Newsletter for December 23, 2018

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Kansas tax credit scholarship program

An op-ed in the Wichita Eagle regarding school choice prompts uninformed and misinformed comments.

An op-ed written by James Franko appearing in the Wichita Eagle explains the importance of the Kansas Tax Credit for Low Income Students Scholarship Program. This is a program that awards scholarships to students to attend schools of choice. It is a small program. For the school year ending in 2018, 292 students received scholarships totaling $675,892.63. This represents one of every 9,606 dollars spent on Kansas schools. For each group of 1,632 Kansas students, one received a tax credit scholarship. Yet, this program is seen as a threat to existing public schools.

Following is Franko’s editorial, followed by some comments left by Wichita Eagle readers.

Tax credit programs give parents power over their children’s education

James Franko
December 22, 2018

James Franko is vice president and policy director at Kansas Policy Institute.

Education in Kansas has evolved dramatically since settlers plowed out a life on the Plains. The one-room schoolhouse is gone and the local community coming together to hire a young woman to teach are left to the Little House stories that I read with my kids. Education is now a political debate where decisions are increasingly made far away from families, teachers and local communities.

While certainly well-intended, people in Topeka and Washington, D.C., are making decisions, demanding paperwork and setting standards that remove parents and teachers from the driver’s seat. Our teachers and other educators deserve our admiration. But we’ve all heard a teacher lament “teaching to the test” or that money that doesn’t seem to reach the classroom.

A recent column about school choice (“How school choice works in Kansas,” Nov. 29 Eagle) seems to confuse what public education is intended to be with what it currently is. Schools — public, private, and home — are tremendous parts of our community. They make our society vibrant as a by-product of preparing children to succeed.

Dr. Sharon Iorio’s concern about expanded tax credit programs undermining public education gets it backward. The free association of people choosing a private school is equally important to “the bond that holds together our society…” as is a choice to send a child to a public school. The point is that tax credit programs, which are different from vouchers, put parents back in the primary role of educating their children. Kansas’ tax credit scholarships help low-income students attending the lowest-performing schools in our state. It is almost paradoxical, but there is evidence from around the country that achievement increases in public schools when school choice is an option.

America and Kansas have always been a patchwork of communities and cultures. This is what makes a road trip so great. We get to experience the different flavors of American life, many of them from our immigrant history. Expanding private school choice enhances and protects this diversity by allowing parents to decide where their children are educated. Local educators and parents will decide what education looks like in a community. This is in contrast to a one-size-fits-all approach taken when standards are dictated, tests are mandated and policies are implemented from afar.

One approach captures the diversity of our communities and helps improve achievement for all students. The other homogenizes a rich community life and too often leaves student achievement stagnant.

Following, some comments from Eagle readers. These comments show how much there is to learn about the actual Tax Credit for Low Income Students Scholarship Program.

Who qualifies for scholarships?

What people think: “The Kochs, err, KPI, wants private vouchers because it gives money to the wealthy to help pay for their expensive private schools.”
“The tax credit idea mostly benefits religious schools.”
“It’s a regressive tax meant for the 1%.”

First, the guidelines from KSDE state: “An educational scholarship shall not exceed $8,000 per eligible student.” Expensive private schools cost more than this, but there are many private schools that do not. Also, $8,000 is less than the state spends on each student.

Further, the scholarship program is limited to students who are “eligible for free lunch and attends a Title I Focus School or Title I Priority School.” This means a student from a low-income family.

Still further, students over the age of six must have attended a public school in the year prior to receiving a scholarship. Students currently enrolled in private schools of any type, including church schools, are not eligible for a scholarship. 1

Parents already have choice

What people think: “You have always had, in fact anyone, freedom to choose where to send their child to school. Be it private or public.”

This is cruel. The people who need school choice the most — poor children in inner-city schools — simply can’t afford tuition at even the most inexpensive private schools. Thinking like this ensures a permanent underclass cut off from private schools or even good public schools.

Who gets the tax credits?

What people think: “Tax credit is only if you make enough to apply for it and I have yet to see any of these minoritys and poor demanding school choice.”
“When one can get 100% of their tax credit refunded and another family only gets a portion of their tuition refunded due to a low tax rate your playing a KPI pretend game without the facts.”

These writers believe that the parents of scholarship students receive tax credits. Anyone who contributes to a scholarship-granting organization may receive a tax credit. Since scholarships are limited to students from low-income families, it’s not likely these families are able to make a contribution and receive a tax credit. Also, the writer who mentioned tax rates is confusing tax deductions with tax credits.

Education only for those who can afford one

What people think: “Right now people have the ability to get a free education. Under the Koch’s dream land, education would be reserved for those who could afford it.”

