the agriculture committee, and voting for leadership. He notes that the federal government has been borrowing 37 cents of each dollar it spends. … Tim and his wife Angela have four young children, all adopted, some from Haiti. I would imagine a big decision he has to make is whether to travel home each weekend — as did predecessor Jerry Moran — or move his family to Washington. It’s not a quick and simple matter to travel from Washington to his home in Fowler. It usually takes about six hours to fly from Washington to Wichita, and then another three hours to drive to Fowler. That’s a lot of time spent traveling, and most of it is idle, wasted time. … I’ve observed Huelskamp in several debates on the floor of the Kansas Senate. Whoever is selected to fill his remaining term has some big shoes to fill.

Election was about the economy. Cato Institute executive vice president David Boaz contributes an excellent analysis of the election and a cautionary warning. In GOP Won on Economy, So Focus on It he writes: “The usual pattern is that after the election, voters and the activists go back to their normal lives, but organized interests redouble their efforts to influence policymakers. The people who want something from government hire lobbyists, make political contributions and otherwise do all they can to get their hands on taxpayers’ money. Meanwhile, the average taxpayer cannot be expected to exert influence on each particular spending bill. Tea partiers must change that pattern. They must keep up the pressure on Congress and state legislators. They must demand actual performance, not just promises. To keep momentum going, tea partiers should also insist that Republicans stay focused on the economic agenda that created their winning coalition, and not get bogged down in divisive social issues, which will split the movement and alienate independents.” In Kansas, this may be a problem. While incoming governor Sam Brownback is already exploring ways to cut taxes in Kansas, there are also proposals for various social legislative agendas, such as restrictions on abortion and requiring photo ID for voting. While these measures are important, I believe our state’s fiscal status is very important and must be dealt with.

Organ recital this Tuesday. This Tuesday German organist Ludger Lohmann visits Wichita to present a recital as part of the Rie Bloomfield Organ Series. The event is at 7:30 pm Tuesday, November 9, at Wiedemann Recital Hall (map) on the campus of Wichita State University. Tickets are $10 with discounts available. For more information call the fine arts box office at 316-978-3233. I’ve not heard Mr. Lohmann live, but I own several of his recordings, and this is a recital that music lovers should not miss.

Kansas and Wichita quick takes: Sunday October 24, 2010

Surprise endorsement from Wichita Eagle. Today the Wichita Eagle endorsed Republican Mike Pompeo over Democrat Raj Goyle in the race for the Kansas fourth Congressional district. Surprising. Still, the Eagle editorial board can’t help reveal its preference for big, expansive government by taking a few digs at Pompeo, describing his free-market, limited government views as “overly idealistic at times.” Continuing, the Eagle wrote “For example, he believes that there wouldn’t be a need for farm subsidies or economic development incentives if there were lower tax rates and a friendlier and more stable regulatory environment. That’s not the real world.” The Eagle editorial board said that Pompeo is “too ideological and wouldn’t seek practical political solutions.” Well, are the “practical” solutions imposed on us by the current federal regime working? I would say not. Other evidence of the Eagle’s unbelief in the power of freedom, free people, and free markets was noticed in its failure to endorse Richard Ranzau for Sedgwick county commission, in which the Eagle mentioned his “inflexible anti-tax, free-market views.” The Eagle prefers “nuanced” politicians.

Who is Raj Goyle? On today’s episode of KAKE Television’s This Week in Kansas hosted by Tim Brown, guests Randy Brown and Ed Flentje discussed the fourth district Congressional race race, and Goyle in particular. The reliably liberal [Randy] Brown said that Goyle made a mistake in not voting for the statewide sales tax increase, which Brown characterized as a “responsible thing to do.” This, he said, caused people — including Democrats — to view Goyle as a political opportunist, and Goyle lost a chance to distinguish himself from his opponent. Flentje said “he does appear to be quite flexible,” which elicited hearty laughter from the panel. He continued: “It’s hard to figure out exactly where he is … he’s trying to address overwhelming Republican advantage in registration. He’s been for the most part a good legislator, campaigns aggressively, but he’s going uphill … I kind of feel for him.”

