WichitaLiberty.TV: John Fund, National Review Columnist

In this episode of WichitaLiberty.TV: National Review columnist John Fund joins Bob Weeks and Karl Peterjohn to discuss elections and their security. View below, or click here to view at YouTube. Episode 168, broadcast October 8, 2017.

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WichitaLiberty.TV: Wichita talk radio pioneer Joseph Ashby

In this episode of WichitaLiberty.TV: Wichita talk radio pioneer Joseph Ashby joins Karl Peterjohn and Bob Weeks to discuss state and national affairs. View below, or click here to view at YouTube. Episode 167, broadcast October 1, 2017.

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Wichita, youthful and growing from the core

A letter writer tells Wichitans that “We have an opportunity to show the country the future of Wichita is youthful and bright, and its growing from the core out.”

In support of replacing Century II with something “no less than absolutely spectacular in ambition,” a letter in the Wichita Eagle states, “We have an opportunity to show the country the future of Wichita is youthful and bright, and its growing from the core out.” 1

Sadly, these observations are not true. Data from the U.S. Census Bureau shows that the median age of Wichitans is rising, the proportion of the population in the millennial category is static or shrinking slightly, and the proportion that are senior citizens is rising. Wichita is growing older, not younger.

As far as “growing from the core out,” the downtown population is up. Although: The increase from 2010 to 2015, proportional to the entire city, was only slightly greater. In 2010, 0.36 percent of Wichitans lived in downtown, rising only slightly to 0.37 percent in 2015. (These are Census figures for zip code 67202, which is downtown Wichita.)

Trends of business activity in downtown Wichita. Click for larger.
Click for larger.
If we gauge growth by the number of jobs, business establishments, and payroll in downtown, we find that downtown Wichita is shrinking. There is some controversy regarding how to measure the number of jobs in downtown Wichita, but by any measure, the number of jobs is declining. 2 3


Notes

  1. Think big on Century II. Wichita Eagle. Letters, September 14, 2017. Available at http://www.kansas.com/opinion/letters-to-the-editor/article174129391.html.
  2. Weeks, Bob. Growth in Downtown Wichita Jobs. Available at https://wichitaliberty.org/wichita-government/growth-downtown-wichita-jobs/.
  3. Weeks, Bob. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.

Downtown Wichita jobs decline

By the measure of jobs used by the City of Wichita, downtown jobs declined in 2015.

Jobs in downtown Wichita, according to LEHD Origin-Destination Employment Statistics. Click for larger.
Annual change in jobs, according to LEHD Origin-Destination Employment Statistics. Click for larger.
According to a series of data from the United States Census Bureau, the number of jobs in downtown Wichita declined by 1.6 percent from 2014 to 2015.

The data, known as LEHD Origin-Destination Employment Statistics, or LODES, was updated in September to include data from 2015. 1. Washington, DC: U.S. Census Bureau, Longitudinal-Employer Household Dynamics Program Available at https://lehd.ces.census.gov/data/#lodes.] Downtown Wichita is defined in this case as zip code 67202, which is the same definition used by the city of Wichita, Wichita Downtown Development Corporation, and Center for Economic Growth and Business Research at Wichita State University.

As can be seen in the nearby charts, the number of jobs has been on a mostly downhill trend.

There is, however a serious problem with this data series, as it includes workers whose “administrative home” is downtown, even though they work somewhere else. The Census Bureau makes this caveat clear to users of this data. 2 Because all Wichita school district employees have an “address” of 201 N. Water in downtown Wichita, they appear in the LODES data series as employees with that address.

Trends of business activity in downtown Wichita. Click for larger.
It is a serious mistake to count all Wichita school district employees as downtown workers. Most school employees work in schools and other sites scattered throughout the city, not in downtown. Further, this year the school district moved its administrative offices to the former Southeast High School building at Lincoln and Edgemoor. That’s in zip code 67218, not 67202. The effect of this on the LODES statistics (it will appear that some 7,000 workers have moved out of downtown Wichita) probably won’t appear for two or three years.

Click for larger.
Even if we use the data series promoted by the Wichita Downtown Development Corporation, the trend in jobs is in the wrong direction. WDDC promotes the large investment in downtown Wichita, by both private and public sources. 3 But employment is trending in the opposite direction. 4

But this data series is not useful as a measure of the number of people working in downtown Wichita, as it overstates the true number. The LODES data is widely cited by the City of Wichita and affiliated agencies such as WDDC and the Wichita Chamber of Commerce. 5 It appears prominently in the State of Downtown report produced by WDDC, generally released on May of each year. So far, there is no report for this year.


