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

GOP and ex-GOP Legislators Promoting Higher Kansas Taxes

From Karl Peterjohn, Executive Director Kansas Taxpayers Network


In a March 4 report on Democrat Washington Day events in Topeka, Hawver News Editor Martin Hawver told about two well known Republicans involved in this statewide Democratic Party event. First is former state representative and former house majority leader Joe Hoagland, ex-Rino Johnson County, who told Democrats that, “I’m never going back,” to the KS GOP. Hoagland also claimed that there were a number of fellow GOP “moderates” aka as liberals who would be joining him on becoming Democrats. None were named in this article. Hoagland briefly flirted last year with challenging Sam Brownback in the 2004 GOP primary but decided not to do so.

Also attending this event was, as Hawver described him, “trial lawyer,” state Senator John Vratil, R-Johnson County. Vratil could have also been described as a school district attorney as well as Vice President of the Kansas senate or vice chairman of the senate’s education committee or chairman of the judiciary committee.

Hawver reported that Vratil wanted to see fellow trial attorney John Edwards speak to the Democrat gathering and was attending as a guest of the senate minority leader Tony Hensley. Hawver explicitly said that Vratil was definitely not following Joe Hoagland’s departure from the ranks of the northeast Kansas Rino’s for the Kansas Democratic Party. Regardless of how liberal Vratil can be (he has one of the lowest fiscal scores on KTN’s vote rating) I cannot see Sen. Vratil leaving the GOP while there are 30 Republicans out of 40 Kansas senate seats.

This is information that Kansas conservatives and folks interested in the Repubican Party in Kansas should know about concerning these efforts at “bipartisanship,” as well as a better understanding of the domination by tax ‘n spend, socially liberal Republicans in the Kansas senate’s current leadership. Soon, that leadership is expected to provide a “revenue enhancement” to help fund the second and third year school spending hike proposals coming out of the senate education committee and its liberal Republican leadership.

Last week the senate GOP majority passed a school spending bill that would increase state spending by almost $150 million a year above the current $2.7 billion for less than 445,000 FTE students in the FY 2006 budget. This bill would also require additional increases in local property taxes above this amount because of the state’s spending growth can automatically trigger higher school district spending within the state’s quite complicated school finance formula. Currently, if all state, local, and federal funds in the current budget year are spent, the average per pupil expenditures are budgeted at $10,162 in the 2004-05 school year.

Governor Sebelius, legislative Democrats, school district lobbyists and adminstrators as well as their attornies who are promoting the school finance litigation are all claiming that higher taxes must occur to meet the Kansas Supreme Court’s January 3, 2005 school finance edict. The court’s decision, that cited several areas where public school funding should be increased, is not final but is subject to court revision on or after April 12, 2005.

The legislature is scheduled for an April 1, 2005 first adjournment but will return to Topeka for a three day “veto” or wrap up session on April 27. In 2002, then Governor Graves was successful in getting over $350 million in higher sales, gasoline, cigarette, business franchise, and other taxes enacted during this “veto” session. Since there is not a daily newspaper in this state with a daily circulation exceeding 5,000 a day that has opposed any of the numerous tax, fee, or other “revenue enhancements” that have become annual events in this state since 1999, the final outcome from this year’s legislature is quite uncertain.

Last week the Kansas senate rejected two separate proposals to raise state taxes. A proposal to add a 7.5% surcharge and give Kansas the highest personal income tax rate in our five state region was defeated with only nine votes cast in favor (6 Democrats and 3 Rino’s) proposed by Sen. Pete Brungardt, Rino-Salina. Manhattan Rino Senator Roger Reitz’s proposal to raise the state’s sales tax by 1/2 cent or almost 10 percent (current rate is 5.3%) received only five votes from tax ‘n spend liberal Republicans, but most of the senate Democrats passed on this vote.

The trial attorney heading up the plaintiffs in the Kansas Supreme Court lawsuit, Alan Rupe, is quote in today’s newspapers that both the senate and house passed school finance spending increase proposals are not adequate and in violation of the Kansas Supreme Court’s decision. KTN has not been successful in convincing the legislature to add a provision to the school finance formula that would do three things critical for improving the deeply flawed and expensive school finance system in Kansas. The three changes are: 1) Require that all federal school funds be included in local school district budgets–currently, most Kansas school districts exclude federal title funds from their official budgets; 2) require voter approval for any local or state tax hikes for; and 3) cut state funding for any local school district that either challenges the constitutionality of school finance in Kansas or the adequacy of state funding. If the school district’s lost $5 in state funding for every $1 spent the previous year for school lawsuits, I think this litigation’s funding would dry up quickly. However, if I’m wrong, let’s cut the funding by $10.

Martha, I’m Glad You’re Home

Writing from Newton, Iowa.

