Job growth in Wichita: Great news?

A tweet from a top Wichita city official promotes great news that really isn’t so great.

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The @WichitaEconDev Twitter account is managed by Scot Rigby, who is Assistant City Manager, Director of Development Services for the City of Wichita. Its tagline is “Promoting, building and preserving Wichita’s economic strength to ensure Wichita is the preferred location for new, existing and expanding organizations.”

The tweet observes “great news” in a Wichita Business Journal article reporting on an employment forecast. Wichita jobs are seen to grow in 2019, according to the forecast.

But the Business Journal article didn’t provide any useful context. Once we learn more about what the numbers in the forecast mean, we may want to temper our enthusiasm.

The forecast for Wichita metro area employment in 2019 calls for modest growth of 0.9 percent, according to the Center for Economic Development and Business Research at Wichita State University. 1 This follows growth of 0.8 percent in 2018. 2

Nationally, the economy is expected to continue strong growth. 3

The nearby chart illustrates that since the end of the last recession, job growth in Wichita has been below job growth in the nation as a whole. Generally, job growth in Wichita has been at about half the rate of the nation. In 2017, Wichita lost jobs.

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Of Wichita job growth in 2018, the CEDBR forecast notes, “This marked a return to the level of growth experienced in the Wichita area from 2012 to 2016, after experiencing a contraction in overall employment in 2017.” The average annual rate of job growth for those years in Wichita was 0.83 percent. It was 1.82 percent for the nation, which is 2.2 times the rate for Wichita.

CEDBR also notes, “Wichita’s unemployment rate declined throughout 2018 to a low of 3.5 percent in October 2018, the lowest unemployment rate for the area since 1999.” We should note that this decline is primarily due to a declining labor force in Wichita, rather than robust job growth.

Back to Rigby’s tweet: There is good news — Wichita is not forecast to lose jobs, as it has in the recent past.

But the rate of growth seen for Wichita is not robust, and that’s a serious problem, especially when our officials think it’s good.


Notes

  1. Center for Economic Development and Business Research at Wichita State University. Wichita Employment Forecast. January 8, 2019. Available at http://www.cedbr.org/forecast-blog/forecasts-wichita/1558-economic-outlook-wichita-2019-january-revision.
  2. Employment figures are not available for December 2018, so I use a crude estimate for that month.
  3. Minutes of the Federal Open Market Committee. December 18-19, 2018. Available at https://www.federalreserve.gov/monetarypolicy/fomcminutes20181219.htm.

Retiring Sedgwick County Commissioner Dave Unruh praised

The praise for retired Sedgwick County Commissioner Dave Unruh can’t be based on our region’s accomplishments under his guidance. That is, if people are informed and truthful.

In January a group of Wichita business leaders submitted an op-ed to the Wichita Eagle to mark the retirement of Sedgwick County Commissioner Dave Unruh. I quote portions here, with emphasis added:

He easily won re-election because his constituents and the rest of us knew he was dedicated to strengthening our community, region and the state.

In economic development Commissioner Unruh was chairman in 2006 when the board voted to build a world-class technical-education facility to ensure we remained competitive for new jobs. The National Center for Aviation Training is home to the growing WSU Tech. He also championed smart economic development programs that generated additional tax dollars and regional cooperation through REAP and other efforts.

In his perseverance to get things done and his belief in our future, he’s made a difference.

On Sunday, the Wichita Eagle published a drawing by cartoonist Richard Crowson which lauded Unruh’s championing of the Intrust Bank Arena, Sedgwick County Zoo, Exploration Place, and mental health services. Responding on his Facebook profile, Commissioner Michael O’Donnell wrote this for public consumption:

“A society grows great when old men plant trees whose shade they know they will never sit in” I believe this Greek proverb sums up the leadership of Dave Unruh as much as this stupendous Wichita Eagle cartoon. Our community has been blessed by the selfless and indelible leadership of Dave Unruh. I believe he was the most consequential local leader in our region for the last 2 decades and those of us fortunate enough to live in Sedgwick County are able to sit under the countless trees which Dave planted for us and our families for generations to come.

