Kansas and Wichita jobs, June 2018

For June 2018, more jobs in Kansas, and a nearly unchanged labor force. Wichita jobs also rose.

Data released this week from the Bureau of Labor Statistics, part of the United States Department of Labor, shows an improving jobs picture for Kansas in June 2018.

Over the year (June 2017 to June 2018), the Kansas labor force is down slightly, while up slightly over the past three months. These changes are small, all being in the range of 0.1 percent.

The number of unemployed persons continues to fall. The unemployment rate remains at 3.4 percent.

Click for larger.

The number of Kansas nonfarm jobs for June 2018 rose by 1.8 percent over last June, adding 24,800 jobs. This is using seasonally adjusted data, and the non-adjusted figure is larger at 30,900.

Click for larger.

This release also provided some data for metropolitan areas. For Wichita, here are employees on nonfarm payrolls, not seasonally adjusted

June 2017: 294,900
May 2018: 300,600
June 2018: 297,900 (up 3,000 jobs, or 1.0 percent over the year)

Comparing May 2018 to June 2018 isn’t meaningful using this data, as it is not adjusted for seasonality.

Wichita Regional Chamber of Commerce PAC mailing

In a campaign for Sedgwick County Commission, the Wichita Regional Chamber of Commerce PAC whips up a lie in order to criticize a candidate.

In a postcard paid for by the Wichita Regional Chamber of Commerce Political Action Committee, Richard Ranzau is criticized: “Ranzau also suggested that Wichita annex a large local job-creating aerospace employer to generate more tax revenue.”

This claim is based on a farcical interpretation of what the commissioner actually said.

Excerpt from Wichita Regional Chamber of Commerce PAC mailing. Click for larger.

The postcard references as the source of the remarks, “Sedgwick County Commissioners Meeting Transcript, 4/18/18.” If you look at this transcript, here’s what Ranzau said: 1

Additionally, Spirit is not in the city of Wichita. It’s an industrial district, this is an agreement between the city and Wichita. If they would be annexed by the City of Wichita, taxes would go up by over nine mills. Okay. So that saves them $532,000 a year over the 20 years of this evaluation, I mean that’s $10.6 million. I think we should get credit for doing that to help them out. Okay? There’s other things that are out there that haven’t been quantified, and there’s things like I’ve say at the state level that should still come to fruition later on.

The problem with the Wichita Chamber PAC’s claim is this: Ranzau did not suggest that Wichita annex Spirit. He merely illustrated that property taxes within the City of Wichita are higher than those outside the city.

(Here’s the data: The total mill levy in the industrial district where Spirit is currently located is 114.895. The new facility, in the Wichita city limits, has a mill levy of 124.244. So, within Wichita, the tax rate is higher by 9.349 mills. 2)

The Wichita Chamber Regional PAC has attributed to Ranzau something he did not say. The Chamber’s PAC’s claim is not even close to what Ranzau said.

The Wichita Chamber Regional PAC is lying. It should retract the accusation and apologize not only to Richard Ranzau, but also to the voters of Sedgwick County. It is they who are harmed by lies such as this.

Hugh Nicks is Ranzau’s opponent in the August primary election. The Wichita Chamber PAC supports Nicks with mailings like this. Let’s ask Hugh Nicks if he supports the Wichita Regional Chamber PAC lying about Ranzau.


Notes

  1. Board of Sedgwick County Commissioners. Meeting detail, April 18, 2018. Available at https://sedgwickcounty.legistar.com/MeetingDetail.aspx?ID=602255&GUID=CCB97C42-38F7-421C-85C5-05676B65D89B.
  2. “The total mill levy in the industrial district is 114.895. The new facility, in the City limits, has a mill levy of 124.244. So, within the City, the tax rate is higher by 9.349 mills. Tax levies in the industrial district include County Fire, Township and South Central Kansas Library District. They total 23.318 mills. Tax levies in the City limits exclude these three and add 32.667 mills for the City of Wichita. Spirit’s tax savings due to the lower tax rate is approximately $532,000.” Email from Brent Shelton, Economic Development & Tax System Director, Sedgwick County Division of Finance. April 12, 2018.

From Pachyderm: Candidates for State Board of Education, District 7

From the Wichita Pachyderm Club: Candidates for State Board of Education, District 7. Republican candidates appearing are Robert M. D’Andrea and Ben Jones. This was recorded on July 20, 2018.

Kenneth Willard is the current member for district 7. He is not seeking election. The winner of the August primary election will meet the Democratic party candidate in the November general election.

The Kansas State Board of Education has ten districts, each being composed of four Kansas Senate districts. District 7 covers portions of central and east-central Kansas, including these cities: Alma, Emporia, Matfield Green, Marion, McPherson, Ellsworth, Lyons, Hutchinson, Kingman, Newton, and portions of North Sedgwick County, but not including Wichita.

Shownotes

  • Robert M. D’Andrea on Facebook
  • Ben Jones on Facebook
  • A map of Kansas State Board of Education district 7 is here
  • A map of all Kansas State Board of Education districts is available here

WichitaLiberty.TV: Author Bud Norman

In this episode of WichitaLiberty.TV: Journalist, author, and blogger Bud Norman joins Bob to discuss the local newspaper, Donald Trump, and the Kansas governor contest. View below, or click here to view at YouTube. Episode 202, broadcast July 21, 2018.

Shownotes

Is the pursuit of intergovernmental grants wise?

Is the pursuit of intergovernmental grants wise? Would local governments fund certain programs if the money was not seen as “free?”

An eariler version of this article failed to distinguish Jim Howell’s position from the majority of candidates. I regret the error.

At a forum of candidates for Sedgwick County Commission, the subject of intergovernmental grants was discussed. All candidates except for current commissioners Richard Ranzau and Jim Howell were fully in favor — enthusiastic, even — of the grant system. Both Ranzau and Howell expressed skepticism of the wisdom and efficacy of the grant system.

Other candidates participating in the forum had several justifications for accepting intergovernmental grants: It’s our tax money we sent to Washington or Topeka, it’s foolish not to try to get back our tax money, the grants are already funded, the money will simply go somewhere else. There are a few problems with these lines of reasoning.

First, the grants are not “already paid for.” Since the federal government runs a deficit, we’re not paying the entire cost of government. To say that some things (program A, B, and C) are paid for, and other things (programs D, E, and F) are not paid for, is making artificial distinctions that can’t be justified.