Alan Reynolds, writing for the Cato Institute, wrote in June 2003 this:

Believe it or not, the government now charges Martha Stewart with “securities fraud” during that same period because she supposedly tried in vain to prop up her own stock by denying that she was guilty of the crime then charged — insider trading. Yet the government now admits she was never guilty of that crime. Instead, she supposedly “obstructed justice” (her own threatened prosecution for a nonexistent crime) and made “false and misleading statements” about her reasons for making a perfectly legal sale of ImClone shares. Any jury of passably sane people would laugh this out of court.

A link to the full article is here: The Sleazy Political Persecution of Martha.

To me this seems like being charged for protesting a speeding ticket, when the police concede that you weren’t speeding. Welcome home Martha. I’m sorry you had to endure your imprisonment.

Kansas (Our Governor, That Is) Earns a “D”

In a policy analysis published today by the Cato Institute (Fiscal Policy Report Card on America’s Governors: 2004) Kansas — or more accurately Kansas’s Governor — earns a grade of “D” based on 15 objective measures of fiscal performance.

The authors state: “Our analysis shows that states that keep tax rates low and restrain spending growth have the best economic performance and thus the best longterm fiscal health.” It is such a simple recipe for success, but so difficult for politicians to implement. As the authors state again:

Yet the sad truth is that the longer most of the senior class Republican governors remained in office — the more comfortable they became in their incumbency and the more the media praised them for “growing in office” — the less resistant they became to higher taxes and increased spending. As a result, they scored lower on the report card.

I think this speaks to the irresistible urge that most politicians have to improve our lives for us. Even conservative politicians who meet with early success can come to believe that their success derived from something they did, instead of what they didn’t do.

Fiscal Policy Report Card on America’s Governors: 2004 http://www.cato.org/pub_display.php?pub_id=3691

KNEA Tax Plan Would Hurt Kansas

From our friends at the Kansas Taxpayers Network.

KANSAS TAXPAYERS NETWORK
P.O. Box 20050
Wichita, KS 67208
316-684-0082
FAX 316-684-7527
www.kansastaxpayers.com

March 1, 2005
Editorial For Immediate Release

KNEA TAX PLAN WOULD HURT KANSAS

By Karl Peterjohn

The powerful and left-wing National Education Association’s Kansas affiliate is working hard to raise your taxes. In a February Olathe News article Terry Forsyth, one of the Kansas National Education Association’s (KNEA) lobbyists, is quoted claiming that there is no correlation between taxes and job growth.

Obviously Mr. Forsyth seems unfamiliar with high tax and high spending states like New York that have lost jobs and population as people have repeatedly voted with their feet and moved to states with lower taxes and limits on tax growth. Colorado has enjoyed massive economic and population growth since their lid on higher state and local taxes was enacted roughly 15 years ago. The Colorado Taxpayer Bill Of Rights (TABOR) has been a critical factor in helping that state succeed economically and allowed income to grow faster than taxes there.

This KNEA lobbyist claims that job losses in the private sector would be more than offset by roughly doubling the number of jobs working for government. That’s a paradigm for inefficiency and another excuse for government “make work” programs. That didn’t work in the 1930’s during the Great Depression in this country and it didn’t work as an engine for economic growth in the old Soviet Union either.

The Wichita based Flint Hills Center for Public Policy’s econometric model estimated that income and sales tax hikes proposed in 2004 by Governor Sebelius would cost this state at least 4,500 private sector jobs. Sadly, this model could not factor in the additional job losses proposed by the governor’s plan to raise the state’s property tax by 10 percent. Governor Sebelius continues to push for higher Kansas taxes at the statehouse.

Governor Sebelius’ proposed hike in state property taxes is occurring at a time of soaring appraisals as well as millage increases. Property tax hike proponents are hurting this state’s economy daily, and this problem is getting worse with the automatic property tax hikes caused every spring. In addition, Kansans’ average income already lags well below the national average but our per pupil school spending is well above both the national and the amounts spent in neighboring states. In the 2004-05 school year, the average public school student will cost taxpayers $10,162 according to the most recent Kansas Department of Education budget figures. This is a large increase over the 2003-04 spending of $9,235 and the first time the statewide average went into five figures.

The KNEA lobbyist took the position that all taxes should be raised to meet the Kansas Supreme Court’s mandate on school finance. This is a blatant attempt to mislead Kansans since the court did not issue any such requirement to raise taxes. It’s not there. The court’s decision is less than five pages long and can be found at: www.kscourts.org/ kscases/supct/2005/20050103/92032.htm. You should go on line and make up your own mind by reading this court’s edict.

Governor Sebelius wants to raise Kansas taxes to help the various spending lobbies in Kansas. Kansas government is too large today. Any tax increase to expand Kansas government is like taking your 400 pound friend out to your local donut shop. Kansas cannot tax itself wealthy or spend ourselves rich.

######

Karl Peterjohn is a former journalist, California state budget analyst, and executive director of the Kansas Taxpayers Network.