There’s another way to look at the Dave Unruh legacy in Sedgwick County, and that is through the lens of data. A shiny downtown area is nice, but not as nice as a prospering economy. Here are some figures.

In 2001, the year when Unruh assumed office in its first month, the median household income in Sedgwick County was higher than that of both Kansas and the United States. By 2017, Unruh’s last full year on the commission, Sedgwick County had fallen behind both, and by significant margins.

In 2001, the poverty rate in Sedgwick County was lower than that for the nation. By 2017, the situation was reversed: The Sedgwick County poverty rate is now higher, and significantly higher.

Looking at other measures of prosperity, we see Sedgwick County falling behind during the time Unruh was in office. Gross domestic product, personal income, per capita personal income, population, total employment, wage and salary employment, and manufacturing employment: In all these measures Sedgwick County underperformed the nation, and usually the State of Kansas. (GDP is available only for the Wichita metropolitan area, which is dominated by Sedgwick County.)

By himself, Dave Unruh isn’t responsible for this economic performance. Many others contributed at Wichita City Hall and the Kansas Capitol, as well as some of Unruh’s colleagues on the Sedgwick County Commission. Unruh and they supported the interventionist, corporatist model of economic development, and it hasn’t worked. That’s why it’s surprising to see so much praise for Unruh. It’s sad, too, because if business leaders and politicians really believe the “Unruh way” is the way that works, the outlook for our region is bleak.

Newsletter for January 20, 2019

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In Wichita, a gentle clawback

Despite the mayor’s bluster, Wichita mostly lets a company off the hook.

As reported in Wichita City Council to consider a clawback, a company failed to meet the targets of an economic development incentive, and according to that agreement, owes the city $253,000 in clawbacks.

The city council, however, decided to require the company to pay only $100,000 of that. The city reasoned that because the company is planning an expansion, that would offset the other $153,000 of the clawback.

Wichita Mayor Jeff Longwell described this is holding the company accountable. The Wichita Eagle quoted him as saying, “This is why we’ve done it, to make sure that everyone is accountable and that the taxpayers, at the end of the day, win.”

But despite the mayor’s bluster, the city failed to enforce the agreement it made to protect taxpayers. Instead, the company receives $153,000 in free taxes that it didn’t deserve, along with an interest-free loan of $100,000 amortized over four years.

By the way, the same Eagle article reported: “Fiber Dynamics, a company founded by Darrin Teeter to commercialize technology developed at Wichita State’s National Institute for Aviation Research in the early ‘90s, hasn’t had to pay city property taxes since 2008, an estimated value of more than $500,000.”

Actually, the company didn’t pay any property taxes on the exempted property. That includes county, school, and state taxes.

Kansas jobs, December 2018

Data released today from the Bureau of Labor Statistics, part of the United States Department of Labor, shows a mostly improving jobs picture for Kansas in December 2018.

Over the year (December 2017 to December 2018), the Kansas labor force is up by 0.8 percent, also rising slightly over the past three months.

The number of unemployed persons rose from November to December, rising by 686 persons, or 1.4 percent. The unemployment rate was 3.3 percent in December, down from 3.5 percent from one year ago, but up by 0.1 percentage points from November. This is because the labor force grew by a larger proportion than did workers.

Click charts and tables for larger versions.

The number of Kansas nonfarm jobs for December 2018 rose by 20,100 or 1.4 percent over last December. This is using seasonally adjusted data. The non-adjusted figure is nearly the same at 19,900.

From November 2018 to December 2018, nonfarm employment in Kansas grew by 1,100, which is 0.1 percent.

Lawrence (Kansas) Park in Winter. By brent flanders. https://flic.kr/p/7wxm4o.
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Wichita migration not improving

Data from the United States Census Bureau shows that the Wichita metropolitan area has lost many people to domestic migration, and the situation is not improving.

The Wichita metropolitan area population is growing, but at a rate slower than most metro areas. From 2010 to 2017, the Wichita metro area grew in population by 2.3 percent. For all U.S. metro areas, the population growth was 6.5 percent. Of the 382 metropolitan areas, Wichita ranked 245.

Considering just the change from 2016 to 2017, Wichita’s population grew by 0.1 percent, ranking 268 of the 382 metro areas. All U.S. metro areas grew by 0.8 percent over the same period.