Who is Sam Brownback? “Most agree that Sam Brownback will be elected governor on November 2, but what kind of governor he will be is less than clear. Even after nearly a quarter century in Kansas politics and government, his divergent political lives prompt voters to ask: Will the real Sam Brownback please stand up?” H. Edward Flentje, political science professor at Wichita State University, through State of the State Kansas. Flentje appeared on today’s episode of KAKE Television’s This Week in Kansas to discuss this column. Fellow guest Randy Brown said “In terms of being a political opportunist, he strikes me as the classic person who tells whatever group of people he’s in front of what they want to hear.” Flentje disagreed with this. The column traces Brownback’s evolution in both the personal and political spheres, and does ask the question “So, will the real Sam Brownback as Kansas governor please stand up?”

Kansas candidates score free TV. “Democratic incumbents Chris Biggs and Dennis McKinney are riding a $100,000-plus wave of television advertising their Republican opponents denounce as thinly veiled self-promotion and an abuse of office that should be stamped out by the Legislature.” More by Tim Carpenter at Topeka Capital-Journal. We shouldn’t be surprised at this, as a look at the Kansas agency websites headed by elected officials shows them using these sites as campaign billboards year round.

Jim Powell political advertisement on Facebook

Politicians advertise on Facebook. Here’s an example of a politician running for office that uses Facebook for advertising. With Facebook ads, you can target who your advertisement is displayed to in great detail.

Putting a price on professors. The Wall Street Journal covers an effort in Texas to evaluate the worth of state university faculty members from a financial viewpoint: “A 265-page spreadsheet, released last month by the chancellor of the Texas A&M University system, amounted to a profit-and-loss statement for each faculty member, weighing annual salary against students taught, tuition generated, and research grants obtained. … The balance sheet sparked an immediate uproar from faculty, who called it misleading, simplistic and crass — not to mention, riddled with errors. But the move here comes amid a national drive, backed by some on both the left and the right, to assess more rigorously what, exactly, public universities are doing with their students — and their tax dollars.” The article notes some dismal statistics of the type we’re used to hearing about K through 12 education: “Just over half of all freshmen entering four-year public colleges will earn a degree from that institution within six years, according to the U.S. Department of Education. And among those with diplomas, just 31% could pass the most recent national prose literacy test, given in 2003; that’s down from 40% a decade earlier, the department says.” Credit goes to the Texas Public Policy Foundation, a state-based think tank that is often at the forefront of the fight for fiscal responsibility.

Pretending the union money doesn’t exist. From RedState: “Desperate Democrats have been hyperventilating for the past month over money being spent by corporate and other groups, notably the Chamber of Commerce and Americans for Prosperity, to run campaign commercials. To conservatives, running commercials to attempt to persuade voters in advance of an election is known as ‘free speech,’ and turnabout is fair play after corporate money went heavily for Obama in 2008, but let’s play along here; how much of an advantage does the GOP have here? … That’s right, three of the five largest campaign spenders this year are not business or pro-business groups but unions affiliated with the Democrats and dominated by public employees.”

iPhone screen

We forget the blessings of technology. As I write this I am plugged into my iPhone. I carry it with me wherever I go. I would rather leave home forgetting my wallet than my iPhone. As it is more than just a telephone, it also holds my music, as seen in the accompanying depiction of its screen. The ability to carry with me — wherever I travel — examples of the great works of music, in this case Beethoven violin and piano sonatas, is something that is truly remarkable. More than that, it’s a miracle. Now when I check in to a hotel, it’s not uncommon to find a clock radio where I can dock or plug in my iPhone and listen to my music as I unpack and prepare for the day’s events. The back of my iPhone reads “Designed by Apple in California. Assembled in China.” If not for this international cooperation, would the miracle of the iPhone — and other similar technology — be affordable, or even possible?

Kansas and Wichita quick takes: Thursday October 21, 2010

Honest journalist too much for NPR. Juan Williams has been fired by National Public Radio. His offense: He spoke in a not-politically-correct way about Muslims. On Monday’s O’Reilly Factor Williams said: “But when I get on a plane — I got to tell you — if I see people who are in Muslim garb, and I think, you know, they are identifying themselves first and foremost as Muslims, I get worried. I get nervous.” According to Williams, NPR said this is a bigoted remark that “crossed the line.” Across all forms of media, this is sure to be a big issue. Williams is an accomplished journalist and reporter who has written many books on civil rights in America. He has been critical of established black leaders like Al Sharpton and Jesse Jackson. Williams will appear on The O’Reilly Factor tonight, with the Fox News promotion teasing “Is he the first victim of George Soros’s new war on Fox News?”

