Tax rates and taxes paid

Is there a relationship between marginal tax rates and tax dollars collected?

The top marginal tax rate — that’s the rate that applies to high income earners on most of their income — was above 90 percent during most of the 1950s. From 2003 to 2012 it was 35 percent, and is now 39.6 percent. Some see that as a lost opportunity. If we could return to the tax rates of the 1950s, they say, we could generate much more revenue for government.

The top marginal tax rate is the rate that applies to income. It’s not the same as what is actually paid. This fact is unknown or ignored by those who clamor for higher taxes on the rich.

Top marginal tax rates and tax paid. Click for larger.
A nearby charts illustrates the lack of relationship between the top marginal income tax rate and the income taxes actually paid. (Click chart for larger version.)

The top marginal tax rate has varied widely. But since World War II, the taxes actually collected, expressed as a percentage of gross domestic product, has been fairly constant. In 1952 the top tax rate was 92.0 percent, and income taxes paid as a percent of GDP was 18.5 percent. In 2007, for example, the top rate was 35.0 percent, and income taxes paid as a percent of GDP was 17.9 percent.

Try as we might, raising tax rates won’t generate higher revenues (as a percentage of gross domestic product), due to Hauser’s law.

W. Kurt Hauser explains in The Wall Street Journal: “Even amoebas learn by trial and error, but some economists and politicians do not. The Obama administration’s budget projections claim that raising taxes on the top 2% of taxpayers, those individuals earning more than $200,000 and couples earning $250,000 or more, will increase revenues to the U.S. Treasury. The empirical evidence suggests otherwise. None of the personal income tax or capital gains tax increases enacted in the post-World War II period has raised the projected tax revenues. Over the past six decades, tax revenues as a percentage of GDP have averaged just under 19% regardless of the top marginal personal income tax rate. The top marginal rate has been as high as 92% (1952-53) and as low as 28% (1988-90). This observation was first reported in an op-ed I wrote for this newspaper in March 1993. A wit later dubbed this ‘Hauser’s Law.'”

For many people, there is a direct relationship between tax rates and the amount of tax paid. For workers who earn a paycheck, there’s not much they can do to change the timing of their income, find tax shelters, or shift income to capital gains. When income tax rates rise, they have to pay more.

But people with high incomes can use these and other strategies to reduce the taxes they pay. In fact, there is an entire industry of accountants and lawyers to help people reduce their tax. Often — particularly in the past when top marginal rates were very high — investments and transactions were made solely for the purpose of avoiding taxes, not for productive economic benefit.

People react to changes in tax law. As tax rates rise, people seek to reduce their taxable income, and make investments in unproductive tax shelters. There is less incentive to work and invest. These are some of the reasons why tax hikes usually don’t generate the promised revenue.

But: High tax rates make the middle class feel better about paying their own taxes. With top tax rates of 90 percent, they may believe that the rich are paying a lot of tax. The middle class may take comfort in the fact that someone else is worse off. But that is based on the misconception that high tax rates mean rich people actually pay correspondingly higher tax.

Data is from The Tax Policy Center (TPC), a joint venture of the Urban Institute and Brookings Institution.

Personal income in the states

An interactive visualization of income growth and change in the states, by major sector.

The Bureau of Economic Analysis, an agency of the United States Department of Commerce, collects and analyses data regarding the U.S. and world economies. One series is personal income, defined by BEA as “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.”1

An example from the visualization. Click for larger.
Data is available for farm and non-farm income. I’ve gathered this data from BEA and present it in an
interactive visualization. This is a series named SA4. Data is subdivided farm or non-farm, and also by state and regions. There are three views of data. Some work best with just two or three states, while others can show many states. You may choose a range of dates (this data is annual through 2016). Also, select one or more states or regions. Click on the legend to highlight one or more series. Trends over time are shown as percentage change from the first year so that comparisons may be made.

Of note is the steep decline in farm income in Kansas and other Plains states.

Click here to use the visualization.


Notes

  1. Bureau of Economic Analysis. State Personal Income, 2016. https://www.bea.gov/newsreleases/regional/spi/sqpi_newsrelease.htm.

Kansas House voting on Medicaid expansion

Here’s a table of the three votes taken in the Kansas House of Representatives in February and April on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.

Vote 3 on April 3 was to override the governor’s veto. 84 votes are required for a successful override.

If you’re interested in contacting your legislators on this issue, click on House Roster and Senate Roster.

To find the district numbers you live in, use Locate Your Polling Place, which is part of Vote Kansas.

Kansans are concerned about the level of state spending on schools

A public opinion poll asks whether Kansans are concerned about school spending, but leaves us wondering why they are concerned.

A public opinion poll commissioned by Kansas Center for Economic Growth asks questions so vague that the results could be interpreted in many ways.

The March 30, 2017 press release on the poll announced: “Nearly all Kansas voters are worried the state is not investing enough public education. Eighty-five percent of Kansas voters feel concerned about the state’s level of spending on public education.”1

Here’s the question asked in the survey:2

“Q.5 Would you say you are very concerned, somewhat concerned, a little concerned, or not at all concerned about the state’s level of spending on public education?”

