Voice For Liberty

Tag: American Legislative Exchange Council (ALEC)

  • WichitaLiberty.TV: After the Kansas tax increases

    WichitaLiberty.TV: After the Kansas tax increases

    In this episode of WichitaLiberty.TV: Jonathan Williams, chief economist at American Legislative Exchange Council (ALEC), joins Bob Weeks and Karl Peterjohn to discuss what ALEC does, and then topics specific to Kansas. View below, or click here to view at YouTube. Episode 159, broadcast July 30, 2017.

    Shownotes

  • Rich States, Poor States, 2107 edition

    Rich States, Poor States, 2107 edition

    In Rich States, Poor States, Kansas improves its middle-of-the-pack performance, but continues with a mediocre forward-looking forecast.

    In the 2017 edition of Rich States, Poor States, Utah continues its streak at the top of Economic Outlook Ranking, meaning that the state is poised for growth and prosperity. Kansas continues with middle-of-the-pack performance rankings, and after falling sharply in the forward-looking forecast, continues at the same level.

    Rich States, Poor States is produced by American Legislative Exchange Council. The authors are economist Dr. Arthur B. Laffer, Stephen Moore, who is Distinguished Visiting Fellow, Project for Economic Growth at The Heritage Foundation, and Jonathan Williams, who is vice president for the Center for State Fiscal Reform at ALEC.

    In addition to the printed and pdf versions of Rich States, Poor States there is now an interactive web site at www.richstatespoorstates.org.

    Rich States, Poor States computes two measures for each state. The first is the Economic Performance Ranking, described as “a backward-looking measure based on a state’s performance on three important variables: State Gross Domestic Product, Absolute Domestic Migration, and Non-Farm Payroll Employment — all of which are highly influenced by state policy.” The process looks at the past ten years.

    Looking forward, there is the Economic Outlook Ranking, “a forecast based on a state’s current standing in 15 state policy variables. Each of these factors is influenced directly by state lawmakers through the legislative process. Generally speaking, states that spend less — especially on income transfer programs, and states that tax less — particularly on productive activities such as working or investing — experience higher growth rates than states that tax and spend more.”

    Economic outlook ranking for Kansas and nearby states. Click for larger.
    For economic performance (the backward-looking measure), Kansas ranks twentieth. That’s up from twenty-seventh last year.

    In this year’s compilation for economic outlook, Kansas ranks twenty-sixth, up one position from the previous year, but down from eighteenth and fifteenth the years before. In 2008, the first year for this measure, Kansas was twenty-ninth.

    Kansas compared to other states

    A nearby chart shows the Economic Outlook Ranking for Kansas and some nearby states, shown as a trend over time since 2008. The peak of Kansas in 2013 is evident, as is the decline since then.

    Why Kansas fell

    Kansas fell in the Economic Outlook Ranking from 2013 to 2016 and moved by just one position in 2017. To investigate why, I gathered data for Kansas from 2008 to 2017. The nearby table shows the results for 2017 and the rank among the states, with the trend since 2008 shown. A rank of one is the best ranking. For the trend lines, an upward slope means a decline in ranking, meaning the state is performing worse.

    There are several areas that account for the difference.

    The most notable change is in the measure “Recently Legislated Tax Changes (per $1,000 of personal income)” Kansas fell four positions in rank. By this measure, Kansas added $2.66 in taxes per $1,000 of personal income, which ranked forty-sixth among the states. This is a large change in a negative direction, as Kansas had ranked seventh two years before.

    For the state liability system, Kansas ranks nineteenth, when it was fifth two years ago.

    Kansas remains one of the states with the most public employees, with 669.8 full-time equivalent employees per 10,000 population. This ranks forty-eighth among the states.

    Kansas has no tax and spending limits, which is a disadvantage compared to other states. These limitations could be in the form of an expenditure limit, laws requiring voter approval of tax increases, or supermajority requirements in the legislature to pass tax increases.

    How valuable is the ranking?

    Correlation of ALEC-Laffer state policy ranks and state economic performance
    Correlation of ALEC-Laffer state policy ranks and state economic performance
    After the 2012 rankings were computed, ALEC looked retrospectively at rankings compared to actual performance. The nearby chart shows the correlation of ALEC-Laffer state policy ranks and state economic performance. In its discussion, ALEC concluded:

    There is a distinctly positive relationship between the Rich States, Poor States’ economic outlook rankings and current and subsequent state economic health.