Star recommends retaining judges. The Kansas City Star recommends retaining all judges on the ballot in Kansas. The newspaper evidently didn’t take into account or give much weight to the admonishment of Kansas Supreme Court Chief Justice Lawton Nuss over an ethics issue. The Star supports the elitest system of judicial selection in Kansas, where lawyers have much more input than do ordinary citizens.

How the right wing echo chamber works. Here’s another instance of left-wing journalists and bloggers claiming to have discovered something that sits in plain sight. Allegations of existence of an “echo chamber” sound sensational and sinister. The left has these, too, as documented in Politico. If you’ve followed some of the attacks on Koch Industries this year, you’re aware that there is a network of websites and blogs that cut-and-paste the same material for wide distribution. This left-wing echo chamber exists in the mainstream media too, when publications like the Wichita Eagle relies on ThinkProgress and the New York Times editorial page for evidence criticizing Jerry Moran on climate change. Who are these sources the Eagle relies on? ThinkProgress is a project of the hard left — but innocently-named — Center for American Progress Action Fund, which in turn is a project of convicted inside trader George Soros. And the New York Times editorial page is, well the New York Times editorial page — enough said.

You — not me — should sacrifice. Another global warming alarmist revealed as a hypocrite. “A Youtube film, released by Irish documentary film makers Ann McElhinney and Phelim McAleer, has revealed the shocking hypocrisy of James Cameron, the director of Avatar. The film shows that Cameron, who has publicly stated that ‘we are all going to have to live with less,’ has continued a lifestyle of extravagant consumption. Cameron, yesterday, announced he was donating $1m to oppose California’s Prop 23. Prop 23 will suspend Global Warming legislation and is being bitterly opposed by environmentalists. Supporters of Prop 23 say that if it is defeated California will lose jobs because of an increase in energy prices.” The video is just over two minutes long and may be viewed by clicking on James Cameron — Hypocrite.

Most expect local tax increases. Rasmussen: “A sizable majority of Americans say their states are now having major budget problems, and they think spending cuts, not higher taxes, are the solution. But most expect their taxes to be raised in the next year anyway.” More at Most Expect State or Local Tax Hikes In the Next Year.

Texas vs. California. “In Texas, the payroll count is back to prerecession levels. California is nearly 1.5 million jobs in the hole. Why such a difference? Chalk it up to taxes, regulation and attitude, says Investor’s Business Daily (IBD).” Summary at NCPA: A Trenchant Tale of Two States .

Email spam spreads to Facebook. I’m sure I’m not the first person to receive something like this, but the well-known Nigerian fraudulent schemes that for many years have used regular email have now spread to Facebook messages. Today I was notified by “barrister James Mawulom a solicitor at law” that a man with my same surname had died in Africa, and I am due to receive a lot of money.

Wichita Eagle editorial endorsements: helpful, or not?

Yesterday’s primary election in Kansas provided a measure of the influence of the Wichita Eagle editorial board. Voters ignored many of its endorsements, indicating that the newspaper — its editorial side, at least — is increasingly out of touch with its readers.

Starting from the top, here’s how the Eagle endorsed and what the voters did. An endorsement is a recommendation to voters, and not intended to be a prediction of the outcome.

For the Republican Party nomination for United States Senate, the Eagle endorsed Jerry Moran. He won. For the Democratic Party side of this race, the Eagle picked Kansas Senator David Haley. He finished in third place.

For the Republican party nomination for United States Congress from the Kansas first district, the Eagle picked Kansas Senator Jim Barnett, noting his “balanced legislative record.” The Eagle dismissed challenger Kansas Senator Tim Huelskamp, calling him a “hard-right conservative with a hard edge.” This race was in a three-way tie in the last poll, but voters chose Huelskamp with 35 percent of the vote to Barnett’s 25 percent and Tracey Mann’s 21 percent.

