Poetry: Welcome New Council Members

Contributed by Kenneth Kindler


WELCOME NEW COUNCIL MEMBERS

I AM OLD AND SICK AND GETTING GRAY
I DON’T KNOW WHERE I WILL GET THE MONEY THAT THE CITY WANTS ME TO PAY.

I WONDER ABOUT THIS TOWN THAT WE LIVE IN.
WHERE THE MAYOR SPENDS HIS TIME DOWN IN OLD TOWN FIGHTING SIN.

WE SUBSUDIZE A AIRLINE THAT MANY OF US CANNOT AFFORD TO FLY.
WE HAVE SPENT MILLIONS DOWNTOWN, I WONDER WHY.

HOW MANY OF US CAN AFFORD TO PAY
FOR PLACES THAT ONLY A FEW CAN PLAY.

DO WE NEED A DOWNTOWN ARENA?
A WATER WALK.
NOW WE ARE GOING TO SELL CENTURY II OR IS THAT JUST TALK.

OUR LEADERS HAVE HAD MANY MONEY LOSING SCEMES IN THE PAST.
EXPLORATION PLACE AND THE ICE RINK WERE A COUPLE
BUT THEY WERN’T THE LAST.

WHEN WILL IT STOP THIS INSANE PLAN
TO EMPTY OUR POCKETS AS FAST AS THEY CAN.

WE HAVE BEEN BULLYED, LIED TO AND RAN INTO THE GROUND.
NOW IS THE TIME FOR US TO REBOUND.

SO COUNCIL MEMBERS WE WANT YOU TO KNOW
IF THIS KEEPS UP YOU ARE GOING TO GO.

SO NEW MEMBERS WE HOPE THAT YOU WILL TAKE HEED
AND PUT YOUR COMMUNITY AHEAD OF YOUR GREED.

Kenneth Kindler

Tax funds finance Kansas school finance lawsuit

Contributed by Kansas Taxpayers Network


By Karl Peterjohn

There might not be funds for public school classrooms but for 15 Kansas school districts there is money for financing lawsuits. Since the 1998-99 school year, $2,095,020 has been spent in public funds to pay for the school finance litigation and lawsuit.

This outrage is a classic case of the school districts biting the state’s hand that fed the 300 Kansas school districts with over $2.7 billion in state funds. Of course, the state does not have any money that it has not taken from taxpayers so you and I pay our taxes to the schools and to the state paying for both the plaintiffs and defendants in this legal battle.

A portion of that money is taken by these school districts and then used to sue for more spending that will require higher taxes. Sadly, Kansas already has the highest property taxes on business in our five state region as well as the second highest taxes on homeowners too so this litigation worsens our tax climate.

This is not a new event. The school finance lawsuits stretch back into the late 1980’s. The lead attorney on the most recent lawsuit, Alan Rupe, has been involved in all of these cases going back to the 1980’s. The 15 school districts misusing their tax funds to finance these lawsuits are led by the Salina and Dodge City public schools. The other school districts financing this litigation are: Arkansas City, Augusta, Derby, El Dorado, Emporia, Fort Scott, Great Bend, Hays, Independence, Leavenworth, Manhattan, Newton, and Winfield (For a listing of the tax dollars spent for these lawsuits between 1998-to-2005 see www.kansastaxpayers.com).

If the legislative conservatives were serious about addressing the litigation crisis in Kansas public schools these expenditures would be stopped. This misuse of tax funds for trial attorneys should stop immediately. Any school finance legislation passed by the Kansas legislature that does not address this abuse of taxpayer funds is a disgrace.

Last year the Topeka public schools faced a financial scandal when it was revealed that roughly $1/2 million had been paid to pay fraudulent checks in central Asia. The schools had such lax financial controls that numerous bogus checks got paid. The schools continued to operate despite this long distance financial flim-flam. Sadly, the mainstream Kansas press outside of Topeka has largely ignored this scandal and treated it as an isolated event.

This is another indication that there are plenty of funds available for financing Kansas public schools. The latest federal data indicate that Kansans, despite having lower than average incomes, are paying substantially more than the national average for our public schools. Kansans are paying more per pupil than for public schools in our neighboring states too. Higher expenditures mean higher taxes. Being a high tax state is one of the reasons that Kansas has suffered the largest reduction in private sector jobs during this century according to federal data.

If the school districts can continue to litigate their way to higher taxes and spending by misusing tax dollars, the future of this state will be grim. Lawsuits promoting higher government spending and higher taxes will drive jobs and businesses to taxpayer friendlier states.

The downside of Being the Air Cap

Harry R. Clements of Wichita contributed this article, which is a summary of a larger study he performed. Click here to read the full study in pdf format.

Mr. Clements’s article makes a striking conclusion as to why airfares in Wichita were so high. I would be curious as to whether any of our government leaders have read the study. We should also ask why our government leaders are not performing research like this when they propose to spend large sums of taxpayer money.


Wichita State’s Center for Economic Development and Business Research recently placed a guest article of mine on their website. It concerns a statistical study based on the level of air travel generated at Wichita’s Mid-Continent Airport compared to five other cities in the region, in which the data shows Wichita is ranked dead last, and an attempt to figure out why we do so poorly in this type of “competition.” It further questions whether our city’s substantial airline subsidy is worth the money spent. Since the article was written for consumption by professionals and is based on what might be considered obscure econometric techniques, it isn’t very suitable for reading by the lay readers of this paper. But I think the results are important enough that they should be seen by our town’s citizens, the decision making politicians that represent them, and the local media that should air such issues.

The cities compared are Des Moines, Oklahoma City, Kansas City, Omaha, Tulsa and our own, over a recent six year period. The important factors affecting airline traffic generation were determined by slimming down a list obtained from the airline industry’s primary trade organization, the Airline Transport Association, with a couple of additions that together with theirs explain the greatest part of the differences in passenger results among these cities. These most important factors are population and per capita income (the more the better for these two) and a novel one, the number of pilots in the city’s population (in this case the lower the better). Wichita not only ranks next to last in population and income among the six — not favorable — but has an astounding more than twice the number of pilots, per capita, than the other cities’ which is really unfavorable. If Wichita were, so to speak, more like these other cities we could expect our airline passenger traffic to double. This is certainly a reason why other cities in our region do not have to rely on subsidies to generate their traffic.