    The formal correlation is not perfect (i.e., it is not equal to 100 percent) because there are other factors that affect a state’s economic prospects. All economists would concede this obvious point. However, the ALEC-Laffer rankings alone have a 25 to 40 percent correlation with state performance rankings. This is a very high percentage for a single variable considering the multiplicity of idiosyncratic factors that affect growth in each state — resource endowments, access to transportation, ports and other marketplaces, etc.

    Rich States, Poor States compilation for Kansas. Click for larger version.
  • Lessons from Kansas tax reform

    Lessons from Kansas tax reform

    What can the rest of the nation learn from our experience in Kansas? Come to think of it, why haven’t we learned much?

    Economists from American Legislative Exchange Council have looked at Kansas and derived some lessons from our state’s struggle with tax reform. The document is titled Lessons from Kansas: A Behind the Scenes Look at America’s Most Discussed Tax Reform Effort. A few remarks and quotations:

    It may be difficult for us in Kansas to see how the rest of the country views our state. But it’s all about the struggle between those who want more government, and those who want more private sector activity: “… it is clear to most observers of state policy at this point Kansas was, and continues to be, a flashpoint in debates about state tax policy. That flashpoint has served as something of a proxy war between big government advocates and those who would prefer to shrink the size and scope of state government.”

    While taxes were cut, the state failed to make the other needed reform: “Spending reductions necessary to implement the plan were eschewed in favor of other tax increases, making any honest judgement of the original plan’s success or failure impossible.”

    On the 2012 plan, was it all for business pass-throughs, or for everyone? “Enacted an estimated $4.5 billion in tax relief over five years, about 80 percent of which was for individuals and 20 percent for business pass-through income.”

    We have to remember the failure of the legislative process in 2012 and the next year: “It is important to note at this point that the revenue increasing offsets included in the 2013 tax plan were nowhere near as comprehensive as the revenue raising offsets in Governor Brownback’s original 2012 tax reform proposal. It was this discrepancy in revenue raising offsets and the failure to rein in state spending that would ultimately lead to revenue problems for Kansas down the road.”

    Credit downgrades are a sign of a mismatch between revenues and expenses. Those who want more spending say the downgrades are caused by a lack of revenue, but we could have cured the mismatch by reforming spending, too: “Contrary to this popularly reported narrative, Moody’s cited much more than just recent tax cuts as the rationale for a downgrade, specifically failure to reduce spending to offset tax cuts, pension liabilities and state debt.

    The purpose of tax cuts? Let us keep more resources in the productive private sector: “It is certainly true that in the years following the tax reductions, Kansas did experience lower revenue collections, even lower than what had been projected. But, part of the goal of the Kansas tax reform was to reduce the amount of money taken in by state government and enhance the resources available to the private sector. Importantly, however, was the resistance to any meaningful spending reductions. Even as the 2012 tax reductions were projected to let Kansans keep $4.5 billion more of their own money, the state increased spending in 2012 by $432 million.”

    Would more taxes help the Kansas economy? “In a late 2012 literature review on this topic, William McBride, former Chief Economist for the Tax Foundation, found that of 26 peer-reviewed academic studies since 1983, only three fail to find a negative effect on economic growth from taxes.”

    The 2015 legislative session: “A block of legislators held out for reductions in the cost of government rather than tax increases but they were unable to get a majority. … The final plan that passed both houses and was signed by Governor Brownback included two main tax increases. The state raised the cigarette tax by 50 cents per pack and increased the sales tax rate from 6.15 percent to 6.5 percent. The two tax increase proposals added up to $384 million in new state revenue and were bolstered by $50 million in spending cuts, although there was still a net increase in spending.”

    Our legislature failed the people of Kansas: “The first lesson to glean from the Kansas experience is that politics affects policy. The final reforms that passed in 2012 were not the reforms that anybody wanted. Specific tax reform ideas are easily diluted and changed, and without the political will to fix imperfect reforms, unintended consequences can be difficult to avoid.”

    Then, politicians should be so boastful. Don’t overpromise. (Ask Barack Obama about that. He said if we don’t pass the ARRA stimulus bill, the unemployment rate would rise above a certain level. Well, the stimulus passed, the unemployment rate went above that level, and it was several years before it fell below. In other words, unemployment was worse with the stimulus than Obama said it would be without the stimulus.) “The second important lesson that can be learned from the Kansas experience is economic growth resulting from bold tax reductions takes time. Governor Brownback’s previous comments about the Kansas tax reforms being ‘a shot of adrenaline’ to the state’s economy continued to hound him throughout the ups and downs of revenue and economic reports. Setting expectations too high or too early can make pushing forward with future reforms nearly impossible, while setting unrealistic expectations can lead to the unwinding of sound economic reforms.”

