Tag Archives: Government spending

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.

This week the Wichita City Council will hold public hearings concerning the issuance of Industrial Revenue Bonds to Spirit AeroSystems, Inc and other companies.1 In the IRB program, government is not lending money, and Wichita taxpayers are not at risk if the bonds are not repaid. In fact, in the case of Spirit, the applicant company plans to purchase the bonds itself, according to city documents. Instead, the purpose of the IRB process is to allow Spirit to escape paying property taxes and, often, sales taxes.

These bonds will allow Spirit to avoid paying property taxes on taxable property purchased with bond proceeds for a period of five years. The abatement may then be extended for another five years. Usually these IRB issues also carry a sales tax exemption, but the agenda packet for this item does not mention such

City documents state that the property tax abatement will be shared among the taxing jurisdictions in these estimated amounts:

City: $424,918
State: $19,500
County: $381,979
USD 259: $731,614

The listing of USD 259, the Wichita public school district, is likely a mistake by the city, as the Spirit properties lie in the Derby school district. This is evident below.

The forgiveness of taxes is justified by the city because it believes it will receive a return that is greater than the foregone taxes. This benefit-cost ratio is calculated by the Center for Economic Development and Business Research (CEDBR) at Wichita State University based on data supplied by the applicant company and the city. The rationale behind these calculations is a matter of debate. Even if valid, calculating the ratio with any degree of precision is folly, reminding us of the old saw “Economists use a decimal point to remind us they have a sense of humor.”

City of Wichita: 5.38 to 1
City General Fund: 2.60 to 1
City Debt Service Fund: NA to 1
Sedgwick County: 2.69 to 1
U.S.D. 260: 1.16 to 1
State of Kansas: 5.51 to 1

These figures reveal that the City of Wichita is forcing a decision on a neighboring jurisdiction that it would not accept for itself, unless it uses one of many exceptions or loopholes. This adverse decision is forced upon the Derby School District. It faces a benefit-cost ratio of 1.16 to 1, which is below the city’s standard of 1.30 to 1, unless an exception is cited. 2 The Derby School District is not involved in this action and has no ability to influence the issuance of these bonds, should it desire to.

We have to wonder why the City of Wichita imposes upon the Derby school district an economic development incentive that costs the Derby schools $731,614 per year, with a substandard payoff?
Of note, the Derby school district extends into Wichita, including parts of city council districts 2 and 3. These districts are represented by Pete Meitzner and James Clendenin, respectively.

In a second agenda item, the city will consider IRBs for a building being developed by Air Capital Flight Line. The beneficiary, however, is Spirit, as city documents state: “The requested sales tax exemption and property tax abatement will be passed on as a benefit to Spirit.”

The annual benefit in tax savings is given by the city as:

City: $294,174
State: $13,500
County: $264,447
USD 259: $506,502

These values are offset by a Payment-In-Lieu-Of-Taxes (PILOT) estimated at $13,251 annually.

For benefit-cost ratios, the city supplies these:

City of Wichita: 3.65 to 1
City of Wichita Gen Fund: 1.83 to 1
City of Wichita Debt Serv: NA to 1
Sedgwick County: 2.09 to 1
USD 260: 1.00 to 1
State of Kansas 2.48: to 1

Here we see the same mistake with the Wichita and Derby school districts. We also see the Derby school district giving up $506,502 in tax revenue, with no positive return.

Spirit is not the only company asking for tax relief through IRBs this week. Three other companies are making similar requests. In none of these cases is economic necessity cited as a reason for escaping taxes. None are threatening to leave Wichita if the relief is not granted.

The problem with these actions

Part of the cost of these companies’ investment, along with the accompanying risk, is spread to a class of business firms that can’t afford additional cost and risk. These are young startup firms, the entrepreneurial firms that we need to nurture in order to have real and sustainable economic growth and jobs. But we can’t identify which firms will be successful. So we need an economic development strategy that creates an environment where these young entrepreneurial firms have the greatest chance to survive. The action the Wichita city council is considering this week works against entrepreneurial firms. (See Kansas economic growth policy should embrace dynamism and How to grow the Kansas economy.)