(The reported results are: Very concerned 63%, Somewhat concerned 20%, A little concerned 5%, Not at all concerned 8%, (Don’t know/refused) 3%)

Let me ask you: Are you concerned about the level of spending on public education? I am. And there might be many reasons why Kansans are concerned.

  • Some people think the state spends too much
  • Some people think the state spends too little
  • Many people know that school spending is a large portion of the state’s budget, so naturally they are concerned, no matter if their opinion is that spending is too high or too low
  • Some people are concerned that state spending is misdirected and inefficient

There could be other reasons why people are concerned about the level of state spending on education. But this question does not give any guidance as to why people are concerned.

Later in the survey another question was asked: “Q.12 As you may know, the Kansas Supreme Court recently ruled, unanimously, that the state’s spending on public education was unconstitutionally low and needed to be fixed by June 30th. With this in mind, would you say you are very concerned, somewhat concerned, a little concerned, or not at all concerned about the state’s level of spending on public education?”

Still, the question did not ask whether people are concerned because spending is too high or too low. As a result, the answers to the survey questions can be used to advance nearly any agenda.


Notes

  1. Kansas Center for Economic Growth. New statewide poll shows overwhelming support for rollback of Brownback tax plan. http://realprosperityks.com/media/press-releases/new-statewide-poll-shows-overwhelming-support-roll-back-brownback-tax-plan/.
  2. Kansas Center for Economic Growth. Results of Kansas statewide poll. http://realprosperityks.com/wp-content/uploads/2017/03/TSPolling_KCEG_KansasStatewide_PublicReleasePacket_2017.03.30-final-1.pdf.

WichitaLiberty.TV: The regulatory and administrative state

In this episode of WichitaLiberty.TV. Fred L. Smith, Jr. is the founder of the Competitive Enterprise Institute. He explains the problems with excessive regulation and a large administrative state. Episode 145, broadcast April 2, 2017. View below, or click here to view at YouTube.

Shownotes

Kansas House voting on Medicaid expansion

There has been another vote on this bill, and the table has been updated. Click here.

Here’s a table of the two votes taken in the Kansas House of Representatives in February on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.

If you’re interested in contacting your legislators on this issue, click on House Roster and Senate Roster.

To find the district numbers you live in, use Locate Your Polling Place, which is part of Vote Kansas.

Kansas Senate voting on Medicaid expansion

Here’s a table of the two votes taken in the Kansas Senate this week on HB 2044, titled “Establishing the KanCare bridge to a healthy Kansas program and providing medicaid reimbursement for clubhouse rehabilitation services.” Medicaid expansion, in other words. This expansion is a key part of Obamacare, but not all states have not adopted the plan.

Reporting on this issue from The Sentinel is at Senate Advances Medicaid Expansion Proposal.

If you’re interested in contacting your legislators on this issue, click on House Roster and Senate Roster.

To find the district numbers you live in, use Locate Your Polling Place, which is part of Vote Kansas.

Economic indicators for the states

An index of past economic activity for each state, and another index looking forward. Presented in an interactive visualization.

The Federal Reserve Bank of Philadelphia calculates two indexes that track and forecast economic activity in the states and the country as a whole.

The coincident index is a measure of current and past economic activity for each state.1 This index includes four indicators: nonfarm payroll employment, the unemployment rate, average hours worked in manufacturing, and wages and salaries (adjusted for inflation). July 1992 is given the value 100.

The leading index anticipates the six-month growth rate of the state’s coincident index.2 In addition to the coincident index, “the models include other variables that lead the economy: state-level housing permits (1 to 4 units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill.”

Positive values mean the coincident index is expected to rise in the future six months, while negative values mean it is expected to fall.

I’ve created an interactive visualization of these two indexes. An example appears nearby. Click here to open the visualization in a new window. You may select a range of dates and one or more states to include on the chart. Click on a state’s legend color to spotlight it against other states.

Example from the visualization. Click for larger.


Notes

  1. Federal Reserve Bank of Philadelphia. State Coincident Indexes. https://www.philadelphiafed.org/research-and-data/regional-economy/indexes/coincident/.
  2. Federal Reserve Bank of Philadelphia. State Leading Indexes. https://www.philadelphiafed.org/research-and-data/regional-economy/indexes/leading/.

Jeff Glendening of Americans for Prosperity

Jeff Glendening is Kansas State Director for Americans for Prosperity. He spoke on the topic “It’s Time to Wake Up!” Recorded at the Wichita Pachyderm Club, March 24, 2017.

Shownotes

WichitaLiberty.TV: Ben Jones on the death penalty in Kansas

In this episode of WichitaLiberty.TV: Ben Jones of Equal Justice USA and Conservatives Concerned about the Death Penalty explains issues surrounding the death penalty. View below, or click here to view at YouTube. Episode 144, broadcast March 26, 2017.

Shownotes

For Wichita Eagle, no concern about relationships

Should the Wichita Eagle, a city’s only daily newspaper and the state’s largest, be concerned about the parties to its business relationships?

It’s a question that the Wichita Eagle should be considering. But the newspaper’s top executives seem to have no concern.

On February 14 I sent a message to the publisher and executive editor of the Wichita Eagle expressing my concerns about the newspaper’s future landlords. That letter appears below. After several follow-up attempts by email and telephone, neither would respond.