Somehow, there are people who think that the goal of companies like Koch Industries and others is to have a poorly-educated population. But companies spend much time and effort recruiting educated and qualified employees to work in scientific laboratories, deal with complicated financial and accounting matters, drive innovation through information technology and other means, deliver health care, and perform numerous other tasks that benefit from a competent education.

Then, don’t these companies want customers to buy their stuff? People with better educations earn more, buy more, and invest more. Companies want more of these people, not fewer.

Without taxes and public schools, there will be no learning

What people think: You don’t like paying taxes? You don’t like living where people can read and write? Go live in the woods.”

In both the Wichita Public School System and the State of Kansas, the proportion of students testing at Level 1 rose. That’s bad. The proportion of students testing at Level 3 or better declined. That’s bad, too. 2

The writer seems to think that public schools are teaching students to read and write. Despite a large influx of spending this year, test scores have fallen. A population of people can’t read and write is becoming larger.


Kansas and Wichita school performance reports. Click for larger.


Notes

  1. “Eligible students must meet the following criteria: (1) eligible for free lunch and attends a Title I Focus School or Title I Priority School; or (2) has previously received a scholarship under this program and has not graduated from high school or reached 21 years of age. 56(d)(1)(A)-(B) AND Eligible students are required to reside in Kansas while receiving a scholarship and be enrolled in a public school in the year prior to receiving the scholarship or be eligible to be enrolled in a public school, if under the age of six. 56(d)(2) and 56(d)(3)(A)-(B).” Kansas State Department of Education. Tax Credit for Low Income Students Scholarship Program Guidelines. Available at https://www.ksde.org/Portals/0/School%20Finance/Action%20Items/TCLISS%20Program–Guidelines.doc.
  2. “Kansas assessment results are now reported in four levels. Level 1 indicates that a student shows a limited ability to understand and use the English Language arts skills and knowledge needed for college and career readiness. Level 2 indicates that a student shows a basic ability to understand and use the English Language arts skills and knowledge needed for college and career readiness. Level 3 indicates that a student shows an effective ability to understand and use the English Language arts skills and knowledge needed for college and career readiness. Level 4 indicates that a student shows an excellent ability to understand and use the English Language arts skills and knowledge needed for college and career readiness.” Kansas State Department of Education, Kansas Report Card.

Kansas House committee assignments for 2019

From the office of Kansas House of Representatives Speaker Ron Ryckman, here are committee assignments for the 2019 session of the Kansas Legislature. The session starts Monday January 14, 2019.

9:00 AM Committees

Appropriations (112-N): Troy Waymaster, Chair; Kyle Hoffman, Vice Chair; Kathy Wolfe Moore, Ranking Minority; John Alcala; Barbara Ballard; Tom Burroughs; Sydney Carlin; Will Carpenter; J.R. Claeys; Susan Concannon; Willie Dove; Shannon Francis; Henry Helgerson; Steven Johnson; Brenda Landwehr; Stephen Owens; Brett Parker; Richard Proehl; Ken Rahjes; Brad Ralph; Bill Sutton; Sean Tarwater; and Kristey Williams.

Federal and State Affairs (346-S): John Barker, Chair; Francis Awerkamp, Vice Chair; Louis Ruiz, Ranking Minority; Tory Arnberger; Jesse Burris; Blake Carpenter; Stephanie Clayton; John Eplee; Renee Erickson; Broderick Henderson; Boog Highberger; Michael Houser; Susan Humphries; Trevor Jacobs; Jim Karleskint; Jan Kessinger; Les Mason; Nancy Lusk; John Resman; Eric Smith; Jerry Stogsdill; Adam Thomas; and Brandon Woodard.

Rural Revitalization (582-N): Don Hineman, Chair; Adam Smith, Vice Chair; Jason Probst, Ranking Minority; Dave Baker; Ken Collins; Owen Donohoe; Cheryl Helmer; Larry Hibbard; Ron Highland; Cindy Holscher; Tim Hodge; Eileen Horn; Russ Jennings; Monica Murnan; Bill Pannbacker; Jene Vickrey; and Paul Waggoner.

Energy, Utilities, and Telecommunications (T/Th) (281-N): Joe Seiwert, Chair; Mark Schreiber, Vice Chair; Annie Kuether, Ranking Minority; Emil Bergquist; John Carmichael; Ken Corbet; Tom Cox; Leo Delperdang; Stan Frownfelter; Randy Garber; Jim Gartner; Nick Hoheisel; Marty Long; Cindy Neighbor; Mark Samsel; Jack Thimesch; and Kellie Warren.