A major reason why these tax abatements are harmful to the Wichita economy is its strangling effect on entrepreneurship and young companies. As these companies and others escape paying taxes, others have to pay. This increases the burden of the cost of government on everyone else — in particular on the companies we need to nurture.

There’s plenty of evidence that entrepreneurship, in particular young business firms, are the key to economic growth. But Wichita’s economic development policies, as evidenced by these actions, are definitely stacked against the entrepreneur. As Wichita props up its established industries, it makes it more difficult for young firms to thrive. Wichita relies on targeted investment in our future. Our elected officials and bureaucrats believe they have the ability to select which companies are worthy of public investment, and which are not. It’s a form of centralized planning by government that shapes the future direction of the Wichita economy.

These targeted economic development efforts fail for several reasons. First is the knowledge problem, in that government simply does not know which companies are worthy of public investment. This lack of knowledge, however, does not stop governments from creating policies for the awarding of incentives. This “active investor” approach to economic development is what has led to companies receiving grants or escaping hundreds of millions in taxes — taxes that others have to pay. That has a harmful effect on other business, both existing and those that wish to form. Young entrepreneurial companies are particularly vulnerable.

Embracing Dynamism: The Next Phase in Kansas Economic Development PolicyProfessor Art Hall of the Center for Applied Economics at the Kansas University School of Business is critical of this approach to economic development. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”

In the same paper, Hall writes this regarding “benchmarking” — the bidding wars for large employers: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

In making his argument, Hall cites research on the futility of chasing large employers as an economic development strategy: “Large-employer businesses have no measurable net economic effect on local economies when properly measured. To quote from the most comprehensive study: ‘The primary finding is that the location of a large firm has no measurable net economic effect on local economies when the entire dynamic of location effects is taken into account. Thus, the siting of large firms that are the target of aggressive recruitment efforts fails to create positive private sector gains and likely does not generate significant public revenue gains either.'”

(For a summary of the peer-reviewed academic research that examines the local impact of targeted tax incentives from an empirical point of view, see Research on economic development incentives. A sample finding is “General fiscal policy found to be mildly effective, while targeted incentives reduced economic performance (as measured by per capita income).”)

There is also substantial research that is it young firms — distinguished from small business in general — that are the engine of economic growth for the future. We can’t detect which of the young firms will blossom into major success — or even small-scale successes. The only way to nurture them is through economic policies that all companies can benefit from. Reducing tax rates for everyone is an example of such a policy. Abating taxes for specific companies through programs like the Wichita city council is considering this week is an example of precisely the wrong policy.

In explaining the importance of dynamism, Hall wrote: “Generally speaking, dynamism represents persistent, annual change in about one-third of Kansas jobs. Job creation may be a key goal of economic development policy but job creation is a residual economic outcome of business dynamism. The policy challenge centers on promoting dynamism by establishing a business environment that induces business birth and expansion without bias related to the size or type of business.”

We need to move away from economic development based on this active investor approach, especially the policies that prop up our established companies to the detriment of dynamism. We need to advocate for policies — at Wichita City Hall, at the Sedgwick County Commission, and at the Kansas Statehouse — that lead to sustainable economic development. We need political leaders who have the wisdom to realize this, and the courage to act appropriately. Which is to say, to not act in most circumstances.

Small business

This year American City Business Journals presented the results of a study of small business vitality in cities. 3 Wichita ranked at number 104 out of 106 cities studied. Awarding incentives to large companies places small business at a disadvantage. Not only must small business pay for the cost of government that incentivized companies avoid, small companies must also compete with subsidized companies for inputs such as capital and labor.

