Voice For Liberty

Category: Sedgwick county government

  • Guest post: The Sedgwick County Downtown Arena Sales Tax

    (It has been suggested that the following message, which I have sent as email to all Kansas State Senators and Representatives, may be of interest to you.

    The article, as written and sent, does contain some minor inaccuracies, both in fact and in interpretation; but this merely shows that those of us who relied on the Wichita Eagle, my primary news source, for information prior to the arena tax vote were denied needed information and were, probably deliberately, given false, incomplete, and/or misleading information. I have made no effort to update it since a week or two after the election.

    John A. Robinson
    Wichita, KS)

    The Kansas Legislature will be asked soon to approve a special sales tax for construction of a Downtown Arena in Wichita.

    The recent “Arena Vote” in Wichita is a classic example of an election rigged by special interests, and does not represent an informed consent of the people of Wichita and Sedgwick County.

    A vote was taken approximately a year prior to this vote in which the people of Wichita voted NOT to build a “downtown arena.” A main reason for the failure to support such a construction in that vote was the almost total inability of those favoring the arena to provide verifiable information in support of their claims that an arena would “do great things for Wichita,” a complete lack of any assessment of adverse related effects, denial, without examination, of any and all obvious problems, and a total lack of any coherent PLAN for the proposed arena. Those advocating this project were essentially unable to demonstrate that they had the best interests of the people of the community in mind, and made it clear that their real objective was their own personal profit and interest.

    The people of Wichita voted NO to a downtown arena.

    Subsequent to that vote, in which Wichita rejected the “arena,” the special interests who wanted one made NO EFFORT to respond to objections to the previous proposal. They made NO EFFORT to develop and show to the people any new plan for what was to be built, where it would be placed, how traffic and parking would be addressed, what REAL economic benefit the community could expect, and what REAL costs would be incurred.

    They simply decided they didn’t like the result of that vote, and decided to take another one and get a different result.

    Instead of examining the need, costs, and benefits, of their “plan” the special interests who favored the arena for their own personal gain determined that they “only needed about 15% more votes.” They did an apparently accurate assessment of what specific demographic groups would likely vote blindly for their “party place” if they could get them to vote, and could “work up enough enthusiasm.” It was perhaps also of interest that as persons not previously inclined to vote, their major demographic group, principally young college students, would be unlikely to affect any “substantive issues” affecting their other interests.

    Very shortly before the election, a SINGLE announcement was made that “one of the County Commissioners” had talked to the Mayor, and the Mayor decided he was in favor of “the downtown arena.” No reason for the change in the mayor’s position was ever offered to the public, but “The Mayor is in favor of the Arena” became a slogan for the campaign.

    Almost immediately, the extortionist threat was advanced by a County Commissioner that failure to vote for the Arena would mean a permanent and burdensome property tax. No substantiation for this claim was ever provided, but it was repeated incessantly.

    Those with special interest, and intent to profit (or profiteer) from the arena, appeared with a “war chest” of several hundred thousand dollars a very few weeks before the election. They sponsored a few “pep rallies” at which they repeated their “the arena will be great” slogans, their “the mayor wants it” and their extortionate lie that “it’s already been decided that property taxes will go up if you vote against it.” By carefully refusing to offer any PLAN for examination, they made it difficult for more rational persons to speak against their campaign, simply because there was nothing to object to. Any objection was met with “that’s not part of our plan,” and couldn’t be countered since THERE WAS NO PLAN.

    By appearing, unexpected, fully funded and organized at the last minute, they forclosed any opportunity for competing opinions to organize, fund, and carry out any effective counter campaign. It must be assumed, from the unexplained “instant switch” to favor of the arena that City and County officials were aware of and/or part of this plan to “silence the opposition.”

    The “pep rallys” were well attended by those profiteers who wanted the arena, and were carefully advertised and “pushed” to the selected demographic groups that they had chosen to get the few votes needed to “vote their way.”