Sent I sent this message, I’ve found I was mistaken about the ownership of the building to where the Eagle will move and become a tenant. Brandon Steven is not an owner. I had relied on Eagle reporting1 from January, naming Steven as an owner. The reporter confirmed to me that was an error.

An error in the digital archives of the Wichita Eagle which could easily be corrected.

Of note, the Eagle portrays itself as a digital entity. One of the things about material published digitally is it can be easily corrected. As of today, the erroneous story from January 3 has not been corrected, even though the reporter knows she made an error.

Is it important that a newspaper avoid business relationships or entanglements with parties that are frequently in the news? I’ve been told that the Eagle has to rent from someone, and Wichita is a small town. Well, not really. The Eagle owns its current building, which eliminated the relationship with a landlord. And if the newspaper wants to be a rental tenant, it could rent from the many landlords who are not frequent newsmakers, especially those that the Eagle needs to hold accountable.

This is a sad episode for the Eagle. When Eagle reporters ask someone about uncomfortable topics and the subject does not respond to messages, the newspaper reports that, and in a negative light. Here, the top two executives at the Eagle would not comment on something they may be uncomfortable discussing. I think we deserve a newspaper with greater capacity for self-examination, and one whose executives are responsive to legitimate concerns.

Following, the message I sent. Note the corrections indicated in footnotes.

February 14, 2017

Mr. Roy Heatherly
Mr. Steve Coffman
The Wichita Eagle

I’m writing because I’m concerned about some issues regarding the Wichita Eagle and its news coverage.

Specifically, I’m concerned about the Eagle entering into business arrangements with the parties who purchased the Eagle building, and then becoming a tenant of the same parties.2

The three parties are Brandon Steven, Dave Wells, and David Burk. While the Eagle is certainly free to do business with anyone it wants to, these three men are newsmakers that the Eagle has covered in the past, and will likely need to cover in the future.

Mr. Heatherly, you may remember that last year at a Wichita Pachyderm Club meeting I asked you about the arrest of Brandon Steven (although I did not use his name), and why the Eagle did not cover this news. Other newspapers did, including the Topeka Capital-Journal and The Morning Sun in Pittsburg.3 4 Those newspapers thought the item newsworthy as Steven had recently been an applicant for a Kansas casino license, and factors such as a person’s reputation are relevant to these applications. Many thought it curious that the Eagle did not report this news.

Regarding David Burk, he is a continual newsmaker in Wichita, and not always in a positive way. A notable incident was his appeal of property taxes on property located within a tax increment financing district, which defeats the purpose of TIF.5 6 Worse, he misrepresented himself as an agent of the city in order to obtain this benefit. When the Eagle reported on this, it rated designation of “special report.” Other than this, Burk is a newsmaker in that he has, for many years, made large and regular campaign contributions to many city council members, and has received much subsidy from the city through many different programs.

For Dave Wells, a principal of Key Construction, he is often in the news for the same reasons as Burk: Large and continual campaign contributions, and a frequent recipient of subsidy. A particularly troubling matter involving Key Construction and public policy occurred in 2012, regarding the awarding of the contract for the new Wichita air terminal, a contract worth around $100 million. Key was one of the parties pursuing the contract. We learned that Key and its partners were making campaign contributions to one Wichita city council member, Jeff Longwell, immediately before and after he participated in a council vote on awarding the contract to Key.7 Several months later after additional campaign finance reports were filed, we saw that Key made contributions to other council members during the run-up to the contract dispute.8

When it was announced that the Eagle was selling its building to these parties, I was not comfortable with this transaction. But it was a one-time deal. Later we learned that the Eagle is to become a tenant of the same parties,9 a business relationship that is likely to last for a long time.

When the Eagle gives these parties free publicity in future news stories, will readers need to be concerned about the motivation for the Eagle printing the stories?

But more important: When these parties do something wrong, will the Eagle vigorously pursue an investigation? An investigation against its landlord?

I hope you can understand my concern.

I would appreciate receiving comments on this matter for a story I am writing for the Voice for Liberty. In addition, if either of you would like to appear on WichitaLiberty.TV to discuss that matter, we can do that too.

Thank you,
Bob Weeks


Notes

  1. Rengers, Carrie. Wichita Eagle signs deal for new downtown headquarters. January 3, 2017. http://www.kansas.com/news/business/article124312049.html
  2. An error. See introduction.
  3. Kansas casino bidder Brandon Steven busted for public nudity. Topeka Capital-Journal, October 1, 2015. http://cjonline.com/blog/tim-carpenter/2015-10-01/kansas-casino-bidder-brandon-steven-busted-public-nudity.
  4. Castle Rock developer arrested. The Morning Sun, October 8, 2015, http://www.morningsun.net/article/20151008/NEWS/151009892.
  5. Developer appealed taxes on city-owned property. Wichita Eagle, February 14, 2010. http://www.kansas.com/news/special-reports/article1024583.html.
  6. Report: Errors made in Old Town Cinema district tax appeal. Wichita Eagle, March 10, 2010. http://www.kansas.com/news/local/article1027324.html.
  7. Sedgwick County Commissioner Karl Peterjohn questions out-of-state contributions to challenger Jeff Longwell. Wichita Eagle, August 1, 2012. http://www.kansas.com/news/politics-government/article1096574.html.
  8. Campaign contributions show need for reform in Wichita. Voice for Liberty, January 11, 2013. https://wichitaliberty.org/wichita-government/campaign-contributions-show-need-for-reform-in-wichita/.
  9. An error. See introduction.