(There is a pattern here. According to the Eagle editorial board, conservatives are “hard,” while liberals are portrayed as soft and cuddly — or “balanced” and “nuanced,” at least.)

For the Republican party nomination for United States Congress from the fourth district, the Eagle chose Kansas Senator Jean Schodorf. This had the potential to be a close race, with some polls — her own, mostly — showing Schodorf in the lead. But the race turned out to be not close, with Wichita businessman Mike Pompeo gathering 39 percent of the vote to Schodorf’s 24 percent and Wichita businessman Wink Hartman‘s 23 percent.

On the Democratic side, the Eagle endorsed Kansas Representative Raj Goyle, and he won handily over a little-known and inexperienced challenger with no experience in elective office.

For the Republican party nomination for Kansas Governor, the Eagle endorsed Sam Brownback, whose only competition was from a candidate with some very peculiar beliefs. Brownback won handily.

For Kansas Secretary of State Democratic Party nomination, the Eagle backed appointed incumbent Chris Biggs over opponent Kansas Senator Chris Steineger, who the Eagle faintly praised for his “out-of-the-box thinking and independence.” Biggs won.

On the Republican side, the Eagle endorsed career bureaucrat Elizabeth Ensley over Kris Kobach. The Eagle — Rhonda Holman, mostly — has criticized Kobach steadily on the editorial page for his contention that voter fraud is a problem in Kansas. Voters overwhelmingly chose Kobach. He got 51 percent of the vote to Ensley’s 27 percent.

For Republican Party nomination for Attorney General, the Eagle chose Kansas Senator Derek Schmidt, and he won handily over the capable but little-known Ralph De Zago.

For Republican Party nomination for insurance commissioner, the Eagle chose incumbent Sandy Praeger, and she easily won.

Sedgwick County Commission voters ignored Eagle recommendations

In primary contests for Sedgwick County Commission, voters didn’t give much weight to Wichita Eagle endorsements.

In the contest for the Democratic Party nomination for District 1, Eagle-endorsed Betty Arnold won. She’ll face unopposed incumbent Dave Unruh in the general election in this heavily Republican district.

In District 4, two Republicans ran to replace Kelly Parks, who chose not to seek re-election. The Eagle endorsed Lucy Burtnett, who served two years in this position when she was appointed by the precinct committee system to replace Carolyn McGinn, who won election to the Kansas Senate. When Burtnett ran for election to that position in 2006, she did not win. Instead of backing the Republican primary winner, she ran a write-in campaign that had the potential to contribute to a possible Republican loss.

Despite her loss in 2006, the Eagle endorsed her over Richard Ranzau, praising her “thoughtful” voting record, which I — after looking at her past votes — characterized as thoughtless. Ranzau won with 55 percent of the vote to Burtnett’s 44 percent. She told the Wichita Eagle that she will not support Ranzau in the general election, which naturally leads to speculation as to whether she’ll run another write-in campaign.

For the Democratic party nomination for the position, the Eagle endorsed former Wichita city council member Sharon Fearey. From the council bench, Fearey had blasted the Eagle for uncovering problems with a real estate developer’s past dealings, blocking passage of a project she supported. Besides the editorial board endorsement, the Eagle also ran a last-minute news story embarrassing to her opponent, Kansas Senator Oletha Faust-Goudeau. As of now, Faust-Goudeau has won by a margin of 60 votes out of 3,450 cast.

In District 5, the Eagle endorsed Chuck Warren in a three-way race for the Republican Party nomination. Wichita city council member Jim Skelton won with 42 percent of the vote to Warren’s 36 percent.

Kansas House of Representatives endorsements

In an open seat in the Kansas House of Representatives, the Eagle endorsed Jim Howell for the 82nd district, which is primarily the city of Derby. He won.

In the Republican party primary for Kansas House of Representatives district 83, parts of east Wichita, veteran legislator Jo Ann Pottorff faced a challenge from the right in recent college graduate Kyle Amos. Pottorff had to run a last-minute ad in the Eagle attempting to burnish her conservative credentials. She won with 53 percent of the vote. This qualifies as a squeaker.