The Law by Frederic Bastiat

About a year ago I became acquainted with the writings of the economist Walter E. Williams. After reading his foreword to this book, I understand — as Williams says himself — how important Bastiat’s writings are. As Williams says:

Reading Bastiat made me keenly aware of all the time wasted, along with the frustrations of going down one blind alley after another, organizing my philosophy of life. The Law did not produce a philosophical conversion for me as much as it created order in my thinking about liberty and just human conduct.

And then this:

…Bastiat’s greatest contribution is that he took the discourse out of the ivory tower and made ideas on liberty so clear that even the unlettered can understand them and statists cannot obfuscate them. Clarity is crucial to persuading our fellowman of the moral superiority of personal liberty.

I am tempted to repeat in full Dr. Williams’s foreword, but you would do well to read it yourself.

The Law is a book about liberty and justice. One of the most important things I learned from reading this book is that the proper function of the law is not to create justice, but to prevent injustice. This makes the laws we should have quite simple. Instead of deciding how much to take from us in the form of taxes (plunder) and how to distribute it, laws should protect us from plunder.

This book may be found in its entirety at several places online. One, which includes Walter Williams’s excellent foreword, is at http://www.econlib.org/library/Bastiat/basEss0a.html.

I wish to thank my friend John Todd, who sent this book to me.

Court Sets Trap for Legislature

I received the following, which I thought was interesting, so I present it. I do not entirely understand the author’s argument, so if anyone can help me understand, I would appreciate it.


Kansas Legislative Education And Research
827 SW TOPEKA BLVD TOPEKA, KS 66612
PHONE: 785 233 8765 EMAIL: ks klear@swbell.net

Contact: Bob L. Corkins

Court sets Trap for Legislature

The Bait:

“The Kansas Constitution thus imposes a mandate that our educational system cannot be static or regressive…

“…there is substantial competent evidence, including the Augenblick & Myers study, establishing that a suitable education, as that term is defined by the legislature, is not being provided.”

“…we need look no further than the legislature’s own definition of suitable education to determine that the standard is not being met under the current financing formula.”

“…the legislature has failed to “make suitable provision for finance” of the public school system as required by Article 6 § 6 of the Kansas Constitution.”

“It is clear increased funding will be required…”

The Snare:

The Supreme Court requires additional funding and implies that the legislature must do so because constitutional standard of “suitable education” has not been achieved. Increasing funding for this reason would be like walking into a trap.

Did the Supreme Court say the constitution requires “suitable education”?

*No*

The Court said the constitution requires “improvement’ and that the legislature has interpreted this to mean
“suitable education”.

The Court merely asserts that Article 6 refers to an improving educational system.

The Court itself is not making the connection, it’s just claiming that the legislature has interpreted “improvement’ ‘to mean “suitable education”.

The Court does not even explicitly say it agrees with the legislature’s alleged interpretation.

Is there anything in the Kansas Constitution that requires a minimally acceptable level of education quality?

No

All the Court’s references to minimum quality standards are to those now set (or may have at one time been set) by the legislature, not by the constitution.

The Court repeatedly states that the legislature failed to satisfy its own standards, not that the legislature failed to satisfy any constitutional standard.

A statutory standard does not equate to a constitutional entitlement.

The constitution’s mandate for “improvement” logically refers to students’ opportunity for personal self ‘improvement as compared to their ability to do so in the absence of public schools.

Suitable education indeed, even uniformly excellent education is a worthy and legitimate public policy goal even if it is not compelled by the state constitution.

To Avoid the Trap:

Financing must be increased, but do not do so because current funding violates any constitutional “suitable education” standard.

All current, and all future, statutory definitions of “suitable education” must make abundantly clear that the legislature is not defining the term as the result of a constitutional mandate, and that “suitable education” is distinct from the true constitutional mandate of “suitable provision for finance”.

Rep. Loganbill Advocates More Tax Brackets

On Saturday February 12, 2005, I attended a meeting of the South-Central Kansas Legislative Delegation. State Representative Judith Loganbill made remarks that included the fact that the maximum Kansas individual income tax rate becomes effective at taxable incomes of $30,000 for singles and $60,000 for married couples. A member of the audience spoke and expressed astonishment to learn this. I didn’t think about it at the time, but I now realize that Rep. Loganbill was advocating more tax brackets with higher rates.

TABOR: not fair?

Mr. Gary Brunk, executive director of Kansas Action for Children, wrote a letter published in The Wichita Eagle on February 23, 2005, opposing a taxpayer bill of rights, or TABOR, in Kansas. As evidence of TABOR’s failure in Colorado, he cites the low rate of childhood immunization in that state.

It is unfortunate that so many Colorado children don’t receive immunizations. Mr. Brunk, however, presents no evidence that Colorado’s TABOR is the cause. It is tempting to conclude that when both x and y are present that x must be the cause of y, but this is not evidence of actual causation. It is possible that other factors are responsible.

