All posts by Bob Weeks

TABOR Fact Sheet: Kansas vs. Colorado

TABOR Fact Sheet: Kansas vs. Colorado

Estimated at 10.4 percent of income, Kansas’s state/local tax burden percentage ranks 14th highest nationally, well above the national average of 10.1 percent.

Kansas taxpayers pay $3,629 per-capita in state and local taxes.

Kansas ranks 32nd in the Tax Foundation’s State Business Tax Climate Index: Missouri (11th), Oklahoma (14th), and Colorado (8th).

Source: Tax Foundation

Taxpayer’s Bill of Rights: GOOD FOR COLORADO…GOOD FOR KANSAS*

3-year average poverty rate, from 2002 to 2004

Colorado: 9.8 percent
Kansas: 10.7 percent

Change from 2003 to 2004

Colorado: .1 percent
Kansas: .7 percent

Since TABOR was enacted in Colorado in 1992:

Colorado ranks 3rd in population growth, Kansas ranks 36th.
Colorado ranks 3rd in personal income growth, Kansas ranks 41st.

In 1992

Colorado ranked 18th in per capita income
Kansas ranked 24th in per capita income

In 2003

Colorado ranked 9th in per capita income
Kansas ranked 28th. In per capita income
Colorado ranked 6th in per capita income growth
Kansas ranked 30th in per capita income growth

Since 1992

Colorado ranks 3rd in productivity growth
Kansas ranks 32nd in productivity growth
Prior to the passage of the Taxpayer’s Bill of Rights in Colorado in 1992, economic growth in Colorado and Kansas was similar.

From 1980 to 1992:

Kansas per capita income growth ranked 47th, Colorado was 34th.
Kansas ranked 25th in population growth, Colorado ranked 13th.

Income

Kansas rank for per capita income in 1980 was #16, Colorado was #12
Kansas rank for per capita income in 2004 was #29, Colorado was #8

Median Household income

1984 rank: Kansas 14, Colorado 10
2004 rank: Kansas 36, Colorado 10

State Economic Productivity (Gross State Product)**
Economic growth from 1980 – 1992

Colorado rank #26
Kansas rank #43

Economic growth from 1993 – 2003

Colorado rank #3
Kansas rank #37

Job Growth**
June 04 to June 05 private sector job growth:

Colorado ranks #16
Kansas ranks #32

June 03 to June 05 private sector job growth:

Colorado ranks #21
Kansas ranks #34

Education* **

Kansas 2003 Spending Per Student ($) 7,454
Colorado 2003 Spending Per Student ($) 7,384
Kansas Bachelor’s degree or higher, persons age 25+, 2000 25.8 percent
Coloardo Bachelor’s degree or higher, persons age 25+, 2000 32.7 percent

*U.S. Census Bureau
*Bureau of Economic Analysis
*Standard & Poor’s

Courtesy of Americans For Prosperity, Kansas Chapter.

Employer-paid health insurance

In the past I have written on how the system in America where almost everyone gets their health insurance through their job (Let’s Pay for Our Own Health Insurance) does not serve us well. Now I have become aware of even more evidence as to why we should all choose and pay for our own health insurance.

A Harvard study (Illness And Injury As Contributors To Bankruptcy) concluded that of families that declared bankruptcy, about half cited medical bills as the reason. Of those, 76% had medical insurance at the time they became sick. Some of the problem is that when people become seriously ill, they can’t work. After they lose their job they have no income, and they can’t pay the premium to continue their existing coverage.

Many types of insurance, and some health insurance policies, I have found, offer an option called “waiver of premium.” This option, if selected and paid for, pays the policy’s premiums when the insured can’t. This would help in the case where people are too sick to work and can’t afford their premiums. They would still be covered.

If your employer, through whom you get your health insurance, doesn’t offer this waiver of premium option, you realistically have no way to obtain it. But if we all chose and paid for our own health insurance, those who wished to could have this option. This is just one more reason why the current system of employer-provided health insurance does not work well.

Randy Scholfield and less government

In an editorial in the September 18, 2005 Wichita Eagle, Randy Scholfield wrote “Less government is a laudable goal.”

The dictionary defines laudable as “Deserving commendation; praiseworthy” or “Deserving honor, respect, or admiration.” Mr. Scholfield’s past writings don’t treat the goal of less government this way. In fact, it doesn’t seem there is a single government program that Mr. Scholfield doesn’t like and praise.

On September 13, 2004, he advocated more funding for early childhood education, writing “… the state Legislature needs to do the right thing for the state’s children and future, and invest in early childhood education.”

He seems to automatically believe that schools need more money.

He believes in government subsidies. In an editorial in The Wichita Eagle published on April 19, 2005, he wrote: “Wichita should stick to its subsidies. They’re fostering competition, not stifling it, and paying off big-time for the community by lowering airfares and boosting economic development.”

He has consistently supported the government building the downtown Wichita arena.

He advocates more government spending on arts (August 9, 2005 “Culture requires community support”).

He supports more funding for Exploration Place.

Mr. Scholfield, is there any government program you have opposed, any example that would lend credibility to your claim that less government is a laudable goal?

Judicial abuse authorized in Kansas

Thank you to Karl Peterjohn of the Kansas Taxpayers Network for this fine article that explains the problems that Kansas should be aware of in the Kansas Supreme Court. Readers of this website may remember that I joined Karl in filing ethics complaints against Justices Allegrucci and Nuss (The Ethics Case Against Justice Donald L. Allegrucci, The Ethics Case Against Justice Lawton R. Nuss). I thought the case we made against Justice Allegrucci was compelling, but the Commission on Judicial Qualifications didn’t think so (The Wrong Canon; The Wrong Allegrucci). But someone did, as his wife — the link to Governor Kathleen Sebelius that was the source of the ethics problem — resigned her position. Readers might be asking where is the coverage in Kansas news media of these cases.

Judicial Abuse Authorized in Kansas
By Karl Peterjohn, Executive Director, Kansas Taxpayers Network

A closed door meeting in early September in Topeka provided the excuse to expand judicial abuse at the highest level of Kansas government. The Commission on Judicial Qualifications met to consider the complaint that Kansas Supreme Court Justice Lawton Nuss should not participate in the school finance lawsuit. This commission decided that Justice Nuss did not need to recuse himself from ruling on this billion dollar lawsuit.

Prior to joining the Kansas Supreme Court in 2002, Nuss had been an attorney representing the lead school district plaintiff that is participating in this lawsuit. The Salina public schools had joined with Dodge City public schools in filing and financing this lawsuit back in the 1990’s and Nuss was one of Salina’s lawyers at that time. Nuss should have recused himself from this case since he had represented one of the plaintiffs when this case arrived in front of the court.

Three years ago when Nuss joined the Kansas Supreme Court he was expected to obey the ethics rules that supposedly exist for the members of Kansas courts. The judicial canon includes provisions that judges are supposed to avoid all appearances of impropriety. These rules in part say, “A judge shall not allow family, social, political, or other relationships to influence the judge’s judicial conduct or judgment. A judge shall not lend the prestige of judicial office to advance the private interests of the judge or others; nor shall the judge convey or permit others to convey the impression that they are in a special position to influence the judge.”

Would you like to go in front a judge who used to represent the person who is suing you? No one would want to do so. This is basic legal ethics. However, you are now a target of an aggressive tax funded plaintiff that is suing you indirectly as a taxpayer. Millions of tax dollars have been spent to finance this school finance litigation in Kansas. The school districts are now suing to transfer $1 billion from the private sector to the public school districts every year. This year they received $290 million more than last year. Next year is likely to be even more costly to Kansas taxpayers.

This appointed commission has now decided that it is perfectly appropriate for Justice Nuss to rule that hundreds of millions of additional tax dollars must be spent for one of the clients he use to represent according to this judicial commission. Well, who appointed this commission of judges, ex-judges, lawyers, and mainly members of the news media? The Kansas Supreme Court appointed them to their four year terms.

So who will oversee the appointed members of this court? The answer is that the Kansas Supreme Court is untouched by ethics rules for the rest of the legal profession. Nuss’ case follows the recent dismissal of similar ethics complaints by this commission. The second complaint concerned Justice Donald Allegrucci, whose wife was until recently the chief of staff as well as the 2002 campaign manager for Governor Sebelius. Governor Sebelius has been supporting the school district’s position that state spending must be dramatically raised.