Sedgwick County to consider raising debt limit

This week the Sedgwick County Commission will consider raising its limit on borrowing for reasons which need to be revealed, and then carefully examined.

Update: On Wednesday the Commission decided to defer this item to a future meeting, probably in April.

Personal correspondence from Sedgwick County Commissioner Richard Ranzau explains the changes the Commission is scheduled to hear this Wednesday:

In 2016, the Board of County Commissioners modified the debt policy by limiting the annual debt service obligations (the amount we pay in principal and interest on a yearly basis) to 9% of budgeted expenditures until January 1, 2019, at which time the maximum will decrease to 8%. The previous maximum had been 20% with the County’s annual debt service hovering around 10% of budgeted expenditures. The policy was amended in an effort to place meaningful yet reasonable limits out the County’s borrowing capacity so as to avoid unnecessary habitual borrowing and excessive spending on projects “just because we can.”

The County’s current annual debt service is 8.22% and will fall below 8% in 2018.

No reason or project has been given as to why this change is needed. The county currently has no plans to issue debt for anything in 2017.

A nearby table summarizes and compares the present policy with debt limits that would exist under the new policy, according to the Sedgwick County Financial Office. (There is an alternative interpretation of policy that if used, would limit borrowing in 2019 to $73,218,639.)

Ranzau’s correspondence says there have been no reasons given for the need to change the debt limit, and that there is no plan to issue debt in 2017.

But that’s the county’s public position. Internally, there is consideration of borrowing and bonding in 2017. Some is for projects already completed and paid for.

Borrowing against the Ronald Reagan Building at 271 W. Third St. is being considered in the amount of $4.0 million. That’s $2.1 million of renovations already completed, plus $1.9 million in planned renovations already paid for.

Borrowing against the Downtown Tag Office at 2525 W. Douglas is considered at $2.3 million. This project has been paid for.

Additionally, the county may borrow to pay for the new Law Enforcement Training Center, in the amount of $5.5 million. This building is under construction, but the county has already transferred cash to the capital improvement fund that is designated to pay for this building.

Why would these buildings — some paid for, another for which cash is already set aside — be under consideration for bond issues?

An analogy is in personal finance, where a family might — after many years — pay off the mortgage on their house. Or maybe they saved and purchased the house outright without borrowing.

But then, the family takes out a mortgage — a new loan — on the house to have additional money for current spending. And more current spending is likely what some Commission members have in mind, as there is no need to take out a mortgage on property owned free and clear unless one wants to spend on something else.

Further, there are more projects the county may consider starting in years through 2021, using borrowing through bonds as payment. These total to $59.4 million, which is within the $61.6 million of borrowing allowed just through 2019. (That limit rises each year.)

This seems to contradict the need for a higher debt limit.

Before approving a higher borrowing limit, Sedgwick County Commissioners need to explain the need for the higher limit, and let taxpayers know if they’re about to be saddled with new mortgages on properties we thought we owned outright.

Sedgwick County may abolish scheduled tax decrease

The Sedgwick County Commission had scheduled a reduction in the property tax rate, but may abandon it.

Update: On Wednesday the Commission, by unanimous vote, disapproved the proposed ordinance, thereby leaving the scheduled reduction in place.

On March 23, 2016, the Sedgwick County Commission passed an ordinance, number 51-2016, which stated: “The maximum target for the mill levy to be assessed by Sedgwick County during its budgeting process for budget years 2017 — 2022 is 29.359 mills, and for budget years thereafter is 28.758, subject to requirements mandated by state law.” All commissioners voted in favor.

The resolution to be considered this week sets the maximum target for the mill levy at 29.359. Period. The language reducing the mill levy after 2022 is gone.

Does this count as a tax increase? People will have different perspectives on this.

But it is certain that if passed, this resolution abandons a plan to reduce taxes in the future.

Change in Wichita mill levy rates, year-to-year and cumulative. Click for larger version.
Of note: When formulating a budget each year, the Commission doesn’t set the mill levy by ordinance. Instead, the Commission decides to spend a certain amount. Then, based on the assessed value of taxable property in the county, the mill levy is calculated. The target established by the Commission is just that, a target. Without a strict target, the Sedgwick County might go the path of the City of Wichita, in which the mill levy drifts upward in many years, resulting in a large increase over time. See Wichita property tax rate: Level for the most recent figures.

Highway budget cuts and sweeps in Kansas

A public interest group makes claims about Kansas roads and highways that are not supported by data. It’s not even close.

Excerpt from fundraising email. Click for larger.
A fundraising email sent by Save Kansas Coalition makes claims about Kansas roads and highways that readers will recognize as a few of the standard complaints common among Kansas spending and taxation advocates. It’s charitable, though, to call them complaints, because they are actually outright lies.