But deficit spending (on grants or other things) makes sense to politicians who want to deliver more government services than are being paid for by current levels of taxation. Federal and state grants make sense to local politicians and bureaucrats who want to be able to say they “won” federal or state dollars, so that the county or city can spend at no one’s cost. That’s how grant money is often characterized: Spending at no one’s cost.

But politicians and bureaucrats across the nation make the same argument. We all wind up spending money at no one’s cost, so they say.

Then: We must “try to get back our tax money.” This highlights another absurdity of government grants. We pay taxes, and then hope that we win the competition to get back our money. Who developed this system? Again, politicians like to boast they “won” grant funding that has no cost. Bureaucrats thrive on the jobs and power that grants provide, both locally and at the state and federal levels. Someone has to collect the taxes, write the applications for grants, evaluate the applications, administer the grant money at the state or federal level, administer the grant money at the local level, write reports on how the grant money is spent, and then someone has to read the reports. This creates a lot of jobs for bureaucrats. It also costs a lot, which is a deadweight cost, that is, costs that provide no benefit.

(If politicians and bureaucrats in other states, cities, and counties are smarter than us, do we have a fair chance of getting our tax money back in the form of grants?)

Finally: There is evidence that intergovernmental grants accepted today result in higher taxes tomorrow. Worse, this is for spending that local governments might not choose if local government bore the entire cost. But after the grant ends and after a constituency is created, it’s difficult to stop the spending.

Following, from 2013, a presentation of research on grants and future taxation.

Federal grants seen to increase future local spending

“Nothing is so permanent as a temporary government program.” — Nobel Laureate Milton Friedman

Is this true? Do federal grants cause state and/or local tax increases in the future after the government grant ends? Economists Russell S. Sobel and George R. Crowley have examined the evidence, and they find the answer is yes.

The research paper is titled Do Intergovernmental Grants Create Ratchets in State and Local Taxes? Testing the Friedman-Sanford Hypothesis.

The difference between this research and most other is that Sobel and Crowley look at the impact of federal grants on state and local tax policy in future periods.

This is important because, in their words, “Federal grants often result in states creating new programs and hiring new employees, and when the federal funding for that specific purpose is discontinued, these new state programs must either be discontinued or financed through increases in state own source taxes.”

The authors caution: “Far from always being an unintended consequence, some federal grants are made with the intention that states will pick up funding the program in the future.”

The conclusion to their research paper states:

Our results clearly demonstrate that grant funding to state and local governments results in higher own source revenue and taxes in the future to support the programs initiated with the federal grant monies. Our results are consistent with Friedman’s quote regarding the permanence of temporary government programs started through grant funding, as well as South Carolina Governor Mark Sanford’s reasoning for trying to deny some federal stimulus monies for his state due to the future tax implications. Most importantly, our results suggest that the recent large increase in federal grants to state and local governments that has occurred as part of the American Recovery and Reinvestment Act (ARRA) will have significant future tax implications at the state and local level as these governments raise revenue to continue these newly funded programs into the future. Federal grants to state and local governments have risen from $461 billion in 2008 to $654 billion in 2010. Based on our estimates, future state taxes will rise by between 33 and 42 cents for every dollar in federal grants states received today, while local revenues will rise by between 23 and 46 cents for every dollar in federal (or state) grants received today. Using our estimates, this increase of $200 billion in federal grants will eventually result in roughly $80 billion in future state and local tax and own source revenue increases. This suggests the true cost of fiscal stimulus is underestimated when the costs of future state and local tax increases are overlooked.

So: Not only are we taxed to pay for the cost of funding federal and state grants, the units of government that receive grants are very likely to raise their own levels of taxation in response to the receipt of the grants. This is a cycle of ever-expanding government that needs to end, and right now.

An introduction to the paper is Do Intergovernmental Grants Create Ratchets in State and Local Taxes?.

Kansas candidate briefings

Recently Kansas Policy Institute, along with Americans for Prosperity and Kansas Chamber of Commerce, held a series of briefings for candidates for the Kansas Legislature. The presentations in Wichita were recorded, and are available as follows:

What Was Really the Matter with the Kansas Tax Plan. KPI President Dave Trabert spoke on the reality and myths of the state’s tax plan. Click here to view at YouTube.

Kansas K-12 Education Spending and Achievement. KPI President Dave Trabert spoke on K-12 education spending and achievement. Click here to view.

Medicaid Expansion. Melissa Fausz, a senior policy analyst with Americans for Prosperity, spoke about Medicaid expansion. Click here to view.

Kansas Chamber Legislative Update. Eric Stafford, vice president of government affairs for the Kansas Chamber of Commerce, spoke on the legislative process in Kansas. Click here to view.

Property Taxes. KPI President Dave Trabert spoke on property taxes in Kansas. Click here to view.

Or, view them all. Click here.

WichitaLiberty.TV: Kelly Parks and property rights

In this episode of WichitaLiberty.TV: Kelly Parks joins Karl Peterjohn to discuss county and zoning issues. Parks is a former member of the Sedgwick County Commission and is a member of Kansans Advocating Responsible Zoning (KARZ). View below, or click here to view at YouTube. Episode 201, broadcast July 14, 2018.

Shownotes

KARZ meets the third Wednesday of each month at Spangle’s, Broadway and Kellogg in downtown Wichita. Meetings start at 6:30 pm for dinner with the actual meeting starting at 7:00 pm.

To learn more about KARZ, call Kelly Parks at 316-755-2757, or by mail:
KARZ
c/o John Dailey
P.O. Box 381
Valley Center, KS 67147

Kansas government employees

Kansas has a lot of government employees when compared to other states, and especially so in education.

Considering all government employees — state and local — Kansas has 68.35 full-time equivalent (FTE) employees per thousand residents. Only two states and the District of Columbia have more.

For total elementary and secondary education employment, Kansas has 30.64 such employees (full-time equivalent) per thousand residents. Only two states have more.

Looking at nearby states and some Plains states commonly thought to be big spenders (Iowa and Minnesota), Kansas has more employees and more education employees, again on a per-resident basis.

This data comes from the United States Census Bureau. I’ve gathered it and present it in an interactive visualization. Click here to learn more about the visualization and to use it yourself.

Example from the visualization, showing Kansas and selected states. Click for larger.