In Kansas House of Representatives district 94, parts of west Wichita, the Eagle chose to endorse a challenger to incumbent Joe McLeland in the Republican primary. The Eagle criticized him as a “yes-man for GOP leadership and anti-tax think tanks” and said he “parroted misleading information about school budgets during the past session.” McLeland won with 63 percent of the vote. His two challengers received 22 percent and 16 percent.

In the Republican Party primary for Kansas House of Representatives district 96, parts of south Wichita, the Eagle endorsed first-term incumbent Phil Hermanson, and he won.

The Eagle recommended that voters chose incumbent Gail Finney in the Democratic Party primary for the 84th district, and she won by a large margin.

For election results from races in Sedgwick County, click on August 3rd, 2010 Primary Election Unofficial Results — Sedgwick County. For statewide races and other races, click on 2010 unofficial primary election results at Kansas Secretary of State.

Wichita Eagle endorsements deserve scrutiny

The Wichita Eagle editorial board has made its endorsements for offices in the August 3rd Kansas primary election. Before voters decide whether to rely on these recommendations, they deserve some examination.

For example, for the Kansas House of Representatives the Eagle endorsed incumbent Republican representative Jo Ann Pottorff for her “balanced voting record.” The Eagle said she was willing to stand apart from the area’s “hard-line conservatives.”

But an examination of Pottorff’s voting record indicates something other than balance. This year, on the Kansas Economic Freedom Index (a project of this site), her score was 13 percent. That placed her in the tenth percentile of members of the Kansas House on a scale that rewards fiscally conservative votes. It’s a liberal voting record, in other words. We might even say a “hard-line liberal” voting record.

(If the Eagle was to criticize a liberal, however, it would probably use the softer and preferred term “progressive.” Even liberals try to hide their lineage.)

Other examples of language that reveals the Wichita Eagle’s bias is in their endorsement of an opponent to current representative Joe McLeland. In its endorsement, the Eagle editorial board wrote: “Unfortunately, he also seemed at times to be a yes-man for GOP leadership and anti-tax think tanks. It was particularly disappointing how McLeland, the chairman of the House Education Budget Committee, parroted misleading information about school budgets during the past session.”

Why didn’t the Eagle write this about Pottorff: “Unfortunately, she seemed to be a yes-woman for the governor and the anti-economic freedom, big-spending teachers union leadership and school spending advocacy groups”?

Regarding McLeland, the Eagle is probably referring to the controversy about unspent school fund balances. The Eagle, along with the teachers union and other school spending lobbies, didn’t believe that these balances existed and wrote so in several opinion pieces. The Eagle probably still doesn’t believe these funds exist, notwithstanding the fact that the schools spent the very same fund balances they said didn’t exist and couldn’t be spent: “By using fund balances, schools in Kansas were able to increase spending by an estimated $320 million in the current school year. Revenue to Kansas school districts declined by about $50 million, but $370 in fund balances were used to boost total spending by $320 million.”

So when the Eagle makes an endorsement based on a factually unsound position, what should voters do?

In the Republican party primary for Sedgwick County Commission District 4, the Eagle chose Lucy Burtnett over Richard Ranzau, praising Burtnett’s “thoughtful voting record” during her two years as an appointed commissioner.

In 2006, while campaigning for this same position, Burtnett was reported by the Wichita Eagle to have this reaction to a proposed Sedgwick County property tax increase: “Lucy Burtnett, the current 4th District county commissioner, told 30 people attending a candidate forum at the Northeast Senior Center that none of the commissioners find the increase acceptable.” Part of the purpose of the proposed tax increase was to fund a jail expansion.

After losing the primary election, Burtnett voted in favor of a tax increase that was somewhat smaller than what the county manager originally proposed. Its purpose, partially, was to fund a jail expansion.

Two years later — realizing the jail expansion wasn’t necessary after all — the county rolled back part of the tax increase that Burtnett voted for.

“Thoughtful” voting record, as the Eagle endorsement said? Or thoughtless?

For Republican Party nomination for United States Congress from the fourth district of Kansas, the Eagle chose Kansas Senator Jean Schodorf.

Describing her as “not overly ideological or partisan,” the Eagle again overlooks facts.