    Finally: “Even though the tax reductions improved economic growth, the lack of commensurate spending reductions led to trouble for the state’s budget. Budget shortfalls and tough negotiations about possible tax increases mean uncertainty for businesses and families, which can hamper some of the positive economic effects of decreasing taxes.”

  • Year in Review: 2016

    Year in Review: 2016

    Here are highlights from Voice for Liberty for 2016. Was it a good year for the principles of individual liberty, limited government, economic freedom, and free markets in Wichita and Kansas?

    Also be sure to view the programs on WichitaLiberty.TV for guests like journalist, novelist, and blogger Bud Norman; Radio talk show host Joseph Ashby; David Bobb, President of Bill of Rights Institute; Heritage Foundation trade expert Bryan Riley; Radio talk show host Andy Hooser; Keen Umbehr; John Chisholm on entrepreneurship; James Rosebush, author of “True Reagan,” Jonathan Williams of American Legislative Exchange Council (ALEC); Gidget Southway, or Danedri Herbert; Lawrence W. Reed, president of the Foundation for Economic Education; and Congressman Mike Pompeo.

    January

    Kansas legislative resources. Citizens who want to be informed of the happenings of the Kansas Legislature have these resources available.

    School choice in Kansas: The haves and have-nots. Kansas non-profit executives work to deny low-income families the school choice opportunities that executive salaries can afford.

    Kansas efficiency study released. An interim version of a report presents possibilities of saving the state $2 billion over five years.

    Wichita Eagle Publisher Roy Heatherly. Wichita Eagle Publisher Roy Heatherly spoke to the Wichita Pachyderm Club on January 15, 2016. This is an audio presentation.

    Pupil-teacher ratios in the states. Kansas ranks near the top of the states in having a low pupil-teacher ratio.

    Kansas highway conditions. Has continually “robbing the bank of KDOT” harmed Kansas highways?

    Property rights in Wichita: Your roof. The Wichita City Council will attempt to settle a dispute concerning whether a new roof should be allowed to have a vertical appearance rather than the horizontal appearance of the old.

    Must it be public schools? A joint statement released by Kansas Association of School Boards, United School Administrators of Kansas, Kansas School Superintendents’ Association, and Kansas National Education Association exposes the attitudes of the Kansas public school establishment.

    Kansas schools and other states. A joint statement released by Kansas Association of School Boards, United School Administrators of Kansas, Kansas School Superintendents’ Association, and Kansas National Education Association makes claims about Kansas public schools that aren’t factual.

    After years of low standards, Kansas schools adopt truthful standards. In a refreshing change, Kansas schools have adopted realistic standards for students, but only after many years of evaluating students using low standards.

    Brownback and Obama stimulus plans. There are useful lessons we can learn from the criticism of Kansas Governor Sam Brownback, including how easy it is to ignore inconvenient lessons of history.

    February

    Spending and taxing in Kansas. Difficulty balancing the Kansas budget is different from, and has not caused, widespread spending cuts.

    In Sedgwick County, choosing your own benchmarks. The Sedgwick County Commission makes a bid for accountability with an economic development agency, but will likely fall short of anything meaningful.

    This is why we must eliminate defined-benefit public pensions. Actions considered by the Kansas Legislature demonstrate — again — that governments are not capable of managing defined-benefit pension plans.

    Kansas transportation bonds economics worse than told. The economic details of a semi-secret sale of bonds by the State of Kansas are worse than what’s been reported.

    Massage business regulations likely to be ineffective, but will be onerous. The Wichita City Council is likely to create a new regulatory regime for massage businesses in response to a problem that is already addressed by strict laws.

    Inspector General evaluates Obamacare website. The HHS Inspector General has released an evaluation of the Obamacare website HealthCare.gov, shedding light on the performance of former Kansas Governor Kathleen Sebelius.

    Kansas highway spending. An op-ed by an advocate for more highway spending in Kansas needs context and correction.

    Brookings Metro Monitor and Wichita. A research project by The Brookings Institution illustrates the poor performance of the Wichita-area economy.