Besides, we might ask this question: Why should the taxpayers of Colorado pay to immunize others’ children? I think the answer many might give is that if the state supplies relatively inexpensive immunizations, the state can avoid paying the substantial healthcare costs for children who become ill with diseases the immunizations prevent.

This is undeniably true, and leads to the even-larger question: Why have states become responsible for providing healthcare (and other services) for so many? Mr. Brunk makes a case for what he terms a “fair” tax system. I submit that a tax system that takes money from one group of people and gives it to another group to whom it does not belong, no matter how noble the intent, is not in any sense fair. That is, if by fair Mr. Brunk means moral.

The economist Walter E. Williams makes the case succinctly: “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.”

It is the runaway growth in taxes and spending — the taking of one person’s property and giving it to another — that a TABOR seeks to stem. A TABOR does not tell legislators how they must allocate state funds; it merely places a limit on how much they can spend. Legislators can still make judgments each year as to which programs are most important. Spending will most likely keep growing, but slower than it has.

The forces that want to increase taxes and spending by increasing amounts are always working and must be restrained. For example, Mr. Brunk, in his letter, advocates legislation that will require “a biannual report on the proportion of their income that people in different income levels pay in taxes.” Reading this, I get the strong impression that Mr. Brunk believes we do not pay enough tax. But for those who believe that state government is already large enough, a TABOR is the best way to manage its growth.

Latest Federal School Finance Spending Revealed

Here is an article from the Kansas Taxpayers Network that reports on school spending: http://www.kansastaxpayers.com/editorial_fedschool.html.

On Saturday February 12, 2005 I attended a meeting of the South Central Kansas Legislative Delegation. Lynn Rogers, USD 259 School Board President, and Connie Dietz, Vice-President of the same body, attended. There has been a proposal to spend an additional $415 million over the next three years on schools. Asked if this would be enough to meet their needs, the Wichita school board members replied, “No.”

Missing From the Social Security Debate

This is what I haven’t seen mentioned in the debate over the future of social security.

Opponents of private accounts cite the risk inherent in investing in markets. Instead, they will rely on future generations of workers to pay the taxes necessary to pay promised social security benefits.

It seems to me, though, that investments in U.S. securities markets, both stocks and bonds, derive their value from the underlying strength of the U.S. economy. If the economy does well, in the long run, markets do well. If the economy does not do well, the investments will not do well, and social security recipients will need to rely on a future generation of workers to pay taxes that will pay benefits.

Where do these taxes come from? They come from workers, hopefully earning high salaries to pay the high taxes that will be needed. But if the economy does not do well, there will not be very many highly-paid workers, and the government may have trouble collecting enough taxes to pay social security benefits.

So we need to hope that the U.S. economy performs well, so that private accounts earn a high return, or there will be workers earning enough to pay high social security payroll taxes.

What is Not Good About Internet Search

The success of the Internet search engine Google is amazing. It has become a cultural phenomena, as “to Google” someone or a topic. The implication is that by using Google, you can find all there is to know about a person or subject.

In my opinion, this attitude can be deceptive. Relying exclusively on Google or any other search engine can lead to conclusions based on erroneous or incomplete sources. For example, The Wall Street Journal, one of the most important sources for research on current topics, is absent from Google. Its content does not appear in searches. That’s because the Wall Street Journal is a subscription service. Readers have to subscribe and pay to view its content. Other subscription services — and there are many, some being quite expensive — may not have their content indexed by Google.

Google has a new service called Google Scholar. Quoting from its “About” page: “Google Scholar enables you to search specifically for scholarly literature, including peer-reviewed papers, theses, books, preprints, abstracts and technical reports from all broad areas of research. Use Google Scholar to find articles from a wide variety of academic publishers, professional societies, preprint repositories and universities, as well as scholarly articles available across the web.” In my brief experience using Google Scholar, it finds some articles I would like to read, but many are expensive to purchase. For example, a search for “Wichita city council” returns an article titled “Searching for a Role for Citizens in the Budget Process.” The article costs $25.00 to read.

An obvious problem in using the Internet for research, and therefore for search engines as well, is the quality of the web pages that are returned in a search. Readers need to be careful in deciding which web pages and sites to trust. It is easy, and becoming easier, to create web sites that have a quality look and feel. That does not mean, however, that the information is reliable. It may have been created to deceive. A good page that can help judge the quality of a web page is here: Evaluating Web Pages: Techniques to Apply & Questions to Ask. Another good resource is Evaluating the Quality of Information on the Internet.

There are many other search engines. Some I have recently become aware of that seem interesting and have merit are Teoma, Alltheweb, Vivisimo, and SMEALSearch. There are also pay search services. These often include content that is not available on free websites. Some of these include HighBeam, Questia, Factiva, and Northern Light.