Wichita’s effort to maintain its aircraft industry and attract other high income new businesses — for instance bio-technology, but not call centers and specialty retailers — will tend to increase per capita income, and population, but is it possible for an airline subsidy to overcome that which comes with being the Air Capital of the World — a high concentration of pilots, with charter and corporate fleets available, able to fly people wherever they need to go? Should we, if we could figure out how, have a policy to decrease the number of pilots? That problem is the downside of being the Air Cap.

Why government spending is (mostly) bad

Government spending replaces the judgment of the market with the judgment of politicians. The judgment of the market refers to the billions of decisions that we collectively make each day, decisions that we freely make, that we believe will advance our self-interest. That is to say, the market is characterized by mutual agreement and voluntary consent.

What about the judgment of politicians? In a free market, in order to effect a transaction with someone, each side has to please the other. But politicians have the tax system, which allows them to take money from us by force. Then, when they decide how to spend money, decisions are often made to satisfy those who seek political favoritism instead of participating in meaningful economic activity. So government spending, then, grossly distorts the free market system.

The more government makes spending decisions for us, the poorer we become.

There is a limited set of things that government does well and should spend money to do. At the national level, we know that there are those who wish to do us harm, so we need a national defense. Locally we need police, courts, and prisons to keep us safe from criminals. There may be cases involving infrastructure where government is more efficient than private industry.

At the federal level, though, about two-thirds of the budget consists of the government taking money from one person and giving it to someone else to whom it does not belong. Both major parties are equally guilty of this. This type of government spending is wrong, no matter who does it. As the economist Walter E. Williams says:

Can a moral case be made for taking the rightful property of one American and giving it to another to whom it does not belong? I think not. That’s why socialism is evil. It uses evil means (coercion) to achieve what are seen as good ends (helping people). We might also note that an act that is inherently evil does not become moral simply because there’s a majority consensus.

TABOR Criticism Analysis

From the introduction to an analysis by the Tax Foundation:

The state of Colorado is under assault. Opponents of Colorado’s Taxpayer Bill of Rights (TABOR) are waging a well coordinated but misleading attack on Colorado’s reputation. This attack takes the form of a number of rankings and statistics that purport to show that the Taxpayer Bill of Rights has decimated Colorado. These rankings and statistics are based on the assumption that if Colorado ranks poorly on things like the adequacy of prenatal care and education spending, then Colorado is failing to adequately care for and educate its citizens, and that the Taxpayer Bill of Rights must be to blame. A closer look at the attacks shows that they fail to prove that the amount a state spends on health care and education determines quality, and they also fail to tell the whole truth about the rankings and statistics of the state of Colorado.

The full article is here: An Analysis of Misleading Attacks on Colorado’s Taxpayer Bill of Rights

Taxed Out of Business

From the Junction City Daily Union, March 24, 2005

By Kay Blanken
Special to The Daily Union

Friday evening, many of us in Junction City opened our newspaper to the headline, “Local Alco Closing Its Doors.” The Kansas City Star reported that 20 Alco stores across Kansas were closing their doors. This is a Kansas corporation that began in Abilene.

I, as a business person, am not surprised. Not just Alco is closing its doors; Kansas has lost many stores and companies in the past four years. Is it bad business practices? I don’t think so. Many of the companies and businesses have been successful for many years. What then is happening? Starting three years ago, the state began raising the fees to Kansas businesses and companies trying to make up for the budget shortfall that our Legislature created by overspending. This overspending came from both Republicans and Democrats. Because the Kansas Constitution forbids ending a year without a balanced budget, legislators had to find a way.

To balance the budget, the Legislature hit many businesses with fees that do not pertain to their type of business. You paid the fees or you risked forfeiting your business. Many of us have our life’s blood in these businesses. We paid the fees.

This year we again received a new shock. Businesses pay a franchise fee for the privilege of doing business in Kansas. On Feb. 7, Kansas businesses received notice that the franchise tax would max out at $5,008. This is based on the gross your business does before you pay any expenses. Two weeks later we received notice the maximum would be $20,000 — plus a $55 fee for the secretary of state. Here is the letter we received:

Dear Business Customer:

Last spring the Kansas Legislature passed SB 147, which requires businesses to pay a franchise tax (we have always paid a franchise tax) to the Kansas Department of Revenue and a separate franchise fee to the Secretary of State. Both are due the 15th day of the fourth month following the tax year end — e.g. April 15, 2005, for entities with a December 31, 2004, tax year end.

KANSAS DEPARTMENT OF REVENUE — franchise tax (maximum $20,000.00)

Business entities that have $100,000.00 net worth or more must pay to the Kansas Department of Revenue a franchise tax of 0.125% of the total net worth. Business entities required to pay the tax will file a return with the Department of Revenue, which must be accompanied by taxpayer’s balance sheet. (I can’t find anyone who does not have to pay.)

Do not send your franchise fee and annual report to the Department of Revenue. Your business will forfeit if the correct annual report and franchise fee are not received by the Secretary of State on or before your forfeiture.

The letter goes on to tell us how to file and report. What it does not say is how we are to get the money to pay the franchise fee. Many of us in business are just now coming out of a very long downturn. Many have had to borrow money to keep their doors open, and then many have not made it.

Now many of you reading this will say, “This don’t affect me.” Sorry, but it does. Do you work for a business or company? If you do, you may not have a job for much longer. Or you may find yourself moving to a state that cares about the business and economic climate. Some of you may be saying, “This is only one tax. What’s the beef?” Wrong.

Businesses pay corporate income tax, which is 4 percent of net income. In addition, net income in excess of $50,000 is subject to a 3.35 percent surtax. The tax law goes on to say “Kansas corporate income tax is calculated using the apportioned net income and the corporate income tax rate of 4 percent for the first $50,000 and 7.35 percent for excess above $50,000.” Then businesses face insurance tax, 2 percent; intangible property tax, counties can tax up to 2.25 percent on intangible property; personal property tax; inventory tax; state sales tax 5.3 percent; city 1 percent; county 1 percent (at this time); unemployment insurance tax from 0.08 percent to 7.4 percent depending on our rating (our rating is based on the willingness of an employee performing his/her job); worker’s compensation insurance (premiums are calculated per $100 of annual employees wages; wonder why that pay raise didn’t come through?), property tax, 25 percent; Social Security tax, 7.65 percent — and I could go on with other licenses/permits and fees, both local and state. So why did Alco call it quits?