Notes

  1. U.S. Census Bureau. LEHD Origin-Destination Employment Statistics Data (2002-2015) [computer file
  2. Weeks, Bob. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.
  3. Weeks, Bob. Growth in Downtown Wichita Jobs. Available at https://wichitaliberty.org/wichita-government/growth-downtown-wichita-jobs/.
  4. Weeks, Bob. Downtown Wichita business trends. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-business-trends/.
  5. Weeks, Bob. The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.

Kansas hotel tax collections

Kansas hotel guest tax collections presented in an interactive visualization.

Cities and counties in Kansas may levy a transient guest tax collection on hotel guests. It is sometimes called a bed tax or guest tax. The tax is collected as a percentage of total room revenue, not the number of rooms or the rate charged for rooms. While the Kansas Department of Revenue collects the tax, the proceeds are returned to the cities or counties, except for a two percent processing fee. In Wichita the rate is six percent.

In some cases, jurisdictions may levy additional taxes that may not be paid to the Kansas Department of Revenue. This is the case with the Wichita city tourism fee, which took effect on January 1, 2015. This tax of 2.75% is paid directly to the city1, so it doesn’t appear in KDOR figures.

Also, jurisdictions may change the tax rate. The Kansas Department of Revenue maintains a list of taxes charged. 2

The visualization has three views of data. One is a table of collections, including percent change from the previous year. A line chart shows the dollar amount of collections. A second line chart shows collections indexed to a common starting point. This is useful for comparing the relative change in guest tax collections. These line charts show data as the average of the previous 12 months.

Examples of nondisclosure.
This data does not represent all hotels in Kansas. Confidentiality rules prohibit disclosure when a jurisdiction has a small number of hotels. In the nearby example, the value “C” is reported for Sedgwick County, indicating such non-disclosure. Obviously, there are hotels in Sedgwick County. But considering hotels in Sedgwick County that are not located in cities like Wichita, the number is too small to report, based on confidentiality guidelines. Similarly, for small cities, data is probably not available to the public.

Of note, while Wichita is the largest city in Kansas, Overland Park collects the most hotel guest tax. Of the largest markets in Kansas, Wichita has experienced the least growth in hotel tax collections since 2010.

Click here to access the visualization.

Guest tax collections in largest hotel markets in Kansas, indexed change. Click for larger.


Notes

  1. City of Wichita ordinance 49-745. Available at http://www.wichita.gov/CityClerk/OrdanicesDocuments/49-745%20TBID%20Fee%20Ordinance.pdf.
  2. Kansas Department of Revenue. Transient Guest Tax Rates, Effective Dates, and Number of Active Accounts. Available at https://www.ksrevenue.org/pdf/tgratesfilers.pdf.

Kansas highway spending

A look at actual spending on Kansas highways, apart from transfers.

KDOT spending, major road programs. Click for larger.
KDOT spending, total road programs. Click for larger.
KDOT transfers. Click for larger.
KDOT funding sources, partial. Click for larger.
When we look at actual spending on Kansas roads and highways, we see something different from what is commonly portrayed. Kansas Department of Transportation publishes a Comprehensive Annual Financial Report that details spending in four categories. These figures represent actual spending on roads and highways, independent of transfers to or from the highway fund.

For fiscal year 2017, when ended June 30, 2017, spending on three categories (Maintenance, Preservation, and Modernization) was nearly unchanged from the year before, while spending on the category Expansion and Enhancement fell by 31 percent.

For these four categories — which represent the major share of KDOT spending on roads — spending in fiscal 2017 totaled $738.798 million. That’s down 14 percent from $857.133 million the year before, and up from a low of $698.770 million in fiscal 2010.

Again, these are dollars actually spent on highway programs. A common characterization of the way Kansas government is funded is called “robbing the bank of KDOT.” To the extent that characterization is accurate, there is a separate line item titled “Distributions to other state funds” that holds these values. It appears in the nearby table. A chart shows sales tax distributions from the general fund to KDOT, and transfers from KDOT.

