Those who advocate greater government planning and spending in downtown Wichita often cite Oklahoma City’s Bricktown area as a model of success. Wichita’s cable television channel broadcasts a spot about it over and over.
An article in the The Journal Record discusses Bricktown, and mentions an official has heard “concerns about underutilized, sometimes dilapidated retail space along the 10-year-old canal and the practicality of extending the waterway.”
Perhaps a trip to Oklahoma City to investigate is in order.
On a five to zero vote, the Wichita City Council has passed a revised arts funding plan. The plan may be viewed at the end of this article.
Speaking for the plan, former Wichita City Council member and Arts Council Board Member Joan Cole spoke in favor of arts funding. She promoted the financial return on investment for these public taxpayer dollars spent supporting arts organizations. As I’ve shown in my post Economic Fallacy Supports Arts in Wichita, Cole is relying on faulty economic analysis.
She also spoke of the benefit that Wichitans receive from the artistic and cultural events and activities. I wonder how she knows that? In free markets, where people are allowed to decide where to spend their leisure and entertainment dollars, we know exactly what types of events people want. They vote with their spending.
But when government takes tax money and lets a commission composed of people like Cole decide how to allocate and spend money, do we have any assurance that it’s spent the way people want it spent? Of course not.
The problem — at least to some — is that the way a lot of people want to spend their money isn’t the way that Cole and her fellow highbrow board members feel it should be spent. But they shouldn’t count.
Cole mentioned that “attendance has increased at a number of these venues this year.” She seemed surprised that this happened — but acknowledged that the recession may be the cause, as people stay in Wichita rather than travel for vacations.
Wichita would do better to stop funding arts and let people spend money the way they want. Each person can choose just the right amount and mix of arts and culture for them. Taxation and a spending commission won’t be necessary.
Other coverage of this issue:
Government Art in Wichita “‘Government art.’ Is this not a sterling example of an oxymoron? Must government weasel its way into every aspect of our lives?”
Economic Fallacy Supports Arts in Wichita “The single greatest defect in this study is that it selectively ignores the secondary effects of government spending on the arts.”
Let Markets Fund Arts and Culture “… if the government would stop funding arts, there would be no need for government-mandated performance measures, and the outcomes that occur would be precisely what people really want.”
How to Decide Arts Funding “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.”
Arts Funding in Wichita Produces Controversy “… there is a very simple way to decide which arts and cultural organizations are worthy of receiving funds: simply stop government funding. Let the people freely decide, though the mechanism of markets rather than government decree, which organizations they prefer.”
(This is a Scribd document. Click on the rectangle at the right of the document’s title bar to get a full-screen view.)
Harold Schlechtweg, business representative of Service Employees International Union Local 513 in Wichita, makes the case that Wichita needs to keep employing its present park maintenance staff, even though it appears there is a way to get the work done at a lower cost. (Cutting park jobs will hurt city, June 30, 2009 Wichita Eagle)
The city has a responsibility to its citizens to operate as efficiently as possible. If it is possible to have work such as park maintenance done less expensively, the city should do so. It should have done so long ago.
Schlechtweg says that if wages and benefits are cut, the community suffers. Let’s remind him who pays the wages and benefits he’s trying to protect: the taxpayers of the city of Wichita. If the city can reduce their taxes and provide the same level of service, Wichitans benefit.
The idea that it’s good for a city to have highly-paid workers such as those the SEIU represents is highly self-serving. It places the interests of a few union members above that of the entire city.
If a private enterprise wishes to pay its employees higher wages than is necessary, that’s their privilege. But in the marketplace, companies can’t do that for very long, or they won’t be competitive with other companies.
The City of Wichita, however, doesn’t operate in a competitive marketplace. If it pays employees too much, it doesn’t suffer very much. Citizens may not even be aware that the city is operating inefficiently until stressful events like the current budget situation expose the situation.
Since the city doesn’t face the discipline of markets, it’s very important that citizens keep an eye on the city’s spending.