There are a lot of reasons why businesses cannot make it in today’s climate. Buying power is one. A small business pays more for goods than a large conglomerate. But we all pay the same type of taxes and have the same routine costs.

With Alco closing, Junction City, Geary County and USD 475 will still receive property taxes, but they will not receive the sales tax revenue Alco generated. And our community will no longer receive Alco’s charitable donations, leaving a lot of good projects to suffer.

At a town hall meeting on Saturday, a candidate for the local school board asked about school finance. The response from state Rep. Barbara Craft was, “We know we need more funding for schools, and maybe we will have to go to the businesses. Oh, maybe I had better rephrase that.”

The state’s mission statement is, “Our state is constitutionally restrained from overspending, providing a foundation of fiscal integrity for our business climate.” So what happened to throw the state so far off of its budget? Why are so many businesses closing or going out of state to do business? The last count I had was more than 1,300 businesses over three years, and I have no idea of how many jobs were lost. Why are cities raising the fees for services?

What affects business also affects you. It’s time we all became concerned and start asking our elected representatives the “why” questions.

Kay Blanken is a Junction City commissioner and co-owner of B&K Enterprises.

Frisky Flunkies in Atchison County

From Karl Peterjohn, Kansas Taxpayers Network


The Wall Street Journal’s “Tony & Tacky” section mentioned one Kansas school district on the day the Kansas senate was debating the largest one-year state spending hike for public schools in this century and according to one legislator, in state history. The $127 million increase in state spending would be in addition to the current $2.7 billion the state is already spending. School districts in Kansas are already spending millions of dollars to lobby the legislature, promote student and school employee contacts to try and influence legislators, and sue the state over school finance. School superintendents, like Wichita’s tax ‘n spend Winston Brooks, have been busy at speaking appearances promoting public school spending growth in excess of $1.4 billion.

In the 1980’s the Kansas City, Missouri schools spent well over a $1 billion proving that throwing tax money at the public schools did not improve student achievement or educational quality. This school district, which has an pupil enrollment similar to Wichita’s, spent all this money and still saw student test scores dropped.

A wise philosopher warned, “Those who do not remember the past are condemned to repeat it.” Kansas is continuing to try and emulate the Kansas City, Missouri public schools spending policy.

Kansas spending for public schools that includes all state, local, and federal tax funds has far exceeded inflation during the last dozen years and now tops $4 billion (KTN has posted at www.kanstaxpayers.com school KS Department of Education finance data on all Kansas public schools from the late 1980’s through the 2003-04 school year). There are slightly less than 445,000 public school students in Kansas. The brief article cited below from today’s Wall Street Journal provides some clues as to more important educational problems than simply throwing taxpayers’ money at the schools and hoping that some of it sticks. Let’s hope that Kansas follows Atchison High School’s policy instead of Atchison County’s D- plan.

The Wall Street Journal said:

Tony & Tacky

Friday, March 25, 2005 12:01 a.m. EST
FRISKY FLUNKIES: Right now, students in Atchison County, Kan., need a C average in order to participate in extracurricular activities. As of next year, however, even a D-minus average will be good enough. A district school board in northeastern Kansas voted last week to lower its threshold after asserting that efforts to determine eligibility under the C rule were distracting teachers from their job of helping pupils learn. Not everyone is buying that argument. Terrance Jordan, the principal and sports director of Atchison High School–which, despite its name, is in a different district–told the March 16 Atchison Daily Globe that his school is considering stricter guidelines: “We’re here to educate kids; extracurricular activities are a bonus. . . . Kids have to be able to do what they’re asked to do before they can play.”

Clunker law epealed, surliness not

I received this message from someone who applied for the refund of overpaid sales tax that many in Kansas paid as part of the “clunker law.” That law attempted to prevent cheating on sales tax by those who self-reported the price they paid for a car. Some people lied and paid less sales tax than they should have. The state started assessing sales taxes based on an assessment system that sometimes overvalued a car. This year the legislature passed a law allowing those who overpaid to seek refunds. A good idea — but sometimes, as this story illustrates, a bit difficult to take advantage of.


Last July I purchased a automobile from a gentleman in Missouri. It was an old clunker that needed much repair as a school car for my daughter for $500. The car had several mechanical problems, had been wrecked and had hail damage. It was worth $500, no more, no less. Even though it had 210,000+ miles, I thought we could have some fun fixing it up. When I went to get a tag for it, they county office informed me that I would have to pay sales tax on $3,400! After much unsatisfactory explanation from the clerk, her supervisor stated “If I wanted a tag, I would have to pay the money”. Sounds like extortion to me. I, then, had to pay sales taxes on the repairs also.

Our great legislature has since decided that they over stepped their authority and a rebate is in order. I went out to the Kansas State Government website to read the process of getting my money back. They stated that I need a copy of the receipt that the county gave me when I overpaid the taxes along with one of the following list:

Copy of the bill of sale.
Copy of the cancelled check used to purchase the car.
Copies of both the front and back of the title.

Sounds easy enough. I went to the county courthouse and stood in line for over an hour, finally having the clerk tell me “we don’t keep any records of the taxes you paid and cannot help you with a copy of the receipt”. She did inform me that the title I needed copies of, was the title from the ORIGINAL owner, which they took from me when I overpaid the taxes, and sent to the State of Kansas.

When I returned home, I spent a couple of hours digging through all my records and finally found the original receipt for sales taxes overpaid. Since I paid cash (the gentleman from Missouri would not accept a personal check, go figure) and in Missouri, the title IS the bill of sale, I came to the realization, that the State had me in a catch 22. I found a phone number on the trusty web site, and gave the department of vehicle taxes a ring. They acknowledged the problem, but gave me a solution. I could write to the Kansas Department of Motor Vehicle Records (downstairs from them) and request a form from them to request that they send a copy of my original title to me. I could then send the copy of the title back to the Vehicle tax department along with the copy of the county tax receipt to get my money back!?????