Many also criticize Kansas government for slashing highway spending, letting our roads crumble. While total spending on these four programs has been falling (after adjusting for inflation), the decline is minor compared to the hysterical claims of those with vested interests in more government, and especially highway, spending.

Kansas law specifies how much sales tax revenue is transferred to the highway fund. Here are recent rates of transfer and dates they became effective: 1

July 1, 2010: 11.427%
July 1, 2011: 11.26%
July 1, 2012: 11.233%
July 1, 2013: 17.073%
July 1, 2015: 16.226%
July 1, 2016 and thereafter: 16.154%

A nearby chart shows the dollar amounts transferred to the highway fund from sales tax revenue. In 2006 the transfer was $98.914 million, and by 2016 it had grown to $514.519 million.

KDOT spending, major road programs. Click for larger.


Notes

  1. Kansas Statutes Annotated 79-3620.

WichitaLiberty.TV: Century II, Again

In this episode of WichitaLiberty.TV: Karl Peterjohn and Bob Weeks continue discussing Century II, Wichita’s convention and performing arts center. But first, some unfortunate economic news for Wichita. View below, or click here to view at YouTube. Episode 166, broadcast September 24, 2017.

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Wichita economy shrinks

The Wichita-area economy was smaller in 2016 than the year before.

The Wichita MSA economy produced fewer goods and services in 2016 than in 2015, according to data from the Bureau of Economic Analysis, which is part of the U.S. Department of Commerce.

In real (inflation-adjusted) dollars, the Wichita metropolitan area gross domestic product fell by 1.4 percent. For all metropolitan areas, GDP grew by 1.7 percent.

Since 2001, GDP for all metropolitan areas grew by 29.3 percent, while Wichita had 12.3 percent growth.

Wichita and US GDP. Click for larger.

Wichita job growth

Wichita economic development efforts viewed in context.

Greater Wichita Partnership is the organization with primary responsibility for economic development in the Wichita area. Data provided by GWP shows that since 2004, GWP takes credit for creating an average 1,847 jobs per year through its economic development efforts. 1

To determine whether this is an impressive amount, we need context.

Over the past ten years the labor force for the Wichita MSA has averaged 314,877 each month (in May 2017 it was 306,809), and there were an average of 295,785 people working each month (May 2017 value was 293,763).

So one level of context is that the jobs for which GWP credits itself amount to 1,847 of 295,785 jobs, or 0.6 percent of the number of people working.

Click for larger.
Another way to look at this level of job creation is to consider it in relation to the number of hires. Over the past ten years, the national average monthly rate of hires is about 3.4 percent, meaning that each month 3.4 percent of jobs have a new person filling them, or the jobs are newly-created. With an average of 295,785 people working in the Wichita MSA each month, this means that about 10,057 jobs have a new worker, each month. That’s 120,684 per year. With GWP taking credit for 1,847 jobs, this means that GWP’s efforts are responsible for 1.5 percent of the new hires each year.

Another context: Employment in the Wichita MSA reached a peak of 312,100 in July 2008. In June 2017 it was 298,800. To get back to the peak, Wichita needs 13,300 new jobs. At the GWP rate of 1,847 per year, it will take seven more years to recover.

All this shows that the efforts of our economic development machinery are responsible for small proportions of the jobs we need to create. This assumes that the data regarding jobs and investment that GWP provides is correct.

Here’s one example of problems with the data GWP provides. GWP reported that companies made investments of $1.2 billion in 2016 when the average for years before that was $138 million. That looks like an impressive jump. This figure, however, contains over one billion dollars of investment by Spirit Aerosystems projected to occur over the next five years. Not in 2016, but possible over the next five years. Yet GWP presents this investment as through it occurred in 2016.

Furthermore, when Spirit asked the city for authority to issue $280 bonds over five years, it told the city this would result in 349 new jobs over the same time period. That’s creating jobs at the rate of 70 per year. These jobs are welcome, but we need thousands of jobs per year. 2

Does GWP deserve credit? GWP says, “We only incorporate data and dollar amounts from projects which we helped attract, retain or expand; we do not include announcements that we have not assisted with.” 3 “Helped” and “assisted” are not very precise. How much “help” did Spirit need to decide to remain in Wichita, except for hundreds of millions of dollars in forgiven taxes? That is something the people of Wichita pay for, not GWP.