An oxymoron is a word that describes a phrase that combines contradictory elements like, “thunderous silence.” The Kansas Supreme Court now orders legislators on what is appropriate as well as what amount should be in the appropriation, issues edicts that could shut down the schools, and capriciously re-writes Kansas law. The term, “judicial ethics,” for the highest court in this state is now an oxymoron. Kansans need to know that the appointed judicial elite is now untouchable by their own ethics rules. The fiscal abuse of Kansans by this state’s highest and, arguably, most activist state court in the entire country continues. Every Kansas taxpayer will have to pay this court’s huge bill.

Book review: What’s The Matter With Kansas?

What’s The Matter With Kansas?
Thomas Frank
Metropolitan Books, 2004

Much has been written about this book and its premise of the great backlash, the revolt against the increasingly liberal society of the 1960’s and 1970’s. Mr. Frank believes (I think) that working-class social conservatives in Kansas are not using their votes wisely, that they vote for Republicans for social reasons, and in turn Big Business Republicans turn around and mistreat them. Their social interest, in other words, works in opposition to their economic interest.

I have some quarrel with this, although I think it is true in some ways. Is it true that the interests of big business are opposite of that of the working man? That’s not always the case.

Reviewers of this book have remarked how witty and funny it is. I must have missed those pages. Mr. Frank is a liberal. He advocates liberal government positions, and there’s not much funny about that. Certainly, Mr. Frank is nowhere near as funny as P.J. O’Rourke. But then, I agree with most of what P.J. writes.

The best part of this book is the extensive research of Kansas and Kansas politicians that Mr. Frank did, and how much of that he includes. The footnotes are valuable. I read this book on loan from the library, but I may look for a used copy to keep as a reference work. It is for that reason that I can recommend reading this book.

Links to good reviews of this book: Resenting the Heartland’s Success by Kimberly Shankman

Prices ration scarce goods

As the price for gasoline rises, politicians hear increased calls for regulation of gas prices. We hear news stories of hotels increasing prices for victims of hurricane Katrina, and prices for needed goods in the destructed area could rise, too.

In Wichita, when gasoline prices rose rapidly, someone told me that this was price gouging, because the price the gas stations pay for gasoline hasn’t increased yet. I’m sure that’s true, their cost hasn’t increased yet, as they’re still selling gasoline they already bought some time ago. This analysis, however, doesn’t consider the most important role of prices: to strike a balance between supply and demand. That’s what prices do.

Consider what the economist Walter E. Williams wrote about plywood prices:

Windfall profits are indeed profits far beyond what’s necessary for an entrepreneur to stay in business, but windfall profits also play a vital role. Windfall profits signal that a human want is not being met. Resources emerge to meet that want. For example, when Hurricane Andrew devastated parts of South Florida, plywood prices skyrocketed. Florida’s attorney general threatened actions against companies for price-gouging.

Those windfall profits conveyed messages to the rest of the economy. Let’s say that pre-hurricane plywood prices were $10 a sheet and afterward they were $20. That profit potential created a powerful signal. Instead of plywood manufacturers selling their plywood inventory to, say, Pennsylvania wholesalers for $8 a sheet, they were more than happy to ship them to Floridian wholesalers for higher prices. Wholesalers in other states were happy to sell their plywood to Floridians for higher prices. Since plywood supplies were moving to Florida, plywood prices elsewhere rose.

From a social point of view, this is wonderful. Say I planned to spend a Saturday afternoon building a house for my dog. I go to my neighborhood lumberyard in Pennsylvania expecting to pay $10 for a plywood sheet, and get there and find out it’s $18. I say, “The heck with the dog; let him sleep in the rain!” I have voluntarily made a plywood sheet available for a more valuable use — rebuilding the house of a human.

None of these and other voluntary actions making plywood available to Floridians would happen if price controls were slapped on plywood making the pre- and post-hurricane prices the same. Freely fluctuating prices, including the potential for windfall profits, encourage people to do voluntarily what’s in the social interest.

In free and open markets, profits are to be praised — not scorned, as economic and political charlatans would have us do.

We might consider the prices for hotel rooms. As families evacuated before (or after) Katrina struck, they needed hotel rooms. If the usual price for a hotel room was, say, $50, and hotel operators can’t increase their prices, there will be a shortage of hotel rooms. Why is this? Think of the Jones family with children. At a room price of $50, the Jones family might take two rooms, one for the parents, and another for the children. If the hotel operator is allowed to increase prices, the room price might rise to, say, $100. At that price, the Jones family might decide they could all stay in one room. That makes the second room, the room the Jones family children would have occupied at a price of $50, available for the Smith family. Otherwise, the Jones family children would be in the second room, and the Smith family is on the street, or has to drive farther to find a room.

Yes, the Smith family had to pay $100 for a room when they would prefer to pay only $50, but if the price is $50, there is no hotel room available for them.

Some people might object that the hotel operator is unjustly enriched by being able to sell hotel rooms for $100, when normally they fetch only $50. But what is the alternative? Is there anyone who has the power to say to the Jones family that they should all stay in one room, leaving a room free for the Smith family? Or, in the case of gasoline prices held artificially low through price controls, someone has to judge whose use of gasoline is more valued.

But if the prices of hotel rooms, plywood, and gasoline are allowed to fluctuate, each person is free to make their own judgment as to how much they want to consume. If the Jones family really wants two hotel rooms, they can have them. If Dr. Williams really wants to build the doghouse, he can. But people acting as they do — demanding less of something as its price rises — there will be more hotel rooms or plywood available for others. If the price of plywood in Florida is controlled so that it can’t increase, the cost of plywood in Pennsylvania will likely be the same $10 as it always is. So plywood is used in Pennsylvania to make doghouses as people in Florida need plywood to patch the roofs of the homes so that they can stay dry.

That’s what is important about prices. They represent people voluntarily — and that’s a very important word that Dr. Williams used — adjusting their behavior. The alternative is shortages, gas lines, rationing, government control, and commissions deciding who gets what at what price — all the signs of a planned economy. That does no one any good.

In the case of my friend in Wichita, who was going to make a weekend trip that would require about 100 gallons of gasoline in a vehicle that gets 12 miles per gallon, I suggested renting a car that gets better fuel economy. That’s what he did. In the end, he’s saving about $100, even considering the cost of car rental, and he’s making about 50 gallons of gasoline available to someone else. That’s the power of prices in action.

Kansas income has large drop in 2004, says census report

Kansas Income Has Large Drop in 2004 Says Census Report
By Karl Peterjohn, Kansas Taxpayers Network

Kansas Taxpayers Network (KTN) expressed dismay at the latest Census Department income figures that show Kansas income dropping at the second worst rate among the 50 states in 2004. The U.S. Census Department released this data at the end of August in their report on Income, Poverty and Health Insurance Coverage in the United States: 2004.

This report is available online at: http://www.census.gov/prod/2005pubs/p60-229.pdf (see page 30 for the 50 state data). In this report Kansas is listed as having the second largest drop in income among the 50 states. Here’s how Kansas ranked with our five neighboring states and the U.S. average:

State                 % Change      Change in Dollars
KANSAS                - 4.2%            -$1,890
Colorado              + 0.3%            +$  164
Missouri              - 3.2%            -$1,419
Nebraska              + 0.1%            +$   53
Oklahoma              + 1.8%            +$  693
U.S. avg.             - 0.2%            -$   79

This large decline in income for Kansas also indicates that this state is lagging behind our neighbors. “The Census Department’s report of declining Kansas income indicates that this state continues to be in economic trouble. This should be worrisome to state officials who seem intent on figuring out more ways of spending taxpayers’ money instead of focusing upon growing this state’s economy,” said Karl Peterjohn, executive director of the Kansas Taxpayers Network.

“The massive fiscal uncertainty created by the activist Kansas Supreme Court and the profligate state spending hikes supported by Governor Sebelius and the legislative big spenders during the special session have put this state in a fiscal bind. The increases in property and income taxes, various other state ‘revenue enhancements,’ and permanent extensions of supposedly ‘temporary’ state sales tax hikes are putting an anchor on this state’s economic prospects. This federal census data dramatically shows the recent decline in Kansans’ incomes. Soaring state spending will only worsen this problem.”