From Pachyderm: Kansas District Court Judicial Candidates

From the Wichita Pachyderm Club: Kansas District Court Judicial Candidates. This was recorded July 13, 2018.

Kansas courts are divided into Judicial Districts. The 18th Judicial District has the same boundaries as Sedgwick County. Judges in the 18th Judicial District run for office and serve in Divisions. There are 28 Divisions. While these Divisions may appear to be geographical districts like those for county commissioner or state legislature, each Division covers the entire Judicial District. Therefore, all Sedgwick County voters may vote for judges in all divisions.

Candidates run as members of a party in the August primary, and winners advance to the November general election. Terms are four years. Of the Divisions that have elections this year, two have contested primaries, with all candidates filing as Republicans except for one Democrat in Division 7. In all other Divisions, only one candidate of any party has filed.

Here are the candidates in order of their opening statements.

Division 17 candidates:

  • Scott Anderson
  • Linda Kirby
  • David Lowdon
  • Richard Paugh

Division 7 candidates:

  • John Van Achen
  • Rodger Woods

Wichita business press needs to step up

If a newspaper is going to write a news story, it might as well take a moment to copy and paste information from a city council agenda packet. Especially when what is missing from the story is perhaps the most important information.

When the Wichita City Council approved an Industrial Revenue Bond issue at its July 10, 2018 meeting, the city’s business press covered the matter. In the Wichita Eagle, the story fails to mention the motivation for the item. 1

The meeting agenda packet for this item, very near its start, states plainly the benefits of the IRBs: “Cargill Incorporated (Cargill) is requesting a Letter of Intent (LOI) for the issuance of Industrial Revenue Bonds (IRBs) in an amount not to exceed $38,000,000 and an 81.5% five-plus-five-year tax abatement and a sales tax exemption for the construction of a new biodiesel facility in north Wichita.” 2

There it is, in plain sight and language: Cargill will save a lot of money in taxes by using these bonds. How much? The same city document details some of the savings:

Based on the current mill levy, the estimated tax value of exempted property for the first full year is $337,904. The value of an 81.5% real property tax exemption (assuming the property is appraised at 80% of the capital investment) as applicable to taxing jurisdictions is:

City $94,109
County $84,677
State $4,321
USD 259 $154,797

The agenda packet doesn’t give an amount for the value of the sales tax exemption, but if all $38,000,000 in bond proceeds was spent on taxable items, sales tax would be $2,850,000. The actual sales tax savings will likely be less than that, but still a lot. (We’ll likely never know, as the Kansas Department of Revenue won’t release the value of sales tax exemptions associated with bond issues.)

Why didn’t the Eagle report this? I don’t know. But the property and sales tax exemptions are the driving motivation behind almost all requests for IRBs. 3

It’s not the case that the company can’t obtain financing on the market. Many IRBs are purchased by the requesting company, as is the case with these bonds, according to the agenda packet: “The bonds will be privately placed with Cargill.”

Instead, Kansas law requires, in most cases, that to issue property and sales tax abatements, IRBs must be used. Again, from the agenda packet: “To insure that all of the real property improvements are receiving the tax abatement, the improvements must be bond financed.” 4

Why can’t the city council simply wave a magic wand and absolve Cargill of paying millions of dollars in property and sales taxes? This is what the city council did, but in a roundabout way.

But because the tax giveaway is mixed with confusing details of bonds, many citizens don’t notice the giveaway. Especially when our city’s leading newspaper does not report this.

Wichita Business Journal reporting was a little better, mentioning the property and sales tax exemptions, but not their monetary value. 5

This article also contains this: “With IRBs, the city serves as a pass-through entity for developers to obtain a lower interest rate on projects. IRBs require no taxpayer commitment.” This is language the newspaper often includes when reporting on IRB issues, and it is simply not true. In this case, a portion of this project qualifies for tax-exempt financing, as it is a solid waste processing facility. 6

But for the remainder of the project, as is the case for most IRB-funded projects, it is not likely the facility will save on interest costs with IRBs. The article is correct in that IRBs require no taxpayer commitment. The city makes no guarantee as to the bond repayment. If the city did guarantee repayment, that would help the borrower obtain a lower interest rate. But there is no guarantee.


Notes

  1. Finger, Stan. Wichita City Council approves bonds for Cargill expansion. Available at https://www.kansas.com/news/business/article214622565.html.
  2. Wichita City Council Agenda packet for July, 10, 2017. Item IV-1.
  3. Weeks, Bob. Industrial revenue bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/.
  4. As noted below, there is a slight wrinkle in this IRB issue, as some of the financed property is exempt from federal income taxes on interest payments and requires IRBs for that particular property. This is an unusual factor, and does not require that all the plant be financed with IRBs.
  5. Daniel McCoy and Bryan Horwath. City Council approves IRBs for Cargill biodiesel plant. Available at https://www.bizjournals.com/wichita/news/2018/07/10/city-council-approves-irbs-for-cargill-biodiesel.html.
  6. “The solid waste processing component qualifies under Internal Revenue Service (IRS) regulations for tax exempt financing, which can save the company interest expense. Of the total project, approximately $30,000,000 would qualify as a Solid Waste Processing Facility, and therefore, eligible for tax-exempt financing.” Agenda Packet for July 10, 2018.

New Wichita water plant

Next week the Wichita City Council will consider a major step in proceeding with a new Wichita water plant.

The central water plant in Wichita is old, and the city has been planning a new plant. The new facility is called the Northwest Water Treatment Facility (NWWTF). Much information is available in the agenda packet for the July 10, 2018 city council meeting.

The city plans to issue a letter of interest (LOI) to apply for a Water Infrastructure Finance and Innovation Act of 2014 (WIFIA) federal loan for up to 49 percent of the project cost, which at this time is estimated as $524,200,000.

The Environmental Protection Agency says that “Based on the information provided in the letter of interest, EPA will invite selected prospective borrowers to submit an application for WIFIA credit assistance.” This will not be the first time the city has attempted to use this financing source, according to city documents: “The City submitted a WIFIA LOI in 2017 but was not invited to apply.”

For the balance of the financing, the city says it intends to apply for a loan from the Kansas State Revolving Loan Fund (SRLF). The advantage to using these government financing sources, says the city, is “Both programs offer low, fixed interest rates and have less expensive financing costs compared to traditional revenue bonds. Repayment of WIFIA is not required until five years after construction is completed and repayment of SRLF begins two years after the first disbursement is received. The delayed repayment allows rates to be smoothed over time to minimize customer impacts, and the low cost of financing keeps the overall project cost down.”