Financial Institutions and Pensions (M/W) (281-N): Jim Kelly, Chair; Boyd Orr, Vice Chair; Gail Finney, Ranking Minority; David Benson; Doug Blex; Suzi Carlson; Tom Cox; Leo Delperdang; Brenda Dietrich; Stan Frownfelter; Megan Lynn; Leonard Mastroni; Bill Rhiley; John Toplikar; Barb Wasinger; Virgil Weigel; and Rui Xu.

Local Government (M/W) (218-N): Kent Thompson, Chair; Emil Bergquist, Vice Chair; Pam Curtis, Ranking Minority; Mike Amyx; Elizabeth Bishop; Michael Capps; Lonnie Clark; Charlotte Esau; Ron Howard; Greg Lewis; Marty Long; J.C. Moore; and Jarrod Ousley.

Veterans (T/Th) (218-N): Lonnie Clark, Chair; Ron Ellis, Vice Chair; Virgil Weigel, Ranking Minority; Chris Croft; Diana Dierks; Brenda Dietrich; David French; Ron Howard; Tom Phillips; Jeff Pittman; Susan Ruiz; Ponka-We Victors; and John Wheeler.

1:30 PM Committees

Agriculture and Natural Resources Budget (142-S): Willie Dove, Chair; Larry Hibbard, Vice Chair; Sydney Carlin, Ranking Minority; Lonnie Clark; Jim Gartner; Trevor Jacobs; Greg Lewis; Boyd Orr; and 58th House District Representative.

Children and Seniors (346-S): Susan Concannon, Chair; Susan Humphries, Vice Chair; Jarrod Ousley, Ranking Minority; Suzi Carlson; Diana Dierks; Charlotte Esau; Randy Garber; Leonard Mastroni; Nancy Lusk; Cindy Neighbor; Bill Rhiley; Susan Ruiz; and Paul Waggoner.

Commerce, Labor, and Economic Development (112-N): Sean Tarwater, Chair; Ken Corbet, Vice Chair; Stan Frownfelter, Ranking Minority; Tom Burroughs; Will Carpenter; Chris Croft; Pam Curtis; Ron Highland; Don Hineman; Kyle Hoffman; Jan Kessinger; Marty Long; Les Mason; Jason Probst; Brad Ralph; Louis Ruiz; and Kristey Williams.

Corrections/Juvenile Justice (152-S): Russ Jennings, Chair; Leo Delperdang, Vice Chair; Boog Highberger, Ranking Minority; John Carmichael; David French; Annie Kuether; Stephen Owens; Fred Patton; Bill Pannbacker; John Resman; Eric Smith; Virgil Weigel; and John Wheeler.

Education (218-N): Steve Huebert, Chair; Brenda Dietrich, Vice Chair; Jim Ward, Ranking Minority; David Benson; Stephanie Clayton; Renee Erickson; Cheryl Helmer; Steven Johnson; Jim Karleskint; Mark Samsel; Mark Schreiber; Adam Smith; Jerry Stogsdill; Adam Thomas; John Toplikar; Jene Vickrey; and Rui Xu

Health and Human Services (546-S): Brenda Landwehr, Chair; John Eplee, Vice Chair; Monica Murnan, Ranking Minority; Tory Arnberger; John Barker; Emil Bergquist; Elizabeth Bishop; Doug Blex; Ken Collins; Ron Ellis; Broderick Henderson; Cindy Holscher; Eileen Horn; Ron Howard; Jim Kelly; Megan Lynn; and Kellie Warren.

Higher Education Budget (281-N): Ken Rahjes, Chair; Tom Phillips, Vice Chair; Brandon Whipple, Ranking Minority; Jesse Burris; Blake Carpenter; J.C. Moore; Brett Parker; Barb Wasinger; and Brandon Woodard.

Transportation (582-N): Richard Proehl, Chair; Jack Thimesch, Vice Chair; Henry Helgerson, Ranking Minority; Francis Awerkamp; Dave Baker; Barbara Ballard; J.R. Claeys; Tom Cox; Shannon Francis; Nick Hoheisel; Michael Houser; KC Ohaebosim; Jeff Pittman; Joe Seiwert; Bill Sutton; Kent Thompson; and Ponka-We Victors.

3:30 PM Committees

Agriculture (582-N): Ron Highland, Chair; Eric Smith, Vice Chair; Sydney Carlin, Ranking Minority; Doug Blex; Larry Hibbard; Eileen Horn; Trevor Jacobs; Jim Karleskint; Greg Lewis; Boyd Orr; Bill Pannbacker; Jason Probst; Mark Schreiber; Joe Seiwert; Kent Thompson; Virgil Weigel; and Rui Xu.

General Government Budget (281-N): J.R. Claeys, Chair; Tory Arnberger, Vice Chair; Tom Burroughs, Ranking Minority; Mike Amyx; Leo Delperdang; David French; Cheryl Helmer; Broderick Henderson; and Marty Long.