For net domestic migration, Wichita experienced a loss of 2.9 percent of its population from 2010 to 2017. This ranked 295 among metro areas. For 2016 to 2017, Wichita lost 0.5 percent, ranking 293, nearly unchanged from the larger earlier period.

This slow population growth and out-migration is happening at the same time Wichita-area leaders tell us that we have great momentum going forward. But the data — domestic migration, employment, gross domestic product, and personal income — don’t support what our leaders tell us.

I get it: We want to be optimistic about our future. But a false optimism is dangerous. It makes us complacent, even proud, when actual accomplishments don’t support that. We may be led to believe that what our leaders are doing is working, when it isn’t working. That is dangerous.

Politicians and bureaucrats can’t be trusted to be frank and truthful about this. They want to be reelected and keep their jobs. Their actions let us know they value their jobs more than the prosperity of Wichitans.

Newsletter for January 13, 2019

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Derek Yonai: Teaching the Morality of Free Enterprise

Derek K. Yonai, JD, Ph.D., Director of the Koch Center for Leadership & Ethics at Emporia State University, spoke to the Wichita Pachyderm Club January 11, 2019, on the topic of Teaching the Morality of Free Enterprise. View below, or click here to view at YouTube.

Wichita employment to grow in 2019

Jobs are forecasted to grow in Wichita in 2019, but the forecasted rate is low.

The forecast for Wichita metro area employment in 2019 calls for modest growth of 0.9 percent, according to the Center for Economic Development and Business Research at Wichita State University. 1 This follows growth of 0.8 percent in 2018. 2

Nationally, the economy is expected to continue strong growth. 3

The nearby chart illustrates that since the end of the last recession, job growth in Wichita has been below job growth in the nation as a whole. Generally, job growth in Wichita has been at about half the rate of the nation. In 2017, Wichita lost jobs.

Click for larger.

Of Wichita job growth in 2018, the CEDBR forecast notes, “This marked a return to the level of growth experienced in the Wichita area from 2012 to 2016, after experiencing a contraction in overall employment in 2017.” The average annual rate of job growth for those years in Wichita was 0.83 percent. It was 1.82 percent for the nation, which is 2.2 times the rate for Wichita.

CEDBR also notes, “Wichita’s unemployment rate declined throughout 2018 to a low of 3.5 percent in October 2018, the lowest unemployment rate for the area since 1999.” We should note that this decline is primarily due to a declining labor force in Wichita, rather than robust job growth.


Notes

  1. Center for Economic Development and Business Research at Wichita State University. Wichita Employment Forecast. January 8, 2019. Available at http://www.cedbr.org/forecast-blog/forecasts-wichita/1558-economic-outlook-wichita-2019-january-revision.
  2. Employment figures are not available for December 2018, so I use a crude estimate for that month.
  3. Minutes of the Federal Open Market Committee. December 18-19, 2018. Available at https://www.federalreserve.gov/monetarypolicy/fomcminutes20181219.htm.

Trump’s Bush League Challenge

If President Trump is going to exceed his presidential standing over his predecessors, he has to overcome his Bush league challenge, writes Karl Peterjohn.

Trump’s Bush League Challenge
By Karl Peterjohn

President Trump’s government closing battle is déjà vu all over again but not in the way the liberal media is covering it. If President Trump is going to exceed his presidential standing over his predecessors, he has to overcome his Bush league challenge. This Bush 41 challenge and comparison goes back almost 30 years ago.

In 1988 George H.W. Bush repeatedly promised, “…read my lips, no new taxes.” This became his signature campaign issue as then Vice President Bush used this promise to defeat his northeastern liberal Democrat opponent, Massachusetts Governor Michael Dukakis, in a landslide. Bush won 40 states with 426 electoral college votes including wins in states like, California, New Jersey, Maryland, and Connecticut. Bush won with over 7 million more votes than Dukakis.