    March

    Wichita: A conversation for a positive community and city agenda. Wichita City Manager Robert Layton held a discussion titled “What are Wichita’s Strengths and Weaknesses: A Conversation for a Positive Community and City Agenda” at the February 26, 2016 luncheon of the Wichita Pachyderm Club.

    In Kansas, teachers unions should stand for retention. A bill requiring teachers unions to stand for retention elections each year would be good for teachers, students, and taxpayers.

    In Kansas, doctors may “learn” just by doing their jobs. A proposed bill in Kansas should make us question the rationale of continuing medical education requirements for physicians.

    Power of Kansas cities to take property may be expanded. A bill working its way through the Kansas Legislature will give cities additional means to seize property.

    Wichita TIF district disbands; taxpayers on the hook. A real estate development in College Hill was not successful. What does this mean for city taxpayers?

    Kansas and Colorado, compared. News that a Wichita-based company is moving to Colorado sparked a round of Kansas-bashing, most not based on facts.

    In Wichita, the phased approach to water supply can save a bundle. In 2014 the City of Wichita recommended voters spend $250 million on a new water supply. But since voters rejected the tax to support that spending, the cost of providing adequate water has dropped, and dropped a lot.

    Wichita Eagle, where are you? The state’s largest newspaper has no good reason to avoid reporting and editorializing on an important issue. But that’s what the Wichita Eagle has done.

    April

    Wichita on verge of new regulatory regime. The Wichita City Council is likely to create a new regulatory regime for massage businesses in response to a problem that is already addressed by strict laws.

    Wichita economic development and capacity. An expansion fueled by incentives is welcome, but illustrates a larger problem with Wichita-area economic development.

    Rich States, Poor States, 2106 edition. In Rich States, Poor States, Kansas continues with middle-of-the-pack performance, and fell sharply in the forward-looking forecast.

    In Wichita, revealing discussion of property rights. Reaction to the veto of a bill in Kansas reveals the instincts of many government officials, which is to grab more power whenever possible.

    ‘Trump, Trump, Trump’ … oops! An event in Wichita that made national headlines has so far turned out to be not the story news media enthusiastically promoted.

    Wichita doesn’t have this. A small Kansas city provides an example of what Wichita should do.

    Kansas continues to snub school choice reform that helps the most vulnerable schoolchildren. Charter schools benefit minority and poor children, yet Kansas does not leverage their benefits, despite having a pressing need to boost the prospects of these children.

    Wichita property tax rate: Up again. The City of Wichita says it hasn’t raised its property mill levy in many years. But data shows the mill levy has risen, and its use has shifted from debt service to current consumption.

    AFP Foundation wins a battle for free speech for everyone. Americans for Prosperity Foundation achieves a victory for free speech and free association.

    Kansas Center for Economic Growth. Kansas Center for Economic Growth, often cited as an authority by Kansas news media and politicians, is not the independent and unbiased source it claims to be.

    Under Goossen, Left’s favorite expert, Kansas was admonished by Securities and Exchange Commission. The State of Kansas was ordered to take remedial action to correct material omissions in the state’s financial statements prepared under the leadership of Duane Goossen.

    May

    Spirit Aerosystems tax relief. Wichita’s largest employer asks to avoid paying millions in taxes, which increases the cost of government for everyone else, including young companies struggling to break through.

    Wichita mayor’s counterfactual op-ed. Wichita’s mayor pens an op-ed that is counter to facts that he knows, or should know.

    Electioneering in Kansas?. An op-ed written under the banner of a non-profit organization appears to violate the ban on electioneering.

    Wichita city council campaign finance reform. Some citizen activists and Wichita city council members believe that a single $500 campaign contribution from a corporation has a corrupting influence. But stacking dozens of the same $500 contributions from executives and spouses of the same corporation? Not a problem.

    In Wichita, more sales tax hypocrisy. Another Wichita company that paid to persuade you to vote for higher taxes now seeks to avoid paying those taxes.

    Wichita student/teacher ratios. Despite years of purported budget cuts, the Wichita public school district has been able to improve its student/teacher ratios.

    June

    KPERS payments and Kansas schools. There is a claim that a recent change in the handling of KPERS payments falsely inflates school spending. The Kansas State Department of Education says otherwise.

    Regulation in Wichita, a ‘labyrinth of city processes’. Wichita offers special regulatory treatment for special circumstances, widening the gulf between the haves and have-nots.

    They really are government schools. What’s wrong with the term “government schools?”

    July

    Kansas City Star as critic, or apologist. An editorial in the Kansas City Star criticizes a Kansas free-market think tank.