We must also be concerned about the reliability of GWP statistics. Earlier this year GWP was prominently promoting on its website the success of NetApp, a technology company. The problem is that NetApp never met the job creation numbers GWP promoted, and in fact, had been downsizing its Wichita operations. 4

Still, GWP promoted NetApp as a success. An important question is, the NetApp jobs that were announced but never created: Are they included in the jobs and investment totals GWP provides? We don’t know, because GWP will not disclose the data used to build its report.

There are other instances of GWP’s predecessor, Greater Wichita Economic Development Coalition (GWEDC), promoting Wichita as home to companies that had closed their Wichita facilities, or were in the process of closing. 5

GWP also promotes this on its website: “Downtown Wichita is work central, boasting 26,000 daytime workers in the financial, healthcare, education, oil & gas and creative services industries.” This claim of 26,000 workers is based on blatant misuse and misrepresentation of U.S. Census data, and GWP leadership has known of this for several months. 6 Still, the use of incorrect data remains.

Capacity to create

When the Wichita area offered incentives to a company that planned to add 50 jobs, the president of the chamber of commerce told commissioners that staff worked very hard to acquire these jobs. He called it “a great moment” in economic development. 7 But 50 jobs, while welcome, is just a drop in the bucket compared to what Wichita needs.

For Spirit to create 349 jobs over five years, we must let the company escape paying property tax and sales tax on $280 million of property.

For BG Products to add 11 well-paying jobs, we must let them avoid paying $204,280 per year in property taxes and $368,417 in sales tax.

In order to prepare the incentives package for another company, several events took place. There was a visit to the company. Then another visit and tour. Then economic development officials helped the company apply for benefits from the Kansas Department of Commerce. Then these officials worked closely with Wichita city staff on an incentive package. City documents stated that the expansion will create 28 jobs over the next five years. Obtaining these jobs took a lot of effort from Wichita and Kansas economic development machinery. Multiple agencies and fleets of bureaucrats at GWEDC, the City of Wichita, Sedgwick County, and the State of Kansas were involved. Wichita State University had to be involved. All this to create 5.6 jobs per year for five years.

This illustrates a capacity problem. Acquiring these jobs took a lot of bureaucratic effort, which has a cost. It required expensive incentives. Occasionally the city works with a large number of jobs, as in the recent case of Cargill. But those jobs required many expensive incentives, and no jobs were created. The incentives and effort were spent simply to persuade Cargill to remain in Wichita instead of moving elsewhere.

All this assumes, of course, that the incentives are necessary. Either that, or there is a larger problem. If companies can’t afford to make investments in Wichita unless they receive exemptions from paying taxes, we must conclude that taxes are too high. It’s either that, or these companies simply don’t want to participate in paying for the cost of government like most other companies and people do.

Civic leaders say that our economic development policies must be reformed. So far that isn’t happening. Our leaders say that we will no longer use cash incentives. But cash incentives like forgivable loans were a minor part of the incentives Wichita and the State of Kansas used. Furthermore, forgiveness of taxes is just as good as receiving cash. 8

The large amount of bureaucratic effort and cost spent to obtain relatively small numbers of jobs lets us know that we need to do something else to grow our local economy. We need to create a dynamic economy, focusing our efforts on creating an environment where growth can occur organically without management by government. Dr. Art Hall’s paper
Embracing Dynamism: The Next Phase in Kansas Economic Development Policy provides much more information on the need for this. 9

In particular, Hall writes: “Embracing dynamism starts with a change in vision. Simply stated, the state government of Kansas should abandon its prevailing policy vision of the State as an active investor in businesses or industries and instead adopt the policy vision of the State as a caretaker of a competitive ‘platform’ — a platform that seeks to induce as much commercial experimentation as possible.” But our economic development policies are that of an “active investor,” and the cost of incentives increases the cost of experimentation.

Another thing we can do to help organically grow our economy and jobs is to reform our local regulatory regime. Kansas Policy Institute released a study of regulation and its impact at the state and local level. This is different from most investigations of regulation, as they usually focus on regulation at the federal level.

Business Perceptions of the Economic Impact of State and Local Government Regulation coverThe study is titled “Business Perceptions of the Economic Impact of State and Local Government Regulation.” It was conducted by the Hugo Wall School of Public Affairs at Wichita State University. Click here to view the entire document.

Following is an excerpt from the introduction by James Franko, Vice President and Policy Director at Kansas Policy Institute. It points to a path forward.