A key reason for this success was Bush’s read my lips promise. Bush repeated this promise from the convention until the end of that campaign. Bush’s convention acceptance speech repeatedly promised to reject the Democrat-controlled House and Senate demands for higher taxes. A couple of years later the liberal media demands for compromise, combined with fraudulent congressional promises to end fiscal gridlock, consigned Bush’s “read my lips” promise to the congressional rubbish bin. Outside the D.C. beltway, “read my lips” became a political boat anchor around the Bush 41 presidency when he flipped. The swamp was delighted when spending soared. Despite federal taxes being raised, the federal debt, both on the books and off, continued to grow.

In 1992, “read my lips, no new taxes” became a ready source of political ridicule, first from the liberal media that had previously demanded “compromis,” to end “gridlock,” and then from the GOP primary challenger Bush faced, conservative Reaganite Pat Buchanan, and even more so in the fall campaign from Democrats. The “read my lips” fiscal flip-flop became another reason for unhappy independents to leave Bush, and many flocked to Ross Perot’s third-party candidacy. Bush received over 10 million fewer votes in 1992 than he had in 1988. Contrast that vote shift with Bill Clinton receiving over 1.8 million more votes than the hapless Dukakis.

The only Republican congressional leader opposing this GOP cave on raising federal taxes during the Bush 41 presidency was a young Georgia congressman, then GOP house whip, Newt Gingrich, who denounced this tax hike “compromise” and was roundly blasted by the liberal media, GOP moderates under Bush, and in the congress, for his trouble. Gingrich’s position did resonate with his congressional back-bench colleagues, and soon Gingrich moved up becoming the GOP minority leader in the house. The speakership arrived for Gingrich a couple of years later. Bush’s switch was fiscal surrender that the Democrat congressional majorities happily approved, and the soon to be ex-president Bush signed into law.

“Build the wall,” is Donald Trump’s equivalent of “read my lips.” If he is truly going to go down as an outstanding president, President Trump cannot cave on this campaign promise. For many Trump voters, immigration and border control is their premier issue. Now that the federal courts immigration meddling, combined with the caravan invasion from the south this issue is bigger than it was in 2016. These Trump voters will walk away if he fails the Bush challenge and reneges on his campaign promise.

That is why the leftist dominated House of Representatives, under Speaker Nancy Pelosi’s control, is adamant that Trump cave. The wall issue is the political key to breaking the Trump coalition of working and middle-class voters who believe that borders matter, and that illegal immigration must cease. This is the top issue going into the 2020 presidential contest.

The argument against real border security, whether it is walls, fences, immovable barriers, or whatever other euphemism being sought by the budget negotiators is the key. Democrats voted for it just a couple of years ago, but Trump campaigned and won on it. Walls work around the world, and the best-known case is the way Israel stopped the Palestinian Islamic terrorists Intifada that was infiltrating terrorists out of the west bank, or Gaza.

The White House has fences. Walls/fences/barriers surround the Obama and Pelosi residences. I suspect they keep their doors locked too. Time will tell if President Trump is able to succeed in locking in his top campaign commitment, or he will follow in the footsteps where his 41st predecessor gave away his critical campaign key to his opponents.

Newsletter for January 6, 2019

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Unruh recollections disputed

A former Sedgwick County Commissioner disputes the narrative told by a retiring commissioner.

By Karl Peterjohn
A version of this appeared in the Wichita Eagle.

Lame duck county commissioner Dave Unruh’s recent commentary (“It’s time to set the record straight.” December 14, 2018 Wichita Eagle.) is an attempt to re-write county commission history. Senator Daniel Patrick Moynihan said, “You are entitled to your own opinion, but you are not entitled to your own facts.” Here are county commission facts correcting the commentary fiction:

Commissioner Unruh was deeply involved in both the hiring, and recent firing, of county manager Scholes by Commissioner Unruh. I know because I was involved in Scholes’ hiring, but as a citizen, publicly opposed the firing of General Scholes, as well as county counselor, Judge Eric Yost in 2018.

The group of county manager candidates were evaluated by all five county commissioners three years ago. Three county commissioners ranked General Scholes as the best candidate. Commissioner Unruh was one of these three commissioners.

I wasn’t one of these three. While I ranked General Scholes highly, I ranked one other candidate as slightly better in our final candidate evaluations. I readily admit that I was very comfortable in agreeing with my three colleagues in hiring General Scholes. This was followed by all five commissioners: Unruh, Tim Norton, Jim Howell, Richard Ranzau, and myself voting to hire General Scholes.