Pursuing large companies

Research has found that the pursuit of large companies doesn’t produce the desired growth: “The results show that large firms fail to produce significant net benefits for their host communities, calling into question the high-stakes bidding war over jobs and investment.” 4

This finding is counterintuitive. People can easily see the large companies. They are likely to know someone that works there. But it is the unseen effects that must be considered too, and that is rarely done.


Notes

  1. City of Wichita. City Council agenda packet for December 6, 2016.
  2. Sedgwick County/City of Wichita Economic Development Policy. Available at www.wichita.gov/Government/Departments/Economic/EconomicDevelopmentDocuments/City%20of%20Wichita%20Economic%20Development%20Policy.pdf.
  3. Wichita Business Journal. The State of Small Business: Wichita scores low in small biz vitality. Available at www.bizjournals.com/wichita/print-edition/2016/04/29/the-state-of-small-business-wichita-scores-low-in.html.
  4. William F. Fox and Matthew N. Murray, “Do Economic Effects Justify the Use of Fiscal Incentives?” Southern Economic Journal, Vol. 71, No. 1, 2004, p. 79.

Gary Sherrer and Kansas Policy Institute

A former Kansas government official criticizes Kansas Policy Institute.

I wouldn’t normally use a Facebook comment in a public way, but the comment was left in public, to a post on my Facebook profile. Plus, the writer is a former Kansas government official. He’s Gary Sherrer, who has been Lieutenant Governor, Secretary of Commerce, and Chair of the Kansas Board of Regents.

From the author's Facebook profile, starting December 2, 2016. Click for larger.
From the author’s Facebook profile, starting December 2, 2016. Click for larger.
Sherrer had criticized the truthfulness of Kansas Policy Institute, claiming he “could write an essay” on his criticism of KPI. Upon my suggestion for him to do so, he offered two criticisms.

First, Sherrer wrote this: “They count KAPERS payments that in the past were direct state payments. Now they send them to the school districts and within hours transfer them back to the state yet it shows as increased revenue in the local budget. Same $s just an accounting trick.”

This is a standard argument of Kansas public school spending advocates, which is that because of a change in the way teacher retirement funds (KPERS contributions) are handled, it looks like the state is spending more on schools, when in fact it is not.

In response, Kansas Policy Institute noted this: “According to Dale Dennis, KPERS funding was last sent directly to KPERS in 2004; it has since been sent directly to school districts included in reported school funding totals.”1

Dale Dennis is Deputy Commissioner at Kansas State Department of Education and head of Fiscal and Administrative Services.

Wichita Public Schools, State Revenue by Source, KPERS ContributionsEven though Dennis is the state’s top education finance official, we don’t have to rely solely on him to illustrate changes in KPERS payment accounting. Information from the Wichita public school district2 shows the same. Here I’ve plotted the funding sent by the state of Kansas to USD 259 for KPERS contributions. As Dennis indicated, in 2005 the Wichita school district started receiving money from the state for KPERS. Prior to that year it received none.

So if anyone wants to claim that KPERS payment accounting has been changed in order to be deceptive, why don’t we ask former governor Kathleen Sebelius why it happened under her watch?

Additionally, the argument that the KPERS funds are held by school districts for just hours or minutes is trivial. If the state allowed school districts to hold the funds for two days, two weeks, two months — would that make any meaningful difference? Instead, school districts ought to be thankful that the taxpayers of the state of Kansas cover part of employee retirement costs. But we don’t hear those thanks, just complaints.

Sherrer is correct on one thing: There are people in government who may be touting increased KPERS payments as increased school spending. Two things: KPERS spending is school spending. If not that, what is it? Second, these people are not Kansas Policy Institute. KPT takes efforts to separate KPERS spending from other school spending.3

Here’s something else from Sherrer: “Anther example- local property taxes collected for schools was always sent directly to the school district- after all it is local not state tax $s. Now the local sends it to the state, then it is sent to school districts. Again, same dollars but trick accounting to make it look like increased state spending.”