I thought about it for a while and decided to give the Vehicle Tax department another call, just to get it straight. I was up to the second level of supervisor and asked him if he really wanted me to—–

Send a request for vehicle registration and history to the Motor Vehicle Records Department (downstairs from him).
They would send me a form.
I would fill out the form (did I mention the $15 fee) and send it back to the Motor Vehicle Records Department (downstairs).
They would send me a copy of the original title from the gentleman from Missouri.
I would send it to the Vehicle tax department along with the copy of the tax overpayment receipt (back upstairs).

I asked him if the process sounded as ridiculous to him as it did to me. I also asked that if I just sent a copy of my title, maybe he could walk downstairs to the title office and cross check it with the original. He said “I will have to get back to you on that one” an after about a week, I actually receive a call from him on my machine! He indicated that I would indeed have to request the title history from the office downstairs and pay the $15.

Senator Ruth Teichman, Republican in Name Only?

This is an interesting analysis that I received from Karl Peterjohn, Executive Director Kansas Taxpayers Network. What Karl doesn’t mention is that Senator Teichman is a Republican.


Bob,

This response is so interesting and the timing is so remarkable that I want to submit it for Wichita Liberty. Sen. Teichman responds to my mid-February email that I sent her opposing SB 58. Shortly thereafter, she voted to APPROVE SB 58 on the floor of the Kansas senate. March 22, 2005 the Kansas house votes for SB 58 in an unamended form so it will go directly to the governor for her signature.

Today, March 24, I received her response to my February 15 e-mail! The timing of this response provides a fascinating insight into the Kansas legislature in general and Senator Teichman in particular. You might also find it interesting to know that Sen. Teichman’s lifetime KTN fiscal vote rating is only 9.7%, and is now the lowest of the currently serving Kansas senators. Sen. Buhler’s was 3.9% but he was beat last November. Her fiscal vote rating is going to continue to be low as Senator Teichman continues to mistreat taxpayers.

Karl Peterjohn

Ruth Teichman wrote:
Date: Thu, 24 Mar 2005 13:25:50 -0600
From: “Ruth Teichman”
To:
Subject: Re: SB 58 Arena tax bill

Thank you for your comments. I appreciate your concerns.
Senator Ruth Teichman

>>> kpeterjohn 02/15/05 12:58 >>>

Senators:

A quick reminder of six reasons why the Kansas Taxpayers Network testified in opposition to SB 58 in senate tax committee earlier this month.

1) SB 58 makes a bad law, KSA 12-187 worse.

2) SB 58 adds a retroactive provision to KSA 12-187. KTN is adamant in opposing retroactive provisions to state tax law.

3) SB 58 treats Kansas citizens as second-class to local units who can ignore state law with impugnity if this law is passed.

4) One of the reasons that this vote won by a very small margin (52-to-48)city, county, and state tax funded organizations donated over $45,000 for the “Vote Yea” campaign conducted by the arena tax hike proponents. This misuse of tax funds outspent the “Vote No” campaign by better than 2-to-1. This was a gross misuse of tax funds including turnpike and regents spending.

5) The arena will be a money losing failure if it is built using the current plan. The plan itself projects annual losses in the range of $800,000 a year. I frankly believe the losses will be larger than projected. This would be added to a large number of governmentally financed projects that are losing money in downtown Wichita.

6) This bill should be amended to extend the requirement in KSA 12-187 requiring voter approval of local sales taxes to be extended to cover local property taxes too.

We have had some folks ask about SB 58 appearing on Kansas Taxpayers Network’s 2005 vote rating. This will be a vote that is included for the reasons cited above.

A better way to pick judges

Contributed by John Todd and William T. Davitt. I fully agree.


A recent editorial in The Wichita Eagle discussed how trial court judges in Kansas are selected by either election or appointment. We favor neither method.

Election of judges invites corruption because attorneys and other special-interest groups contribute money to judges’ election campaigns. It is doubtful whether one voter in 10 could even name two of the 25 judges currently on the court. And if they could name two judges, would they have any idea regarding their job performance? Thus it appears that voters do not make an “informed choice” in the voting booth, and instead select judges based on name recognition, party affiliation or yard-sign count.

Appointment of judges invites corruption because attorneys and other special interests maneuver their members onto the selection committee that sends the names to the governor, and then they go behind the scenes and tell the governor which one they really want.

We favor a third way of selecting judges as advocated by Gerry Spence in his book “From Freedom to Slavery.” Mr. Spence favors having our judges drafted from a pool of trial lawyers who would serve on the bench for a “limited calendar of cases” before being returned to their private practices. Every trial lawyer would be required to support the system in the same manner, as citizens are now required to serve as jurors.

Court dockets would soon clear out, because enough judges could be drafted as were needed to clear the dockets. Mr. Spence states: “If judges were drafted, we would no longer be saddled for life with the political cronies of those in power, or be faced with judges who have received campaign contributions from our opponents. To be sure, we would experience some bad judges. But, Lord knows, we have them now — and often for life! On the other hand, we would benefit from the best minds in the legal business, who under our present system rarely seek the judiciary.”

Democracy requires full faith that justice will be administered with absolute impartiality. That faith is certainly challenged if we enter a courtroom knowing that our opponent has contributed substantial money to our trial judge’s last election campaign or that the judge was endorsed for appointment by a group or corporation that opposes our position in court. The current methods of electing or appointing judges offer little comfort in view of their corrosive effect on public confidence in the court system.

John R. Todd is a Wichita real estate broker. William T. Davitt is a Wichita lawyer.

Sedgwick County Arena Sales Tax Ready to Pass

Following is a message from Karl Peterjohn, Executive Director Kansas Taxpayers Network, regarding the debate over SB 58, allowing Sedgwick County to raise its sales tax to pay for the downtown Wichita arena. I listened to the (as Karl rightly characterises it) “debate.” Karl’s reporting of the legislative action and the effects the sales tax will have is accurate. (Someone called the sales tax the “Western Butler County Improvement Act.”)