I don’t mean to pick exclusively on Google, as their search service is very good, and some of their more little-known services are amazing. The recently introduced Google Maps (link: http://maps.google.com ), for example, is a technical tour-de-force and different from other map services. But we must realize that the Internet is not quite like a library with the helpful and knowledgeable librarian there to help us.

Increase our awareness of taxes

As the annual tax season is upon us, we should take a moment to examine our level of awareness of the taxes we pay.

First, very many families don’t pay any federal income tax. According to a study by the Tax Foundation (link: http://www.taxfoundation.org/ff/zerotaxfilers.html) 58 million households, representing some 122 million people or 44 percent of the U.S. population, pay no federal income tax.

For those who do pay taxes, they often aren’t aware, on a continual basis, of just how much tax they pay. That’s because our taxes are conveniently withheld for us on our paychecks. Many people, I suspect, look at the bottom line — the amount they receive as a check or automatic bank deposit — and don’t really take notice of the taxes that were withheld. This makes paying taxes almost painless.

An alternative would be to eliminate the withholding of taxes from paychecks, and from monthly mortgage payments, too. Instead, each month or year the various taxing governments would send a bill to each taxpayer, and they would pay it just like the rest of their periodic bills. In this way, we would all be acutely aware of just how much tax we pay. I’m aware there is an obvious collection problem.

A further perversion is that many people are happy during tax season, because they get a refund. And they’re delighted to get that refund, so much so that many will pay high interest rates on a refund anticipation loan just to get the money a little earlier. The irony is that by adjusting their withholding, they could take possession of much of that money during the year as they earn it.

The other people happy during tax season are tax preparers. As a country we spend an enormous effort on tax recordkeeping and compliance. Another study by the Tax Foundation estimates that in 2002 we spent, as a nation, 5.8 billion hours and $194 billion complying with the federal tax code. (5.8 billion hours is equivalent to about 2,800,000 people working 40 hours per week, 52 weeks per year.) By simplifying our tax code, we could eliminate much of this effort, and return that effort to productive use.

Since tax withholding from paychecks and mortgages reduces our awareness of just how much tax we pay, it’s unlikely that governments will stop withholding and submit a bill to taxpayers. It’s left to ourselves to remain aware of how much we are paying.

SB 58 Testimony from Kansas Taxpayers Network

More testimony opposing SB 58, the bill to allow Sedgwick County to increase its sales tax to pay for the downtown arena.


Testimony Opposing SB 58
By Karl Peterjohn, Executive Director, Kansas Taxpayers Network

SB 58 is a flawed bill that should either be re-drafted or defeated in its current form, Let me outline the major problems with this legislation.

1) This bill does not address the serious flaws already contained within KSA 12 187 that cry out for correction. This is a grossly non uniform statute that should be made, uniform covering all local government units. Today, cities may, and some already have, opt out of this statute using their home rule powers because of this statute’s non uniform condition. County home rule requires a change in statutes for the lid on local sales taxes (see KSA 19 101a). At some point in time the cities may opt out of this statute in a way that negates any requirement for voter approval at an election. It will be a sad day for Kansas government when the voter approval requirement within this statute gets voided within a municipality. This is only a matter of when, not a matter of if

It may surprise this committee that the Kansas Taxpayers Network (KTN) supports removing this local sales tax Ed under limited circumstances. The circumstances are straightforward. KTN strongly supports requiring voter approval before taxes are raised. KTN has repeatedly testified in front of both legislative tax committees in support of this principle. We strongly urge this committee to broaden this voter approval requirement to extend to city, county, and local property tax millage hikes. KTN would also like to see a requirement added to this statute that would extend this principle of voter approval of tax hikes to extend to all local taxes. Currently, Missouri, Colorado, and Oklahoma require voter approval before property taxes can be raised in those three states. In Colorado and Missouri this requirement for voter approval currently covers all local taxes.

This would correct the pro tax raising bias that exists in current law. Local sales tax hike proponents raise local sales taxes in a way I’ll describe ‘in three words: “carrot and stick.” The “carrot” approach to raising sales taxes is how Sedgwick County originally got their 1 cent local sales tax 20 years ago, “Vote for this local sales tax and we’ll lower your property tax.” That’s how Pottawatomie County got their local sales tax raised last year.

The “stick” approach was used by arena proponents in narrowly getting voter approval during the advisory vote November 2, 2004 in Sedgwick County. “If you don’t vote for this temporary sales tax hike we’ll raise your property taxes.” Arena proponents’ flyers and advertising said, “Vote No. And a 20 year property tax buys a facelift for the aging Kansas Coliseum… ” So it all comes down to: higher sales or higher property taxes would the condemned prefer to be hung or shot?

2) SB 58 is a slap in the face for taxpayers by making an advisory vote retroactively into a binding vote. This is an affront to the rule of law. The county knew they had no authority to raise the local sales tax under current state law. Now they want you to retroactively provide them with this approval. I wrote an editorial ‘in the Wichita Eagle last August that publicly informed them that they had no legal authority under Kansas law to impose this tax. They arrogantly proceeded anyway and now want the legislature to grant retroactive authorization.