    State and local government employee and payroll. Considering all state and local government employees in proportion to population, Kansas has many, compared to other states, and especially so in education.

    Kansas government ‘hollowed-out’. Considering all state and local government employees in proportion to population, Kansas has many, compared to other states, and especially so in education.

    In Wichita, Meitzner, Clendenin sow seeds of distrust. Comments by two Wichita city council members give citizens more reasons to be cynical and distrusting of politicians.

    David Dennis, gleeful regulatory revisionist. David Dennis, candidate for Sedgwick County Commission, rewrites his history of service on the Kansas State Board of Education.

    Say no to Kansas taxpayer-funded campaigning. Kansas taxpayers should know their tax dollars are helping staff campaigns for political office.

    Roger Marshall campaign setting new standards. Attacks on Tim Huelskamp reveal the worst in political campaigning.

    Wichita Metro Chamber of Commerce on the campaign trail. We want to believe that The Wichita Metro Chamber of Commerce and its PAC are a force for good. Why does the PAC need to be deceptive and untruthful?

    August

    Which Kansas Governor made these proposals?. Cutting spending for higher education, holding K through 12 public school spending steady, sweeping highway money to the general fund, reducing aid to local governments, spending down state reserves, and a huge projected budget gap. Who and when is the following newspaper report referencing?

    Wichita Business Journal editorial missed the news on the Wichita economy. A Wichita business newspaper’s editorial ignores the history of our local economy. Even the history that it reported in its own pages.

    Sedgwick County Health Department: Services provided. Sedgwick County government trimmed spending on health. What has been the result so far?

    School staffing and students. Trends for the nation and each state in teachers, administrators, and students, presented in an interactive visualization.

    Intrust Bank Arena loss for 2015 is $4.1 million. The depreciation expense of Intrust Bank Arena in downtown Wichita recognizes and accounts for the sacrifices of the people of Sedgwick County and its visitors to pay for the arena.

    School spending in the states. School spending in the states, presented in an interactive visualization.

    September

    Kansas construction employment. Tip to the Wichita Eagle editorial board: When a lobbying group feeds you statistics, try to learn what they really mean.

    Wichita has no city sales tax, except for these. There is no Wichita city retail sales tax, but the city collects tax revenue from citizens when they buy utilities, just like a sales tax.

    CID and other incentives approved in downtown Wichita. The Wichita City Council approves economic development incentives, but citizens should not be proud of the discussion and deliberation.

    Cost per visitor to Wichita cultural attractions. Wichitans might be surprised to learn the cost of cultural attractions.

    GetTheFactsKansas launched. From Kansas Policy Institute and the Kansas Chamber of Commerce, a new website with facts about the Kansas budget, economy, and schools.

    The nation’s report card and charter schools.
    * An interactive table of NAEP scores for the states and races, broken down by charter school and traditional public school.
    * Some states have few or no charter schools.
    * In many states, minority students perform better on the NAEP test when in charter schools.

    School choice and funding. Opponents of school choice programs argue the programs harm traditional public schools, both financially and in their ability to serve their remaining students. Evidence does not support this position.

    October

    Public school experts. Do only those within the Kansas public schooling community have a say?

    Kansas and Arizona schools. Arizona shows that Kansas is missing out on an opportunity to provide better education at lower cost.

    Video in the Kansas Senate. A plan to increase visibility of the Kansas Senate is a good start, and needs to go just one or two steps farther.

    Kansas, a frugal state?. Is Kansas a frugal state, compared to others?

    Topeka Capital-Journal falls for a story. The editorial boards of two large Kansas newspapers have shown how little effort goes into forming the opinions they foist upon our state.

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

    Kansas school fund balances.
    * Kansas school fund balances rose significantly this year, in both absolute dollars and dollars per pupil.
    * Kansans might wonder why schools did not spend some of these funds to offset cuts they have contended were necessary.
    * The interactive visualization holds data for each district since 2008.

    In Wichita, developer welfare under a cloud. A downtown Wichita project receives a small benefit from the city, with no mention of the really big money.

    Wichita, give back the Hyatt proceeds. Instead of spending the proceeds of the Hyatt hotel sale, the city should honor those who paid for the hotel — the city’s taxpayers.

    Kansas Democrats: They don’t add it up — or they don’t tell us. Kansas Democrats (and some Republicans) are campaigning on some very expensive programs, and they’re aren’t adding it up for us.