    At NO TIME during this campaign was there EVER any discussion of what they planned to do, what other things would be affected, exactly how much it would cost, or what the peripheral impacts on the community would be and how they would be handled.

    During the campaign, there was no discussion of a “plan” because there WAS NO PLAN. The entire campaign was based on “lets have a party.” The astonishingly large turnout for this election was ENTIRELY the result of a well funded, well planned recruitment of carefully selected groups likely to vote for the result that the “Arena Interests” wanted.

    The threat to raise property taxes, made by the one “interested” Co. Commissioner, was clearly only for publicity. It was based on the costs to renovate the existing Colliseum, but it was never revealed whether, or how, the plans for the Colliseum would change if the arena was approved. It SPECIFICALLY was not revealed that those making this pseudo-plan fully intended the complete demolition of the Colliseum if the arena was approved. Since the Colliseum would compete with “their” arena, they have obviously decided, without consulting the public, that it will be demolished. NO SUGGESTION of any alternative use will be considered. THEY DO NOT HAVE PUBLIC APPROVAL TO DEMOLISH THE COLLISEUM.

    Immediately after the election (less than two weeks) it was announced that the “arena plan” would “require cost estimates” for the demolition of the Colliseum. The people were NEVER given the choice of whether to find alternative use for the Colliseum, and were never told that DEMOLISHING the Colliseum was part of the “plan.” If it was part of the “arena plan,” the failure to have in hand an estimate of this major cost is only one more indication that THERE WAS NO PLAN EXCEPT FOR PROFIT FOR A FEW SPECIAL INTERESTS.

    The passage of this “tax approval” was obtained by carefully selecting a demographic group susceptible to false and misleading publicity, massive publicity based on “let’s have a party,” false and misleading claims about fictitious benefits, vague but cheerful promises that “everything will be wonderful,” blatent lies, distortions, and mistruths bordering on extortion, and willful concealment of the “real” intent of those pushing the arena.

    A physician who lies to a patient in order to get permission for a questionable procedure would not be likely to get by with an “informed consent” defense of his malpractice. This vote for the “arena tax” DOES NOT REPRESENT THE INFORMED CONSENT OF THE PEOPLE.

    The Legislature should NOT APPROVE this tax. To do so is to reward EXTORTION by the persistent special interests who continue to believe they have a “right” to take whatever they want from the people as long as “they’ve got a good lie.”

    Personal Observation:

    The announcement that “the mayor is in favor of the arena” was made by the County Commissioner who “visited the mayor.” The Commissioner was not named in that report, and has not been clearly identified in the few subsequently published reports. So far as has been reported in the Wichita Eagle, my prinicipal source of local news, the mayor never appeared to publicly affirm his change in opinion about the arena. No explanation for his change in position has been published. Given the frequency with which he freely commented on city government and was quoted in local news, it is also noteworthy that since that announcement there have been NO REPORTS of his existence or of any participation in the affairs of the city.

    Given the potential impact on the City of Wichita and on Sedgwick County, it would be reasonable that the news should be full of plans and analyses of the Arena; but the ONLY substantive report in the Wichita Eagle has been a rather weakly stated “The VOTE is OVER, shut up and take it” in one masthead editorial. “Opinion Line” comments, a feature of the Eagle, have contained the same terse “The Vote Passed, Shut Up and Take It” at approximately 2-day intervals since the election; but NO SUBSTANTIVE NEGATIVE COMMENTS have been published in the same column.

    The Mayor and the Wichita Eagle, have been effectively SILENCED, whether by coercion or by collusion, on this matter.

    Historical Note:

    When Kellogg Avenue (US 54 Highway) was paved through the middle of Wichita in the 50’s, our public officials yielded to Cronyism and at the demand of the “special interests” in “Downtown Wichita” refused to make it a throughway. For nearly 50 years Wichita contended with 23 stoplights in a stretch of about 10 miles of what should have been a major trafficway. Since they made it impossible to travel conveniently between the East and West sides of town on that trafficway, major traffic flow continued through the downtown, at densities which required removal of all on-street parking, a maze of one way streets, and significant deterioration of road surfaces, never maintained, of most of the downtown area. Due to the high traffic densities diverted through the downtown, it was impossible to stop and do business there. By yielding to the “special interests,” they KILLED the downtown as a place of business.