After a relatively brief and lackluster debate, the 1 cent sales tax hike for the downtown arena in Wichita received preliminary approval in the Kansas house March 21 on a voice vote. SB 58 will be voted upon for final action tomorrow in the Kansas House of Representatives. This odious bill should have been amended but a bipartisan group of Wichita legislators worked hard and were successful in keeping it “clean” so there weren’t any amendments. An amendment would have required a conference committee and a delay in enacting this tax. SB 58 will be passed easily and signed by the governor within the next couple of weeks.

The closest amendment to getting added to this bill was a “prevailing wage,” amendment offered by Democrat Minority Leader McKinney that failed on a division vote (no roll call) with over 40 yes votes. Prevailing wage would require union wages for the construction of this project but even the Democrats did not press this very hard since they did not even bother forcing a roll call vote on this amendment.

After some desultory comments by proponents, Rep. Huebert offered an amendment to address the uniformity issue but then withdrew it following Rep. Wilk’s opposition and promise that the tax committee that Wilk chairs would take up this issue shortly.

Your tax dollars were hard at work lobbying. Two tax funded lobbyists from Sedgwick County along with Sen. Carolyn McGinn were there to follow the vote. Wichita had its contract lobbyist as well as city employee Jeanne Goodvin was there. Other tax funded organizations like Ed Wolverton from the Wichita Downtown Development Corporation, Bob Hanson from the Sports Commission, and another sports commission board member Joe Johnston had lobbied the house members as they entered the chamber. A number of other business and labor lobbyists supporting the arena were also monitoring the desultory debate.

Huebert was the only member to oppose the bill during this “debate.” Steve spoke about his district’s opposition (2-to-1) and how this vote, where the county segment was opposed while the Wichita area was supportive (both voted 54-46 on their respective sides last November) might relate to a consolidation of government bill in Shawnee County’s vote on their city-county consolidation issue. The retroactive tax authorization WAS NOT EVEN MENTIONED in the debate.

Steve Brunk, who serves on the tax committee, “carried” the bill on the floor. Mario Goico, Brenda Landwehr, Jo Ann Pottorff, and Nile Dillmore all praised this measure in a form of Sedgwick County bipartisanship. Goico liked the eco-devo aspect while Pottorff praised the downtown revitalization with the waterwalk boondoggle for economic growth.

I have been told privately that there has been commitments for vote trading on this issue and other issues coming before the house that are of concern to non-Sedgwick County legislators. While there will certainly be a number of no votes cast on final action tomorrow, the final outcome is now clear. July 1 the sales tax rate in Sedgwick County will rise to 7.3% with the exception of Derby where it will rise to 7.8%. In a couple of years there will be a brand new pigeon coop, that lacks an anchor tenant, in downtown Wichita to add to the succession of money losing boondoggles that already litter the area.

If the Senator Hensley’s of the world prevail (he is the senate minority leader who issued his statewide tax hike plan last week), the 2005 legislature will soon pass a statewide sales tax hike and he would add at least another .2% to the figures cited in the previous sentence. The governor favors a statewide tax hike and there is talk of “rounding up” to say, an even 6 percent statewide. If that happens, there are parts of this state that will have total (state and local)sales tax rates approaching 10 percent.

The new millionaires who will be created through the prices the county will pay for the land it wants downtown for this boondoggle project will provide an interesting (but expensive) source of amusement in the near future too. It will also be interesting to see what portion of the construction labor used is “union” versus non union. Dale Swenson praised prevailing wage and other mandatory union wage rates like the federal government’s Davis-Bacon Act during the debate on that amendment.

As a frame of reference, New York City has a 8.625% sales tax rate. New York City does NOT tax groceries. I’ll let you decide, regardless of whether Kansas raises state rates or not, how we compare with a sales tax rate of 7.3%-or as much as-8.0%. If one of the tax raising legislators had not taken ill in the senate, the odds of a statewide tax hike raising the sales tax to 6.0% is not out of the question. Sedgwick County will have a high sales tax rate.

The only suggestion for Sedgwick County taxpayers that I can think of is that most of the cities in Butler County only have a 1/2 cent local sales tax, so their total is 5.8%. If you live in eastern Sedgwick County and want to save on grocery purchases, there is a Dillons at Andover Road and Kellogg. You should be able to save $1.50 on the purchase of $100 worth of groceries after July 1 based upon the variable local sales tax rates between Sedgwick and Butler counties.

I look forward to fulfilling my promise and including the recorded vote on final passage of SB 58 into the 2005 Kansas Taxpayers Network’s vote rating. Every legislator who cast an affirmative vote for SB 58 will have to bear some responsiblity for this looming boondoggle. The next battle will be trying to get this odious sales tax removed because a fiscal “crisis” in government will certainly appear before this tax expires. Rep. Huy was absent.

HCR 5009: An attempt to drive down property taxes

From Representative Frank Miller


The Kansas Legislative Research Department provided information substantiating that property taxes increased by 126 percent since 1993, yet the inflation rate adjusted for population growth increased only 43 percent! I don’t see how the appraised value of residential property could have risen 2.75 times faster than inflation adjusted for population growth! I would suggest that appraisers are encouraged to over-appraise property in order to satisfy the need for increased property taxes without increasing the mill levy. I authored this bill in the hopes of restraining appraisers from adjusting the value of your property to a value that is higher than market value. Is not the selling price of your home the only true value for “MARKET VALUE”?

The key wording in the resolution would change the Constitution as follows: “The legislature shall provide that the appraised valuation of real property used for residential purposes which has been sold shall be adjusted to an amount equal to the average of the appraised valuation of such real property when sold determined pursuant to law and the sales price of such real property when sold.”

The clearest way to explain what this resolution would do is to offer an example. Assume that the latest appraised value of your home is $50,000, but during the year you put your home up for sale. Let’s further assume that your asking price was $55,000, but after much time the best price you could get was only $40,000. The county appraiser would be required by this change in the constitution to reduce the appraised value to half the difference or to $45,000. Is not the closest value to true market value the price a house is sold for on the market? This change reduces, or in like manner increases, the appraised value of residential property in a fair manner and in a manner that mirrors much closer the true market value of property.