Webster’s dictionary gives one definition of ideology as “the integrated assertions, theories and aims that constitute a sociopolitical program.” The Eagle uses this term with a dark connotation, implying that candidates with ideologies are inflexible and unwilling to consider anything other than their own views. Other liberal media outlets use this term in the same way.

But ideologies cut both ways. And Schodorf hasn’t seen many school spending programs and accompanying taxes that she won’t vote for. This is in spite of evidence that schools had money they weren’t spending, and that all the spending hasn’t done much to improve student outcomes. (The Eagle and Schodorf would have to look beyond the fraudulent Kansas state assessment scores to see that.)

The view of Schodorf and the Wichita Eagle editorial board is that Kansas public schools are always underfunded, and schools can be fixed only with more money. That’s an ideology, and one that is demonstrably harmful to Kansas schoolchildren.

This is all the more striking when we consider that Schodorf is chair of the Senate Education Committee. She has been in one of the most powerful positions to do something for Kansas schoolchildren, but she has not done that. So when the Eagle praises her for being “a pragmatist who cares about finding real solutions, not scoring political points,” consider that Kansas has few of the reforms such as charter schools and school choice that are working in other states. These are “real solutions” that the Eagle doesn’t favor. Instead, Schodorf seeks favor and campaign contributions from the teachers union and school spending lobby, earning the “political points” the Eagle editorial board purportedly condemns.

As for not being partisan, Schodorf simply belongs to the wrong party, if we are to believe that the Republican Party is home to conservative thought and practice. Schodorf’s voting record this year is more liberal — considering the same bills — than that of the presumptive Democratic Party nominee for this position.

It’s pretty easy to appear non-partisan when your party label is wrong.

It’s hard to tell, but it appears that the Eagle editorial board gave extra consideration to its Schodorf endorsement because she didn’t run a negative campaign. Regarding Mike Pompeo, the Eagle wrote, after listing his credentials, “It’s too bad he ran such an ugly campaign.”

That “ugly campaign,” however, can be viewed as simply responding to the allegations and charges made by another candidate. He didn’t attack Schodorf — perhaps he should have — so she, as well as the other candidates, didn’t have to defend themselves.

In Wichita, will Southwest save our city?

Talk that low-cost carrier Southwest Airlines might enter the Wichita market has the usual cast of government bureaucrats, centralized planning advocates, and their boosters in a tizzy.

The Wichita Eagle’s Rhonda Holman has Wichita director of airports Victor White saying that if the necessary subsidies are offered, the popular airline will consider serving Wichita.

(Oops. White actually used the word “incentives,” not “subsidies.” There are some who believe there is a difference in meaning between the two words. These are the types of nuances you have to become comfortable with when politicians and government bureaucrats try to direct and control economic development.)

Holman’s editorial makes a case for subsidizing another low-cost airline at Wichita’s airport, citing some remarkable economic development statistics:

Two recent studies supported the view that Southwest would build on the current affordable airfares program in leveraging low fares and boosting ridership at Mid-Continent — forecasting 33.5, 37 and 39 percent increases in airport activity and 7,000 additional direct and indirect jobs over such a carrier’s first three years in Wichita, as well as $29.5 million annually in savings for travelers.

As I pointed out a few weeks ago, these numbers are not believable. As I wrote two weeks ago, while more air service options are good for Wichita travelers, we need to be suspicious of the lofty claims of thousands of jobs and huge economic impact like the numbers claimed in this case. A few years ago I reported on a whopper of a economic impact figure given for the Wichita airport. It turned it the figures was based on some unrealistic assumptions, and used numbers likely to be counted a second time as part of someone else’s economic impact.

In the present case, the claim of 7,000 jobs to be created is a very large number. According to figures provided by the Greater Wichita Economic Development Coalition, only one company in the greater Wichita area has over 7,000 employees. The company with an employee count nearest 7,000 is Cessna, with about 6,000 employees.

Can anyone seriously claim that adding one more airline to the many already serving Wichita will result in the addition of more jobs than what exists at Cessna?

This is particularly true in that while there is one (or maybe two, depending on your definition) low-cost airlines receiving subsidies to serve Wichita, the other major airlines pretty much meet the discounters’ prices. This was the rational for bringing a low-cost airline to Wichita: by bringing in even one, it would force all other airlines to lower their fares.