Commissioner Unruh’s inaccurate commentary is part of an effort to provide an excuse for the scandalous mess that has engulfed the current county commission majority resulting in a variety of FBI and state investigations after Commissioner Michael O’Donnell’s criminal indictments. However, only Commissioner Unruh was part of the current commission majority (Unruh, O’Donnell, and David Dennis) involved in both this hiring, and supporting the firing of both General Scholes, and the county counselor, Judge Eric Yost.

This is important because there also seems to be some confusion by Commissioner Dennis about the powers of former Sedgwick County Commissioners like myself. In December, Commissioner Dennis publicly claimed that I was in some way responsible for this personnel debacle and the financial mess created by the current progressive-moderate commission majority in firing first Judge Yost, and then General Scholes.

I reject this ludicrous claim. My impact on Sedgwick County finances ended the day I left the commission in January, 2017. Anyone on the county commission who claims otherwise is trying to hide their own malfeasance. I believe that Commissioner Dennis should apologize to me for his fabulist statement. Sedgwick County citizens also deserve an apology for this commission majority’s misconduct in mishandling county staff, and finances. I have asked Commissioner Dennis for an apology for his statement attacking me, and publicly do so again with this letter.

Taxpayers will miss Richard Ranzau

When a county commissioner’s questions produce a reversal of the county manager’s spending plans, you know we have good representation.

That’s what happened in 2013 when the county manager wanted to spend $47,000 to clear some trees. Commissioner Richard Ranzau thought the expense should be the responsibility of the neighborhood that would benefit from what he thought was a thinly-veiled request to shove off spending to the county.

What did the county manager say after Ranzau’s questions?

“We got out in front of ourselves without doing much critical thinking, and I take full responsibility for that,” Sedgwick County Manager Bill Buchanan said.

Good job, Richard Ranzau. You will be missed as a member of the Board of Sedgwick County Commissioners.

Wichita City Council to consider a clawback

The unrealized potential of an economic development incentive teaches lessons.

This week the Wichita City Council will consider an amendment to an economic development incentive agreement. 1

In 2008 the city awarded an incentive to a company in the form of exemption from paying property taxes, estimated by the city to be $93,175 annually at the time the incentive was awarded. 2

The incentive was awarded based on the applicant company creating a certain number of jobs and making a certain level of investment. It was rewarded on a five plus five basis, meaning that the city council reviewed the deal after five years. The plan was if the company met goals, the city would extend the incentive for another five years.

At the five-year review, however, the applicant company had not met the job goals. The city invoked an exception that allowed extension of the incentive based on a downturn in the economy as measured by the Wichita Current Conditions Index, which is produced by the Center for Economic Development and Business Research at Wichita State University. 3

Now is the end of the second five-year period. The job goals have not been met, and the city has decided the applicant company is in default of the agreement. The city is proposing a clawback, that is, recovery of the value of the incentive for the second five-year period. According to the agenda packet: “The value of the abated taxes for the second five-years is approximately $253,000. The City Council could clawback the entire amount, or some portion, per the incentive agreement.”

But: The agreement that the council will consider is that the applicant company build an expansion to its facilities at a cost of $2,500,000, using no incentives. Also, the company will repay $100,000 of the abated taxes, in four annual payments of $25,000.

A few things to learn:

First, economic development incentives don’t always work. This reflects the uncertainty of business. When the city presents projections like benefit-cost ratios, it might want to remind us that these values will be achieved only if the project targets are reached. When businesses describe their plans, these are called forward-looking statements. They are accompanied by disclaimers like “subject to risks and uncertainties that could cause actual results to differ materially.” Investors and interested parties are “cautioned not to place undue reliance on these forward-looking statements.” The same cautions hold for citizens of Wichita, as they are the investors paying the cost of incentives and expecting to receive the benefits. That is, after all, the foundation of the benefit-cost analysis that accompanies requests for incentives: That by spending now or by giving up future tax collections, the city receives even more in benefits.