Now I’m not saying that you can’t add retroactivity into Kansas tax law. That has occurred in the past nationally and fairly recently. In 1993 then President Clinton proposed adding retroactive provisions to federal tax code as part of his tax raising bill. This was enacted, it was litigated and the U.S. Supreme Court ruled that retroactive tax law was constitutional. This was bad federal tax law in 1993 and Kansas should not adopt this retroactively principle in 2005.

Now let me demonstrate how a taxpayer would be a second class citizen in Kansas if you enact SB 58 in its current form. If I decided as a citizen that I would no longer be bound by the portions of the tax law I’d like to see changed, and then proceeded to ignore the law, I would be in violation of the law and could be penalized under this law. Apparently, that is not a problem if the legal entity happens to be a local government, like Sedgwick County in Kansas. If I then had the arrogance to proceed to ask you as legislators to retroactively change state law to help me out of my own violation of state law, you would not take my request seriously. Today, you are taking the county’s request very seriously and if recent press reports are correct, a majority of you have already decided to vote for this bill. If this bill passes it will clearly establish the fact that taxpayers are second or perhaps even third class citizens behind local units of government in Kansas.

This bill would be a gross violation of the rule of law in this state. In fact, the legislature rarely provides retroactive provisions in state law and usually enacts statutes that only take effect at a future date.

3) Since the November 2 vote was advisory *in nature, the fact that arena opponents were outspent is an abuse of taxpayer funds but is not critical under current Kansas law. Arena opponents raised over $20,000 in private funds in the unsuccessful advisory election November 2, 2004. We were outspent by a greater than 2 to I margin by city, county, and state funded tax dollars spent by tax funded organizations.

This included city property taxes, city hotel/motel taxes, county tax funds, and state turnpike and regents tax dollars. This statute should be amended to ban the use of state and local tax funds in tax referendum elections. It is now clear that Kansas has already descended upon the slippery slope where tax dollars are being spent to promote higher taxes.

4) If the legislature does not act upon SB 58 or any similar legislation then one of two events will occur. The county could follow the usual practice and get KSA 12 187 changed so a binding election could occur. The city of Wichita, which also strongly backs this tax hike, could exercise their home rule option in this matter or also seek a change in this statute to hold a binding election in the future. The rule of law could be preserved even if this important principle is contained within this flawed and non uniform statute.

SB 58 is flawed and should be rejected by this committee. KTN has intentionally not discussed the merits of the downtown arena since that is an issue for a binding election and not for this committee or the legislature to consider. The legislature must make state law for all the citizens and all of the local units. SB 5 8 makes a bad statute worse.

A better approach would be to extend the principle of voter approval of local sales taxes to cover all local taxes in Kansas. Then you could remove the caps, terminate the “carrot and sticks,” tax raising strategy, delete the non uniformities, and allow the Kansas economy to begin to be able to compete with our neighboring states that have already empowered their citizens with mandatory tax referendums at the ballot box.

Legislative Delegation, Saturday February 5, 2005

On Saturday February 5, 2005 I attended the meeting of the local legislative delegation regarding the arena tax. Representative Tom Sawyer chaired the meeting. The audience wrote questions on notecards, and Representative Brenda Landwehr read them. To the best of my recollection, the people allowed to answer questions were Sedgwick County Commissioner Tom Winters, Sedgwick County Assistant County Manager Ron Holt, Sedgwick County Director of Finance Chris Chronis, Wichita Mayor Carlos Mayans, and Wichita Downtown Development Corporation President Ed Wolverton. All of these are arena supporters. No one with an opposing view was allowed to speak, except for near the end when Kansas Taxpayers Network Executive Director Karl Peterjohn spoke from the audience for a moment.

The news that was made during this event was that it was totally scripted by arena supporters, and except for Mr. Peterjohn’s brief remarks from the audience, there was no balance.

I created a handout for the legislators. A link to it is here.

From John Todd: Testimony regarding Senate Bill No. 58

February 3, 2005

Members
Senate Assessment and Taxation Committee
State Capitol
Topeka, Kansas 66612

Subject: Testimony in OPPOSITION TO SENATE BILL #58 (Sales Tax Increase For The Proposed Wichita/Sedgwick County 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.

The reason why I am here in opposition to this government driven plan is my basic belief that individuals know best how to spend their own money, and that they should be allowed the freedom to spend the fruit of their own labor as they wish, and not as government dictates, particularly when it involves mandatory spending for an elective entertainment venue like the proposed downtown arena.

If the need for a Downtown Arena were market driven, the private sector would already be building it, and the taxpayers would be left out of the loop. Obviously, it is not, and so the proponents want the taxpayers to build it and absorb the losses. I believe their plan calls for over $20 million in operational losses. This does not count the business property that will be taken off the tax rolls for a county owned facility. If the Wichita Eagle’s pre-election numbers of $40 million in property value was correct, those losses in real estate taxes could amount to $1 million more in lost taxes per year, and I would bet that that shortfall will be spread back over the other real estate property taxpayers.