This goal being largely achieved, it’s hard to fathom that adding one more discount airline would have a huge impact.

These economic development studies deserve scrutiny, and not just by eco-devo boosters and their cheerleaders who believe the government should heap money on anyone or anything that hints they might locate in Wichita — or leave Wichita. I asked Jeremy Hill of Wichita State University’s Center for Economic Development and Business Research if I could see the study that purportedly supports paying for more airline service. He, citing a non-disclosure agreement, would not send me the report or comment on its content. So I have a request pending at city hall.

There’s another angle to this story that hasn’t been reported in the Wichita Eagle news stories and editorials: Charleston was able to obtain Southwest Airlines service without paying a subsidy. The State, South Carolina’s largest newspaper and owned by the same McClatchy Company that owns the Wichita Eagle, reports that there was a lot of wooing, but there were no economic incentives.

In the Charleston situation, there evidently won’t be the massive state-supplied subsidy as we have in Kansas. But Southwest will still get a leg up: A USA Today story quotes a Charleston airport official saying “Southwest didn’t want a state subsidy, but was interested in the airport’s incentives a temporary waiver of landing fees, up to $10,000 to market new flights, and up to $150,000 for other start-up costs.”

Correction: The Wichita Eagle reported in its May 13 article that Southwest service in Charleston is not contingent of state subsidies.

Wichita’s Intrust Bank Arena shrouded in mystery

Okay, maybe that’s a little over-hyped, but when arena cheerleader Rhonda Holman of the Wichita Eagle starts to question the operations of Intrust Bank Arena in downtown Wichita, there must be something going on.

Holman’s column of yesterday complained of lack of transparency in the arena’s operations: “But with hindsight, and with the Intrust Bank Arena open three months and generating revenue, it’s more clear all the time that county leaders gave away too much oversight authority to SMG, leaving citizens in the strange and frustrating position of having too little hard information about how their $206 million investment is doing.”

The sudden departure of arena manager Chris Presson under circumstances that can only be described as alarming will add to the concern of citizens. Well, not all citizens. Some arena boosters simply don’t care how much of a burden the arena may become to county taxpayers, as long as they have their arena.

The lack of transparency at the arena and some county commissioner’s lack of concern about this important issue has been the subject of articles on this site. See Wichita downtown arena open records failure, Wichita downtown arena contract seems to require Sedgwick County approval, and Sedgwick County keeps lease agreement secret.

Kansas taxes and spending debated

Should Kansas increase taxes or control spending in order to balance its budget? On the editorial page of the Wichita Eagle yesterday, three editorials discussed the Kansas budget, taxes, and spending.

Rhonda Holman’s editorial featured Kansas Governor Mark Parkinson and his claims that the temporary one-cent sales tax used to fund the Intrust Bank Arena in downtown Wichita wasn’t noticed, and therefore didn’t harm the economy. The governor’s reasoning is incorrect, as taxes do indeed harm the economy.

When it was proposed in Wichita in 2002 to have a sales tax increase of one-half cent per dollar to build an arena, Wichita car dealers claimed that it would place them at a competitive disadvantage. So people and business do notice the effect of sales taxes.

While the geography is different — the proposed Wichita sales tax was to be only for one city, while the governor’s sales tax is for the entire state — the principle is the same: Higher taxes in Kansas will place our state at a competitive disadvantage.

This editorial also mentions “painful cuts to education” that have been made. More about that in a moment.

A second editorial was written by Bernie Koch, who is Executive Director of the Kansas Economic Progress Council. He takes the position that we can’t make additional cuts, concluding that “To simply rely on cuts will damage the institutions and systems needed to survive the Great Recession and pursue economic recovery.”

Referring to a SurveyUSA poll from last month, Koch wrote: “86 percent [of Kansans] said they were somewhat or very concerned about cuts to education.”

The problem with this poll is that the people of Kansas are very uninformed about school spending and cuts. First, there are plenty of cuts to be made, cuts that don’t affect the classroom. Recently the Wichita school district was able to find $2.5 million annual savings by adjusting transportation schedules at a small number of schools. Now that district is looking at savings that can be had in administration.