“Budget cuts and sweeps from the Bank of KDOT have decimated our state’s transportation infrastructure investments.” Decimate means “to reduce drastically” or “to cause great destruction or harm to.”1

Total spending on major road programs in Kansas. Click for larger.
Spending on major road programs in Kansas. Click for larger.
Reading that, you might think that spending has been cut by — how much? 10 percent? That doesn’t sound like decimating. 50 percent? 75 percent? That’s more like what decimating means.

So what is the story on Kansas Department of Transportation spending? Nearby is a chart. It shows amounts of money actually spent on road and highway programs, according to KDOT’s annual financial reports. SKC is correct, partially. There have been sweeps from KDOT to the general fund. Those are not a good idea, even though they’ve been practiced for many years. But as shown nearby and in more detail at Spending on roads in Kansas spending has not declined. It been up and down a little, but is higher than it was in 2007 and 2008, before the recession.

In particular, spending on maintenance has been fairly level until dipping a bit in 2016. Spending on preservation rose rapidly until dipping, also in 2016. It’s still twice as high as in the pre-recession years of 2007 and 2008.

Does this sound like spending has been decimated?

Transfers from sales tax to Kansas highway fund. Click for larger.
By the way, there are sweeps from sales tax to the highway fund. Nearby is another chart showing how much sales tax was transferred to the highway fund. In 2006 the transfer was $98,914. In 2016 it was $517,698, an increase of $418,784 or 423 percent.

SKC also writes: “Whereas we formerly maintained 1200 miles of roadway each year, the state now can only afford 200 miles of upkeep. That means road repair once every 50 years!”

Each year KDOT publishes a list of the road projects underway. I’ve obtained this data in machine-readable form for five years, and I present the relevant data in a nearby table.

(A few definitions: According to KDOT, “The Preservation program protects the public’s investment in its highway system by maintaining the ‘as built’ condition of roads and bridges. Projects in this group range from roadway surfacing rehabilitation and bridge repairs to pavement and bridge replacement.”2 For Modernization, KDOT says “Projects under this program are designed to enhance safety and/or improve roadways by adding shoulders, flattening hills, straightening curves and upgrading intersections on already existing roadways.”3)

While SKC isn’t specific in what it means by “maintained” or “upkeep,” it’s possible it is referring to the category “Non-Interstate Resurfacing (PMS 1R).” As you can see in the table, the number of miles in the program has risen for the past three years, and is far above the 200 miles SKC claims we can afford.

The claims made by Save Kansas Coalition don’t add up. Ironically, SKC’s website promises “A willingness to engage in meaningful discussion, in-depth research and critical analysis is vital to the health of the Kansas economy.” But nothing in the record of relevant data supports these claims — unless SKC has secret data it isn’t willing to share.

Sum of KDOT projects, selected categories, measured in miles. Click for larger.


Notes

  1. Merriam-Webster. https://www.merriam-webster.com/dictionary/decimate.
  2. Appendix to the Kansas Department of Transportation’s 2016 Annual Report.
  3. ibid

Kansas revenue estimates

Kansas revenue estimates are frequently in the news and have become a political issue. Here’s a look at them over the past decades.

A favorite criticism of liberals and progressives across the nation is that in Kansas, actual revenues to the state’s general fund have fallen short of projections, month after month. Reading most newspaper reports and editorials, one might think that these negative variances are a new phenomenon, and one relished by the Left. As many as a dozen articles on this topic have appeared in the New York Times in the past two years.

The revenue estimates in Kansas are produced by a body known as the Consensus Revenue Estimating Group. It consists of one member each from the Division of the Budget, Department of Revenue, Legislative Research Department, and one consulting economist each from the University of Kansas, Kansas State University, and Wichita State University.

As described: “This group meets each spring and fall. Before December 4th, the group makes its initial estimate for the budget year and revises the estimate for the current year. By April 20th, the fall estimate is reviewed, along with any additional data. A revised estimate is published, which the Legislature may use in adjusting expenditures, if necessary.”1

The estimates are important because the legislature and governor are required to use them when formulating budgets and spending plans. If the estimates are high, meaning that revenue is less than expected, it’s possible that the legislature or (more likely) the governor will need to make spending cuts. (The other alternative is that leftover funds from prior years may be used, if available.)

If, on the other hand, the estimates are too low, meaning that revenue is higher than expected, the state has collected too much tax revenue. In this case, the state should refund the excess to taxpayers. Some states do that, notably Colorado, although residents may vote to let the state keep the excess.

Some states have true rainy day funds, and the excess revenue might be used to build that fund’s balance. In a true rainy day fund, the fund’s balances can be spent only during specific sets of circumstances.

But in Kansas, the excess revenue is simply called the “ending balance” and is available to spend at the legislature’s whim. That’s what happened in fiscal years 2014 and 2015, when the state spent $340 million and $308 million, respectively, of the ending balance rather than cut spending.

What has been the history of the revenue estimates compared to actual revenue? First, know that making these estimates is not easy. Some of the inputs to the process include the inflation rate in future years, interest rates in future years, and the prices of oil and natural gas in the future. If someone knew these values with any certainty, they could earn huge profits by trading in futures markets.

The state makes the revenue estimates available.2 I’ve presented the results since 1975 in a chart at the end of this article. For each year, two numbers are presented. One it the difference from the Original Estimate and actual revenue. The other is the difference from the Adjusted Final Estimate and actual revenue.