    November

    How would higher Kansas taxes help?. Candidates in Kansas who promise more spending ought to explain just how higher taxes will — purportedly — help the Kansas economy.

    Decoding the Kansas teachers union. Explaining to Kansans what the teachers union really means in its public communications.

    Kansas school spending: Visualization. An interactive visualization of revenue and spending data for Kansas school districts.

    Decoding Duane Goossen. The writing of Duane Goossen, a former Kansas budget director, requires decoding and explanation. This time, his vehicle is “Rise Up, Kansas.”

    Decoding the Kansas teachers union. Decoding and deconstructing communications from KNEA, the Kansas teachers union, lets us discover the true purpose of the union.

    Government schools’ entitlement mentality. If the Kansas personal income grows, should school spending also rise?

    December

    Wichita bridges, well memorialized. Drivers on East Twenty-First Street in Wichita are happy that the work on a small bridge is complete, but may not be pleased with one aspect of the project.

    Gary Sherrer and Kansas Policy Institute. A former Kansas government official criticizes Kansas Policy Institute.

    Wichita to grant property and sales tax relief. Several large employers in Wichita ask to avoid paying millions in taxes, which increases the cost of government for everyone else, including young companies struggling to break through.

    Economic development incentives at the margin. The evaluation of economic development incentives in Wichita and Kansas requires thinking at the margin, not the entirety.

    The Wichita economy, according to Milken Institute. The performance of the Wichita-area economy, compared to other large cities, is on a downward trend.

    State pension cronyism. A new report details the way state pension funds harm workers and taxpayers through cronyism.

    In Wichita, converting a hotel into street repairs. In Wichita, it turns out we have to sell a hotel in order to fix our streets.

    In Wichita, we’ll not know how this tax money is spent. Despite claims to the contrary, the attitude of the City of Wichita towards citizens’ right to know is poor, and its attitude will likely be reaffirmed this week.

  • State pension cronyism

    State pension cronyism

    A new report details the way state pension funds harm workers and taxpayers through cronyism.

    Updated to accurately reflect the time period of the targeted investments.

    American Legislative Exchange Council (ALEC) has released a report detailing the various ways state employee pension funds are harmed by cronyism. The report may be read at Keeping the Promise: Getting Politics Out of Pensions.

    The problem, ALEC reports, is: “Unfortunately, many lawmakers and pension plan officials have other priorities besides doing what is best for workers. They see the billions of pension fund dollars they manage as an opportunity to advance their own agendas. Rather than investing to earn the best return for workers, they use pension funds in a misguided attempt to boost their local economies, provide kickbacks to their political supporters, reward industries they like, punish those they don’t and bully corporations into silence and behaving as they see fit.”

    One form of pension fund cronyism is Economically Targeted Investments (ETIs). These are local investments “that have been selected for their economic or social benefits in addition to the investment return to the employee benefit plan.” Kansas has its own experience with this type of cronyism. During the first half of the 1980s KPERS, the Kansas Public Employee Retirement System, made numerous targeted investments that led to large losses. One newspaper article reported: 1

    It all seemed so easy to many economic development planners.

    In an era of hard-to-get money for business start-ups and small business expansion, why not tap into the state’s healthy $3 billion-plus retirement funds as a source for seed capital?

    After all, it is there. And much of the profits earned by the Kansas Public Employees Retirement Systems have come from out-of-state investments.

    For many Kansas legislators, the lure of using KPERS money for economic development was tempting. So KPERS, under considerable legislative pressure, agreed to target nearly 10 percent of its fund for business expansions in Kansas.

    But three years after that decision, it is clear that KPERS money is not a panacea for economic development.

    Here is one particularly egregious example of how KPERS did business.2 In this case, the chair of KPERS benefited personally from KPERS investment decisions, and in a brazen manner:

    Take, for example, the $7.8 million investment in Emblem Graphic Systems, a company based in Kansas City and Denver that manufactured specialty package labels. According to court documents:

    KPERS Chairman Mike Russell was on the Emblem board of directors and had personally guaranteed $200,000 in loans to the company.

    Shortly before KPERS invested $5.3 million in Emblem in 1985, Russell resigned from his Emblem seat. The KPERS loan, however, was used to relieve Russell of his obligation to cover the earlier loans totaling $200,000.

    KPERS continued to invest in the company until 1988, At one point, KPERS even paid $273,305 to itself to pay back the money it had lent Emblem when the company was sold. KPERS got back only $1.76 million of the $7.8 million it had lent the company.