#####

Revenue Growth Lags As Kansas Falters

Revenue Growth Lags As Kansas Falters
By Karl Peterjohn, Kansas Taxpayers Network

In early August Governor Sebelius issued a news release praising the economic growth that had allowed state tax revenues to grow significantly in the fiscal year that ended June 30. In the state’s general fund revenues were 7.1 percent or $322 million above last year.

This seemingly good news hides a big problem. Kansas revenues are growing well below the national averages. We are also lagging behind our neighbors and this includes job growth too. Nationally, the Wall Street Journal reported in July that federal revenues were 14.6% above the same period last year or over $204 billion. Oklahoma’s state government is taking $150 million of their increased tax revenue to use to cut personal income taxes but they will also raise spending by $750 million more according to Budget and Tax News in August.

Why is Kansas economic growth lagging? Some tax collections are actually down. In 2002 the state’s cigarette tax was raised from 24 to 79 cents a pack. Naturally, tax collections soared in 2003 with this 229 percent tax hike. However, the state’s revenue per penny of cigarette taxes started to fall and has continued to decline. Total revenues are falling in the last two years and are now over $10 million below the 2003 high point.

Before the cigarette tax was raised, this levy generated about $2 million for every penny of tax. Now it is barely $1.5 million per penny. While total revenues are about $119 million, or 2 percent of the state’s revenues, the proposal by Governor Sebelius for another large, 50 cent a pack tax hike will just shift a lot of cigarette purchases out-of-state, to the internet, or other tax avoiding alternatives. Sadly, this is also leading to more illegal cigarette sales and smuggling.

Severance tax collections soared over 22 percent or over $18 million in the most recent fiscal year as oil and gas prices enjoyed large hikes. This tax collected over $100 million for the first time but is also just 2 percent of state tax collections.

Personal and corporate income tax receipts enjoyed a large percentage growth of 11.9 percent or $244 million above last year. This increase alone was 75 percent of the total increase in state general fund revenues. In contrast, Kansans are shopping outside of Kansas since sales tax collections grew only 2.2 percent or $35 million. Many Kansans, particularly those in eastern Kansas, have learned that the lower state tax rates on groceries, cigarettes, gasoline, beer and alcohol lead to lower prices in western Missouri and in other border states.

This might also explain the generally flat overall, but in some individual cases, declining tax collections the state has on various forms of alcohol and related products. The state’s cereal malt beverage tax collections actually dropped over 4 percent or $88 thousand last year.

The state’s 20 mill property tax for public schools is excluded from the official state revenue estimates. However, the increase in appraisals resulted in estimates of a $40 million hike in the state’s tax collections for this levy that is excluded from the official Kansas General Fund figures.

So the shifting changes in Kansas tax collections shows the mixed nature of the economic recovery in this state. This is an additional reason why Kansas cannot afford another new state spending spree next year.

#####

Karl Peterjohn is the executive director of the Kansas Taxpayers Network and is a former news reporter and California Department of Finance budget analyst.

From Karl Peterjohn to Ann Mah

Here’s an open letter from Karl Peterjohn of the Kansas Taxpayers Network to Kansas Representative Ann Mah, a Democrat from district 53, which is southeast Topeka and areas southeast of there. Rep. Mah scored 12.5 on KTN’s 2005 Legislative Vote Ranking, which places here very near the left end of the spectrum. In other words, she didn’t see many taxes she didn’t vote for. Organizations like KTN bring facts like these to the public’s attention. Sometimes politicians do not like being exposed in this way, and as we have learned, we can’t rely solely on Kansas newspapers and other Kansas news media to report all that we need to know.

Rep. Mah:

I have heard that you made some derogatory comments about Kansas Taxpayers Network and myself on Jim Cates radio program yesterday. I look forward to a public debate on Kansas fiscal issues with you to correct the left-wing misinformation you are spreading.

I would be interested in your source for your assertion that HB 2247 contained a $400 million increase in taxes. I heard many descriptions of this bill during the regular session but I did not see any Legislative Research or other analysis that contained this information at that time. Ooops, in re-reading your post you prefaced this with the word “..potential..,” well the KTN vote rating likes to deal with specifics, like the votes to raise income and sales taxes in 2004 passed the Kansas house with EVERY house Democrat voting for it. Sadly, many fiscally liberal Republicans joined in passing that bill out of the house, like Bill Kassebaum, Cindy Neighbor, Stan Dreher, Mary Compton, and others you didn’t get a chance to meet because they did not return to the 2005 legislature.

Like I said in my previous post the SB 3 legislation was much more important in school finance than HB 2247.

You should be aware that most of the recorded votes cast on bills during final action are often unanimous or close to unanimous with a member or two missing due to health or other excused absences. I find it odd that you would want KTN to include bills on modifying insurance statutes, grain elevator regulations, the color of lights in emergency vehicles or recorded votes on similar legislation for KTN’s vote rating. Have you extended your critique of KTN’s vote rating to the other organizations, like the teachers unions (KNEA) or Kansas chamber (KCCI) which also use a much smaller number of votes than the 457 cast during the legislative session?

I am sorry that you have overlooked the massive tax hikes that were enacted between 1999 and 2003 during the second Graves administration. The Graves administration raised sales, cigarette, business franchise, gasoline, “enhanced” revenues, and raised a variety of charges and other fees. These votes were included in our vote ratings for each of these years and are available for viewing at www.kansastaxpayers.com. More recent tax hike and fiscal votes from 2003-05 Kansas legislatures are there now too.

Since Governor Graves left office this trend has largely continued albeit at a reduced level since the unsuccessful effort to raise broadbased state taxes under Governor Sebelius’ leadership failed in 2004. Democrats lost seats in the Kansas house due to their support for higher spending and taxes last year.

Growing Kansas spending and taxes have occurred due to pressure from liberals and fiscal leftists supporting an expansion of Kansas spending in both major political parties in this state since the 1970’s. I heard that you are claiming that our vote rating is “partisan”. I would point out to you that the two lowest scores in the 2005 house rating is for two Republican house members. In 2004’s scorecard there were four senators who receive scores of zero. Three were Republicans.

I am sorry that you seem to be unable to comprehend the meaning of oligarchy and the damange created by the appointed Kansas Supreme Court as you as an elected official helped surrender your constitutional powers to the judges. The courts treated you and your 164 legislative colleagues in such contempt that they refused to even let any legislator appear before them before they issued their edicts. You helped to meekly surrender your powers as an elected official and violated your oath of office to defend the Kansas Constitution.

Our form of government is in jeopardy in this state due to this judicial usurpation of power that you and over 40 other house colleagues repeatedly surrendered during the special session. Sadly, only two Democrats in the legislature resisted this surrender. If this trend is not reversed the Kansas legislature will become an elected advisory body to the real power in this state: the appointed judiciary and the governor. I have heard a number of legislators on the floor of the house point this out to the entire house. I was disappointed that you and so many of your colleagues ignored this problem.

Kansas is in trouble. This state is stagnating economically due to hostile fiscal policies that have been created before you took office but also by these liberal/left wing policies that you are helping promote while you have been in elected office. I’ll provide you with some excellent commentary from a Kansas businessman that was posted earlier this week on www.kssmallbiz.com that discusses this economic trend. I could share with you stories about the odious “rich” that leftist politicians have helped drive out of this state but this action does have consequences. I hope you’ll read this commentary and see a private sector perspective and how this trend is occurring:

FUNDING OF BUSINESSES: A DIFFERENT PERSPECTIVE PART II
By Kenneth Daniel
August 31, 2005

In my article of last week, I made the point that the risk capital of businesses is almost exclusively made up of personal savings invested in the business by the owners plus profits left in the business. When we take money away from businesses in the form of taxes, we are curtailing their financial viability, their growth, and their ability to compete with businesses in lower-tax states.

Employees and others, including governments, that depend on our businesses to provide salaries and tax revenues are better off if businesses are financially sound than if they are not. And, we really, really want our businesses and their owners to park their wealth here instead of elsewhere to support jobs and generate taxes for Kansas.

What other things are preventing our business owners from keeping wealth here?

Last week the American Shareholders Association released a report on
the impact of the American Jobs Creation Act, signed into law in 2004 by President Bush. A provision of the act allows companies to bring their foreign profits back to the U.S. at an income tax rate of 5.25% instead of the normal 35% domestic rate.