Schlechtweg’s argument — that the city should keep paying more to maintain parks than it needs to — is ridiculous on its face. It likens city spending to a perpetual motion machine: pour in more taxes to support more spending, and you get more wages and benefits paid to workers. That, in turns, feeds more taxes into the machine. The world doesn’t work that way.
Schlechtweg writes: “The bottom line is that workers’ wages and benefits are not the problem.” Unfortunately for the workers he represents, paying more than necessary to get a job done is a problem for Wichita’s taxpayers. If Wichita can save money at the expense of apparently over-paid workers, the city needs to do so, and now.
Here’s an announcement of an event that I hope is just the start of an ongoing operation.
Wichita Area Chapter Meeting of Americans For Prosperity
Monday July 6, 2009 and Tuesday July 7, 2009
Topic: Local Government 101: Learn how to get involved in Wichita city government and how to influence public policy as a citizen activist.
First meeting:
7:00 p.m. – 8:30 p.m., Monday, July 6, 2009
Americans for Prosperity meeting room
800 E. 1st, Suite 401, (in Old Town), Wichita, Kansas 67202
(Northeast corner of First and Mead Streets. For a Google map, click here.
The first meeting is followed by this event:
Attend a Wichita City Council Meeting
9:00 a.m. – 11:30 a.m., Tuesday, July 7, 2009
Wichita City Hall, 455 N. Main, Wichita, Kansas 67202
(Southwest corner Main and Central. For a Google map, click here.
Then, lunch at Mike’s Steakhouse (Private Meeting Room)
11:45 a.m. – 1:00 p.m.
2131 S. Broadway, Wichita, Kansas 67211
For a Google map, click here.
Menu: Individual choices off the menu with individual tickets plus gratuity.
Please RSVP to: either John Todd, Wichita AFP volunteer coordinator at john@johntodd.net, (316) 312-7335 cell, or Susan Estes, AFP Field Director, Kansas at sestes@afphq.org, (316) 269-4170.
Attendees will participate in an interactive presentation of the inner workings of Wichita City Government. You will learn how to discover the secrets hidden in agendas, how to prepare for a meeting, how to foster constructive relationships with elected and non-elected officials and learn ways to influence public policy. Part One is an evening session at the Wichita office from 7:00-8:30 on Monday, July 6. In this class we will examine a typical Wichita City Council Agenda in conjunction with a video recording of the actual meeting.
Part two’s session will begin at Wichita’s City Hall to observe a City Council meeting from 9:00 a.m. until 11:30 a.m., followed by a luncheon discussion on at Mile’s Steakhouse meeting room from 11:30 a.m. until 1:00 p.m.
The Kansas Chapter of Americans for Prosperity (AFP-KS) is committed to advancing every Kansan’s right to economic freedom and opportunity. AFP-KS is an organization of grassroots citizen leaders who engage in spreading the message of fiscally responsible government, free market ideals and regulatory restraint to policymakers on the local and state levels.
At today’s meeting of the Wichita City Council, a privately-owned condominium association is seeking special assessment financing to make repairs to its building.
Special assessment financing means that the cost of the repairs, $112,620 in this case, will be added to the building’s property taxes. Actually, in this case, to each of the condominium owners’ taxes. They’ll pay it off over the course of 15 years.
So the city is not giving this money to the building’s owners. They’ll have to pay it back. The city is, however, setting new precedent in this action.
First, special assessment financing has traditionally been used to fund infrastructure such as streets and sewers, and new infrastructure at that. The city, under its facade improvement program, now allows this type of financing to be used to make repairs and renovations to existing buildings. That’s if your building is located in one of the politically-favored areas of town. Not all buildings will qualify.
By using special assessment financing in this way, the city seeks to direct investment towards parts of town that it feels doesn’t have enough investment. This form of centralized government planning is bad public policy. The city should stop doing this, and let people freely choose where to invest.
This case, however, is an even more egregious example of the city’s desire to control where and how people invest.
The agenda report for this item details two exceptions to the city’s facade improvement program that must be waived for this project to obtain special assessment financing.
The first is the private investment match. Here, the city is proposing that since the building’s owners have made a past private investment in this property, there’s no need to require a concurrent investment.