Surprising to some, the businesses interviewed did not have as much of a problem with the regulations themselves, or the need for regulations, but with their application and enforcement. Across industries and focus group sessions the key themes were clear — give businesses transparency in what regulations are being applied, how they are employed, provide flexibility in meeting those goals, and allow an opportunity for compliance.

Sometimes things can be said so often as to lose their punch and become little more than the platitudes referenced above. The findings from Hugo Wall are clear that businesses will adapt and comply with regulations if they are transparent and accountable. Many in the public can be forgiven for thinking this was already the case. Thankfully, local and state governments can ensure this happens with minimal additional expense.

A transparent and accountable regulatory regime should be considered the “low hanging fruit” of government. Individuals and communities will always land on different places along the continuum of appropriate regulation. And, a give and take will always exist between regulators and the regulated. Those two truisms, however, should do nothing to undermine the need for regulations to be applied equally, based on clear rules and interpretations, and to give each business an opportunity to comply. (emphasis added)

Creating a dynamic economy and a reformed regulatory regime should cost very little. The benefits would apply to all companies — large or small, startup or established, local or relocations, in any industry.

Our civic leaders say that our economic development efforts must be reformed. Will the path forward be a dynamic economy and reformed regulation? Or will it be more bureaucracy, chasing jobs a handful at a time?


Notes

  1. Greater Wichita Partnership – 2017 Investment Request. Part of the February 15, 2017 Sedgwick County Commission meeting. Available at https://goo.gl/hk6RHB.
  2. “Spirit is now requesting a new Letter of Intent (LOI) to issues IRBs in an amount not to exceed $280,000,000 for a period of five years. … Spirit projects it will create 349 new jobs over the next five years as a result of these expansions. In addition to the $280,000,000 Spirit expects to invest in facilities over the next five years, it also projects approximately $825,000,000 of capital investment in new machinery and equipment for a total capital investment in excess of $1 billion dollars.” Wichita City Council agenda packet for May 3, 2016.
  3. Personal correspondence from Andrew Nave, GWP executive vice president of economic development.
  4. Weeks, Bob. Greater Wichita Partnership. Available at https://wichitaliberty.org/wichita-government/greater-wichita-partnership/.
  5. Weeks, Bob. Wichita economic development not being managed. Available at https://wichitaliberty.org/wichita-government/wichita-economic-development-managed/.
  6. “The claim of 26,000 workers in downtown Wichita is based on misuse of data so blatant it can be described only as malpractice.” Weeks, Bob. Downtown Wichita jobs, sort of. Available at https://wichitaliberty.org/wichita-government/downtown-wichita-jobs/.
  7. Weeks, Bob. Economic development in Sedgwick County. Available at https://wichitaliberty.org/sedgwick-county-government/economic-development-sedgwick-county/.
  8. Weeks, Bob. Contrary to officials, Wichita has many incentive programs. Available at https://wichitaliberty.org/wichita-government/contrary-officials-wichita-has-many-incentive-programs/. Also: Fact-checking Yes Wichita: Boeing incentives. Available at https://wichitaliberty.org/wichita-government/fact-checking-yes-wichita-boeing-incentives/.
  9. See also Weeks, Bob. Wichita to grant property and sales tax relief. Available at https://wichitaliberty.org/wichita-government/wichita-grant-property-sales-tax-relief/.

Sales tax incentives yes, but no relief on grocery sales tax

Is it equitable for business firms to pay no sales tax, while low-income families pay sales tax on groceries?

Last week I wondered if the city’s agenda packet for economic development incentives proposed for BG Products was complete. 1 Since the city’s narrative had no mention of a sales tax exemption, but the accompanying ordinance that was passed authorized a sales tax exemption, I wondered if the analysis performed by the Wichita State University Center for Economic Development and Business Research was correct.

Now that I’ve received the document, it appears that CEDBR’s analysis properly included the cost of the sales tax exemption incentive. 2 The city’s narrative did not mention the sales tax exemption.

According to the CEDBR analysis, the sales tax exemption has a cost of $368,417. It is shared among the city, county and state, with 88 percent born by the state. 3

From a public policy perspective, we must wonder whether this incentive, and the other incentives BG Products received, are necessary for the company to proceed with its expansion in Wichita. The Industrial Revenue Bond program, which is the enabler of these incentives, does not require the applicant companies to demonstrate financial need. There are a few requirements, but none have to do with economic or financial necessity. 4

The State of Kansas applies the full sales tax rate to groceries, and is one of the few states to do this. 5 This tax disproportionally harms low-income families. 6 This is a problem in equity, in that business firms may request sales tax exemptions without showing need, while low-income families have no way to avoid the sales tax on their groceries.