    For more than 50 years, our “leaders” have come up with one plan after another to “save” a downtown that IS DEAD so far as the majority of the people of this community are concerned. They have done so at the expense of other parts of the city, and at the expense of the community as a whole.

    We have a “pretty” walkway along the side of the river, a few garish “art works” and have already dumped millions into “saving downtown” with subsidies for empty hotels and “startup money” for “botique shops” and bars. We have good hotels and motels, adquate for any visible needs, OUTSIDE the downtown area, but they get no support, and are ignored by our “planners.” This all for the benefit of the half dozen commissioners who meet “downtown,” the owners of the empty hotels “downtown,” the lawyers who wish to be near the courthouse “downtown,” and a whole lot of drunks who frequent the overpriced bars that would not exist “downtown” without frequent infusions of City Bond money.

    In the meantime, half our city population is required to traverse the “Big Ditch” in fewer than a dozen traffic lanes twice daily, because Wichita cannot afford improvements to major traffic arteries “until we finish saving downtown.” Our tapwater occasionally STINKS because we can’t afford proper treatment until “we finish saving downtown.” We truck our trash out of state, because special interests must be placated who object to every plan for disposal. We can’t recycle with our trash, because special interests believe it will reduce their profitable trash service. We can’t have a beer at a neighborhood bar because the subsidized “entertainment” downtown has driven most of them out of business or very close to it.

    Once again, by carefully selecting “which of the people to survey,” by whipping up enthusiasm with a selected minority demographic, and by concealing their intent from the population at large, the Council got the answer they wanted; but it IS NOT THE INFORMED CONSENT OF THE PEOPLE. IT IS A FRAUD. IT IS EXTORTION.

    It is a rigged election, bought and paid for, by special interests, with the cooperation of City and County officials. A vote was taken, and ignored. A vote was RIGGED, bought and paid for, and should be ignored by the Legislature.

    They are asking to DOUBLE the city sales tax. Not a trivial action. A vote for this tax will make it very much more difficult to ask for additional sales tax if a need for additional school funding is determined to exist.

    There is no tyranny like the tyranny of a rigged “democratic election.”

    Please VOTE NO to the Sedgwick County Arena Sales Tax.

    John A. Robinson
    Wichita, KS 67218

  • Prepare for sales tax-induced job effects now

    Collecting the sales tax to pay for the downtown Wichita arena may produce unintended consequences.

    A paper titled “An Assessment of the Economic Impact of a Multipurpose Arena” by Ronald John Hy and R. Lawson Veasey, both of the University of Central Arkansas, (Public Administration & Management: An Interactive Journal 5, 2, 2000, pp. 86-98) looked at the effect of jobs and economic activity during the construction of the Alltel Arena in Pulaski County, Arkansas. This arena cost $50 million. It was funded in part by a one percent increase in the county sales tax for one year (1998). The sales tax generated $20 million.

    In the net, considering both jobs lost and jobs gained due to sales tax and construction effects, workers in the wholesale and retail trades lost 60 jobs, and service workers lost 52 jobs. There was a net increase of 198 jobs in construction.

    The fact that jobs were lost in retail should not be a surprise. When a sales tax makes nearly everything sold at retail more expensive, the supply curve shifts to the left, and less is demanded. It may be difficult to estimate the magnitude of the change in demand, but it is certain that it does change.

    Workers in these sectors, should the sales tax increase take effect, may want to reconsider their career plans. How many retail and service workers can make the transition to construction work is unknown. It is certain, however, that when workers lose their jobs it imposes benefits costs on the government — and the taxpayers.