Judiciary (346-S): Fred Patton, Chair; Brad Ralph, Vice Chair; John Carmichael, Ranking Minority; Emil Bergquist; Jesse Burris; Pam Curtis; Randy Garber; Boog Highberger; Nick Hoheisel;
Susan Humphries; Russ Jennings; Annie Kuether; KC Ohaebosim; Stephen Owens; Mark Samsel; Kellie Warren; and John Wheeler.

K-12 Education Budget (546-S): Kristey Williams, Chair; Kyle Hoffman, Vice Chair; Valdenia Winn, Ranking Minority; Brenda Dietrich; Renee Erickson; Cindy Holscher; Steve Huebert; Brenda Landwehr; Nancy Lusk; Adam Smith; Sean Tarwater; Adam Thomas; and Jim Ward.

Social Services Budget (144-S): Will Carpenter, Chair; Leonard Mastroni, Vice Chair; Barbara Ballard, Ranking Minority; Suzi Carlson; Owen Donohoe; Ron Howard; Megan Lynn; Monica Murnan; and Susan Ruiz.

Taxation (112-N): Steven Johnson, Chair; Les Mason, Vice Chair; Jim Gartner, Ranking Minority; John Alcala; Dave Baker; John Barker; Stephanie Clayton; Susan Concannon; Ken Corbet; Chris Croft; John Eplee; Henry Helgerson; Don Hineman; Jim Kelly; Tom Phillips; Richard Proehl; Ken Rahjes; Jerry Stogsdill; Jack Thimesch; John Toplikar; Barb Wasinger; Kathy Wolfe Moore; and 58th House District Representative.

Transportation and Public Safety Budget (142-S): Shannon Francis, Chair; John Resman, Vice Chair; Jeff Pittman, Ranking Minority; David Benson; Ron Ellis; Charlotte Esau; Michael Houser; Jan Kessinger; and Ponka-We Victors.

Elections (T/Th) (212B-N): Bill Sutton, Chair; Blake Carpenter, Vice Chair; Brett Parker, Ranking Minority; Frances Awerkamp; Lonnie Clark; Ken Collins; Willie Dove; Tim Hodge; J.C. Moore, Jarrod Ousley; Bill Rhiley; Paul Waggoner; and Brandon Whipple.

Insurance (M/W) (212B-N): Jene Vickrey, Chair; Tom Cox, Vice Chair; Cindy Neighbor, Ranking Minority; Francis Awerkamp; Elizabeth Bishop; Michael Capps; Blake Carpenter; Ken Collins; Diana Dierks; Willie Dove; Gail Finney; Stan Frownfelter; J.C. Moore; Bill Rhiley; Bill Sutton; Paul Waggoner; and Brandon Woodard.

Kansas jobs, November 2018

For November 2018, a growing labor force and more employment, but growing more slowly from October.

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

Over the year (November 2017 to November 2018), the Kansas labor force is up by 0.6 percent, also rising slightly over the past three months.

The number of unemployed persons fell from October to November, falling by 136 persons, or 0.3 percent. The unemployment rate was 3.2 percent in November, down from 3.5 percent from one year ago, and down from 3.3 percent in October.

The number of Kansas nonfarm jobs for November 2018 rose by 19,700 or 1.4 percent over last November. This is using seasonally adjusted data. The non-adjusted figure is nearly the same at 20,000.

From October 2018 to November 2018, nonfarm employment in Kansas grew by 1,500, which is 0.1 percent.

Click charts and tables for larger versions.

Kansas personal income rises

Kansas personal income grew in the third quarter of 2018, but slower than in most states.

Today the Bureau of Economic Analysis, an agency of the United States Department of Commerce, released state personal income data for the third quarter of 2018. The press release noted, “State personal income increased 4.0 percent at an annual rate in the third quarter of 2018, an acceleration from the 3.4 percent increase in the second quarter.”

Personal income in Kansas rose at an annual rate of 3.1 percent, while Plains States rose at 3.2 percent. (For this data, Plains States are Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.)

The 3.1 percent rate in Kansas ranked 40th among the states. Over the period covered by this news release, Kansas personal income has grown more slowly than the nation.

According to BEA, “Personal income is the income received by, or on behalf of, all persons from all sources: from participation as laborers in production, from owning a home or business, from the ownership of financial assets, and from government and business in the form of transfers. It includes income from domestic sources as well as the rest of world. It does not include realized or unrealized capital gains or losses.”

Click illustrations for larger versions.

Starlite loan isn’t needed

The Wichita City Council seems poised to enter an unnecessarily complicated transaction.