Of note, the city intends to use an acquisition process that is different from the usual:

City staff have analyzed different project delivery methods and determined that a Hybrid DBo is the most beneficial approach. It pairs the lowest cost source of financing, which is available exclusively to the City, with the cost containment and project quality that can be delivered under a public-private partnership. This expertise also provides value-added engineering and access to advanced technologies that may lower total project costs. The key to getting the best of both approaches is to hire a Construction Management company with expertise in constructing similar treatment facilities. The City will also issue an RFP to select a Construction Management company that will oversee the selected DBo team.

In the LOI to the EPA, the city included this:

The City has considered and evaluated multiple project delivery approaches, including a range of possibilities from traditional design-bid-build to full privatization through a design-build-own- finance-operate and maintain model. Through these deliberations, the City has concluded that design-build with short-term operations presents the least risk and highest value. The City refers to this delivery approach as DBo, in which the operations component is a relatively short term of up to 5 years, including transitioning operations to the City. The City has selected a DBo approach for the following reasons:

  • Accelerated project delivery by overlapping design, permitting, and equipment procurement tasks (see Attachment 6, Project Schedule).
  • Optimal risk allocation by assigning risk to the party or parties that can best control those risks (see Table A-1).
  • Early cost certainty.
  • Highest value for money derived by leveraging the experience and capability of the designer, builder, and operator to achieve the optimal balance of capital and lifecycle costs.
  • Ability to “staff up” through the use of a contract operator during startup and commissioning of the NWWTF.
  • Ability to prepare for transition to City operation through robust training of the City’s operations leadership.
  • Ability to “staff down” once the City’s own operations forces are trained and available

Wichita water users need to follow this process carefully. The ASR project — a $247 million Wichita water project — has been underperforming by a large amount.

Project Wichita survey

The Project Wichita survey is about to end. Will it have collected useful data?

Project Wichita is “a community engagement process to identify the future we want for our home and the steps necessary to achieve it.” 1 So far it has held focus groups that collected ideas for the future of Wichita, in which “an astounding 3,800+ people 2 shared their vision in 239+ focus groups,” according to the project’s Facebook page. The survey, which is ending on July 6, is another component of the “listen” phase of the project, with “focus” and “share” phases still to come.

The survey may be taken on-line or by paper. The online survey is implemented as a number of pages, each concerning a topic. The first page is titled “Vision for Our Region: Please indicate your level of agreement with the following for developing a vision for the Wichita region. Our region should be a place that:” Following are several items like “all children have the chance to succeed.” Respondents are asked to select one of these responses for each item:

  • Strongly Disagree
  • Disagree
  • Undecided
  • Agree
  • Strongly Agree

The second page is titled “Strong Neighborhoods. Please indicate the importance of investing resources (time, human resources, money) in the following for developing and supporting safe and strong neighborhoods throughout our region.” A sample item is “Repair deteriorating homes to improve neighborhoods.” Respondents may choose from these responses:

  • Not important investment
  • Slightly important investment
  • Moderately important investment
  • Very important investment
  • Essential investment

There is no opportunity to answer in any way other than these responses. There is no possibility of leaving a comment.

The question of the importance of investment continues with slight variation for six more pages on these topics:

  • Economic Advantage and Opportunity
  • Transportation
  • Cultural Arts
  • Attractions and Entertainment
  • Education; Community Wellness
  • Wichita Riverfront and Downtown Development

Then a page titled Regional Perspectives: “Please tell us your thoughts about the following regional questions” where participants are asked to indicate their degree of agreement or disagreement with the following:

  • I think an increase in population would make the Wichita region thrive.
  • I am optimistic about the future of the Wichita region.
  • I think the Wichita region has to be willing to change to keep and attract the next generation.

Then there are some demographic questions.

Problems

First, the responses that the project will collect are from a self-selected group of respondents. There is no way to guarantee or know that the respondents are a representative sample of area residents. The focus groups had the same problem. This has been a problem with Wichita’s outreach in the past. In 2014 the city was quite proud of its engagement and positive response regarding the proposed city sales tax. Then, on election day, 62 percent of voters said no. 3 (Of course, those who vote are also a self-selected group of respondents. On the sales tax question, 103,290 people cast a vote. 4 For that year, the Census Bureau estimated there were 283,780 people of voting age in Wichita. 5 So 36.4 percent of the eligible voters made the decision for the rest, voters and non-voters, and also for those too young or ineligible to vote. But when we ask to settle issues by voting, voters are the people who make the decisions.)

Another problem has to do with the preface to the many questions asking about the importance of making investments in various things. What is missing is whose resources are to be invested? Yours? Mine? Someone we don’t know?

Related is that almost all the items participants are asked to rate are things that almost everyone agrees are good. Who could not strongly agree with investing so that “all children have the chance to succeed?” I suppose that some people might select “Very important investment” instead of “Essential investment” for some items. That might produce a shade of difference in the importance of items.

What would really be useful, however, is asking participants to rank the importance of investing in each item, from most important to least important, with no ties allowed. Instructions might be worded like “Rank the importance of investing in the following five areas. 1 is the most important investment, while 5 is the least important. You must assign a rank to each item, and there may be no ties.”

Then, to make things really useful: Ask participants to produce rankings for the importance of public sector investment, and separate rankings for the importance of private sector investment.

Understanding and distinguishing the difference between public and private investment is vital. When people believe that others will be paying, there is no limit to what people want. Milton Friedman knew this: “When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it. When a man spends his own money to buy something for someone else, he is still very careful about how much he spends, but somewhat less what he spends it on. When a man spends someone else’s money to buy something for himself, he is very careful about what he buys, but doesn’t care at all how much he spends. And when a man spends someone else’s money on someone else, he doesn’t care how much he spends or what he spends it on. And that’s government for you.” (For more, see Friedman: The fallacy of the welfare state.)

People recognize this. Remarks left on Facebook on the Project Wichita page 6 included this by one writer:

Just took survey! One would think “they” want to convert Wichita or Kansas to socialism. I’m a liberal conservative Democrat and yet questions are very concerning and disturbing.