Previously, companies had to leave the profits overseas to avoid U.S. taxes, and wealth that could have supported jobs in the U.S. was left overseas. Among the study’s findings:

According to the International Strategy and Investment Group (ISI), 91 companies listed on the S&P 500 have repatriated more than $191 billion back to America that otherwise would have been invested in other countries.

JP Morgan estimates the provision will increase GDP by an additional 1 percent over the next two years.

JP Morgan further estimates $120 billion will be used for new investment, which will create 500,000 new jobs over the next two years.

The lesson here is the same – business wealth is good. We want and need our businesses to keep their money here. An interesting question is whether Kansas businesses that repatriate money will be hit with the full state income tax for doing so. If they are, multi-state businesses will almost certainly repatriate their profits to some other state that does not have a state corporate income tax.

Another way we punish our Kansas businesses for keeping their money here is through our Franchise Tax. Kansas is one of fewer than twenty states that have a stand-alone tax on the net worth of a business. The old adage is “if you want less of something, tax it”. Kansas apparently wants less business wealth in the state.

Kansas has yet another tax to punish business owners who keep their wealth here, and that is the estate tax. In 2010, when the federal estate tax goes away, Kansas will be one of fewer than twenty states with an estate tax. This is a virtual guarantee that our wealthiest business owners will retire elsewhere or sell their Kansas business interests so they can move their wealth. Even if they don’t, the business is at risk of losing part of its capital or of being sold to pay estate taxes.

Kansas is likely to continue to be one of the slowest-growing states as long as we continue to eat our business nest eggs with punitive taxes. Even when the business owners aren’t whining, those eggs are being eaten, and we will continue to ship most of our best and brightest kids to other states.

The federal government has figured this out. By lowering taxes on businesses and getting businesses to bring their wealth back to the U.S., the national economy is cooking along extremely well. Will we ever figure this out in Kansas?

— END —

Kenneth Daniel (kdaniel@kssmallbiz.com) is a Topeka small business owner and free-lance writer. He is publisher of www.kssmallbiz.com, a website dedicated to Kansas small business.

Sadly, the benefits from this 2004 federal legislation are likely to diminish in the near future. This is going to result in a reduction in the growth rate of state tax collections. This will make the legislature and governor’s job of finding more money to feed the avaricious and litigious spending lobbies even more difficult next year.

Unless the Kansas Supreme Court backs down from their spending edict (I don’t know why they would) the fiscal hole facing the governor and the legislature in 2006 is massive. If we follow the traditional Kansas path of raising taxes we will make our uncompetitive fiscal climate even worse. We will lag behind the rest of the country. This trend will worsen. Our young people will leave school with degrees but with few if any local job prospects. These young people will become “Kansas tourists,” who come back to their state at Thanksgiving, or Christmas, or perhaps a week during the summer to visit their family after finding employment in more competitive parts of the country.

This is a terrible fiscal trend that I have been trying to stop for over a dozen years. Sadly, elected officials like yourself have succeeded in your liberal/leftist spending and tax policies across Kansas over a number of decades. Government’s share grows while the private sector recedes. I will look forward to debating you on fiscal issues on Jim Cates show in the near future.

The middle class you claim to represent is moving away from the Kansas state oligarchy by voting with their feet. Since the 2000 census Kansas has dropped behind Arkansas in population. Arkansas! In 2010 or 2020 this state will lose another congressional seat under current fiscal trends and we’ll have only three. Kansans may be limited at the ballot box (no property tax referendums, and very few other tax/bond votes–unlike CO, MO, & OK) but hard working Kansans can still vote with their feet.

Karl Peterjohn

Augenblick perhaps cheap by comparison

Augenblick Perhaps Cheap by Comparison
By Bob L. Corkins, Freestate Center for Liberty Studies
August 29, 2005

Billions of dollars are riding on the outcome of the state’s two education finance studies, one by the Legislative Division of Post Audit, the other by the national firm of business analysts at Standard & Poors. The Kansas Supreme Court is putting great reliance on the results of these studies in deciding how to resolve the behemoth Montoy v. State K-12 finance litigation.

By threatening to close public schools, the Court forced the Legislature this summer to increase K-12 spending by a record-setting $293 million enhancement. However, the Court said this did not end the lawsuit and pointed to the 2002 study by education consultants Augenblick & Myers when declaring that at least another $580 million more may be necessary. The high price tag of A&M’s recommendation may be reaffirmed, the Court reasoned, by the new Post Audit and S&P studies to be completed by January. The Post Audit study is so important to the Court’s ultimate ruling, in fact, that the Court ordered changes to the study to accommodate all of the Court’s legal concerns.

S&P to Finish First; Not a Cost Study

In February of this year the private Kansas City based Kauffman Foundation gave the state of Kansas a $400,000 grant to pay for an education finance study to be performed by S&P. Governor Sebelius’ office then contracted with S&P to define the scope, method, schedule, and other details of the work S&P would perform.

Overseeing much of the state’s interests in this project is Duane Goossen, the Governor’s Budget Director. Goossen emphasized, and the terms of the contract confirm, that S&P will not perform an education “cost study” for Kansas as many have expected and as S&P has done in other states. Rather, S&P will complete a “best practices” analysis that is in some ways is more thorough, but less extensive overall.

Although there are many details, we can summarize the contract study process. S&P uses state-provided data to analyze all USDs and identify those that are “resource effective”. The state, in consultation with S&P, will select four USDs from the resource effective list. S&P will then conduct site visits to those four USDs to conduct various detailed interviews. All that input is used by S&P to write a “resource management study” that will include examples of effective practices that other USDs may emulate. The projected publication for S&P’s study is early November.

Post Audit to Employ Syracuse Experts

At the Supreme Court’s insistence, the Post Audit study will conduct an “outcomes-based” analysis of K-12 costs in addition to an “input-based” approach. The primary question the input approach will answer is: “What should it cost for regular K-12 education to deliver the curriculum, related services, and programs mandated by state statute?”

Future reports by the Freestate Center will examine particular parts of the S&P study as well as Post Audit’s. For now there is one feature of the Post Audit’s outcomes-based project that merits special attention. The primary question Post Audit will address in this chore is: “What should it cost for regular K-12 education to meet the performance outcome standards set by the Board of Education?” To help answer that question, Post Audit has contracted with two professors – William Duncombe and John Yinger – from Syracuse University in New York for their expertise in education finance.

Authority for outside consultants was granted by HB 2247 during the regular 2005 legislative session and by SB 3 during the special session. The relevant language from both bills provides that “In conducting such cost analysis study, the legislative post auditor may enter into contracts with consultants as the post auditor deems necessary.” Although this gives discretion to Post Audit in deciding upon consultants, another part of the statute specifies that “the cost study analysis shall be conducted as directed by the legislative post audit committee.”

Criticisms of Duncombe and Yinger

Perhaps the best insight into what Kansas can expect from these researchers is found in their own published material. The state of New York was sued for allegedly failing to provide a constitutionally “adequate education”. In that litigation that’s now before a group of special masters, Duncombe and Yinger jointly filed a brief on September 17, 2004. Some highlights of their court brief are:

(1) For the New York City school district alone, which currently spends about $10.8 billion, D&Y recommended an increase of $7.2 billion as “the best available current estimate of the annual cost of achieving the 160 adequacy standard”;

(2) A large factor affecting D&Y’s recommendation was teacher wages. D&Y criticized as being “implausible” another study’s conclusion that teacher wages in New York City averaged only 10% higher than the state average. D&Y’s own method, which additionally adjusts for teacher working conditions such as their share of students eligible for a free lunch or with limited English proficiency, estimates that “wage costs are 54% above the state average in New York City and 13% above the state average in downstate suburbs.”

(3) D&Y are critical of cost studies done by Standard & Poors. D&Y wrote “The S&P report also includes extra weights for the share of students in poverty or with limited English proficiency, but these weights are neither estimated nor drawn from the scholarly literature. All of the calculations in the [S&P] report, including the estimated cost of reform, are based on the same unrealistically low weights for disadvantaged students.”

We also look to how other scholars view Duncombe & Yinger. A February 2004 review of various education cost studies was published by economics professor Thomas Downes of Tufts University. Downes observed that Duncombe uses the “cost function” approach and that there are “three main problems” with that method: (1) It is the least intuitive to non-economists and the least understood, requiring complex statistical techniques which are difficult to explain; (2) The data quality must be extremely good, since the entire model is based on real historical data; and, (3) It is sometimes called a “black box” method, since researchers do not say how funds should be spent, but simply how much should be spent. Downes also remarked in general that “.seemingly small methodological differences can translate into dramatic differences in spending distributions.”