There is nothing in the bill prohibiting appraisers from adjusting the appraised value of your home the following year. However, property owners will have a much stronger argument if the new appraised value represents an unreasonable increase, and this is at the heart of this resolution. The resolution will check the tendency to over evaluate the appraised value of residential property.

What kind of sales does this apply to? This bill would apply to arm’s-length sales. You could not sell your house to a relative (i.e. son, wife, etc) in order to manipulate artificially the appraised value of your property. I think this bill would be very beneficial to Kansans in trying to keep the escalation of property taxes in check. Unfortunately, the resolution at this moment is stuck in the House Taxation Committee and likely will not get out of committee this year. I will be pushing this resolution again next year. Let me know what you think.

To contact Rep. Frank Miller write, telephone, or email to P.O. Box 665, Independence, KS, 67301, Tel: (Home) 620-331-0281; Topeka office 785-296-7646, Email [email protected] or [email protected] Take a look at Frank’s updated webpage www.frankmiller.org.

Letter to County Commissioners Regarding AirTran Subsidy

March 18, 2005

Board of Sedgwick County Commissioners

Dear Commissioner:

I am writing to explain my opposition to Sedgwick County funding the AirTran subsidy.

My primary reason for opposing this subsidy is that it distorts the market process through which individuals and businesses decide how to most productively allocate capital.

Aside from that, it seems to me that the argument that many Fair Fares supporters make is flawed. They are grossly — I would say even speciously — overstating the importance of the airport to our local economy.

As an example, Mr. Troy Carlson, then Chairman of Fair Fares, wrote a letter that was published on September 16, 2004 in the Wichita Eagle. In that letter he claimed $2.4 billion economic benefit from the Fair Fares program ($4.8 billion for the entire state). I was curious about how these figures were derived. Through correspondence With Mr. Steve Flesher, air service development director for the city of Wichita, I learned that the basis for them is a study by the Center for Economic Development and Business Research at Wichita State University that estimates the economic impact of the airport at $1.6 billion annually. In this study, the salaries of the employees of Cessna and Bombardier, because these companies use the airport’s facilities, are counted as economic impact dollars that the airport is responsible for generating.

To me, this accounting doesn’t make sense on several levels. For one thing, if we count the economic impact of the income of these employees as belonging to the airport, what then do we say about the economic impact of Cessna and Bombardier? We would have to count it as very little, because the impact of their employees’ earnings has been assigned to the airport.

Or it may be that someday Cessna or Bombardier will ask Sedgwick County for some type of economic subsidy, and they will use these same economic impact dollars in their justification. But these dollars will have already been used, as they were attributed to the airport.

Or suppose that Cessna tires of being on the west side of town, so it moves east and starts using Jabara Airport. Would Cessna’s economic impact on Sedgwick County be any different? I think it wouldn’t. But its impact on the Wichita airport would now be zero. Similar reasoning would apply if Cessna built its own runway.

An article I wrote titled Stretching Figures Strains Credibility provides more information, including a link to the Center for Economic Development and Business Research study.

I would be happy to speak to the County Commission as a group if you think they would be interested.

I thank you for your time and consideration.

Sincerely,

Bob Weeks

Affording Tax Cuts, or Whose Money Is It, Anyway?

The logic of paygo for taxes is backward, in that it starts from the assumption that all tax revenue is Washington’s in the first place and thus any tax cuts must be “offset” so Congress can be made whole. But of course the money belongs to the taxpayers who earned it, and the burden ought to be on the politicians to spend less so Americans can keep more. Republicans claim to believe this. (“Budget Irresolution,” The Wall Street Journal, March 14, 2005)

“Paygo” refers to the “pay-as-you-go” budget rules, which require that any tax cuts be offset by other tax increases. Alternatively, we often hear politicians at all levels claim that we can’t afford tax cuts.

If we stop and think for a moment, we should easily be able to recognize the absurdity of politicians claiming we can’t afford tax cuts. The mindset behind this is that the tax money belongs to the government in the first place, and if we are lucky enough, the politicians might cut our taxes a little, if they decide they can afford it.

As the Wall Street Journal editorial rightly says, the money is ours to begin with! How have we descended to the level where politicians don’t understand this, that is the taxpayer that can’t afford to pay taxes, that taxes are a drain on the growth of our economy?

Part of the answer may be found in the small book “The Law” by Frederic Bastiat. A link to an online version of it may be found on the “Other websites, resources” section of this website.

Americans for Prosperity Day in Topeka, March 14, 2005

I had the pleasure of driving John Todd, Benny Boman, and Bill Davitt to Topeka for the Americans for Prosperity Day in Topeka on Monday March 14, 2005.

We started the day at the AFP office, and then drove to the Kansas Statehouse. I met with several legislators including Representatives Bonnie Huy of Wichita, Ted Powers of Mulvane, and Kenny Wilk of Lansing. I attended the Republican House caucus, and observed the House from the gallery.

We had a luncheon where I had the pleasure of speaking at length with Representative Bill McCreary of Wellington, from whom I learned much about how the Kansas House works.

After lunch we met in the House gallery where Speaker of the House Doug Mays, Majority Leader Clay Aurand, and Representative Brenda Landwehr of Wichita spoke to us. There was a press conference about AFP’s activities. I was then able to meet Senator Peggy Palmer of Augusta, who impressed me as a liberty-protecting legislator.

There was a reception at the end of the day, where I had the pleasure of speaking at length with Senator Kay O’Connor of Olathe. She is an advocate of school choice and vouchers. I learned a great deal from her.

We returned to Wichita at about 9:30 pm. Having left Wichita at 6:00 am, it was a long and tiring day. But I learned much about how our state government works.

A slide show of some photos I took is here: https://wichitaliberty.org/files/afp_day_in_topeka_2005-03-14/index.html

Let free markets determine downtown Wichita’s viability

“Wichita’s been an east/west town for as long as I can remember. Obviously, we’re trying to change that,” says Tom Johnson, president of the upcoming downtown project, WaterWalk. (Wichita Business Journal, March 4, 2005)

A healthy community needs a healthy downtown. … In Downtown, public investment has a proven track record of generating new, private investment. Since 1990, the government’s investment of $165 million has stimulated $248 million in private investment. (Voteyea.com website.)