Following up, the same person wrote:

Applaud the effort however many of the questions concerning me as it relates to governments role in community and well-being of such. … At what point should community and individuals be primarily responsible for many of the topics you address in your survey?

Another Facebook user wrote:

Your survey is great but you left out a very important piece of information. WHO is going to provide the money for the investments that are queried in your survey? A lot of areas need investment of funds but, those funds should come from the private sector, not public sector. As a result of the inability to discern a difference in the source of required investments, the survey is somewhat useless.”

Yet another from Facebook:

Each of your questions should be followed by the question, “How much are you personally willing to pay for this line item” or “Which government service should be eliminated to pay for this line item”. Your list will get quite short when people are asked to spend their own money rather than other people’s money.

These basic defects preclude this effort as being serious social science research. Yet, that is likely how it will be presented, especially since a university agency is involved.

Of note: Project Wichita has no official opinion as who should pay for these investments. Cynics — that is, realists — believe that programs like Project Wichita are designed to convince citizens to support increased taxes or debt issues to be repaid with future taxes, with those future taxes undoubtedly higher.

One reason for this suspicion is that portions of the Project Wichita process are being managed by Wichita State University’s Public Policy and Management Center. 7 Its director and its associated academics have a clear preference for higher taxes, at one time writing a paper advising cities to create “more willing taxpayers.” 8

Other people and companies that Project Wichita identifies as part of the “Vision Team” (or “funders”) also made large contributions to the campaign for a Wichita City sales tax in 2014:

  • Allen Gibbs & Houlik, L.C.
  • Jon Rolph and his company Sasnak
  • The Chandler family and Intrust Bank
  • GLMV Architecture
  • Emprise Bank
  • Spirit Aerosystems
  • Commerce Bank
  • Equity Bank
  • Cox Machine
  • Westar Energy
  • Professional Engineering Consultants
  • Star Lumber
  • Bothner & Bradley and its principals
  • Envision
  • Lubrication Engineers
  • Jeff Fluhr, head of Downtown Wichita and now also Greater Wichita Partnership

Some of these companies regularly receive economic development incentives from the City of Wichita or do business with the city. Some are subject to the city’s regulations such as zoning and permitting.

It’s difficult to digest all this without concluding that Project Wichita project is designed to develop a case — an appetite — for higher taxes. That’s even before realizing that the driving force behind Project Wichita — according to word on the street — is Jon Rolph, who was the chair of the campaign for the Wichita city sales tax in 2014. Further, Project Wichita is sharing offices with the Greater Wichita Partnership and Downtown Wichita, two organizations always in favor of the expansion of government.

Individual questions

Besides general problems with the survey instrument, there are these problems with individual items:

“Improve the current public transit system (e.g. expand routes, expand hours).” There may be support for spending public funds on this, even if it means raising taxes. This was one of the uses for the proposed Wichita city sales tax in 2014. It was bundled with other items, and voters defeated the tax.

“Make flights from Wichita Eisenhower National Airport more affordable.” We’ve spent a lot doing this. The city and the airport say the programs have been successful.

“Increase direct flights from Wichita Eisenhower National Airport.” This is an area that could use improvement. The number of departures and the number of available seats on departing flights has been underperforming the nation, despite much investment in the forms of tax-funded subsidies for airlines. There is also a new airport terminal.

“Offer more diverse entertainment options (e.g. music festivals, restaurants, theme parks).” There are many people trying to figure out what type of restaurants are wanted in Wichita, and where. These people are motivated by profit. It’s difficult to believe that government could do a better job of deciding upon, and operating, restaurants.

“Support entrepreneurial opportunities.” There is an organization doing this, e2e. More broadly, when the city offers economic development incentives, it makes it harder for young, entrepreneurial companies to survive as they must bear the cost of incentives and compete with incentivized companies for labor and capital. 9

Under education, a topic that is glaringly omitted is school choice. Parents like having the possibility of school choice, especially parents who can’t afford private school tuition. Plus, school choice, like charter schools, could help control “sprawl,” something that is often seen as a negative factor. If parents who want to live in central Wichita could have access to school choice in nearby schools, it might counter the commonly-held perception that if you want good schools for your children, you must buy a home outside the Wichita school district.

“Provide modern performing arts center (e.g. symphony, music theater, opera) that meets the region’s needs.” and “Provide a modern convention center that attracts more conventions and events.” These are topics that Wichita will likely be grappling with soon, and in a real way. Wichita has already hired a consultant to study this issue. (More information is at Century II resource center.) A task force is studying the issue. Soon, it is quite likely that residents of Wichita or Sedgwick County may be asked to approve a sales tax to fund a convention center and possible a performing arts center. Or, citizens suffer the implementation of Design Build Finance Operate and Maintain (DBFOM), or P3. In this model as applied to Wichita, a third party would do all the work of designing, financing, building, and operating a convention center and possibly a performing arts center. Then, the city simply pays a fee each year to use the center, called an “availability payment.” This is simple a way to disguise long-term debt. See Wichita about to commit to more spending. Bigly. for more about this.

Cynics — that is, realists — believe that programs like Project Wichita are designed to convince citizens to support these taxes or debt issues. (By the way, the convention center business is a poor way to build a city’s economy. See Should Wichita expand its convention facilities?.)