A national review panel in 1999 compared D&Y to Augenblick and suggested that D&Y would exacerbate inefficient school spending. The National Reseach Council’s Committee on Education Finance wrote: “William Duncombe and John Yinger.are highly skeptical about whether schools with concentrations of low-income children, especially in urban areas, can realistically succeed with an amount of money that Augenblick’s model would provide. Given the complexity of the Duncombe and Yinger methodology, many will wonder to what extent they really have taken into account only costs that are beyond the school or district’s control and not allowed past spending inefficiencies to determine how much future revenue a school or district ought fairly have.”

Freestate Commentary

A few observations flow from our review of this information:

(1) Had D&Y performed the cost analysis for Kansas in 2002 instead of Augenblick & Myers, it is quite possible that D&Y would have recommended more than that study’s $860 million increase for K-12.

(2) Why did the state not want S&P to do a cost analysis? S&P’s “best practices” study will be different and more thorough than what S&P has done for any other state. Consider its timing. The S&P details were agreed upon early in 2005 before legislation required Post Audit to undertake any similar project. Was the Administration aware last spring, when it contracted with S&P, that Duncombe and Yinger disapprove of S&P’s methodology?

(3) Even if for no other reason than timing, it’s very unlikely that Post Audit will cancel its contract with D&Y. Still, the Post Audit Committee has authority to direct the conduct of the study and perhaps insist on additional consultants. It might be cost effective for Post Audit to hire other national experts to evaluate D&Y’s conclusions without duplicating their work.

Future Freestate Center bulletins will report on additional news about the pending state K-12 studies. All relevant findings will eventually be published in a Freestate Center study to be completed later this year.

# # #

Bob L. Corkins is executive director of the Freestate Center for Liberty Studies. The Freestate Center is a nonpartisan, not-for-profit, Topeka based research institute for advancing the Constitutional principles of limited government, individual liberty, free enterprise and traditional family values. Freestate is organized under IRS § 501(c)(3).

FREESTATE CENTER OFFICERS
President Gayle Mollenkamp, Quinter / Secretary-Treasurer Terry Presta, Leawood

The Freestate Center for Liberty Studies

Freestate Center for Liberty Studies
827 SW Topeka Blvd., Topeka, KS 66612
785.233.5157 office
785.220.2800 mobile
ksfreestate@sbcglobal.net

Consider carefully all costs of gambling in Wichita

In a free society dedicated to personal liberty, people should be able to gamble. But that’s not what we have, as in a free society dedicated to personal liberty, people wouldn’t be taxed to pay for the problems that others cause in the pursuit of their happiness.

How does this relate to the issue of casino gambling in or near Wichita?

There is a document titled “Economic & Social Impact Anlaysis [sic] For A Proposed Casino & Hotel” created by GVA Marquette Advisors for the Wichita Downtown Development Corporation and the Greater Wichita Convention and Visitors Bureau, dated April 2004. This document presents a lot of information about the benefits and the costs of gambling in the Wichita area. One of their presentations of data concludes that the average cost per pathological gambler is $13,586 per year. Quoting from the study in the section titled Social Impact VII-9: “Most studies conclude that nationally between 1.0 and 1.5 percent of adults are susceptible to becoming a pathological gambler. Applying this statistic to the 521,000 adults projected to live within 50 miles of Wichita in 2008, the community could eventually have between 5,200 and 7,800 pathological gamblers. At a cost of $13,586 in social costs for each, the annual burden on the community could range between $71 and $106 million.”

If all we had to do was to pay that amount each year in money that would be one thing. But the components of the cost of pathological gamblers include, according to the same study, increased crime and family costs. In other words, people are hurt, physically and emotionally, by pathological gamblers. Often the people who are harmed are those who have no option to leave the gambler, such as children.

Quoting again from the study: “While this community social burden could be significant, its quantified estimate is still surpassed by the positive economic impacts measured in this study.” The largest components of the positive economic impacts are employee wages, additional earnings in the county, and state casino revenue share, along with some minor elements. Together these total $142 million, which is, as the authors point out, larger than the projected costs shown above. But this analysis is flawed. Employee wages don’t go towards paying the costs of pathological gamblers, as employees probably want to spend their wages on other things. And the state casino revenue share is supposed to go towards schools.

The absurdity mounts as we realize that gambling is promoted, by none other than Governor Kathleen Sebelius, as a way to raise money for schools. Often the figure quoted for the amount of money gambling would generate for the state is $150 million per year. But here is a study concluding that the monetary costs to just the Wichita area would be a large fraction of that, and when you add the human misery, it just doesn’t make sense to fund schools with revenue from gambling.

What to do about gasoline prices

Almost anything the government does in response to the recent high gasoline prices is bound to fail. The easy political solution is to place price controls on gasoline, as Hawaii has done. Basic economics tells us that when a price is held artificially low through price controls, demand will be higher than what it would otherwise be, and supply will be less than it would otherwise be. What does that spell? A shortage, as was the case the last time there were price controls on gasoline. The misery of dealing with lines at gas stations was much worse than slightly higher gasoline prices.

As Thomas Sowell wrote in a recent column: “The last time we had price controls on gasoline, we had long lines of cars at filling stations, these lines sometimes stretching around the block, with motorists sitting in those lines for hours.

That nonsense ended almost overnight when President Ronald Reagan, ignoring the cries of liberal politicians and the liberal media, got rid of price controls with a stroke of the pen.

What happened is what usually happens when government restrictions are ended: There was more production of oil. In fact the 1980s became known as the era of an ‘oil glut’ and gasoline prices declined.”

In an article titled “What’s the Answer for High Gasoline Prices? Absolutely Nothing” by Jerry Taylor & Peter VanDoren, published last October in National Review, we read:

“… consumers have a right to make their own decisions about trade-offs between higher gasoline prices and conservation without the government whacking them over the head with higher taxes, constrained choices in the vehicle market, or extracting their earnings for the benefit of corporations engaged in making cars or fuels that consumers presently don’t want to buy. Simply put, individuals know better how to order their personal affairs than do politicians or bureaucrats no matter how well meaning they might be.

At the end of the day, the best remedy for high gasoline prices is…high gasoline prices, which provide all the incentives necessary for motorists to conserve, for oil companies to put more product into the marketplace, and for investors to look into alternatives fuel technologies. Government has never demonstrated an ability to do better.”

There are also unintended consequences of any action. When government requires higher fuel economy quickly (as many are calling for), automakers will find that the easiest way to comply is to decrease the weight of cars, since weight is the most important determinant of fuel economy. As Dr. Sowell wrote: “Many of the same people who cry ‘No blood for oil!’ also want higher gas mileage standards for cars. But higher mileage standards have meant lighter and more flimsy cars, leading to more injuries and deaths in accidents — in other words, trading blood for oil.”

News stories tell us of SUV drivers considering trading for vehicles with more efficient usage of gasoline. Anyone who is considering such a move needs to do a little arithmetic first. Figure out the cost per mile, considering gasoline only, for the two vehicles. Then consider the costs of ownership of a new vehicle. Sales tax alone on a new $25,000 car (that’s about the average price now) in Wichita is $1,825. If you trade a 15 mpg vehicle for a 25 mpg vehicle, with gas at $2.60 per gallon, you’re saving about $.173 per mile in gasoline costs. That seems like a lot, but you’ll need to drive 10,549 miles just to “save” what you paid in sales tax. For many people, it might take a year to drive that many miles.

Consider the other costs. Since cars depreciate at about 2% per month, a $25,000 vehicle depreciates about $500 its first month. The vehicle you already own that’s worth, say, $10,000 depreciates just $200 the same month. That difference of $300 requires 1,734 miles of driving to pay for (but will decrease each month as the new car rapidly loses its value). If you borrow money to buy the new car, you’re paying interest that needs to be allowed for. Add it all up, and you may not be saving as much as you thought you might. Then, if the price of gasoline drops, you may not save anything at all.

Why I Voted Against the Amendment

On April 5, 2005, the State of Kansas voted on an amendment to our constitution. The amendment would prohibit same-sex marriage.