We can see that in fiscal years 2014 and 2016, the variance of the estimates is negative, meaning that revenue was lower than the estimates. The magnitude of these variances, however, is not out of line with the magnitude of the variances of other years, either positive or negative.

In fact, the negative variances — revenue shortfalls, in other words — in the periods 2002 to 2003 and 2009 to 2010 were generally much larger in magnitude than those of recent years. This is of interest as Duane Goossen, who was the budget director during these periods, is a prominent critic of the recent revenue shortfalls. Evidently, he has forgotten the difficulty of creating these estimates.

While Goossen along with newspaper reporters and editorialists use the negative revenue estimate variances as a political weapon against the governor and conservatives, it is in the interest of the people of Kansas that revenue estimates be as accurate as possible. In an effort to produce more accurate revenue estimates, Governor Brownback created a commission to study the issue. That group released its report in October.3

Kansas revenue estimate errors. Click for larger.


Notes

  1. Consensus Revenue Estimating Group. Available at budget.ks.gov/cre.htm.
  2. Kansas Division of the Budget. State General Fund Receipt Revisions for FY 2016 and FY 2017. May 2, 2016. Available at: budget.ks.gov/files/FY2017/CRE_Long_Memo_April2016.pdf. Also Kansas Legislative Research for 2016 figures.
  3. Governor’s Consensus Revenue Estimating Working Group. Final Recommendations. Available at budget.ks.gov/files/FY2017/cre_workgroup_report.pdf.

WichitaLiberty.TV: Keen Umbehr on criminal justice reform

In this episode of WichitaLiberty.TV: Keen Umbehr is a criminal defense attorney. He talks about reforms needed in the criminal justice system. View below, or click here to view on YouTube. Episode 143, broadcast March 19, 2017.

Show notes

During Sunshine Week, here are a few things Wichita could do

The City of Wichita says it values open and transparent government, but the city lags far behind in providing information and records to citizens.

The City of Wichita is proud to be an open and transparent governmental agency, its officials say. Former Mayor Carl Brewer often spoke in favor of government transparency. For example, in his State of the City address for 2011, he listed as an important goal for the city this: “And we must provide transparency in all that we do.”

When the city received an award for transparency in 2013, a city news release quoted Wichita City Manager Robert Layton:

“The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”

Current Mayor Jeff Longwell penned a column in which he said, “First off, we want City Hall to be open and transparent to everyone in the community.” (But he has wondered if the city could conduct business with fewer public hearings.)

But the reality of obtaining information and records from the City of Wichita is far different from the claims of its leaders. Two years ago the city expanded its staff by hiring a Strategic Communications Director. When the city announced the new position, it said: “The Strategic Communications Director is the City’s top communications position, charged with developing, managing, and evaluating innovative, strategic and proactive public communications plans that support the City’s mission, vision and goals.”

But there has been little, perhaps no, improvement in the data and information made available to citizens.

The city’s attitude

Despite the proclamations of mayors and manager, the city needs a change of attitude towards government transparency. Here’s perhaps the most glaring example of how the city goes out of its way to conduct public business in secret.

Citizen watchdogs need access to records and data. The City of Wichita, however, has created several not-for-profit organizations that are controlled by the city and largely funded by tax money. The three I am concerned with are the Wichita Downtown Development Corporation, Visit Wichita (the former Go Wichita Convention and Visitors Bureau), and Greater Wichita Economic Development Coalition, now the Greater Wichita Partnership. Each of these agencies refuses to comply with the Kansas Open Records Act, using the reasoning that they are not “public agencies” as defined in the Kansas law that’s designed to provide citizen access to records.

The city backs this interpretation. When legislation was introduced to bring these agencies under the umbrella of the Kansas Open Records Act, cities — including Wichita — protested vigorously, and the legislation went nowhere.

Recently the City of Wichita added a new tax to hotel bills that may generate $3 million per year for the convention and visitors bureau to spend. Unless the city changes its attitude towards citizens’ right to know, this money will be spent in secret.

Another example of the City of Wichita’s attitude towards citizens and open government took place at a Kansas Legislature committee hearing. I had asked for email to or from a certain official for a certain period of time. The response from the city was that my request would encompass some 19,000 email messages, and the city denied the request as too burdensome. Fair enough.

But Dale Goter, the city’s lobbyist at the time, told legislators that my request for 19,000 emails was an example of abuse of the Kansas Open Records Act, citing it as evidence as to why reform was not needed. But I did not request 19,000 email messages. I made a request for messages meeting a certain criteria, and I had no way of knowing in advance how many email messages this would entail. The City of Wichita denied this request as burdensome, so there was either no cost or very little cost to the city. No harm, no foul.

Still the City of Wichita used this incident — and a similar incident involving the Kansas Policy Institute — as reasons that the Kansas Open Records Act needs no reform. This illustrates a problem with the attitude of Wichita city government towards citizens’ right to know.

This attitude may be noticed by the citizenry at large. Survey respondents were asked to rate “the job Wichita does at welcoming citizen involvement.” The results are shown in the nearby chart created from data in the most recent version of the Wichita Performance Measure Report. The numbers are the percent of respondents giving “excellent” or “good” as their response to the question.