Notes

  1. Project Wichita. Available at https://www.projectwichita.org/.
  2. With the population of the city of Wichita at about 388,000, (U.S. Census Bureau. 2012-2016 American Community Survey 5-Year Estimates), nearly one percent participated.
  3. Sedgwick County Election Office. Available at https://www.sedgwickcounty.org/elections/election-results/2014-general/.
  4. Ibid.
  5. U.S. Census Bureau. 2010-2014 American Community Survey 5-Year Estimates.
  6. Available at https://www.facebook.com/ProjectWichita/.
  7. “Volunteers wanted the regional 10-year vision and action plan Project Wichita process to include big discussions from as many people as possible. So Wichita State University’s (WSU) Public Policy and Management Center team built a custom process for gathering input across the region. The process includes focus groups with individuals and organizations, gathering feedback at diverse community events, online surveys and robust social media engagement.” Project Wichita. Process. Available at https://www.projectwichita.org/process.
  8. Misty Bruckner is the Director. A few years ago Brucker she and her colleagues co-authored a paper titled “Citizen Attachment: Building Sustainable Communities. See http://www.gfoa.org/sites/default/files/GFR_OCT_10_24.pdf. My reporting on it was titled Wichita needs more, and willing, taxpayers. An excerpt: “Increasingly, citizens are retreating from their responsibilities to community and demanding more from government than they are willing to pay for. But changes in local government behavior can be instrumental in reversing this trend, by strengthening citizens’ commitment to the well-being of their communities. Citizens who are committed to community are more willing to accept responsibility for the well-being of their fellow citizens and are also more likely to join with government and other parties to improve their communities. Citizens who are committed to community are also more willing taxpayers — that is, when government demonstrates that it can be trusted to invest public resources in ways that strengthen the community. The central thrust of this model is getting citizens and governments to work together, but realistically, many communities will require new revenue — including additional tax dollars — if they are to assemble the critical mass of resources necessary for meaningful change. Accordingly, citizens who are willing to pay increased taxes are an important component of building sustainable communities.” (emphasis added)
  9. See Weeks, Bob. Job creation at young firms declines. https://wichitaliberty.org/economics/job-creation-at-young-firms-declines/. Also: “Part of the cost of these companies’ investment, along with the accompanying risk, is spread to a class of business firms that can’t afford additional cost and risk. These are young startup firms, the entrepreneurial firms that we need to nurture in order to have real and sustainable economic growth and jobs. But we can’t identify which firms will be successful. So we need an economic development strategy that creates an environment where these young entrepreneurial firms have the greatest chance to survive. The action the Wichita city council is considering this week works against entrepreneurial firms.” Weeks, Bob. Wichita to grant property and sales tax relief. Available at https://wichitaliberty.org/wichita-government/wichita-grant-property-sales-tax-relief/.

For Hugh Nicks, a return to the backroom deal?

Remarks from a candidate for Sedgwick County Commission call for presenting a unified front to the public.

Speaking to the Wichita Pachyderm Club, Sedgwick County Commission candidate Hugh Nicks called for leadership to end what he called “divisive behavior:” “We can’t have — we can’t have the kind of divisive behavior that we have going on right now — we just — it’s just not — it’s just not acceptable.”

His opponent in the August Republican Party primary election is Richard Ranzau, who currently holds the office.

The “divisive behavior” that Nicks objects to takes several forms, but it’s clear he thinks that the Sedgwick County Commission should present a united front: The commission should have a plan that’s agreed to, and if commissioners don’t follow the plan, there should be consequences. At least that’s the moral of a story he told members of guests of the Wichita Pachyderm Club.

That attitude is problematic. Especially so because the Sedgwick County Commission is different from a legislature. At the commission, there is no opportunity for interested parties — lobbyists and regular people — to testify before a committee as legislation is being developed. At the commission, there is no committee mark-up process in which the text of a bill is crafted and finalized. There is no committee vote that decides whether to recommend the bill to the entire legislative body.

So there really isn’t much debate or disagreement in public at the Sedgwick County Commission meetings. And when there is, it may be squelched. Last year a commissioner attempted to offer two amendments to a proposal. He was trying to generate a consensus. But the majority of commissioners wouldn’t have it, and the vote happened without considering the amendments. (See For Sedgwick County Commission, too much debate.)

It’s important that there be discussion in public, even if “divisive.” The prelude to the Kansas Open Meetings Act gives a reason why: “In recognition of the fact that a representative government is dependent upon an informed electorate, it is declared to be the policy of this state that meetings for the conduct of governmental affairs and the transaction of governmental business be open to the public.” 1

When things are not done in view of the public, we call them backroom deals, with all the well-deserved negative connotations. Here’s an example, from 2012: Sedgwick County staff and several commissioners worked out a deal to sell an unused radio tower for $280,000. Commissioners Ranzau and Peterjohn thought there should be an auction. There was an auction, and the county received net proceeds of $553,872. 2

There is already too much suspicion that backroom deals are common at the county and City of Wichita. The more important and “divisive” a matter is, the more discussion it deserves in public.

But that isn’t the attitude of candidate Nicks when he said, “It’d be like a business: I mean, if in our business when we had closed door meetings when, when we argue about how we move forward, in our, in our business, we didn’t go out in front of our employees afterwards and act the same way that we did back behind closed doors. It just doesn’t work. And if we went and acted that way in front of our customers, if we did, we wouldn’t have any customers.”

Business and government are different things. A business is accountable only to its owners and shareholders, and also to the public by acting lawfully. Other than this, a business can do what it wants. It may make decisions using any means its owners tolerate. 3

Government, however, is different. It should be accountable to the people. Sometimes — frequently — that requires “divisive” discussion and debate. And the more important the matter, the more discussion and debate — transparency — is needed.

It’s a lot easier on commissioners if the attitude is “go along to get along.” That attitude has led to a faltering Wichita economy as majorities of members of the Wichita City Council and Sedgwick County Commission have avoided debate and gone along with the advice of staff and economic development regimes. I think this is the strategy of Hugh Nicks, should he be elected to the commission.

It might be tempting to dismiss these remarks as having been made by an uninformed candidate. But Nicks says he has been running since October 2017 so that he can learn about the issues. 4

Following are excerpts of remarks of Hugh Nicks and Richard Ranzau at the Wichita Pachyderm Club, June 8, 2018.

Hugh Nicks:

In the area — in the area of leadership, uh, it always starts at the top. Yeah, it doesn’t matter what organization it is, it always starts at the top. I’ll give you just a couple of examples. Uh, when I first started out as a young guy, and I was coaching, I worked for a guy Lafayette Norwood. Maybe some of you know that name. Uh, he was the first black basketball coach — the city league’s first black coach in the city of Wichita, actually. And I worked for the man for two years and learned some hard lessons from him because he wanted to fire me a couple times.

Yeah, he wanted to fire me because one day I decided I’d run some drills that he would not have agreed upon and when we got back in the locker room and got all the kids checked out, he came and said, “I believe I’m gonna fire you.” I said, “I need that job.” It pays 6,200 dollars a year. I already said that. He said, “Well I saw what you were doing down at the other end of the court. It’s not what we agreed on. And uh, so, when we have a plan, we leave this, this office, then you’re gonna do what you’re supposed to do, and you’re not gonna counter anything that I say out on that floor because we’re a team and we’re gonna move forward.”