I voted against this amendment. I don’t think we want a government that cares who we decide to marry. Before the election, The Wichita Eagle published a list of over 1,000 benefits that arise from marriage. This list alone, outside the context of the controversy over gay marriage, shows just how intrusive government at all levels is. Even if we agree that marriage is a good thing, it doesn’t follow that we want a government to practically force it upon us. Granting these benefits treats people who choose not to marry as second-class citizens.

The amendment passed with 70% of the vote.

How to decide arts funding

Writing from Miami, Fla.

In an editorial in The Wichita Eagle on August 9, 2005, Randy Schofield wrote, explaining why government should support culture: “Because cultural amenities make Wichita a more desirable place to live, work and visit, and thus help realize Wichita’s quality of life and economic development goals.” We might examine some of the ideas and reasoning behind this statement.

Do cultural amenities make Wichita more desirable? That’s quite a judgment to make. Personally, I enjoy many of the music events held at Wichita State University. I look forward to attending the recitals in the Rie Bloomfield Organ Series, and the piano recitals by Professors Paul Reed, Julie Bees, and Andrew Trechak are the highlights of my cultural season, and, sadly, largely unappreciated by the rest of Wichita. But that’s my taste and preference.

There is a common tendency to judge “highbrow” culture — art museums, the symphony, opera, etc. — as somehow being more valued than other culture. But what people actually do indicates something different. When people spend their own money we find that not many go to the piano recital, the symphony, or the art museum. Instead, they attend pop, rock, or country music concerts, attend sporting events, go to movies, eat at restaurants, rent DVDs, and watch cable or satellite television. I’m not prepared to make a value judgment as to which activities are more desirable. In a free society dedicated to personal liberty, that’s a decision for each person to make individually.

Because there is the tendency to judge highbrow culture as highly valued, governments, as is the case in Wichita, often subsidize it or pay for it outright. Generally, governments don’t subsidize the “lowbrow” culture events that I listed above. So why does highbrow culture require a subsidy? There can be only one reason why: the public, as a whole, does not place as much value on this culture as it costs to produce it. There is simply no way to conclude otherwise.

Consider the movie industry. It, to my knowledge, does not receive government subsidies. Yet, it is able to make a profit most of the time, even though it faces fierce competition from many other ways people can spend their leisure dollars. The movie industry has also faced many challenges arising from new technologies: television, videocassette recorders, and cable television come to mind. How has this industry survived? By focusing on the customer, by determining what people are willing to spend their money on, and by producing products that people value enough to buy. Since the movie industry does not receive government subsidies, it has to do this. It has to meet customer needs and desires and do so efficiently. Otherwise, it starts to lose money. These losses are a signal to management that they aren’t satisfying customers, or not running their business efficiently. They have to change something, or they cease to exist.

When an organization receives government funding, however, it is isolated from the marketplace and its customers. If the organization doesn’t generate enough revenue to cover its costs, it simply asks the taxpayer to pay the difference and it goes on to the next year. The vital imperative to change, to improve, to serve the customer, it doesn’t exist. That’s exactly what is happening with Exploration Place. It has operated at a loss for four years. By accounts, the museum’s exhibits are tired. In the face of mounting losses, they weren’t able to change in ways that the public valued. Yet, the Sedgwick County Commission has given it funding to stay open for a little while longer, and the museum is asking for $2.8 million per year.

Some might say that it doesn’t really matter much if a government gives a little money to a highbrow cultural program. But consider from where the government gets the money. It has to tax people, and that leaves people — not by their own choice — with less money to do the things they really want to do. That makes our city, as a whole, poorer than it would be otherwise, as people aren’t able to spend their money on the things they value most. The government, instead, tells us that we have made the wrong choices, and they are going to correct our poor judgment.

The way to determine what the people of Wichita truly value is to price things at their true cost. People, by freely choosing how they spend their money, will tell us what they value.

In his editorial, Mr. Schofield also said: “The city needs a fair, objective way to evaluate cultural programs and award funding.” I submit that it is not fair to ask one group of people to pay for the leisure activities of another group, no matter how much we value those activities. This is what happens when the city spends tax money on culture. For the evaluation as to which programs are worthy, a free market will tell us that. People will vote, using the votes they really value — their own personal dollars — and decide which programs are valued. When governments or commissions spend taxpayer money, they don’t have to consider value.

“It’s a good first step to bringing some discipline to the arts funding process.” The free marketplace of ideas where true costs are charged provides all the discipline required. How can we expect politicians and arts commission members to exhibit discipline when they aren’t spending their own money?

“No, government can’t support every cultural arts organization.” Finally, a statement from Mr. Schofield that I can agree with!

“But it can help protect Wichita’s cultural investment by providing a dependable source of funds for proven programs and clear oversight and accountability for taxpayers.” There are no “proven” programs as long as they accept government funds, especially when they know the source of funds is dependable. That dependable source of funds allows them to ignore the market and their customers. The way to prove a program’s worth is to price it so that it pays for its entire cost of production. Then, see if people are willing to buy.

Would there be any arts and culture in Wichita if government stopped funding cultural programs? I don’t know, but I imagine there will be. It might turn out that the culture we would have would be better than what we have now, because the operators of cultural programs would have to produce what people want badly enough to pay full freight for. We don’t really know. But we do know that the alternative is worse. It’s more government and more commissions making decisions for us, deciding what we should do with our own money and time.

Untold and Under Reported Stories From the Kansas Special Session: Part II

Thank you, Karl, for this insight into the character of our leading Kansas politicians, and for another example of how Kansas newspapers and other news media aren’t giving us the information we need.


Untold and Under Reported Stories From the Kansas Special Session: Part II

By Karl Peterjohn, Executive Director, Kansas Taxpayers Network

Early in the special session of the Kansas legislature the house speaker, Representative Doug Mays, R-Topeka, spoke one-on-one with Governor Sebelius. Following this conversation Rep. Mays relayed his discussion with the governor to his house GOP caucus as he laid out a variety of public policy options for the special session. This event deserves more public attention than it has received.

Speaker Mays said that he and Governor Sebelius did not find a lot of common ground. Mays did say that the governor was willing to do a deal. The governor wanted expanded gambling while the conservative GOP legislators behind Mays wanted a constitutional amendment to defend the budgetary authority of elected officials from the Kansas courts.

The two constitutional amendments both ended in failure on the house floor with 41 of 42 house Democrats voting against both proposals to limit the Kansas Supreme Court’s spending edict. A 2/3 vote or 84 out of 125 house members would be needed to send a constitutional amendment to Kansas voters after two separate amendments passed the senate. Unified house Democrats have the votes to stop any constitutional amendment.

This proposal to swap gambling for constitutional restrictions on judicial activism and protecting legislative budget power is major news. I asked Rep. Mays why this has not been reported statewide? “I have no idea why they (the press) didn’t,” Mays said. He also said, “It’s public knowledge,” based upon the caucus discussion. Some press members sit in on the caucuses since they fall under open meetings provisions.

The governor’s spokeswoman Nicole Corcoran said that the governor spoke with many legislators during the special session but that her office had no knowledge of this proposed swap on these two major issues.

I asked Mays if he was surprised that this has not been reported statewide. Mays expressed frustration that this deal has not become public knowledge. Mays went on to explain that is most of the state house press, “Didn’t seem to be inclined to report anything to put the governor in a bad light.”

Mays went on to acknowledge that he had been clobbered by a number of critical newspaper editorials concerning his legislative actions during the special session. This editorial page criticism does not bother Mays because the bulk of the public feedback he has received has been positive.

The editorial criticism is not as important as the news reporting. Kansans need to know that there was talk about trading votes for a constitutional amendment in exchange for state expansion of casino gambling. This is important information since we no longer have a judiciary that has usurped legislative budget authority. Kansas now has an oligarchy of appointed judges. The average Kansan needs to know about this deal was being discussed at the statehouse during 2005 special legislative session.

#####

Karl Peterjohn is the executive director of the Kansas Taxpayers Network and is a former news reporter and California Department of Finance budget analyst.

Pricing a Car, Pricing a School?

Pricing a Car, Pricing a School?
By Bob L. Corkins
August 4, 2005

Think about buying an education as if you were buying a car.

A car may be stylish, perfectly sized, fuel efficient, constructed for long life and safety, and loaded with the latest technology, but its price is still negotiable. And despite a window sticker that assigns a dollar amount to every selling feature, you can still cut a deal.