This week the Wichita City Council will consider a loan to the operator of the Starlite Drive-In Theater in Wichita. According to city documents, the proposal is for a five-year loan of $200,000 with an annual interest rate of one percent. The city is requiring both a personal guarantee and a letter of credit, presumably from a reputable bank. 1

We have to wonder why the city asks for both a letter of credit and a personal guarantee. When issuing a letter of credit, a bank will be careful. It is, in effect, making a promise to issue credit to a borrower (the operator of the Starlite) if the borrower does not perform according to the agreement with the city. That alone ought to be enough security.

Moreover, if a bank has enough confidence in a customer to issue a letter of credit for $200,000, it would probably make a loan for the same amount. But that would cost more than one percent in interest.

This is really what the city is doing: Reducing the cost of a loan that a borrower ought to be able to obtain on his own.

Given this, why doesn’t the city simply subsidize the interest cost of the loan? I don’t know what rate a bank would charge this borrower, but it might be 12 percent or so. Then the borrower would have interest costs of $24,000 per year as compared to $2,000 per year for the City of Wichita loan. If the city would simply pay the borrower the difference between the two, things would be much simpler for the city. It wouldn’t have to worry about the loan being repaid.

Well, the city shouldn’t have to worry about repayment, because of the letter of credit. But if the borrower qualifies for that, he can also qualify for a loan.

There are other reasons why the city shouldn’t get involved in the Starlite theater, but if it must, let’s try to keep things simple. Based on what we know so far, I don’t think we’re being told the entire story.

Further evidence of lack of transparency is that this matter has been elevated to an emergency. According to city documents, the mayor will make this declaration regarding the enabling ordinance: “I, Jeff Longwell, Mayor of the City of Wichita, Kansas, hereby request that the City Council declare that a public emergency exists requiring the final adoption and passage on the day of its introduction, to wit, December 18, 2018 …” 2

Notes

  1. “The $200,000 loan from the City will be structured to be repaid over five years as an interest only loan with an interest rate of 1% per annum, with quarterly interest payments for the first four years. The borrower will pay one-twelfth of the principal amount plus interest in each month of year five. The borrower is Blake Smith through Starlite, LLC, a Kansas limited liability company. Smith will provide the City with a personal guarantee as well as a letter of credit securing the entire loan. The letter of credit will be structured as a declining letter of credit. If any principal amount of the loan is prepaid, the letter of credit can be reduced by an equal amount. For instance, if $25,000 is paid at the end of year one, the letter of credit may be reduced to $175,000, the remaining balance of the loan.” City of Wichita, Agenda Packet for December 18, 2018. Item V-5.
  2. REQUEST FOR DECLARATION OF EMERGENCY
    REQUEST OF THE MAYOR OF THE CITY OF WICHITA, KANSAS, FOR THE DECLARATION BY THE CITY COUNCIL OF SAID CITY OF THE EXISTENCE OF A PUBLIC EMERGENCY REQUIRING THE ADOPTION OF AN ORDINANCE BELOW DESIGNATED.
    TO THE MEMBERS OF THE CITY COUNCIL OF THE CITY OF WICHITA, KANSAS:
    I, Jeff Longwell, Mayor of the City of Wichita, Kansas, hereby request that the City Council declare that a public emergency exists requiring the final adoption and passage on the day of its introduction, to wit, December 18, 2018 of an ordinance entitled:
    ORDINANCE NO. _____
    AMENDMENTS TO ORDINANCE 50-585 OF THE CITY OF WICHITA, KANSAS, PERTAINING TO HYATT GRANT PROCEEDS FOR COMMUNITY IMPROVEMENT PROJECTS, GRANTS AND GRANT PROGRAMS
    The general nature of such public emergency lies in the need to pass and publish this ordinance to authorize the release of funds for the purchase of special digital projection equipment and for costs related to its installation for Wichita’s Starlite Drive-In, which was recently purchased by an anonymous buyer to prevent its closure.
    It is therefore expedient at this time that the City Council find and determine that a public emergency exists by reason of the foregoing and that the above entitled Ordinance be finally adopted on the day of its introduction.
    Executed at Wichita, Kansas on this day of December 18, 2018.
    MAYOR OF THE CITY OF WICHITA, KANSAS. ibid.

Sedgwick County tax exemptions

Unlike the City of Wichita, Sedgwick County has kept track of its tax exemptions.

As part of an effort to increase efficiency and management of Sedgwick County government, former county manager Michael Scholes implemented numerous changes, as detailed in the document Efficiencies in Sedgwick County government. One management accomplishment was described as this:

Developed a tax system and business intelligence query to identify Industrial Revenue Bonds (IRB) & Economic Development (EDX) tax exemptions and report foregone property tax revenues for Governmental Accounting Standards Board (GASB) 77 reporting. The report provides the ability to report by tax authority, company, and real or personal property for one (1) or up to four (4) years. Prior reporting was time consuming and error prone; requiring manual data entry into Excel spreadsheets.