Second, facade improvement projects are required to undergo a gap analysis to “prove” the need for public financing. According to the report: “This project does not lend itself to this type of gap analysis; however, staff believes that conventional financing would be difficult to obtain for exterior repairs to a residential condominium property like this.”
So the city proposes to waive this requirement as well.
What would happen if the city council doesn’t approve the special assessment financing? The agenda report states “Each individual condo owner would be required to fund a share of the cost.”
Isn’t that what private property owners do: fund the cost of repairs to their property?
Today’s action, if approved, would set a public hearing on July 7.
If the city council approves this project — and I suspect it will with no dissenting votes — we must now realize that Wichita has a mayor, city council, and city staff that are willing to throw any principle aside for political expediency.
By the way, the developer of this building is Real Development. Its principles, particularly Michael Elzufon, are familiar to the mayor and some council members as campaign donors. Its public relations executive has been the campaign manager for the mayor and a city council member.
In the past I’ve referred to Real Development as “crony capitalists,” defined in Investopedia this way: “A description of capitalist society as being based on the close relationships between businessmen and the state. Instead of success being determined by a free market and the rule of law, the success of a business is dependent on the favoritism that is shown to it by the ruling government in the form of tax breaks, government grants and other incentives.”
Elzufon took exception to that characterization. After asking for this special assessment financing project and its waivers, it fits even better.
(This is a Scribd document. Click on the rectangle at the right of the document’s title bar to get a full-screen view.)
The problem Wichita faces lies in the cost structure of water treatment and delivery. One source estimated that 70 to 80 percent of the costs of a city’s water supply system were fixed, or quasi-fixed, costs.
These fixed costs don’t vary with the amount of water demanded by customers, at least not in the short run. But the city charges for water based primarily on the amount that customers use. So when demand is low, revenue drops rapidly, but the water department’s costs decrease very little. That’s the source of the problem.
There is a fixed component to customer’s water bills. One solution would be to increase that fixed charge and drop the cost of a gallon of water. That would make the water department’s revenue less variable. This pricing formula would more accurately reflect the department’s cost structure.
In retrospect, it appears that the city’s campaign to get people to conserve water has been, to put it kindly, a waste of resources. We’ve conserved — although nature has been the primary force behind this — but we still have to pay. Just because the city council doesn’t want to raise water bills now, someone is still going to have to pay.
The water department is in control of its fixed costs over the long term, however. The growing demand for water over the long term is what leads it to make capital investment in its plant. Paying for these projects (fixed costs) by relying on revenue from the usage of water (variable revenue), as we now see, is problematic. The solution is to realize that these capital investments are not driven by daily or even yearly usage. Customers should pay for these capital improvements, then, through a fixed charge.
An alternative would be to charge new connections to the water system a fee that helps pay for the capital investment necessary to expand the water supply. As a matter of fact, the department charges a “Water Plant Equity Fee” just for this purpose. Currently this fee is $1,520. (This is in addition to a fee of $850 for tapping into a water main and installing a meter.) Perhaps the equity fee needs to be raised.
It appears that it is the desire of the city council to pay for capital improvements to the water system through a way other than raising the fixed portion of water bills. The net effect, whatever the city does, will still be felt by citizens as an increase in the cost of providing water. It would be best if this cost was realized as close as possible to its source, which is the water bill.
Hopefully the city council will do something to recognize this, regardless of whether Rhonda Holman will support them.
Here are comments left to this post that were lost and then reconstructed:
Charlotte: You don’t fully understand. The city water dept. needs this money coming in to pay for their ASR project–which is located up by Burrton along the Arkansas River. They did one part of the project and now they want to do more. ASR, Aquafier S—? Recovery is taking the dirty water out of the Arkansas River when it gets up after a rain, running it through a big above ground filter that creates sludge (which they sell) and then pumping that (supposedly clean water) down into the Halstead Equas Bed. I am not thoroughly convinced that the water they are putting into the clean Equas Bed is all that clean. They say we are drawing water out of the Equas Bed faster than this ASR is putting it back in. They say the city needs to do this for economic development.
I replied that the aquifer recharge project is an example of the type of capital improvements to plant that I was referring to.