That sticker won’t list the car’s value to your sense of self worth, your hope for recaptured youth or freedom, or even the improved welfare to your children that the car might represent.

All possible benefits of the car will have their value defined by one number: the final selling price. When you voluntarily agree on a price, that price sends signals to all sorts of people throughout our economy.

The value of an automobile is as subjective as the value of a child’s education. But because the value of cars is determined in a competitive market where price is negotiated to the satisfaction of buyer and seller, a far greater consensus on value is possible.

Only when value is determined by a voluntary exchange does the price send reliable messages to producers and consumers. Nobel laureate economist Milton Friedman observed that “Anything that prevents prices from expressing freely the conditions of demand or supply interferes with the transmission of accurate information.”

In utter disregard of this principle, Kansas is now under Supreme Court order to list the manufacturer’s suggested retail price for K-12 education. You can bet it will be no mere suggestion once the experts finish their calculations.

Two state-sanctioned studies are now underway that will tell us by January how much more this state must spend on K-12. Although the Court already forced a $293 million enhancement (our largest ever) last month by threatening to close public schools, the Court also held that the new state studies might require at least another $568 million for the following school year.

Before this ruling, Kansas used to have a method for keeping the price of K-12 within reason. Voters would elect legislators; the legislators, in turn, would receive input from an unlimited number of sources and exercise their judgments on appropriate spending levels.

For K-12, which consumes a rapidly growing majority of the Kansas state budget, this is no longer a matter of legislative discretion.

Legislator judgment was not a perfect substitute for voluntary market pricing, but it was far better than what the Court compels. Kansas’ K-12 pricing decisions are now in the hands of appointed judges, bureaucrats and hired consultants who have no duty to care how additional money is raised to pay for K-12.

Another Nobel Prize winning economist, James Buchanan, highlighted this all-too-common problem. “Indeed, by their very nature, bureaucrats act as monopolistic suppliers. Whether their role is to supply politicians with information about alternative policies, or to design the specifics of policies to be implemented…they do so in a setting in which competitive provision of such expert advice, or alternative sources of supply of the relevant public goods, are unavailable.”

Even the most intense and professional effort of those engaged in Kansas’ studies cannot overcome this handicap. Their research will try to examine cost factors for achieving a level of student achievement that the Court finds acceptable.

This is not just a tall order, it’s an impossible mission.

Explaining that impossibility was the core purpose of still another Nobel laureate economist, Friedrich Hayek. Admiring the unplanned and infinite interplay of market interests, Hayek summarized that “all the details of the changes constantly affecting the conditions of demand and supply of the different commodities can never be fully known … [but] this is precisely what the price system does under competition, and what no other system even promises to accomplish.”

Understanding the flawed premise of the Court and the ensuing studies helps to crystallize a vastly superior alternative. For the field of education, like so many other policy areas, this state should embrace market pricing over government pricing, competition over monopoly, and choice over coercion.

The time for school-choice has now come to Kansas. Indeed, the Supreme Court has served up the idea on a silver platter to lawmakers. By removing crucial budgetary authority from the legislative branch, the Court has left no other effective means for taxpayers and elected officials to financially govern the big picture of public education.

Legislators should start by addressing the real areas of student need that the Court identified. School-choice scholarships should be immediately extended to the low-income “at-risk” children and special education students who motivated the lawsuit in the first place.

The state’s K-12 studies will eventually present us with a “book value” of our supposed price per student, just like car buyers and sellers will cite published “blue book values” whenever they can gain an advantage by quoting them. The Supreme Court may come to realize what everyone in the car market already knows, that the only book that buys anything is a checkbook.

# # #

Bob L. Corkins is executive director of the Freestate Center for Liberty Studies. The Freestate Center is a nonpartisan, not-for-profit, Topeka based research institute for advancing the Constitutional principles of limited government, individual liberty, free enterprise and traditional family values. Freestate is organized under IRS 501(c)(3).

The Freestate Center for Liberty Studies
827 S.W. Topeka Blvd.
Topeka, KS 66612
(785) 233-5157 office
(785) 220-2800 mobile
ksfreestate@sbcglobal.net

Favorite Internet and computer things

Pdf995

Pdf995, available as a free download at http://www.pdf995.com/, lets you create documents in the popular Adobe Acrobat pdf format. This is immensely useful for many situations. A companion program, PdfEdit995, lets you edit some attributes of the pdf files. For basic usage, though, Pdf995 works just fine. After you download and install the software, you’ll be able to “print” any document to pdf format, and then do with it as you wish. When using Pdf995 you have to watch a small advertisement, but this is what keeps the program free.

What’s so great about pdf files? They’re a good way to send documents by email or web without worrying about viruses, compatibility, and formatting. Many people send Microsoft Word documents to one another. But what if the recipient doesn’t own Microsoft Word? Did you also know that there’s a programming language built into Word (and Excel and other Microsoft Office document types) that can transmit viruses and worms? Pdf documents retain the original formatting, which is important in many cases (but not all). Pdf documents are also a good way to save a copy of a web page.

Save as “Web archive, single file”

What if you’ve read an article on a website and you want to save it? Do you print it? You can, but then you’re stuck with paper with its attendant drawbacks. Can you save the website on your computer? If you’re using Internet Explorer, there is is the “Save as” command on the “File” menu, which will save a copy of the web page. But there’s a catch to be aware of. If you use the default value for the “Save as type” setting, which is “Web page, complete” you’ll end up with many small files on your computer. A better setting is “Web archive, single file,” which saves the web page in a single file. This is a much cleaner and neater option. Printing the web page as a pdf file (see above) is also useful.

Offline Files

How do you keep your notebook computer’s files synchronized with your desktop computer’s files? The best answer is offline files, a feature built into recent versions of Microsoft Windows. With offline files, it’s almost as if your notebook and desktop computers were acting as one, even when you’re away from home or office.

Offline files is not easy to configure and not always easy to use, but it works and performs an indispensable service. Without it, it would be much more difficult to manage using two computers.

Suspend and Hibernate

Windows has two useful features that are an alternative to turning off your computer when you’re finished using it. Suspend puts your computer in a state where it uses very little power, but will come back to life almost instantly. Hibernate saves the state of your computer to disk and turns off the computer so that it uses no (or just a little trickle) power. It takes a little longer to bring your computer to life after hibernation, but it’s still faster than starting from scratch, and as with standby, all your programs will be running as you left them.

Each of these two options can save a lot of time and electricity, too. Plus, when your computer is in standby or hibernate mode, it isn’t going to be attacked by hackers.

Google Mail

Currently my Google Mail, or gmail, account tells me that I have 2470 MB total space available for my use. I pay nothing for this space. It was not along ago that my Internet Service Provider, to which I pay $40 monthly, granted me 10 mb total space.

Google mail works very well, although it has a few quirks and peculiarities when compared to traditional email services. I use gmail to receive email newsletter subscriptions and other similar email.

Google Alerts

Google Alerts let you “save” a Google search and have the results emailed to you as new web pages that match your searches are found. This is an invaluable way to keep up-to-date on topics you are interested in.

Your Own Cheap Website

For less than $50 a year plus about $8 for a domain name, you can have your own web site with perhaps 2,000 mb of storage and a lot of bandwidth. What can you do with all this? For one thing, you can host a website like wichitaliberty.org. Some other things: Create email addresses, manage a mailing list, store backups of your personal data offsite (with cautions), host a blog, host a website using any number of content management systems such as Drupal that runs wichitaliberty.org, host a discussion forum, use image gallery systems for photo albums, use project management systems to coordinate a project, host a wiki for collaboration, and many other things. Most of these systems make use of open source software and work very well. But, a lot of these things are not for the inexperienced computer user. There are times I have had to manually edit various Linux configuration files and mySQL databases to make things work. But it’s a lot of fun to learn, and some of the open source software is amazing in its capability and quality.

Online Newspapers and Magazines

Did you know that you can read the content of many of our nation’s important newspapers for free? Each day I read (well, at least I have the potential to read) the New York Times, Washington Post, Washington Times, Chicago Tribune, Christian Science Monitor, and Los Angeles Times. Around the state of Kansas, The Wichita Eagle, Wichita Business Journal, Topeka Capital-Journal, Lawrence Journal-World, and The Kansas City Star are available for free. I pay to subscribe to The Wall Street Journal, but that newspaper stands out as an exception.