The county has not made this report available on its website. To access this report in an alternative manner, click here

The City of Wichita, to my knowledge, does not provide information like this, except as a total amount in the city’s Comprehensive Annual Financial Report (CAFR). (The city and county numbers are not in agreement, and by a large amount.)

Of note, the mayor’s page on the Wichita city government website holds this: “Mayor Longwell has championed many issues related to improving the community including government accountability, accessibility and transparency …” So far, the mayor’s leadership and stewardship has not produced this level of information.

Of further note, a majority of the Sedgwick County Commission decided to fire Michael Scholes.

WichitaLiberty.TV: Judge Kevin Smith and foster care

In this episode of WichitaLiberty.TV: Judge Kevin Smith explains some of the problems in the foster care system in Kansas, and what we can do to improve it. View below, or click here to view at YouTube. Episode 221, broadcast December 16, 2018.

Shownotes

Newsletter for December 9, 2018

Click here to view the freshest edition of the newsletter from Voice For Liberty. This edition is dated December 9, 2018.

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Efficiencies in Sedgwick County government

A document that hasn’t been made public details savings achieved in Sedgwick County over a recent period of nearly three years.

A document prepared within the Sedgwick County Division of Finance details savings of $6,308,097 over a period of almost three years, starting in November 2015. That is the month when Michael Scholes joined Sedgwick County as County Manger. His last day as manager was November 30, 2018, after being dismissed by the county commission. This document is dated August 29, 2018.

An example of a savings is: “Eliminated 6.0 FTEs and associated funding due to the outsourcing of EMS Billing ($304,027).”

The document contains a summary:

  • Priority 1 – Safe & Secure Communities had a total savings listed of $3,959,137, where the categories of efficiencies included technology changes, process improvements, consolidation, training, grants to offset costs, and staffing changes.
  • Priority 2 – Human Services & Cultural Experiences had a total savings listed of $1,931,447, where the categories of efficiencies included technology changes, process improvements, staffing changes, consolidation, training, and collaboration with other entities.
  • Priority 3 – Communications & Engagement had efficiencies in transparency and elections process with the purchase of new voting equipment.
  • Priority 4 – Effective Government Organization had a total savings listed of $417,513, where the categories of efficiencies included technology changes, process improvements, and staffing changes.

To the best of my knowledge, this document has not been shared with the public, and is not found on the county’s website. I make it available here.

Newsletter for December 3, 2018

Click here to view the freshest edition of the newsletter from Voice For Liberty. This edition is dated December 3, 2018.

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On big contracts, Wichita has had problems

As Wichita prepares to award a large construction contract, let’s hope the city acts in an ethical manner this time.

As the Wichita City Council prepares to make a decision regarding a contract for the new baseball stadium, the council’s past reputation in these matters can’t be overlooked.

The controversy over the stadium contract has been covered by the Wichita Eagle: “The Wichita City Council hasn’t officially approved a design-build team for the city’s new $75 million Minor League ballpark, but there’s already been a protest over the recommended group. … At issue in a protest by a competing team is whether the JE Dunn team meets a key requirement to be selected, which is that it has built at least three similar Major or Minor League ballparks.” 1

The biggest potential for unethical behavior comes from Wichita Mayor Jeff Longwell. In 2012, as the Wichita city council was considering the award of the contract for the new airport terminal, Longwell (then a council member) received campaign contributions from executives of Walbridge, a Michigan construction company partnering with Key Construction to build the new Wichita airport terminal. 2

Two Walbridge contributions were made on July 16, 2012, the day before the council, Longwell included, voted to award the contract to the Key/Walbridge partnership. More contributions from Walbridge arrived on July 20, according to Longwell’s campaign finance reports.

When questioned about the Michigan contributions, Longwell told the Wichita Eagle, “We often get contributions from a wide variety of sources, including out-of-town people.” But analysis of past campaign finance documents filed by Longwell showed just three out-of-state contributions totaling $1,500. 3

In deciding the airport contract issue, the council was asked to make decisions involving whether discretion was abused or whether laws were improperly applied. It’s not surprising that Jeff Longwell made these decisions in favor of his campaign contributors. But he shouldn’t have been involved in the decision.

That was not the first time Jeff Longwell has placed the interests of his campaign contributors ahead of taxpayers. In 2011 the city council, with Longwell’s vote, decided to award Key a no-bid contract to build the parking garage that is part of the Ambassador Hotel project. The no-bid cost of the garage was to be $6 million, according to a letter of intent. Later the city decided to place the contract for competitive bid. Key Construction won the bidding, but for a price $1.3 million less.