Notes

  1. Weeks, Bob. Wichita Business Journal grants city council excess power. Available at https://wichitaliberty.org/wichita-government/wichita-business-journal-grants-city-council-excess-power/.
  2. Analysis by Center for Economic Development and Business Research at Wichita State University. Available at https://drive.google.com/file/d/0B97azj3TSm9MZXJaOVhzUzBJc2M/.
  3. From the analysis performed by the city by Center for Economic Development and Business Research at Wichita State University, these are the values of the sales tax incentives:
    City: 29,109
    County: 14,308
    State: 325,000
    Total: 368,417
    With the sales tax rate of 7.50%, this implies taxable spending of $4,912,227.
  4. “The percentage of taxes abated is based on capital investment and job creation. Majority of goods or services sold must be destined for customers outside of the Wichita Metropolitan Statistical Area (MSA). Company must pay average wages equal to or greater than the industry or Wichita MSA wage rate. City benefit/cost ration must be at least 1.3 to 1.” City of Wichita, Economic Development Incentives. Available at http://www.wichita.gov/Economic/Pages/Incentives.aspx.
  5. “Kansas has nearly the highest statewide sales tax rate for groceries. Cities and counties often add even more tax on food.” Weeks, Bob. Kansas sales tax on groceries is among the highest. Available at https://wichitaliberty.org/kansas-government/kansas-sales-tax-groceries-among-highest/.
  6. “Analysis of household expenditure data shows that a proposed sales tax in Wichita affects low income families in greatest proportion, confirming the regressive nature of sales taxes.” Weeks, Bob. Wichita sales tax hike harms low income families most severely. Available at https://wichitaliberty.org/wichita-government/wichita-sales-tax-hike-harms-low-income-families-severely/.

Century II: The consultant’s disclaimer

The report produced for the City of Wichita on Century II has a disclaimer that absolves pretty much everyone from any accountability.

The document is titled “Funding and Delivery Options Analysis for the Century II Facility Expansion: Delivery and Funding Strategy.” It was produced by Arup Advisory Inc. at a cost to the city of $294,000. The entire document is available at https://goo.gl/hq9iqR.

Following is the disclaimer at the front of the report. It is typical of what is found in reports produced by economic development consultants. It establishes several large loopholes for Arup, the City of Wichita, and boosters of public spending on downtown like Wichita Downtown Development Corporation and the Chamber of Commerce.

Disclaimer

Current accepted professional practices and procedures were used in the development of this report. However, as with any forecast, there may be differences between forecasted and actual results. The report contains reasonable assumptions, estimates, and projections that may not be indicative of actual or future values or events and are therefore subject to substantial uncertainty. Future developments cannot be predicted with certainty, and this may affect the estimates or projections expressed in this report, consequently Arup specifically does not guarantee or warrant any estimate or projections contained in this report.

This document is intended only for the information of the City. It is not intended for and should not be relied upon by any third party, and no responsibility is undertaken to any third party.

Our findings are based on limited technical, financial, and commercial data concerning the project and its potential delivery options. Arup has relied upon the reasonable assurances of independent parties and is not aware of any facts that would make such information misleading.

We must emphasize that the realization of any prospective financial information set out within our report is dependent on the continuing validity of the assumptions on which it is based. We accept no responsibility for the realization of the prospective financial information. Actual results are likely to be different from those shown in the prospective financial information because events and circumstances frequently do not occur as expected, and the differences may be material.

From Pachyderm: Why I Am a Republican

From the Wichita Pachyderm Club: A panel presentation on the topic “Why I Am a Republican.” Panelists, in order of their initial remarks, are Ben Sauceda, former Sedgwick County Commissioner Karl Peterjohn, Precinct Leader Linda Baker, and Sedgwick County Commissioner Richard Ranzau. Todd Johnson is the moderator. This audio presentation was recorded on September 15, 2017.