Many national and local magazines have all or some of their content available on their websites for free, too. Furthermore, many of these publications will send me an email about each issue.

Strunk: The Elements of Style

This important reference work is at http://www.bartleby.com/141/. Strunk is a little old-fashioned in some ways, such as advocating the use of the Oxford comma, but I think that’s good.

AVG Anti-Virus

I became disenchanted with several commercial anti-virus program because they seemed to be doing too much, integrating firewall and other protections, and they seemed to be making my computers run slower than they should. So at home I investigated AVG anti-virus, from grisoft.com. It works just fine, and for home users, there is the “Free Edition.” You have to look pretty hard on the website to find it, but it’s there. For work I use the professional edition, which I pay for, but it is less expensive than many competing products, and is less intrusive.

ZoneAlarm

I recommend a firewall in addition to anti-virus software. Recent versions of Windows have a built-in firewall. For older versions of Windows, of if you want to use something else, I recommend ZoneAlarm, from zonelabs.com. You have to look pretty hard on the website for the free edition, but it’s there.

Sbybot — Search & Destroy

Besides anti-virus and a firewall, I recommend an anti-spyware program. Sbybot — Search & Destroy, available for free at http://www.safer-networking.org works very well.

Skype

Skype is free Internet telephony that works very well. You need a broadband or high-speed Internet connection, but after that it’s free, and the quality of voice call is usually much better than that of regular telephone service.

Audacity

Audacity, available at http://audacity.sourceforge.net, is an open source software product that provides you with many of the features of a professional recording studio. At the minimum, you could make a recording of your voice, edit it, and save it, perhaps as an mp3 file. With additional effort, you can alter recording to remove noise, add enhancements, and other tricks.

Book Review: Basic Economics: A Citizen’s Guide to the Economy

Basic Economics: A Citizen’s Guide to the Economy
Revised and Expanded Edition
Thomas Sowell
Basic Books, 2004

This book is a general introduction to economics written in a non-technical way. It provides excellent coverage of many introductory topics in economics, and you don’t have to be a mathematical sophisticate to understand it. It is very readable by anyone who is interested in this topic.

One of the best things the author does in this book is to distinguish between what politicians want to happen and say they are doing when they implement economic policies, and what incentives are actually created. Often there is a big difference between the two.

One of the most important things to learn from this book is the importance of prices, and what goes wrong when governments interfere with prices. As the author says: “Prices play a crucial role in determining how much of each resource gets used where. Yet this role is seldom understood by the public and it is often disregarded entirely by politicians.” As an example: “The last premiere of the Soviet Union, Mikhail Gorbachev, is said to have asked British Prime Minister Margaret Thatcher: How do you see to it that people get food? The answer was that she didn’t. Prices did that. And the British people were better fed than those in the Soviet Union, even though the British have never grown enough food to feed themselves in more than a century. Prices bring them food from other countries.”

The example of rent control illustrates how what politicians intend to do may not be what actually happens: “In short, a policy intended to make housing affordable for the poor has had the net effect of shifting resources towards housing affordable only by the affluent or rich, since luxury housing is often exempt from rent control.” What lower-priced housing that remains is in short supply (since less is supplied at a lower price), is in high demand (because more is demanded at a lower price), and is in poorer condition than it would be otherwise (since housing is in a shortage, landlords have an easy time finding tenants, and there is little incentive to maintain their housing stock). In fact, rent control often leads to rental housing being taken off the market, or, especially in New York City, entire buildings being abandoned when the (artificially low) rent that comes in isn’t sufficient to provide city-required services to the tenants.

But because there are more tenants than landlords, Dr. Sowell explains, rent control is often a political success. It is easier for the average person to look at the situation superficially, to see that politicians are looking out for them by protecting them from landlords who would otherwise gouge them on rent.

You can learn all this and more just by reading through page 40 of this nearly 400 page book. I highly recommend this book.

Governor Claims Growth While Jobs Disappear

Governor Claims Growth While Jobs Disappear
By Karl Peterjohn, Executive Director Kansas Taxpayers Network

Governor Sebelius’ press office issued a news release headlined, “Kansas economy continues to grow under Governor’s leadership,” August 4. The same day the Wichita Eagle headlined the layoffs in Winfield as 1/3 of the 600 employees at Rubbermaid Inc. were laid off.

Is the Kansas economy growing or are the layoffs plaguing the private sector in Kansas aberrations? Recently, the Kansas branch of Americans for Prosperity has been reporting that for every new state and local government jobs that have been created in Kansas in the last five years, a larger number of private sector jobs have disappeared.

This is a distressing trend when Kansas state and local government employment is measured. Kansas is already one of the top states for government employment as a percentage of the workforce when census figures compare the Sunflower state to our neighbors.

Despite the shrinking private sector in Kansas, it is certainly true that state revenues are growing. If there had been any limits on fiscal spending, there would have been plenty of money to start making the Kansas tax climate competitive. Instead, the money was spent by profligate “moderates” from both major political parties that dominate the statehouse. Governor Sebelius, a very liberal “moderate,” happily signed this increased spending into law.

State revenues for the fiscal year that ended June 30 were 7.1 percent, or $322.5 million, above the previous year’s total. This is good news and the governor deserves the credit, right? Well, you need to look at the rest of the country. The Wall Street Journal reported July 12 that federal tax revenues were 14.6%, or $204 billion, above the same level as last year.

So, Kansas is actually growing its tax base at less than half the national rate. Governor Sebelius claimed, “Kansas businesses are hiring more employees, Kansas workers are earning more, and Kansas consumers are spending more.” The governor went on to cite additional public school “investment,” the most popular euphemism for increased government spending, as a reason for this growth.

The actual reason for the growing revenues is the 2003 federal tax cuts passed by Congress and President Bush and the economic stimulus that federal tax cuts are generating. The positive economic impact of this tax cut is covering the entire country. Even Kansas is getting some benefit from the federal tax cut that was opposed by almost every Democrat in Congress. Ironically, these cuts may improve the Kansas economy enough to help Governor Sebelius win a second term in office next year.

What is clear about this data is that Kansas is lagging behind the rest of the country. Many Kansans, including our governor, do not even realize this fact. This situation is going to get worse even before the activist Kansas Supreme Court can expand their fiscal damage with more edicts in 2006.

Oklahoma recently enacted personal income tax cuts that will lower that state’s top income tax rate to below Kansas’ top rate beginning in 2006. Instead of spending their fiscal windfall like Kansas, Oklahoma is investing it in their people in the form of a six percent personal income tax cut. In Kansas, the only growth industry is bigger government and rising prospects for future tax hikes.

The misplaced morality of public officials

In Wichita some public officials, particularly mayor Carlos Mayans, are seeking to eliminate adult businesses and stores selling pornography. This focus on private morality lies in sharp contrast with government’s large-scale acts of public immorality.

If government allows people to gamble, look at nude dancers, or buy pornography and sex toys, it is not government that is “sinning” or acting immorally. Government is not requiring that we do these things. Government is merely allowing those who wish to do so to engage in these activities.

But when government — say the Wichita City Council — takes the property of one person and gives it to another person to whom it does not belong, government is actively and purposefully committing an immoral act.

How do we know that it is immoral when government takes money from one person and gives it to someone else? We can learn from the insight of Frederic Bastiat (1801 – 1850), writing in his short book The Law:

But how is this legal plunder [theft] to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

It doesn’t matter to whom the money is given: poor people, homeless people, airlines, farmers, banks, artists, downtown developers, problem gamblers, nonprofit organizations, students, schools, civic groups, museums, sick people, children, public amenities, or businesses under the guise of economic development. It doesn’t matter how much they need it, or how deserving they may be. It’s simply wrong for a private person or government to take money from one person and give it to another. The economist Walter E. Williams also makes this case succinctly:

Can a moral case be made for taking the rightful property of one American and giving it to another to whom it does not belong? I think not. That’s why socialism is evil. It uses evil means (coercion) to achieve what are seen as good ends (helping people). We might also note that an act that is inherently evil does not become moral simply because there’s a majority consensus.

This is not to say that we should not support some of the people or groups mentioned earlier. We should do so voluntarily, however. To help someone through an act of charity is noble. There is nothing good or moral happening when governments tax one person and give the proceeds to someone else.

So when government officials want to control private morality, remember government’s large-scale acts of public immorality.