“Anything downtown seems to be off-limits for criticism or analysis. I don’t know why it is,” Lambke said. (Council member Phil Lambke, Wichita Eagle, November 14, 2004)

If you listen to local Wichita news media, our local politicians, and various community advocates, the desirability of downtown development over other development is accepted as a given. But what people actually do with their own money is different.

Free markets, since they represent people voluntarily entering into transactions that they believe will benefit them, lead to the most equitable and efficient allocation of scarce resources. When left to their own free will, most people and businesses in Wichita have decided to purchase property somewhere other than downtown. I don’t know why people have made this choice, and that’s really not important to me. What is important to me is that people and businesses make the choice of where to invest voluntarily. By investing in parts of town other than downtown, they are assigning a higher value to non-downtown property. As far as I know, no one is forcing this decision. People and businesses make it of their own free will.

As it happens, some people don’t agree with the choices that most people and businesses have made. They believe that people and businesses should have purchased property downtown. They are, in effect, telling us that we have made a poor decision. They propose, and are in the process of doing just this, to trump the decisions of individuals and businesses with their own. They do this through the political process and the tax system. They take tax money and give it to businesses to induce them to locate downtown.

Why don’t businesses voluntarily locate downtown, using their own money? There can only be one answer to this question: When spending their own money, most businesses have decided that the most productive use of it is to invest it somewhere other than downtown Wichita.

It is adding insult to injury when we realize that the tax money given away comes largely from people who have voted — with their own dollars — not to do what these tax dollars are used to promote. It is a further blow when we realize that the money given to downtown businesses in the form of incentives makes our town poorer as a whole. Why is that? It’s because that most people and businesses, when exercising their own best judgment, have decided that investing in downtown Wichita is not the most productive use of their resources. When the government, using its power to tax, makes a different decision for us, resources are not allocated as efficiently and productively. Therefore, we are poorer.

The result of all this is that we have the spectacle of the people of Wichita, voting with their own dollars, making one choice. Then the politicians and various quasi-public organizations say, “No, citizens of Wichita, you are wrong,” and impose their will on the people of Wichita through their power to tax. How arrogant is that?

Why is the Wichita news media not interested?

This is a version of a letter that I have been sending to (mostly) Wichita-area newspapers, television stations, and radio stations. Some have expressed some interest and have even assigned reporters to look into this, but so far no stories have appeared.


February 11, 2005

Sherry Chisenhall
The Wichita Eagle

Dear Ms. Chishenhall,

I am writing to express my concern over the lack of reporting on some important issues regarding the downtown Wichita arena tax.

My research has uncovered several findings, which I summarize here:

1. The WSU Center for Economic Development and Business Research study does not include depreciation costs, even though Government Accounting Standards Board Statement 34 requires governments to depreciate their assets. Incredibly, the CEDBR at WSU was not aware of this requirement when they prepared the study that was used to promote the proposed arena. They admitted this when I called it to their attention.

2. The WSU study did not allow for the substitution effect. This is the term used to describe what research has found: that much of the new economic activity such as bars and restaurants that might appear around a downtown arena would be bars and restaurants that have moved from other parts of the city. There is little or no new economic activity, just movement of existing activity. Mr. Ed Wolverton, President of the Wichita Downtown Development Corporation, admitted this oversight in a television news story.

3. Arena proponents cite economic benefit as a reason why the community as a whole should pay for the construction and operation of the arena. I have found no research that supports the claim of economic benefit. There is, however, ample research to the contrary. For example, in a paper titled “Professional Sports Facilities, Franchises and Urban Economic Development” (UMBC Economics Department Working Paper 03-103) by Dennis Coates and Brad R. Humphreys of the University of Maryland, Baltimore County we find this quote:

“Siegfried and Zimbalist (2000) recently surveyed the growing literature on retrospective studies of the economic impact of sports facilities and franchises on local economies. The literature published in peer-reviewed academic journals differs strikingly from the predictions in ‘economic impact studies.’ No retrospective econometric study found any evidence of positive economic impact from professional sports facilities or franchises on urban economies.”

I created a handout I made for the legislators that provides more information. A link to it is here:

https://wichitaliberty.org/files/Sedgwick_County_Legislative_Delegation_2005-02-05.pdf

There has been much recent news about the financial performance of publicly-owned institutions. Often government leaders proclaim their ignorance about what the facts of the matter were, and then your newspaper has to editorialize about government leaders not doing due diligence before committing to projects. Mr. Brownlee wrote such an editorial just this week.

Here we have a final opportunity to examine the issues involving the wisdom of a taxpayer-built arena before it is too late. I am not asking that you believe what I have said just on my say-so. I believe, however, that the people of our town would appreciate someone with the skill and experience of your reporters performing an investigation to see if they reach the same conclusions I have.

Testimony in Opposition to Senate Bill 58

From John Todd.


Members
House Taxation Committee
State Capitol
Topeka, Kansas 66612

Subject:
Testimony in OPPOSITION TO SENATE BILL #58 (Sales Tax Increase For The Proposed Downtown Wichita Arena).

My name is John Todd. I am a self-employed real estate broker from Wichita, and I come before you in opposition to the enabling legislation that would allow Sedgwick County to raise the local sales tax 1% to fund a new Downtown Arena in violation of current state law.

Under current state law, Counties in Kansas are not authorized to raise county sales taxes for projects like the proposed Downtown Wichita Arena without first obtaining the required legislative approval prior to any vote of the public. A public vote advertised as non-binding was held in Sedgwick County on November 2, 2004 without the legislative approval as required by law, and now Sedgwick County officials are asking you to approve this illegal vote retroactively to the November General Election.

Before you consider the favorable passage of Senate Bill #58 into law that would make an illegal vote legal, ex post facto, after the fact, and retroactively, you really ought to consider what was the original legislative intent of the current state law in the first place, and whether it is good precedence to allow counties to decide which laws to obey and which to ignore. Does anyone suppose that the intent of the current law was a desire on the part of prior legislators to exercise some modest control over a counties ability to “approve” massive sales tax hikes on it’s citizens, particularly for non-essential entertainment venues like arenas? Do you, as legislators not have a fiduciary responsibility to your constituents and the people of Kansas by demanding that local governmental units follow the rule of law in the same manner as you expect citizens to follow the law? If the current statute is flawed, perhaps you should be working to correct those flaws before you allow Sedgwick County to break the law?