Citizens rate “the job Wichita does at welcoming citizen involvement."
Citizens rate “the job Wichita does at welcoming citizen involvement.”

The report says this performance is “much below” a benchmark set by the National Research Center National Citizen Survey.

Website

An important way governments communicate with their subjects is through their websites. Wichita moved to a new website early in 2013. With the launching of the new City of Wichita website, the city has actually taken a step backwards in providing information to citizens.

Something that had been very useful is missing and hasn’t been replaced: MyWichita.

mywichita_logo

As described here, MyWichita was a useful service. By using it, you could receive email notices of new press releases, city council agendas and minutes, district advisory board agenda and minutes, agendas and minutes of other boards, and other items. Using MyWichita was much easier than having to check multiple sections of the city’s website looking for newly-released agendas, minutes, etc.

This email reminder service was very valuable. It’s a basic customer service feature of many commercial and governmental websites. But MyWichita didn’t survive the conversion to the new website, and there’s nothing that replaces its function. When I asked about this missing functionality, the city said it was working on a replacement that should be available in a month or two. It’s been several years since I asked.

Spending data

Many governmental agencies post their checkbooks on their websites. Sedgwick County does, and also the Wichita school district. Not so the City of Wichita.

Until a few years ago, Wichita could supply data of only limited utility. What was supplied to me was data in pdf form, and as images, not text. It would be difficult and beyond the capability of most citizens to translate the data to a useful format. Even if someone translated the reports to computer-readable format, I don’t think it would be very useful. This was a serious defect in the city’s transparency efforts.

Now, if you ask the city for this data, you’ll receive data in an Excel spreadsheet. This is an improvement. But: You must pay for this data. The city says that someday it will make check register data available. See Wichita check register for the data and details on the request.

Legal notices

Kansas law requires that local government agencies publish legal notices for a variety of topics. Presently these are published in the Wichita Eagle at great cost to taxpayers. These notices could also be published on the city’s website, where they could be searched and archived. This would increase the usability of these documents at very little cost to the city. See Towards government transparency in Wichita: Legal notices.

Publish fulfilled requests

When governmental agencies like the City of Wichita fulfill records requests, they could also publish the records on their websites. Most of the time the records are supplied electronically, so this is an additional simple (and low cost) step that would leverage the value of the city’s effort.

Leveraging our lobbyists

What do lobbyists, including taxpayer-funded lobbyists, do in Topeka? One thing they do is testify before committees, in both verbal and written form. Another thing they do is to prepare reports for the clients, advising them on upcoming legislation, analyzing how it affects them, and what the prospects for the bill might be. They also meet with legislators and their clients, which are your elected officials.

Here’s a proposal that will help citizens make best use of their taxpayer-funded lobbyists:

I see nothing in the Kansas Open Records Act that allows local governmental units in Kansas to refuse to disclose these documents: testimony, reports by lobbyists to their government clients, and the lobbyists’ calendars (or billing records for contract lobbyists). Instead of making citizens ask for these records, possibly paying fees to obtain what they’re already paying for, why don’t local governments post these documents immediately on their websites?

Citizens could then benefit from the activities of the lobbyists they’re paying for. They could learn more about legislation as it works its way through the process. Citizens could judge whether the positions taken by the government lobbyists they’re paying for are aligned with their policy preferences.

If the actions taken by taxpayer-funded lobbyists are truly in the public interest, you’d think that cities, counties, and school boards would already be making this information easily available. In any case, there should be no resistance to starting this program.

Economic development transparency

For several years, the Kansas city of Lawrence has published an economic development report letting citizens know about the activities of the city in this area. The most recent edition may be viewed here.

The Lawrence report contains enough detail and length that an executive summary is provided. This is the type of information that cities should be providing, but the City of Wichita does not do this.

It’s not like the City of Wichita does not realize the desirability of providing citizens with information. In fact, Wichitans have been teased with the promise of more information in order to induce them to vote for higher taxes. During the campaign for the one cent per dollar Wichita city sales tax in 2014, a city document promised this information regarding economic development spending if the tax passed: “The process will be transparent, with reports posted online outlining expenditures and expected outcomes.” (This is what Lawrence has been doing for several years.)

The “Yes Wichita” campaign promised, “Reports will be measured and reported publicly.” (But “Yes Wichita” was a campaign group and not an entity whose promises can be relied on, and can’t be held accountable for failure to perform.)

These are good ideas. The city should implement them even though the sales tax did not pass. If it’s good for citizens to have this type of information if the sales tax had passed, it’s good for them to know in any circumstance, because the city (and other overlapping governmental jurisdictions) still spends a lot on economic development.

Where are our documents?

Government promotes and promises transparency, but finds it difficult to actually provide.

During the campaign for the one cent per dollar Wichita city sales tax in 2014, a city document promised this if the tax passed: “The process will be transparent, with reports posted online outlining expenditures and expected outcomes.” The “Yes Wichita” campaign promised “Reports will be measured and reported publicly.”

Why is this information not available in any case? Is the city’s communications staff overwhelmed and have no time to provide this type of information? During the sales tax campaign Wichita city staff had time to prepare news releases with titles like “City to Compete in Chili Cook-off” and “Jerry Seinfeld Returns to Century II.”