So when the Eagle editorial board and the governor claim that “painful cuts” have been made to schools, were those painful cuts made before transportation schedules were adjusted? Kansans should ask where these priorities are set.

Second, Kansans are simply uninformed — perhaps deliberately misinformed — about the level of school spending, as a poll conducted by the Kansas Policy Institute found. This poll, released last week, found that “fewer than one Kansan in 10 has a clear idea how much money schools actually receive — or spend — to educate elementary, middle and high school students across the state.”

Further, when informed about the true level of spending and the increase over the past five years, 81 percent of Kansans oppose tax increases for school spending. Only 11 percent were willing to pay increased taxes.

The third editorial was written by Kent Beisner, who is interim president and CEO of the Kansas Chamber of Commerce.

Beisner accurately diagnoses the cause of the problem: “The governor and his allies in the Legislature actually have the audacity to claim that recent tax cuts are to blame for the state’s budget deficit. But when the Legislature cut taxes earlier this decade, revenues to the state skyrocketed. The problem occurred when the state showed zero fiscal restraint and committed to spending more than it was taking in, erasing more than a $950 million budget surplus in just two years. Kansas most definitely does not have a tax-cutting or revenue problem.”

The way to get out of this problem is to control spending so that taxes don’t have to be raised. A low-tax environment is the best tool Kansas can use to attract and keep business, Beisner added: “If the Legislature adopts what will amount to the largest tax increase in the state’s history, states more competitive than Kansas will no doubt take advantage of our resulting anti-growth climate and lure our employers and workers out of the state.”

Wichita schools, despite claims, find cost savings

Despite claims that school spending has been “cut to the bone,” USD 259, the Wichita public school district, found a way to save $2.5 million per year by adjusting school starting times, thereby saving on transportation costs.

School spending advocates have claimed that it is not possible to cut spending without affecting students. It starts at the top with Kansas Governor Mark Parkinson’s repeated claims that spending has been “cut to the bone.” He says it’s not possible to make more cuts.

Other school spending advocates repeat this theme of having cut as much as possible, repeating the “bone” theme. An issue of the Kansas National Education Association newsletter Under the Dome for March 30, 2009 claims that spending has “already been cut to the bone.”

Kansas Board of Education Chair Janet Waugh said “Districts have already cut to the bone,” according to a Kansas Reporter article.

Last year Representative Jim Ward, a Wichita Democrat, former Wichita school board member, and Assistant Minority Leader of the Kansas House of Representatives, stated in a KAKE Television news story “If you cut $10 million, you’re now cutting into the bone, the marrow, and you’re going to have a significant impact on the ability to deliver education.”

The Wichita Eagle editorial board has said several times that cuts to Wichita school spending will hurt students. Referring to the possible need to cut $25 million from the Wichita school budget, Philip Brownlee in March wrote “Cutting that much money — or even a third as much — could cause great harm.”

Despite these claims, by adjusting school starting times and transportation schedules, the Wichita school system was able to save a great deal of money without impacting the classroom. The $2.5 million savings just discovered by the Wichita school district is 30% of the “one-third of $25 million” that Brownlee says cutting would cause great harm. It represents 25% of the amount that Ward claimed would have a significant impact.

We should now ask these questions:

First, are there other cuts like this that can be made? It seems unlikely that this change is the only cost savings the Wichita school district — and other districts — can find.

Second, the Wichita school district did not participate in a voluntary school audit program. What other costs savings might have been found if Wichita had participated?

Third, why wasn’t this savings discovered and implemented in past years? Does it take a budget crisis to force public schools to seek ways in which to operate more efficiently?

Finally, private sector businesses face the never-ending discipline of market competition and seek ways to operate more efficiently even in good times. Government institutions such as public schools, however, don’t face this discipline. Should Kansas find a way to introduce market discipline to our state’s schools?

Regulation has not lessened, instead it has harmed us

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.

Kansas fund balances disputed despite evidence of their existence, benefit

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.

Lutz, Hanson, Fahnestock owe Wichita an apology

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.

To sway opinion, basic facts must be correct

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.

Wichita Eagle reporting, headlining discussed by commissioners

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

Wichita downtown arena parking problem

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.