It’s not only Longwell with problematic behavior in the past. In 2012, before the vote on the airport contract, executives of Key Construction and spouses contributed heavily to the campaigns of both Wichita City Council Member Lavonta Williams (district 1, northeast Wichita) and Wichita City Council Member James Clendenin (district 3, southeast and south Wichita). These contributions were not known to the public until months after the vote was cast.

Williams is no longer on the council, but Clendenin remains.

Former Wichita Mayor Carl Brewer had his own issues, with a curious set of ethics principles. 4

The city needs an adult in the room. That person is, or should be, Wichita city manager Robert Layton. In the past he has implemented policies to end the practice of no-bid contracts. We don’t know what will happen this week.


Notes

  1. Rengers, Carrie. City selects ballpark design-build group; competing bidder questions qualifications. Wichita Eagle, November 29, 2018. Available at https://www.kansas.com/news/business/biz-columns-blogs/carrie-rengers/article222372330.html (subscription may be required).
  2. “A campaign finance report filed by Wichita City Council Member Jeff Longwell contains contributions from executives associated with Walbridge, a Michigan construction company partnering with Key Construction to build the new Wichita airport terminal. … These contributions are of interest because on July 17, 2012, the Wichita City Council, sitting in a quasi-judicial capacity, made a decision in favor of Key and Walbridge that will cost some group of taxpayers or airport customers an extra $2.1 million. Five council members, including Longwell, voted in favor of this decision. Two members were opposed.” Weeks, Bob. Michigan company involved in disputed Wichita airport contract contributes to Jeff Longwell. Available at https://wichitaliberty.org/wichita-government/michigan-company-involved-in-disputed-wichita-airport-contract-contributes-to-jeff-longwell/.
  3. “Analysis of Longwell’s July 30, 2012 campaign finance report shows that the only contributions received from addresses outside Kansas are the Walbridge contributions from Michigan, which contradicts Longwell’s claim. Additionally, analysis of ten recent campaign finance reports filed by Longwell going back to 2007 found three contributions totaling $1,500 from California addresses.” Weeks, Bob. Jeff Longwell out-of-town campaign contributions. Available at https://wichitaliberty.org/wichita-government/jeff-longwell-out-of-town-campaign-contributions/.
  4. Weeks, Bob. The odd ethics of Wichita Mayor Carl Brewer. Available at https://wichitaliberty.org/wichita-government/odd-ethics-wichita-mayor-carl-brewer/.

It’s not the bonds, it’s the taxes

A Wichita Eagle headline reads “Wichita aircraft supplier plans 45 new jobs with $7.5 million bond request,” but important information is buried and incomplete.

According to the agenda packet for the December 4, 2018 meeting of the Wichita City Council, a local aircraft supplier is “requesting issuance of bonds” worth $7.5 million. 1

Even if you read the entire Wichita Eagle article2 on this matter, you wouldn’t really learn much about this item. You might think the city is lending the company this money, which many people assume is the purpose of the Industrial Revenue Bonds program. But in the IRB program, the city lends no money, nor does it guarantee repayment of the bonds. 3

Instead, the purpose of the IRBs is to convey a tax holiday. In the very last paragraph, the article mentions this property tax abatement, but no dollar value is given, even though the “city documents” presumably used as a source for this story clearly state the dollar values. The sales tax exemption is also mentioned, with no dollar value given. City documents don’t hold that, either.

The value of the tax holiday, according to the city, is estimated at $82,040 annually for up to ten years, shared among local taxing authorities thusly:

City of Wichita: $22,837
State of Kansas: $1,050
Sedgwick County: $20,575
USD 259 (Wichita school district): $37,578

For the value of the sales tax exemption, no value is given. By city documents state the purpose of the bonds is to pay for “$4,000,000 for new machinery and equipment.” Sales tax on that would be $300,000. If the entire $7.5 million is spent on taxable purchases, sales tax savings would be $562,500.

Why doesn’t the Wichita Eagle mention some of these important matters?

The article also holds no mention of the important public policy issues involved. For example, why does the owner of the business want to escape paying the same taxes that (nearly) everyone else must pay? This question is especially pertinent as Kansas is one of the few states in which even low-income households pay the full sales tax rate on groceries.

Perhaps the reason is that the cost of government makes this investment unprofitable. If that is true, we have a grave problem. If the city must issue bonds and create a tax holiday for this rather small investment, we have a capacity problem. A reader on Facebook left this wry comment to the Eagle story: “So, local area population 600,000+ people … About to add 45 jobs over 5 years?”

The city justifies tax giveaways like this by using a benefit-cost analysis. That is, if the city gives up some taxes, it will receive even more in additional taxes. This analysis is useful to politicians and bureaucrats. But the analysis is valid and meaningful only if the investment is impossible without the tax giveaway.