How did we ever get the idea that the road to prosperity is built on government spending and the heavy taxation of our people? How far from the truth can this be?

Anyone who has read the Eagle in recent months can attest to the massive number of so called “economic development” projects in downtown Wichita that are losing money, and that the taxpayer is being asked to cover. One only needs to read of the $1.00 per year 99 year leases that are being awarded for the millions of dollars taxpayer owned land and the $7 million dollars needed to lure a second or third choice anchor retailer downtown to grow disenchanted with local government’s ability to “manage” anything, particularly if it is related to real estate development.

And why should anyone be concerned with these boondoggles? We can’t continue to take $184.5 million here and $140 million there, and $100 million yonder out of our economy and hope to favorably compete with other cities, counties, and states in our region.

There are numerous excellent examples of free market economics at work in our city. One only needs to look north and south on Rock Road in Wichita to observe the benefits of this privately funded system that expands the tax base, creates jobs, and is indeed true “economic growth”, and best of all, the taxpayer is not liable if any of these business ventures fail. Will a 1% sales tax that will remove $184.5 million from the Sedgwick County economy hurt these local businesses? Absolutely! And according to an article in the March 2001 issue of “FedGaxette,” published by the Federal Reserve Bank of Minneapolis entitled “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.”

The proponents of this Bill here today will tell you that 52% of the voters voted for the arena. That is true; however, they ignore the fact that our County elected officials were less than forthcoming in advising voters that the arena vote was an advisory election only, and is not binding. The County is not authorized to raise sales taxes without first obtaining legislative approval prior to any vote. Sedgwick County broke state law! The legislature is now faced with the dilemma of passing enabling legislating, and making it retroactive to the November 2, 2004 election and calling that election binding. This is wrong, and you should not let it happen. At the very least, if you pass the enabling legislation, a subsequent public vote should be required before allowing the County to raise the sales tax.

Before you pass this Bill into law, several matters need to be considered.

1. Is the $184.5 million dollar price tag excessive?

2. What is the real impact of taking $184.5 million dollars out of the private economy in terms of retailer profits and potential job losses?

3. The arena vote was won by a narrow margin. Rural Sedgwick County voters voted against the arena as did voters in the less affluent neighborhoods. Perhaps the sales tax should be optional at the check out stand. Those who want to pay the arena tax could and those who don’t could simply ‘opt out’.

4. What will happen to the Sedgwick County economy if the Legislature or the Supreme Court mandates a statewide sales tax to meet the Court’s requirements for school financing?

5. What is the specific location for the proposed arena? Who owns the land? Is the land going to cost $1.00 per square foot or $20.00 per square foot? And is the $20 million for land acquisition going to cover the actual cost, or will it be double or triple that amount? Would not an astute “private” investor already own the land or control the price under an option to purchase contract? If the Legislature allows the County to fill its checkbook, will not the price of land double or triple?

6. No one knows what the proposed arena will look like since it has not been designed. Should not the taxpayers have known what they are voting for?

7. Before you authorize giving the Sedgwick County Commission a blank check with $184.5 million of taxpayer money deposited in it, perhaps you need to consider placing some “controls” over how they spend the money?

8. Will the people who contributed to the pro arena campaign be allowed to bid on the construction work, participate in the design work, earn commissions for the sale/purchase of the land, or will these be considered a “conflict of interest”?

9. Will the Sedgwick County commissioners be required to explain why they voted for a $55 million dollar renovation for the Kansas Coliseum and then decided that it was too expensive? What did they do with the long-term capital improvement fund(s) that should have been earmarked for this project? And how do they explain that only $25 million in private funds were needed to renovate a similar size arena at Wichita State University? Does it always cost the public sector twice the amount to do the work as the private sector? Perhaps we need to enlist the business acumen of the private sector to build the arena for half of the proposed cost?

10. Perhaps our voters need better information in order for them to make an informed decision regarding a new arena or a renovated Coliseum? Property taxes were made an issue in the arena campaign. Many votes expressed their frustration to me that they were not given the opportunity to vote for “none of the above”, and since they were more opposed to property taxes than sales taxes, they were forced to vote for the arena. Perhaps the legislature needs to enact legislation requiring a public vote before local governments can raise local property taxes?

11. Are not government directed projects like the arena the antitheses of the free market system? Does anyone else tire of working until April or May of each year to pay his or her taxes? Is government really the answer?

Too many questions need to be answered before you decide pass this Bill into law. A non-binding public vote for a downtown arena in 1993 failed to pass by a wide margin. Since the 1993 vote was ignored, you have the necessary precedence and current state law on your side to ignore this vote, and at the very least amend this Bill to require another public referendum.