    The population of Pulaski County in 2000 was 361,474, while Sedgwick County’s population at the same time was 452,869, so Sedgwick County is a somewhat larger. Our sales tax will last 2.5 times as long, and our proposed arena is about three times as expensive. How these factors will impact the number of jobs is unknown, but I feel that the number of jobs lost in Sedgwick County in retail and services will be larger that what Pulaski County experienced.

    It is interesting to note that the authors of this study, while measuring a positive net economic impact for the Alltel Arena, make this conclusion:

    “The primary reason for this positive economic impact is that the state of Arkansas contributed $20 million to the construction of the arena. As a result, the economic impact of building the arena in Pulaski County is greater than it would be if the county had funded the arena by itself. A vast majority of the jobs that will be created will be in the service sector that frequently offers lower wages than jobs in other sectors of the economy.”

    The proposed downtown Wichita arena does not have the advantage of having 40% of its cost paid for by outsiders. It may be that we feel even more strongly the negative impacts of the sales tax.

  • Downtown Wichita arena as a public good

    The streets and highways, and certainly the public parks, are examples of public goods. Public goods are characterized by two things: nonexcludability, meaning that non-payers can’t be excluded from enjoying and using the good, and nonrivalrous consumption, meaning that consumption of the good by one person doesn’t reduce the availability of the good to others. Neither applies to an arena.

    Roads and highways, to a large extent, are paid for by those who use them. As far as I know, I paid for the entire cost of street in front of my house through special tax assessments. It is reasonable that I pay for that street, as I use it extensively. In the broader case, a large source of funding for roads and highways is the gasoline tax, which is an attempt to ask those who use and benefit from the resource to pay for it.

    Some roads, such as toll roads, require their users, and potentially only their users, to pay for them.

    The proposed downtown Wichita arena or Kansas Coliseum benefits only those who actually attend events. This is especially so in the case of the Coliseum, as downtown arena supporters readily point out that there has been no development surrounding it. We can easily identify those who benefit from an arena or stadium because they rent the facility or buy tickets to attend events. So it is very easy to ask them, and no one else, to pay.

  • Arenas’ Financial Statements Not Complete

    The WSU Center for Economic Development and Business Research study (reported by Fred Mann in the September 5 Wichita Eagle), showing a small loss for the proposed downtown arena, does not account for the cost of building the arena. Neither do the Qwest Center in Omaha nor the Alltel Arena in Arkansas when they report their profits. How do I know? I wrote to each of these facilities and asked. None include any expense for depreciation, debt service, lease payments, or anything that recognizes the tremendous amount of capital consumed by building these arenas. Yet, these facilities report a profit, or perhaps a negligibly small loss.

    I have found that the arenas I have looked at (Qwest, Alltel, and the proposed Wichita) don’t account for the cost of the capital consumed in building them. For example, the projected profit (actually a small loss) for the proposed Wichita downtown arena includes no expense taken for depreciation. Now it is true, that being a government entity, the downtown arena wouldn’t pay taxes, and therefore depreciation expense doesn’t help it reduce its income taxes. But an allowance for depreciation helps us to recognize that a large amount of money was spent to build this arena, and that money has a correspondingly large opportunity cost. Indeed, GASB 34 requires governments to start depreciating their assets, and Mr. Chris Chronis, the Chief Financial Officer of Sedgwick County, has told me that the county will take depreciation expense for the downtown arena, or for a remodeled Kansas Coliseum, for that matter.

    My investigation and a series of email messages with Mr. Ed Wolverton revealed that the WSU center that prepared the estimate of profitability for the proposed downtown arena wasn’t aware that the county would be required to calculate depreciation expense.

  • WSU Study on Downtown Wichita Arena Not Complete

    Government Accounting Standards Board Statement 34 requires governments to account for the cost of their assets, usually by stating depreciation expense each year. Through a series of email exchanges with Mr. Ed Wolverton, President of the Wichita Downtown Development Corporation, I have learned that the WSU Center for Economic Development and Business Research was not aware of this requirement when they prepared their forecast. Mr. Wolverton admitted this after checking with the study authors.