At yesterday’s meeting of the Wichita City Council, the water department asked for permission to add $1.00 per month to water bills. It’s actually a $2.00 per month proposed increase, as $1.00 would be added to both the water charge and the sewer charge, and most people have both services.
It’s estimated that this charge would bring in $270,000 per month, or about $3,240,000 per year.
The problem is that with the rainy weather for the past year or more, water usage is down. The water department would like to “guarantee a revenue stream not affected by weather conditions.” This is at a time when the water department is undertaking some expensive capital improvement programs, including an aquifer recharge program.
In answering a question, Kristi Irick, customer service manager for the water department, said “If we have a nice dry summer, like we’re hoping for …” This illustrates a conflict of interest: the water department wants revenue, but water customers don’t want to pay a lot to water their lawns. It seems that everyone except the water department views rainfall in the Kansas summer as a blessing.
One citizen said that in light of the federal government recently spending “$700 billion [sic] just to give jobs back to people so they can make a living,” not considering this proposed increase is “petty.” He suggested an additional $1.00 per month increase so that the city could train people and give them jobs in water efficiency. He also suggested a rebate program for those who who are “truly suffering and have done everything they can” to use water wisely.
His suggestion for an even steeper rate increase was met with a chuckle from the audience.
In general, council members and the mayor expressed concern over the proposed increase. The competitiveness of Wichita versus other cities was mentioned, as was the large number of recently laid-off workers in Wichita.
Council member Paul Gray said that “we have a process of revenue generation that is counterproductive to conservation.” The need for a water rate increase, he said, is that use is down. He wants to find an alternative way of paying for the aquifer recharge project, an idea supported by other council members.
In the end, the council deferred action, wanting to wait for methods of alternative funding to be discovered.
We should be glad that Wichita water and sewer rates are low. That’s a blessing, not a problem.
The concern of the council over water and sewer rates, while welcome, is a little misplaced. Concern for the citizens of Wichita is a factor in some types of spending, but not for others. As an example, earlier in the meeting the council approved a grant of $20,000 to a private business in Wichita to help them upgrade the facade of their building. A cynic might say the city just increased the profit of a private business by $20,000, all at the expense of taxpayers if Wichita.
Or, the city spends some $2,000,000 per year subsidizing arts in Wichita. That’s a burden to the finances of many homes in Wichita, just as an increase in water rates is.
Even worse, our electric utility has been increasing its rates by amounts much larger than this proposed water increase. A large reason for this request is the expense of wind power. I imagine a number of city council members support wind power and renewable energy.
It seems there there is momentum towards paying for the aquifer recharge project is a way other than through water bills. If this happens, it will isolate to some degree the cost of the city’s water system from the level that people make use of it.
As this city council decides whether to give a grant of $20,000 to a private business, we need to consider the effect of programs like this on all the people of Wichita. And people are telling me that they don’t like it. They wonder why, at a time when the city is struggling with its budget, and when many are struggling with their personal budgets, there’s money available for programs like this.
They also wonder why can’t everyone be eligible for grants like this. Many people throughout the city — not only in politically favored areas — would like help in repairing their buildings.
Programs like the facade improvement program represent centralized government planning. It’s the polar opposite of free people trading voluntarily in markets. These programs represent politicians and bureaucrats deciding where money should be spent, rather than people deciding themselves.
Strip away all the lofty talk and wishful thinking about downtown and revitalization areas, and what we have is this city council deciding that people don’t know how to spend and invest their own money.
That’s a slap in the face to citizens. People don’t like that.
Besides the personal insult, programs like this harm the wealth of our community. Free and competitive markets are the best way to decide where to make investments. Government simply doesn’t have all the knowledge necessary to make these decisions. Government doesn’t have the right incentives, either.
These programs have a way of expanding and growing. Now we have the city manager and his staff deciding whether or not to pay certain bills as developers work on facade improvement. This seems to be an additional layer of city bureaucracy that we can’t afford.
Mr. Mayor and members of the council, please respect the citizens of Wichita by voting against this grant of taxpayer funds to a private business.