From left to right: Ben Sauceda, Karl Peterjohn, Linda Baker, Richard Ranzau, Todd Johnson

WichitaLiberty.TV: Century II, Its Future

In this episode of WichitaLiberty.TV: Community influencer John Todd joins Karl Peterjohn and Bob Weeks to discuss Century II, Wichita’s convention and performing arts center. View below, or click here to view at YouTube. Episode 165, broadcast September 17, 2017.

Shownotes

Wichita Business Journal grants city council excess power

The Wichita Business Journal and the City of Wichita team to provide incorrect coverage and missing analysis.

Today the Wichita Business Journal reported: “An $11.5 million expansion of the Wichita operations of BG Products has been given the go-ahead. The Wichita City Council on Tuesday approved the expansion plan and issued industrial revenue bonds for the project.” 1

The problem with this reporting is that BG Products was not asking for the city’s permission to expand its operations, as the first sentence implies. Nor did the council approve an expansion plan, as the second sentence plainly states.

Instead, today the council granted BG Products an exemption from paying property taxes estimated at $204,280 per year for the next five years, and possibly another five years. This is how the industrial revenue bond program works in Kansas. Cities do not lend money. Instead, they grant exemptions from paying taxes. 2

(BG has agreed to pay $5,143 per year, the present taxes on a building being razed.)

While the agenda packet for the meeting specified BG’s plans for the bond proceeds, the proposed uses of the funds have little — nothing, really — to do with qualifying for IRBs. 3

So it’s curious as to why the agenda packet details the company’s plans for the bond proceeds. It’s even more curious why city economic development analyst Tim Goodpasture spent quite a bit of time briefing council members on these plans. Except: His Twitter handle is @goodybagict.

While the agenda packet supplies the estimated amount of property tax exemption granted to BG products, the city’s analysis makes no mention of the amount of sales tax BG may escape paying. Sales tax exemptions are another feature of IRBs in addition to property tax exemptions. While the city’s analysis doesn’t mention sales tax, section 5 of the ordinance passed by the council states the city has determined BG is entitled to a sales tax exemption of unspecified amount.

Since the city’s analysis of the proposal did not include mention of sales tax, we’re left to wonder whether the Wichita State University Center for Economic Development and Business Research incorporated the sales tax exemption in the analysis it performs for the city.


Notes

  1. Heck, Josh. Council green-lights company’s $11.5M expansion. Wichita Business Journal, September 12, 2017. Available at https://www.bizjournals.com/wichita/news/2017/09/12/council-green-lights-companys-11-5m-expansion.html.
  2. Weeks, Bob. Industrial revenue bonds in Kansas. Available at https://wichitaliberty.org/kansas-government/industrial-revenue-bonds-kansas/.
  3. “The percentage of taxes abated is based on capital investment and job creation. Majority of goods or services sold must be destined for customers outside of the Wichita Metropolitan Statistical Area (MSA). Company must pay average wages equal to or greater than the industry or Wichita MSA wage rate. City benefit/cost ration must be at least 1.3 to 1.” City of Wichita, Economic Development Incentives. Available at http://www.wichita.gov/Economic/Pages/Incentives.aspx.

WichitaLiberty.TV: Radio Host Andy Hooser

In this episode of WichitaLiberty.TV: Radio talk show host Andy Hooser joins Karl Peterjohn to discuss developments on Andy’s show along with national and state affairs, while Bob Weeks takes off a week. View below, or click here to view at YouTube. Episode 164, broadcast September 10, 2017.

Shownotes

WichitaLiberty.TV: Wichita and Kansas economies

In this episode of WichitaLiberty.TV: Bob Weeks and Karl Peterjohn discuss issues regarding the Wichita and Kansas economies. View below, or click here to view at YouTube. Episode 163, broadcast September 3, 2017.

Shownotes

  • Wichita employment trends. While the unemployment rate in the Wichita metropolitan area has been declining, the numbers behind the decline are not encouraging.
  • Downtown Wichita business trends. There has been much investment in Downtown Wichita, both public and private. What has been the trend in business activity during this time?
  • Wichita downtown plan focused on elite values, incorrect assumptions. One of the themes of those planning the future of downtown Wichita is that the suburban areas of Wichita are bad. The people living there are not cultured and sophisticated, the planners say. Suburbanites live wasteful lifestyles. Planners say they use too much energy, emit too much carbon, and gobble up too much land, all for things they’ve been duped into believing they want.
  • Charts shown in the show: (Click charts for larger versions.)

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

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