Thank you for allowing me to speak. I would be glad to answer questions.

Sincerely,

John R. Todd

Written testimony regarding Senate Bill No. 58 (Wichita downtown arena tax)

Written testimony of Bob Weeks regarding Senate Bill No. 58, an act concerning sales taxation; relating to countywide retailers’ sales tax in Sedgwick County.

February 3, 2005

Members
Senate Assessment and Taxation Committee
State Capitol
Topeka, Kansas 66612

Honorable Senators:

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 warn 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 Entirely 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.

Unintended Economic Effects

A paper titled “An Assessment of the Economic Impact of a Multipurpose Arena” by Ronald John Hy and R. Lawson Veasey, both of the University of Central Arkansas, (Public Administration & Management: An Interactive Journal 5, 2, 2000, pp. 86-98) looked at the effect of jobs and economic activity during the construction of the Alltel Arena in Pulaski County, Arkansas. This arena cost $50 million. It was funded in part by a one percent increase in the county sales tax for one year (1998). The sales tax generated $20 million.

In the net, considering both jobs lost and jobs gained due to sales tax and construction effects, workers in the wholesale and retail trades lost 60 jobs, and service workers lost 52 jobs. There was a net increase of 198 jobs in construction.

The fact that jobs were lost in retail should not be a surprise. When a sales tax makes nearly everything sold at retail more expensive, the supply curve shifts to the left, and less is demanded. It may be difficult to estimate the magnitude of the change in demand, but it is certain that it does change.

Workers in these sectors, should the sales tax increase take effect, may want to reconsider their career plans. How many retail and service workers can make the transition to construction work is unknown. It is certain, however, that when workers lose their jobs it imposes benefits costs on the government — and the taxpayers.

The population of Pulaski County in 2000 was 361,474, while Sedgwick County’s population at the same time was 452,869, so Sedgwick County is a somewhat larger. Our sales tax will last 2.5 times as long, and our proposed arena is about three times as expensive. How these factors will impact the number of jobs is unknown, but I feel that the number of jobs lost in Sedgwick County in retail and services will be larger that what Pulaski County experienced.

It is interesting to note that the authors of this study, while measuring a positive net economic impact for the Alltel Arena, make this conclusion:

“The primary reason for this positive economic impact is that the state of Arkansas contributed $20 million to the construction of the arena. As a result, the economic impact of building the arena in Pulaski County is greater than it would be if the county had funded the arena by itself. A vast majority of the jobs that will be created will be in the service sector that frequently offers lower wages than jobs in other sectors of the economy.”

The proposed downtown Wichita arena does not have the advantage of having 40% of its cost paid for by outsiders. It may be that we feel even more strongly the negative impacts of the sales tax.

The Difference Between a Publicly-Owned and Privately-Owned Arena

Instead of the government building an arena, suppose that arena supporters, along with those who voted yes for the sales tax and anyone else who wants to, formed a corporation to build and own an arena.

Instead of having paid taxes to the government, arena supporters would be investors and they would own something: their shares in the arena. They would have the pride and responsibility that comes with ownership. They would have a financial stake in its success. Even taxpayer-funded arena opponents might see merit in investing in a local business rather than paying taxes to a government.

Instead of government bureaucrats deciding what the people of our town want and need, a privately owned arena would be subject to the guidance and discipline of free markets. It would either provide a valuable service to its customers and stay in business, or it would fail to do that and it would go out of business. Governments do not have such a powerful incentive to succeed.

Instead of the bitter feelings dividing this town over the issue of a taxpayer-funded arena and other perceived governmental missteps, the arena corporation would act in the best interests of its shareholders and customers. Even if it didn’t, it wouldn’t be the public’s business, because after all, the corporation is formed of private individuals investing their own money.

When individuals invest in an arena they are nurturing the virtues of investment, thrift, industry, risk-taking, and entrepreneurship, Wichita having an especially proud tradition of the last. There is nothing noble about a politician taxing and spending someone else’s money on projects like a downtown arena, or a renovated Kansas Coliseum for that matter.

At this time in our town we have a chance to let private initiative and free markets work, or we can allow the government to continue to provide for us in ways that few seem truly satisfied with. Writing about a public utility in England that was transferred to private enterprise, economist John Blundell observed:

“When it was ‘public’ it was very private. Indeed, it was totally captured by a small band of bureaucrats. Even members of Parliament struggled to find out what was going on. No proper accounts were produced, and with a complete lack of market signals, managers were clueless as to the correct course to take. The greatest casualty was a lack of long-term capital investment.

Now it is ‘private’ and very public. Not just public in the sense of open, but also in the sense of accountable directly to its shareholders and customers. Copious reports and accounts are available and questioning citizens will find their concerns taken very seriously indeed.”

If we allow the government instead of private enterprise to build a new arena or to renovate the Kansas Coliseum, this is the opportunity we lose.

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

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