    Russell, however, was able to make a profit on his 3,000 shares in Emblem when the company bought him out for $48,330 — using KPERS money.

    KPERS is suing, among others, Russell, the lawyers who approved the transactions, and Kenneth Koger, who managed the Emblem investment and about 70 percent of the investments in question.

    Russell was not available for comment.

    In 1992, Russell pleaded no contest to one felony count of aiding and abetting securities fraud regarding a different KPERS investment.3

    In September 1991 the loss to KPERS was given as $92 million. 4 Lawsuits continued until 2003.

    The governor of Kansas during the time of the targeted KPERS investments was John Carlin (1979 to 1987).

    —
    Notes

    1. S. Gossett/The Wichita Eagle, F 1989, ‘Disappointing returns the percentage of the KPERS fund given over to new business ventures has been reduced in light of big losses’, Wichita Eagle, The (KS), 16 Oct, p. 7D, (online NewsBank). ↩
    2. Hobson, G 1996, ‘Full Accountability’, Wichita Eagle, The (KS), 22 Sep, p. 1A, (online NewsBank). ↩
    3. Press, A 1992, ‘Former KPERS Chief Sentenced To Probation For Securities Fraud’, Wichita Eagle, The (KS), 25 Jun, p. 4D, (online NewsBank).} ↩
    4. “After six years of investing in small- and medium-sized companies in Kansas, the state pension fund has 87 investments that are worth $231 million less than the fund paid for them, analysts told the fund’s trustees Friday. Considering that KPERS has collected about $139 million from those companies, however, the fund has lost $92 million in cash on its so-called ‘direct placement’ program, according to estimates by the staff of the Kansas Public Employees Retirement System.” Cross/The Wichita Eagle, J 1991, ‘Kpers Losses Put At $92 Million Lawyer Predicts ‘Monumental’ Suit’, Wichita Eagle, The (KS), 14 Sep, p. 2D, (online NewsBank). ↩
  • State of the States, 2016

    State of the States, 2016

    What did the nation’s governors tell their constituents this year?

    American Legislative Exchange Council (ALEC) has examined the “State of the State” addresses delivered this year by state governors. Its report State of the States 2016 analyzes each for proposals that will affect economic competitiveness.

    The good news, according to the report? “The majority of governors seem to understand that lower tax rates and limited government give citizens and businesses a greater incentive to reside and operate in their states compared to others with higher tax rates and more regulations.”

    But some states received bad news. Louisiana Governor John Bel Edwards told his state: “So, if you insist on saying that I never said I would raise taxes — that I’m going back on my word — that’s fine. Say it. Get it out of your system, and then please come back here ready to work with me to do the job we were all hired to do.”

    In Minnesota — which has a budget surplus — Governor Mark Dayton told his constituents, “They say, ‘give it all back’ to the taxpayers. But that slogan is based upon a wrong premise and a wrong conclusion.”

    Kansas wasn’t highlighted in this report, as Governor Brownback’s State of the State address contained little regarding economic policy.

    The report is available at no charge from ALEC at State of the States 2016.

  • WichitaLiberty.TV: The State of Kansas

    WichitaLiberty.TV: The State of Kansas

    In this episode of WichitaLiberty.TV: Jonathan Williams helps us understand what’s right — and wrong — with Kansas. Williams is Vice President for the Center for State Fiscal Reform at the American Legislative Exchange Council (ALEC). View below, or click here to view at YouTube.

    Shownotes

    • American Legislative Exchange Council (ALEC)
    • Rich States, Poor States, ninth edition. This volume holds the most recent state-by-state rankings.
    • Rich States, Poor States, eighth edition. This volume holds Chapter 4, titled “Lessons from Kansas: A Behind the Scenes Look at America’s Most Discussed Tax Reform Effort.”

  • A National Perspective on Kansas Fiscal Policy

    A National Perspective on Kansas Fiscal Policy

    Jonathan Williams, Vice President in charge of the Center for State Fiscal Reform at the American Legislative Exchange Council (ALEC), addressed a luncheon gathering of the Wichita Pachyderm Club on July 22, 2016, presenting “A National Perspective on Kansas Fiscal Policy.” View below, or click here to view at YouTube. Videography by Paul Soutar.

  • Kansas Center for Economic Growth

    Kansas Center for Economic Growth

    Kansas Center for Economic Growth, often cited as an authority by Kansas news media and politicians, is not the independent and unbiased source it claims to be.