    Mr. Chris Chronis, Chief Financial Officer of Sedgwick County, in an email conversation told me that the county will take depreciation expense for the downtown arena, or for a renovated Kansas Coliseum, for that matter.

    I appeared in a story on a local television station where I presented research I had read showing that if new development occurs around a downtown arena, it would likely be economic activity that formerly took place somewhere else in town. This is the “substitution effect.” Mr. Wolverton appeared in the same story and state that due to time constraints, the WSU study did not study these effects.

  • The leadership of our local government officials regarding the downtown Wichita arena

    It is clear that our local government leaders want a downtown arena in Wichita. Just read their remarks in the Wichita Eaglenewspaper. Since the Sedgwick County Commission has promised that they will proceed with renovation of the Kansas Coliseum if the downtown arena vote fails, it is in their interest to make the Coliseum renovation option look as bad as possible. In my opinion, they’ve done a pretty good job of this.

    If you do the math on what it costs to borrow $55 million, paying it back at $6.1 million a year for 20 years, the interest rate is 9.17%, which is a terribly high interest rate for a government to pay. Yet, if we believe the county commissioners, they are ready to pay this much if we don’t agree to the arena.

    Arena supporters cite economic benefit to the community as a reason to build the downtown arena, and they concede no such benefit is likely near a renovated Coliseum. Yet they are willing to spend millions there if we don’t give them a downtown arena.

    Arena supporters cast the Coliseum renovation in the worst possible light. Consider a homebuyer who just bought a $100,000 home, financing it at 5% for 30 years. The total payments would be about $193,000. Do these people, having just bought the $100,000 home, go about saying they just moved into a $193,000 home? Of course they don’t. The total financed cost, to be sure, is an important fact, and a bad financing decision is a handy fact for arena supporters to use as they portray the Coliseum renovations in the worst possible light.

    Arena supporters claim that there are only two decisions, the new downtown arena or the renovation of the Coliseum. Framing the debate this way, especially when one decision outcome is so distasteful, is a good strategy for downtown arena supporters to use, but not good public policy.

    The Sedgwick County Commission has said that if the downtown arena fails, Coliseum renovation will start. We, as the citizens of Sedgwick County, should not allow this coercion to affect our decision on the downtown arena. We do not have to stand for this type of bad government.

  • Economic justification of arenas and the downtown Wichita arena

    It seems that the best argument that arena supporters have for asking the entire community to pay for the Downtown Wichita arena is that it will somehow pay for itself through spillover economic benefit. That is, through increased economic development around a downtown arena, the citizens of Sedgwick County will somehow be repaid for their investment in the arena through the taxes they paid.

    Current economic research indicates otherwise, as follows.

    A review of the book “Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums” by Roger G. Noll and Andrew Zimbalist, available at this url at the Brookings Institution: https://www.brookings.edu/press/books/sports.htm states in part: “The primary conclusions are: first, sports teams and facilities are not a source of local economic growth and employment; second, the magnitude of the net subsidy exceeds the financial benefit of a new stadium to a team; and, third, the most plausible reasons that cities are willing to subsidize sports teams are the intense popularity of sports among a substantial proportion of voters and businesses and the leverage that teams enjoy from the monopoly position of professional sports leagues.”

    Another important paper, “Identifying the Real Costs and Benefits of Sports Facilities” is available at this url: http://www.lincolninst.edu/pubs/dl/671_chapin-web.pdf. This is from the conclusion: “A pro-facility argument that rests solely on the magnitude of the economic benefits conferred by a new facility is unsustainable. The economic impact literature has ended once and for all the argument that the economic impact of these projects justifies public subsidies for new sports facilities.”