Uh, so that — that was one of my first lessons that I learned with regard to leadership. But I, I think it starts at the top, so here’s what I see at the county: Um, you know, we can’t have — we can’t have the kind of divisive behavior that we have going on right now — we just — it’s just not — it’s just not acceptable.

Now, it’s alright to disagree in my view. I mean, I’m probably one of the — one of the guys that disagree with and vehemently if I have a strong opinion. But it’s not done in public. You just — you just — you just can’t do that. So, if you want to have an argument with me and go back behind closed doors and have it all day long, that’s alright with me. But when we come out and we’re in front of a staff, then were gonna act differently, and we’re certainly gonna act differently in front of our constituents — in front of, in front of the, the people that we represent. It’d be like a business: I mean, if in our business when we had closed door meetings when, when we argue about how we move forward, in our, in our business, we didn’t go out in front of our employees afterwards and act the same way that we did back behind closed doors. It just doesn’t work. And if we went and acted that way in front of our customers, if we did, we wouldn’t have any customers.

So I’m a proponent, and trying to answer that question from back there in, in terms of leadership style, that we need a different leadership style in the county. Now Richard’s probably gonna take exception with that because he fights for what he believes in and I understand that. But it’s a matter of the way we go about it in my view, uh, and everything starts at the top. I mean, it starts at the top and works its way down, uh, that’s — that’s how I view that.


Notes

  1. Kansas Statutes Annotated 75-4317. Available at https://www.ksrevisor.org/statutes/chapters/ch75/075_043_0017.html.
  2. As a result of system upgrades, the county no longer needs a radio tower located near 77th Street North and Interstate 135. Pixius Communications, LLC made an offer to purchase the tower and the five acre tower site for $280,000. The county proceeded making arrangements for the sale, preparing a sales agreement contract between Sedgwick County and Pixius with a sales price of $280,000, along with several other legal documents necessary to support the sale. … But commissioners Richard Ranzau and Karl Peterjohn felt that the best way to sell the tower was through an auction. … The result of the auction? A Florida company offered $610,000. After a sales commission ($55,000) and half of closing costs ($1,128), the county will net $553,872. That’s almost twice the price the county manager and two commissioners were willing to sell the tower for. See Weeks, Bob. Sedgwick County tower sale was not in citizens’ best interest. Available at https://wichitaliberty.org/sedgwick-county-government/sedgwick-county-tower-sale-was-not-in-citizens-best-interest/.
  3. It’s true that some government officials say we must run government like a business. They usually mean that until they are held to the standards of accountability the private sector faces. Then, things are different. Accountability is avoided. (The non-discussion of expenses of the Intrust Bank Arena is an example of evading business-type accountability by members of the Sedgwick County Commission. See Intrust Bank Arena loss for 2017 is $4,222,182.)
  4. “You may wonder why I’m announcing so early, since the Republican Primary for the County Commission seat isn’t until August 2018. The reason is simple. I like to do my homework. I want to learn about the way Sedgwick County governs, and the rationale behind the decisions that have been made. I want to learn about the issues that are most important to the people in the 4th District. I think serving as County Commissioner is too important to take an on-the-job-training approach, and I don’t want to be on a learning curve at the taxpayers’ expense.” Nicks4commissioner.com. News. October 19, 2017. Available at http://www.nicks4commissioner.com/news.html. .

Kansas tax collections

If Kansas government doesn’t have enough money to meet spending requests, it’s not for the lack of collecting taxes.

Here is a chart of state tax collections per resident, for Kansas and selected states.

Do you hear complaints of how Kansas is bankrupt and there is no money to spend on schools, roads, and other needs? If these complaints are valid (they aren’t), the problem is not caused by collecting insufficient tax revenue.

To learn more about the data in this visualization and to use it to make your own charts, click here.

State government tax collections per resident, Kansas and other states. Click for larger.

WichitaLiberty.TV: Sedgwick County Election Commissioner Tabitha Lehman

In this episode of WichitaLiberty.TV: Sedgwick County Election Commissioner Tabitha Lehman briefs Bob and Karl about the upcoming elections. View below, or click here to view at youTube. Episode 200, broadcast June 30, 2018.

Shownotes

  • Website for Sedgwick County Election Office. Includes how to register, sample ballots, options for voting, where to vote, when to vote, and other information.
  • Telephone number for the election office: 316-660-7100.

From Pachyderm: Kansas House of Representatives Candidates

From the Wichita Pachyderm Club: Kansas House of Representatives Candidates for districts 97 and 100. This was recorded June 29, 2018.

Candidates invited this week included:

Kansas House District 97
Nick J. Hoheisel and Michael E. Walker. Hoheisel did not attend.
District 97 is currently represented by Les Osterman, who is not running. It is far southwest Wichita plus surrounding areas. A map is here:
www.kslegislature.org/li/m/pdf/district_maps/district_map_h_097.pdf

Kansas House District 100
James Francis Breitenbach and Dan Hawkins
District 100 is currently represented by Dan Hawkins. It covers west Wichita and part of Maize. A map is here:
www.kslegislature.org/li/m/pdf/district_maps/district_map_h_100.pdf

Shownotes

Campaign websites for:

  • Nick J. Hoheisel: None found
  • Michael E. Walker: None found
  • James Francis Breitenbach: None found
  • Dan Hawkins: www.danhawkinskansas.com

Wichita jobs up

Wichita employment trends are positive for three consecutive months.

Seasonally adjusted data from the Bureau of Labor Statistics, part of the United States Department of Labor, shows a rise in the Wichita metropolitan area labor force and job count. This data is through May 2018 and shows three consecutive months of rising employment.

This is a reversal of the long term trend for Wichita, in which the labor force and employment have been falling or trending steady while the nation’s economy has been growing. An interactive visualization of employment data for all metropolitan areas is available here.

While the upward trend is welcome, it is not known whether Wichita can sustain positive growth.

In May, the forecast for Wichita from Center for Economic Development and Business Research (CEDBR) at Wichita State University was pessimistic: “The production sectors are projected to remain approximately flat in 2018. Natural resources and construction employment is forecast to increase by less than 100 jobs while manufacturing employment is projected to decline by less than 100 jobs.”

This decline in manufacturing employment is forecast even after the new Spirit Aerosystems jobs are accounted for. In its reporting on this forecast, the Wichita Eagle wrote:

Late last year, Spirit, the city’s largest employer, announced plans to hire an additional 1,000 mostly production workers over two years, with the bulk of the hiring expected in 2018. Bombardier announced plans to add 100 jobs when it moves its Global 5000 business jet interior completions work from Canada to Wichita later this year.