The question then becomes: Is this tax forgiveness necessary? City documents don’t say. Showing necessity is not a requirement of the IRB incentive program. We’re left wondering if the tax expenditure, which is potentially more than one million dollars over ten years, is truly needed.

The city is proud of its requirements that the benefit-cost ratio must be at least 1.3 to 1. But for USD 259, the Wichita school district, the ratio is 1.17 to 1. So the city is pushing an “investment” on the school district that is below the standard it requires for itself. The school district has no say in the matter, based on Kansas state law. Note also that the school district gives up the most tax revenue, 1.6 times as much as the city.

By the way, Wichita Mayor Jeff Longwell says the city is no longer using cash as economic development incentives. But when the city waves a magic legislative wand and says you don’t have to pay $82,040 per year in property tax, how is that different than giving the same amount in cash? Or when the city says don’t bother paying the sales tax on this, how is that different than giving a cash discount?

The answer is there’s no difference. The mayor, city council members, and city bureaucrats hope you won’t notice the sleight of hand, that is, skillful deception. And with the Wichita Eagle being the watchdog, there’s little chance very many people will be informed.


Notes

  1. City of Wichita, agenda for December 4, 2018. V-2: Public Hearing and Issuance of Industrial Revenue Bonds, Etezazi Industries, Inc. Available at http://www.wichita.gov/Council/Agendas/12-04-2018%20Agenda.pdf.
  2. Siebenmark, Jerry. Wichita aircraft supplier plans 45 new jobs with $7.5 million bond request. Wichita Eagle, November 30, 2018.
  3. “Industrial Revenue Bonds are a mechanism that Kansas cities and counties use to allow companies to avoid paying property and sales taxes.” Weeks, Bob. Industrial revenue bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/.

Sedgwick County income and poverty

Census data show Sedgwick County continuing to fall behind the nation in two key measures.

Data released today from the United States Census Bureau through the Small Area Income and Poverty Estimates (SAIPE) Program shows Sedgwick County median household income continues to fall farther behind the nation.

In 1989, median household income in Sedgwick County was greater than that for Kansas and the nation. In 2017, however, Sedgwick County has fallen behind both.

In 1989, the all-age poverty rate in Sedgwick County was less than the national rate, but now it is higher.

As can be seen in the nearby charts produced by the Census Bureau’s visualization tool, the trend in economic performance between Sedgwick County and the nation started diverging around the time of the last recession. As time passes, the gap between the two generally grows larger, with Sedgwick County falling farther behind.

Courtesy U.S. Census Bureau. Click for larger.
Courtesy U.S. Census Bureau. Click for larger.

WichitaLiberty.TV: Kansas Representative Leo Delperdang

In this episode of WichitaLiberty.TV: Representative Leo Delperdang joins Bob Weeks to discuss the recent election and the upcoming session of the Kansas Legislature. View below or click here to view at YouTube. Episode 220, broadcast December 2, 2018.

Shownotes

Wichita employment, October 2018

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

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

Total nonfarm employment rose from 296,900 last October to 299,000 this October. That’s an increase of 2,100 jobs, or 0.7 percent. (This data is not seasonally adjusted, so month-to-month comparisons are not valid.) For the same period, jobs in the nation grew by 1.7 percent.

The unemployment rate was 3.3 percent, down from 3.5 percent one year ago.

Considering seasonally adjusted data from the household survey, the labor force rose by 719 persons (0.2 percent) in October 2018 from September 2018, the number of unemployed persons rose by 283 (2.7 percent), and the unemployment rate was unchanged at 3.5 percent. The number of employed persons not working on farms rose to 298,219 in October from 297,783 the prior month, an increase of 436 persons, or 0.1 percent.

Click charts for larger versions.

Newsletter for November 25, 2018

Click here to view the freshest edition of the newsletter from Voice For Liberty. This edition is dated November 25, 2018.

To subscribe by email, click here. All you need to supply is your email address, and it’s easy to unsubscribe. If you aren’t getting the emails after you’ve subscribed, click here for suggestions on how to fix it.

WichitaLiberty.TV: Economic development incentives

In this episode of WichitaLiberty.TV: A look at some economic development incentive programs in Wichita and Kansas. Second in a series. Tax increment financing (TIF) is prominent in this episode. View below, or click here to view at YouTube. Episode 219, broadcast November 25, 2018.

Shownotes

Updated: Kansas tax receipts

Kansas tax receipts by category, presented in an interactive visualization.

The Kansas Division of the Budget publishes monthly statistics regarding tax collections. I’ve gathered these and present them in an interactive visualization. Updated with data through October 2018.

Click here to learn more and access the visualization.

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

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