The solution to this problem is for you to reject Senate Bill #58 or at a bare minimum, I would suggest that you amend the Bill by approving the 1% sales tax subject to new vote of the people, as current state law requires. Local governmental units should not be allowed to selectively ignore the state law(s) they chooses not to follow by essentially placing themselves above the law. This sets bad legislative precedence, and you should not allow it to happen.

Sincerely,

John R. Todd

Testimony regarding House Bill No. 2132

Written testimony of Bob Weeks regarding House Bill No. 2132. A pdf version is available here: https://wichitaliberty.org/files/House_Bill_2132_Testimony_by_Bob_Weeks_2005-03-10.pdf

March 10, 2005

Thank you for allowing me to present this written testimony. I realize that the voters in Sedgwick County voted for the arena sales tax increase. I believe, however, there is ample reason why you should vote against the tax. The idea of the taxpayer-funded arena came about so fast in the summer of 2004 that there was little thought given to the underlying issues. I wish to present what my research has uncovered.

WSU Study Not Complete

On of the main arguments advanced for having all the residents of Sedgwick County pay to build the arena was a study prepared by the Center for Economic Development and Business Research at Wichita State University. The study claimed a large economic benefit from the arena. It is because of this economic benefit that arena supporters say the entire community should pay to build the arena. This study, however, is incomplete in two important areas: its lack of depreciation accounting, and it ignores the substitution effect.

No Depreciation Accounting

Government Accounting Standards Board Statement 34 requires governments to account for the cost of their assets, usually by stating depreciation expense each year. Through a series of email exchanges with Mr. Ed Wolverton, President of the Wichita Downtown Development Corporation, I have learned that the WSU Center for Economic Development and Business Research was not aware of this requirement when they prepared their study. Mr. Wolverton admitted this after checking with the study authors. Furthermore, Mr. Chris Chronis, Chief Financial Officer of Sedgwick County, in an email conversation told me that the county will take depreciation expense for the downtown arena. I do not know what a figure for depreciation expense would be, but it would likely be several million dollars per year, and it would materially and substantially change the arena’s financial footing.

No Substitution Effect Allowed For

In a television new story reported by Mr. Erik Runge of KWCH Television on October 25, 2004, I was interviewed, and I mentioned the substitution effect. This is the term used to describe what research has found: that much of the new economic activity such as bars and restaurants that might appear around a downtown arena would be bars and restaurants that have moved from other parts of the city. There is little or no new economic activity, just movement of existing activity. Mr. Runge interviewed Mr. Ed Wolverton, President of the Wichita Downtown Development Corporation, who said “In WSU’s report they felt like there definitely could be some substitution effect.” The reporter explained “But how much was never studied. Downtown development backer Ed Wolverton says mostly due to time restraints.”

These two glaring omissions of materially important facts by the WSU study should lead us to question its other findings. Other than the report on KWCH, I saw no reporting of these two matters.

Claimed Economic Benefit is Not Realized

Arena supporters say that everyone should pay to build and operate the arena because it will generate economic impact that everyone will benefit from. The economic benefit claimed by arena supporters, however, has not been found to materialize in other cities. In the March 2001 issue of “FedGazette,” published by the Federal Reserve Bank of Minneapolis, an article titled “Stadiums and convention centers as community loss leaders” contains this quote:

“Current research indicates that stadiums and arenas have a particularly bad track record when it comes to delivering on promises of community economic windfalls. University researchers Mark Rosentraub and Mark Swindell found that three decades worth of studies ‘lead to the inescapable conclusion that the direct and indirect economic impacts of sports teams and the facilities are quite small’ and do not create much in the way of new jobs or economic development.”

In a paper titled “Professional Sports Facilities, Franchises and Urban Economic Development” (UMBC Economics Department Working Paper 03-103) by Dennis Coates and Brad R. Humphreys of the University of Maryland, Baltimore County we find this quote:

“Siegfried and Zimbalist (2000) recently surveyed the growing literature on retrospective studies of the economic impact of sports facilities and franchises on local economies. The literature published in peer-reviewed academic journals differs strikingly from the predictions in ‘economic impact studies.’ No retrospective econometric study found any evidence of positive economic impact from professional sports facilities or franchises on urban economies.”

Arena Tax Requires Everyone to Subsidize the Interests of a Few

Since, as current research has found, arenas do not generate the positive economic impact that their supporters claim, the arena tax instead becomes the public as a whole subsidizing the leisure activities of a relatively small number of people. The people who do use the arena, moreover, are quite easy to identify: they purchase tickets to events, or they pay to rent the arena. It is these people who should pay the full cost of the arena construction and operation.

Local Officials Not Truthful

Sedgwick County Commissioners stated that if the downtown arena sales tax did not pass, they would borrow money to renovate the Kansas Coliseum. If we do the math on the figures they quoted, that is to borrow $55 million and pay it back at $6.1 million a year for 20 years, we find that the interest rate is 9.17%, which is a terribly high interest rate for a government to pay. The county commissioners told us they were ready to pay this much if the arena tax didn’t pass.

I wrote to Sedgwick County Commissioner Tom Winters, asking him for an explanation. He replied that the interest rate is really 7.5% for this reason: To the $55.3 million cost of the renovations, we must add $6.5 million for capitalized interest during the construction period, and $.9 million for debt issuance costs. So yes, Commissioner Winters is correct about the 7.5% rate, but this also means that the cost of the Coliseum renovations should be stated as $62.7 million instead of $55 million. But even 7.5% interest is too high to pay.

What is troubling is that local government officials are not being truthful with the public.

A Letter to the Editor is Edited

I wrote a letter to the editor of The Wichita Eagle for publication. It was published today, March 7, 2005.

I have learned a lesson: my letter was much too long. I don’t fault the Eagle for editing for space reasons. I do think, though, that my letter has a much different meaning in its edited form. You can be the judge. I have created a document that shows, side-by-side, my original letter and the published letter. The link is here: https://wichitaliberty.org/files/Letter_of_2005-03-07_Edited.pdf

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

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