    When supporters of more government spending and taxation in Kansas want to bolster their case, they often turn to Kansas Center for Economic Growth (KCEG). Portraying itself as a “nonprofit, nonpartisan organization,” KCEG says its mission is “to advance responsible policies by informing public discussion through credible, fact-based materials.” It says it conducts research and analysis to “promote balanced state policies.” 1

    As it turns out, KCEG is not really the nonpartisan, independent think tank it pretends to be. Instead, as shown below, KCEG is a side project of Kansas Action for Children, Inc.. Both organizations are funded by and affiliated with well-known liberal organizations whose goals are always to expand the size and scope of government.

    This is of interest to Kansans as groups that support low taxes, efficient government spending, and economic freedom are often maligned as being merely puppets of larger organizations that hide their purportedly nefarious goals. In particular, Kansas Policy Institute is often mentioned in this regard.

    On its website KPI says it is “an independent think-tank that advocates for free market solutions and the protection of personal freedom for all Kansans.” 2 Also, KPI says it produces “objective research and creative ideas to promote a low-tax, pro-growth environment.”

    Whenever KPI is mentioned, often condemnation of American Legislative Exchange Council follows, scorned for purportedly being a shadowy outfit that forces model legislation on unwitting legislators. But ALEC’s mission is quite clear and transparent. Its website says ALEC is “dedicated to the principles of limited government, free markets and federalism.” Economic freedom is also mentioned. ALEC says it provides a “toolkit for anyone who wants to increase the effectiveness and reduce the size, reach and cost of government.” 3

    These mission statements plainly state the purposes of KPI and ALEC. Contrast them with the mission of Center on Budget and Policy Priorities, which is filled with material like this: “We pursue federal and state policies designed both to reduce poverty and inequality and to restore fiscal responsibility in equitable and effective ways.” 4 “Fiscal responsibility” can mean almost anything. To CBPP and its affiliates like KCEG, it means more taxes and more spending.

    That dovetails cleanly with the preference of most Kansas newspapers. They — and most other news outlets — call for more spending and more taxation as the solution to all problems, state and local. They do so explicitly on their editorial pages, which is their right and privilege. In their news reporting, by using KCEG as an “objective” source, they rely on a source that isn’t being honest about its independence, its organizational status, and its ingrained policy preferences.

    Who — or what — is Kansas Center for Economic Growth?

    On its website, Kansas Center for Economic Growth (KCEG) says it is a “nonprofit, nonpartisan organization.” But no records exist for this entity at either the IRS or Kansas Secretary of State. Instead, KCEG uses Kansas Action for Children, Inc. (KAC) as its “fiscal agent” and funding source. KAC is a registered 501(c)(3) tax-exempt organization.

    On its IRS form 990s, KAC lists a grant from AECF and SFAI, the purpose of which is supporting the type of work KCEG performs. AECF is Annie E. Casey Foundation, a non-profit with income of nearly $223 million and an endowment of $2.9 billion, according to most up-to-date IRS form 990 available. SFAI is State Priorities Partnership, originally founded as the State Fiscal Analysis Initiative (SFAI). It lists KCEG as a partner organization. 5 Both organizations promote solutions involving more government spending and taxation.

    State Priorities Partnership, in turn, is coordinated by Center on Budget and Policy Priorities (CBPP). 6 CBPP promotes itself as pursuing “federal and state policies designed both to reduce poverty and inequality and to restore fiscal responsibility in equitable and effective ways.” 7 Its recommend policies nearly always call for more government spending and taxation.

    In 2013 Bob Weeks was recognized by the Kansas Policy Institute with the John J. Ingalls Spirit of Freedom Award, given annually to a Kansan who uniquely supports the principles of individual liberty and economic freedom.

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    Notes

    1. Kansas Center for Economic Growth. About Us. Available at realprosperityks.com/about-us/. ↩
    2. Kansas Policy Institute. About. Available at kansaspolicy.org/about/. ↩
    3. American Legislative Exchange Council. About ALEC. Available at www.alec.org/about/. ↩
    4. Center on Budget and Policy Priorities. Our Mission. Available at www.cbpp.org/about/mission-history. ↩
    5. State Priorities Partnership. State Priorities Partners. Available at statepriorities.org/state-priorities-partners/. ↩
    6. State Priorities Partnership. About. Available at statepriorities.org/about/. ↩
    7. Center on Budget and Policy Priorities. Our Mission and History. Available at www.cbpp.org/about/mission-history. ↩