“I’m not so sure all of the positive news means we’re growing,” [CEDBR director Jeremy] Hill said.

He said the gains at Bombardier and Spirit are offset by contraction and consolidation by smaller manufacturers that supply parts to Spirit and other aircraft manufacturers. In some cases, work the smaller firms have done has been taken back by larger manufacturers, who are now doing it themselves. Retirements in aircraft manufacturing may also be affecting the numbers, Hill said, but he doesn’t have the data to confirm that.

“It is hard to get your hands on,” he said. “It’s definitely not showing up in the (employment) numbers, not showing up in output in durables manufacturing.”

Wichita and U.S. employment. Click for larger.

Wichita and Midwest income

A look at income in Wichita compared to other Midwest cities.

How much do Wichitans earn at their jobs, compared to other cities?

Click for larger.
This data is of interest as recently James Chung told an audience that “average income” is $10,000 higher in Midwest comparable cities than in Wichita. He didn’t define the term “income,” he didn’t define the comparable cities, and he didn’t provide any sources of data. But mention of this is a good time to look at income in Wichita and other cities.

Occupational salaries

The Bureau of Labor Statistics, part of the United States Department of Labor, collects data regarding salaries of occupations in different cities in a program called Occupational Employment Statistics. More information about this program may be found here.

One way to examine income in different cities is to compare the salaries for different jobs using the OES data collected by BLS. I selected some cities to compare with Wichita: Cedar Rapids, IA; Colorado Springs, CO; Des Moines-West Des Moines, IA; Fayetteville-Springdale-Rogers, AR-MO; Kansas City, MO-KS; Oklahoma City, OK; Omaha-Council Bluffs, NE-IA; and Tulsa, OK. (The data is collected for Metropolitan Statistical Areas (MSAs), not cities. But it seems more natural to use the term city.)

The OES dataset is large, holding data on over 800 occupations, and it’s unwieldy to make apt comparisons. Besides what I report below, I’ve also created an interactive visualization of the OES data. In the interactive visualization, you may select any cities and occupations for comparison. Click here to learn more and use it.

Occupational salary example. Click for larger.
Considering all occupations for this sampling of cities, the annual salary in Wichita is $43,880, while it is $50,600 in Des Moines. That’s $6,720 lower in Wichita, or 13 percent.

Considering a few semi-random occupations: For buyers and purchasing agents, the highest salary is in Cedar Rapids at $75,830. The Wichita salary is $9,640 less, while the Des Moines salary is $15,070 less.

For food service managers, the highest salary is in Colorado Springs at $66,300. The Wichita salary is $1,520 less, while the Des Moines salary is $21,270 less.

For police officers, the highest salary is in Colorado Springs at $68,980. The Wichita salary is $21,670 less, while the Des Moines salary is $4,310 less.

For telemarketers, the highest salary is in Fayetteville at $27,760. The Wichita salary is $1,860 less, while the Des Moines salary is $2,100 less.

For the broad category of architecture and engineering occupations, Wichita is the leader in the sample at $82,710. Des Moines is at $71.930, which is $10,780 lower.

For the broad category of production workers, Wichita again leads the sample at $44,950, while Des Moines is at $35,190, which is $9,760 lower.

Personal income

Another set of data that can help is personal income. For Des Moines, personal income per person is $50,677 (complete year 2016). For Wichita, the value is $47,395, which is $3,282 less. (For an interactive visualization of personal income, see Visualization: Personal income by metropolitan area.)

Click for larger.

Difficulties

Comparing average salaries for groups of occupations in different cities has problems. One is the number of workers in occupations. Considering management occupations, there are few chief executive officers but many other managers. The weight of the number of workers needs to be considered.

Also, the magnitude of salaries is an issue. Chief executive officer salaries vary widely, by tens of thousands of dollars. The data tells us that a CEO in Wichita earns $65,400 less than in Des Moines. That variation is greater than the average salary across all occupations, and provides little insight into the salaries of the majority of workers.

The per capita personal income figures overcome these obstacles.

$10,000

Do Wichitans earn $10,000 less than in comparable Midwest cities, as James Chung recently presented? Based on per capita personal income, the answer is no. Not even close to that, although Wichita’s per capita income is not encouraging.

Based on occupational salaries, Wichitans earn less than many comparable Midwest cities, but nothing near $10,000 less when all occupations are considered. In specific occupations, Wichita salaries are much less, but in some cases Wichita salaries are highest.

From Pachyderm: Kansas House of Representatives Candidates

From the Wichita Pachyderm Club: Kansas House of Representatives Candidates for districts 87 and 93. This was recorded June 22, 2018.

Candidates invited this week included:

Kansas House District 87
Renee Erickson and Jeff Kennedy
District 87 is currently represented by Roger Elliott, who is not running. It is far east Wichita plus portions of Minneha township. A map is here:
www.kslegislature.org/li/m/pdf/district_maps/district_map_h_087.pdf

Kansas House District 93
J.C. Moore and John Whitmer. Moore did not attend.
District 93 is currently represented by John Whitmer. It covers a small part of southwest Wichita and areas west and south. Cities: Cheney, Clearwater, Goddard (part), Haysville (part), Mulvane (part), Viola and Wichita (part). Townships: Afton, Attica (part), Erie, Illinois (part), Morton, Ninnescah, Ohio, Salem, Viola and Waco(part). A map is here:
www.kslegislature.org/li/m/pdf/district_maps/district_map_h_093.pdf

Shownotes

Campaign websites for:

Kansas personal income, first quarter 2018

Kansas personal income rose at the annual rate of 4.2 percent in the first quarter of 2018, compared to the previous quarter. Compared to the same quarter of 2017, the increase was 2.2 percent.

The quarterly change for the first quarter ranked 32 among the states.

Major contributors to the change in personal income were farm earnings down 0.61 percent, durable goods manufacturing up 0.88 percent, finance and insurance up 0.53, professional, scientific, and technical services up 0.39, and health care and social assistance up 0.48.

The full release from Bureau of Economic Analysis is at State Personal Income: First Quarter 2018.

Individual liberty, limited government, economic freedom, and free markets in Wichita and Kansas

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