Wichita Facebook page example 2015-09-14 aSince then the city has hired additional communications staff, adding a Strategic Communications Director. Now, while the city’s Facebook page has some useful information, there is also time to promote Barry the Bison playing golf.

Now Wichitans have to wonder: Was transparency promised only to get people to vote for the sales tax? Or is it a governing principle of our city? I think I know the answer.

Here’s an example. A few years ago as Sedgwick County was preparing and debating its budget, I wanted to do some research on past budgets. But on the county’s website, the only budgets available were for this year and last year. There was nothing else.

11-Sedgwick County FinancialsSo I asked for budgets and other financial documents. I received them on CD. Then I created a shared folder using Google Drive and uploaded the documents. Now, these documents are available to the world. They can be found using a Google search. Oh, and here’s something a little ironic. These old budgets had been on the Sedgwick County website at one time. Someone made the decision to remove them.

Creating this depository of budget documents cost nothing except a little bit of time. Well, if you have a lot of data to share, you might have to pay Google a little, like ten dollars per month for each agency or person. But it is so simple that there is no excuse for the failure of agencies like Wichita Transit to make documents like agendas and minutes available. You don’t need specialized personnel to do this work. All you need is the will and desire to make the documents available.

Here’s another example of how simple it can be to achieve transparency. These days live and archived video of governmental meetings is commonplace. Commonplace, that is, except for the Wichita public schools. If you want to see a meeting of the Wichita school board, you must either attend the meetings, or view delayed broadcasts on cable TV. There’s a simple and low-cost way to fix this. It’s called YouTube.

When the Sedgwick County Commission was faced with an aging web infrastructure for its archived broadcasts, it did the sensible thing. It created a YouTube channel and uploaded video of its meetings. Now citizens can view commission meetings at any time on desktop PCs, tablets, and smartphones. This was an improvement over the old system, which was difficult to use and required special browser plug-ins. I could never get the video to play on my Iphone.

Wichita public schools  YouTubeThe Wichita school district could do the same. In fact, the district already has a YouTube channel. Yes, it takes a long time to upload two or three hours of video to YouTube, but once started the process runs in the background without intervention. No one has to sit and watch the process.

I’ve asked why the district does not make video of its meetings available archived online. The district responded that it “has a long-standing commitment to the USD 259 community of showing unabridged recordings of regular Board of Education meetings on Cox Cable Channel 20 and more recently AT&T U-verse Channel 99.” The meetings are broadcast seven times starting the day after each meeting. Two of the broadcasts start at 1:00 am.

Showing meetings delayed on cable TV is okay. It was innovative at one time. But why aren’t meetings shown live? What if you can’t watch the meeting before it disappears from the broadcast schedule after a week? What if you don’t want to pay cable television bills? What if you want to watch meetings on your computer, tablet, or smartphone? I don’t think the fact that meetings are on cable TV means they can’t also be on YouTube.

There are two elements of irony here, if that is the correct term. One is that earlier this year the Wichita school district considered hiring a marketing firm to “gauge its reputation and suggest new branding strategies.” Here’s an idea: Act as though you care about people being able to view the district’s board meetings.

Recently the Wichita school district raised property taxes. The mill levy will rise by 2.86, an increase of about five percent from its present level. The projected cost is an additional $33 per year for a home worth $100.000. That is quite a large increase. That’s bad. What’s also bad is the district’s lack of respect for taxpayers. As I’ve just told you, it’s difficult to view a meeting of the school board, which is a sign that the district prefers to operate in the shadows as much as possible. The board will raise your taxes, and at the same time keep it difficult for you to see them do it.

Just for the sake of completeness, let’s not let the state of Kansas off the hook. Currently, the proceedings of the Kansas Senate and House of Representatives are not available on video. The audio is broadcast on the internet, but it’s live only. No archiving. You must listen live, or figure out some way to record it on your own.

But for eight dollars per month the legislature could make its audio proceedings available to listen to at any time. For eight dollars per month at least one podcast hosting company offers an unlimited plan. Unlimited storage, and unlimited bandwidth. That is just what is needed. And since the audio of the proceedings of the House and Senate is broadcast on the internet, it must pass through a computer somewhere. That computer could also be recording the audio. Once recorded, the process of uploading the audio to the podcast host is a trivial procedure.

But neither Kansas legislative chamber records their proceedings, according to the Secretary of the Senate and the Chief Clerk of the House. I asked. Recordings of sessions are not available because they are not made. It would be simple to record audio of the Kansas House and Senate and make it available for anyone to listen to at any time. It is almost without cost. It would have great benefit.

All these levels of government say they value open records and transparency. But let me ask you: Do you think they really mean it?

In Kansas, the war on property rights

John Todd makes an appearance on The Voice of Reason with Andy Hooser to talk about proposed legislation in Kansas that would be harmful to private property rights. View below, or click here to view on YouTube. Recorded on March 16, 2017.

For more information on this important issue, see In Kansas, the war on blight continues: Kansas governments are trying — again — to expand their powers to take property to the detriment of one of the fundamental rights of citizens: private property rights.

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

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