Second, cities often don’t have the fortitude to strictly enforce clawbacks. Here, the company is receiving credit of $153,000 for construction an expansion to its facility, something the company was contemplating anyway. In other words, receiving credit for something it was going to do anyway. This is the usual case. 4

Third, when the city and its officials say we no longer use cash as an incentive, here’s a case where the city canceled $153,000 of debt the city is entitled to, based on its agreement with the applicant company. That’s just like cash.

For more on this topic, see Clawbacks illustrate difficulty of economic development and In Wichita, a gentle clawback


Notes

  1. Wichita City Council Agenda Packet for January 8, 2019. Item V-1.
  2. Wichita City Council Agenda Packet for February 12, 2008. Item No. 34
  3. See http://kansaseconomy.org/local-indices/wichita-current-index.
  4. Bartik, Timothy J. 2018. “‘But For’ Percentages for Economic Development Incentives: What percentage estimates are plausible based on the research literature?” Upjohn Institute Working Paper 18-289. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/wp18-289.

From Pachyderm: Martin Hawver

From the Wichita Pachyderm Club: Martin Hawver, dean of the Kansas Statehouse press corps. This was recorded January 4, 2019.

Martin Hawver is the editor and publisher of Hawver’s Capitol Report, the respected, non-partisan news service that reports on Kansas government and politics.

He also is the dean of the Kansas Statehouse press corps, having covered the beat (36 years) longer than any current Statehouse reporter — first for 17 years as a Statehouse reporter for the Topeka Capital-Journal and since 1993 for Hawver’s Capitol Report. He is the primary reporter/writer for the news service. He also writes a column syndicated to Kansas newspapers, is interviewed about Kansas government and politics on TV and radio shows, and is a speaker for seminars and conventions.

Hawver has covered 36 Kansas legislative sessions and 14 national Republican and Democratic political conventions, plus countless statewide and local political conventions.

Hawver writes a weekly column called “At The Rail” that is syndicated to Kansas newspapers. He also turns out to be an entertaining, informative, and pretty well-known public speaker, and if your Kansas-based group is interested in political humor, government humor, or even just understanding the landscape in the ever-more-confusing world of politics, you might want to consider having Martin Hawver speak. (Source: Hawver’s Capitol Report)

Wichita employment, November 2018

For the Wichita metropolitan area in November 2018, jobs are up, the labor force is up, and the unemployment rate is down, compared to the same month one year ago. Seasonal data shows a slowdown in the rate of job growth.

Data released today by the Bureau of Labor Statistics, part of the United States Department of Labor, shows a mostly improving employment situation for the Wichita Metropolitan Statistical Area.

Total nonfarm employment rose from 296,700 last November to 302,200 this November. That’s an increase of 5,500 jobs, or 1.9 percent. (This data is not seasonally adjusted, so month-to-month comparisons are not valid.) For the same period, jobs in the nation grew by 1.6 percent.

The unemployment rate was 3.2 percent, down from 3.6 percent one year ago.

Considering seasonally adjusted data from the household survey, the labor force rose by 391 persons (0.1 percent) in November 2018 from October 2018, the number of unemployed persons fell by 8 (0.1 percent), and the unemployment rate was unchanged at 3.5 percent. The number of employed persons not working on farms rose to 298,749 in November from 298,350 the prior month, an increase of 399 persons, or 0.1 percent.

Click charts for larger versions.

Sedgwick County tops $434K in extra personnel costs

Sedgwick County has spent $434,663 in costs relating to the separations of two members of top management.

Through December 21, 2018, Sedgwick County had spent $434,663 on matters relating to former County Counselor Eric Yost and former County Manager Michael Scholes. The bulk of the costs were severance payments to both. There was also $89,375 for a study of matters related to county management. Additionally, there were attorney fees for Yost, Scholes, and all county commissioners except Michael O’Donnell.

Click here to view the report prepared by county financial staff.

Newsletter for December 30, 2018

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Kansas agency expenditures

Data regarding State of Kansas agency spending presented in an interactive visualization.

The source of this data is KanView, the Kansas transparency portal, through its download center. Data from multiple years are combined into one database. Data starts with fiscal year 2011.

This visualization is experimental. I would appreciate feedback on views of this data that would be useful.

Click here to access the visualization.

Example from the visualization. Click for larger.

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

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