    From a paper titled “Professional Sports Facilities, Franchises and Urban Economic Development (UMBC Economics Department Working Paper 03-103)” available at http://www.umbc.edu/economics/wpapers/wp_03_103.pdf we can read this about the impact of sports facilities:

    Siegfried and Zimbalist (2000) recently surveyed the growing literature on retrospective studies of the economic impact of sports facilities and franchises on local economies. The literature published in peer-reviewed academic journals differs strikingly from the predictions in “economic impact studies.” No retrospective econometric study found any evidence of positive economic impact from professional sports facilities or franchises on urban economies. While evidence exists suggesting that narrowly defined occupational groups, like workers employed in the sports industry (SIC Code industry 79 — Recreation and Amusements), benefit from the construction of new sports facilities, building new sports facilities and attracting new professional sports teams did not raise income per capita or total employment in any US city. In fact, some research has found a negative economic impact of professional sports on urban economies.

    Later, from the same paper:

    Coates and Humphreys (2003) extended this research to examine the earnings and employment in narrowly-defined occupational groups in US cities with professional sports teams. In this study, the earnings and employment in the SIC-code industry containing sports facilities and teams — SIC-code 79, Amusements and Recreation — were higher but the earnings and employment in other important sectors like Retail Trade, Hotels, and Eating and Drinking Establishments were lower. The economic benefit from sports facilities and franchises appears to be concentrated in a small sector of the economy and comes at the expense of other sectors of urban economies.

    If, then, it appears that the community-wide economic benefit that arena supports claim will not materialize, the people who benefit from the arena are quite easy to identify. They buy tickets to events, or they rent the arena. These are the people who should pay its cost.

  • The value of economic impact studies

    One of the factors that usually plays a part in an economic impact study like that used to promote the Downtown Wichita arena is the “multiplier,” which accounts for the fact that money spent once is spent again, and maybe yet again.

    To quote from “Economic Impact Multipliers for Kansas” published in “Kansas Business Review” Vol 12, No. 3, Spring 1989, and available at http://www.ku.edu/pri/publicat/multipliers/multipliers.htm:

    It sometimes seems that the bigger a multiplier is, the more often it is quoted. (1) In any case, some distinctly one-sided political and economic motives encourage the propagation of exaggerated multipliers.

    In particular, economic multipliers are used to justify public concessions to private industry. Such assistance for business may include land acquisition, new roads and sewers, job training programs, subsidized loans, and tax incentives.(2) The extent of public concessions is determined through bargaining between government and industry, and in the course of the bargaining those who stand to gain most from the new enterprise have a natural tendency to inflate the relevant multipliers.(3)

    The inflation of multipliers may stem less from venality than from an innate optimism, which seems to be necessary in the risky business of development. Since multipliers are costly to measure, of uncertain accuracy, varied in their meanings, and multifarious in their origins, a convenient range of multiplier values is always available; discriminating users are free to choose the best values for their purposes.

  • Local government officials as downtown Wichita arena advocates

    Kansas Attorney General Opinion 93-125 deals with “the use of public funds to promote or advocate a governing body’s position on a matter which is before the electorate.” In its summary, it states “However, public funds may be expended to educate and inform regarding issues to be voted on by the electorate.”

    Our local government leaders, especially the Sedgwick County Commission and the Mayor of Wichita, are leading what they term the “educational effort” to get out the facts about the proposed downtown arena. I would suggest, however, that their effort is hardly educational, as they readily admit their preference, and little or no information about criticism or alternatives is to be found. On the Sedgwick County website, for example, there are no opposing viewpoints to be found. The only alternative to the downtown arena is the renovation of the Kansas Coliseum, which is portrayed as an unwise choice.

    On two television shows, Sedgwick County Commissioner Ben Sciortino wore a “Vote Yea” polo shirt.

    From an editorial by Phillip Brownlee, published in the Wichita Eagle on September 5, 2004: “If the plan is to pass, city and county elected officials — supported by business leaders — must continue their strong leadership and high-profile support for the arena.”

    It has also been shown that some of the financial contributors to the “Vote Yea” campaign are funded by taxpayers.