I’ve never seen KPI make the claim that Sherrer makes. Others may make it, but KPI takes steps to adjust figures for this change.4

Finally, Sherrer writes: “When is Kansas Policy going do do research on the financial disaster called the Kansas budget?” Well, KPI has done this, providing a detailed roadmap. In my reporting on KPI’s plan, I wrote:

The State of Kansas has implemented tax reform that reduces the tax burden for Kansans. A remaining challenge that has not yet been tackled is spending reform, that is, aligning Kansas state government spending with a smaller stream of tax revenue. Critics of tax reform say the Kansas budget is a mess or a train wreck, pointing to projections of large deficits before long. Tax increases or service cuts will be required to balance the budget, contend critics.

In a policy brief released today, Kansas Policy Institute presented a plan for bringing the budget in balance while retaining low tax rates (and future reductions) and accommodating projected future spending needs for Medicare and schools.

You can more about the plan at For Kansas budget, balance is attainable.


Notes

  1. Trabert, Dave. State school board member should practice what he preaches. https://kansaspolicy.org/state-school-board-member-practice-preaches/.
  2. USD 259 Comprehensive Annual Financial Report for 2015, State Revenue by Source, Governmental Funds, and USD 259 Comprehensive Annual Financial Report for 2007, State Revenue by Source, Governmental Funds.
  3. For example, see Dorsey, David. Non-KPERS funding sets another per-pupil record in 2015-16. https://kansaspolicy.org/non-kpers-funding-sets-another-per-pupil-record-in-2015-16/.
  4. For example, see Parkes, Patrick. State school funding ranks high in Kansas. https://kansaspolicy.org/state-school-funding-ranks-high-in-kansas/.

Wichita bridges, well memorialized

Drivers — like me — 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.

The memorial plaque celebrating the accomplishment on East Twenty-First Street in Wichita. The flare from the sun is a defect of this photograph, not the marker. Click for larger.
The memorial plaque celebrating the accomplishment on East Twenty-First Street in Wichita. The flare from the sun is a defect of this photograph, not the marker. Click for larger.
It’s a small bridge, on East Twenty-First Street between Mosely and New York Streets. At 49 feet long it is designated a bridge by the Federal Highway Administration. And we’re glad it’s there.

But with city lane width guidelines for arterial streets at 11 feet, this four-lane bridge may not be not much longer than it is wide.1

The bridge on East Twenty-First Street. Click for larger.
The bridge on East Twenty-First Street. Click for larger.
Does it warrant the full commemorative treatment of a bronze plaque memorializing the elected officials and bureaucrats who happened to be in office at the time taxpayers paid for this bridge?

A city official told me that the plaque cost around $2500, and noted that the City Council approves them for each project.2

Why does the city spend so much on plaques for bridges that, in some cases, may not be much longer than wide? It’s a small matter, but these issues are symbolic of government’s attitude towards costs, and of some officials’ view of their own self-importance.

It’s presumptuous, that such a mundane accomplishment would be decorated so at the expense of taxpayers. More than this, it’s preposterous.

West Twenty-Ninth Street in Sedgwick County. Click for larger.
West Twenty-Ninth Street in Sedgwick County. Click for larger.
The City of Wichita is not alone. As I reported in The bridges of Sedgwick County are well marked, Sedgwick County does this, too. And doubly so. The bridge in Twenty-First Street in Wichita has one plaque, but even small bridges in Sedgwick County have two, one on each side.


Notes

  1. City of Wichita. *Street Design Guidelines, Approved by the City Council, December 2014. http://www.wichita.gov/Government/Departments/Planning/PlanningDocument/Street%20Design%20Guidelines-Final.pdf
  2. Email correspondence with Gary Janzen, Wichita City Engineer and Assistant Director Public Works & Utilities, November 28, 2016.

Spending in the States

The National Association of State Budget Officers publishes spending data for the states. In this interactive visualization, I present the data in a graphical and flexible format.

Data for each state is subdivided by fund (see below for definitions). Data through 2015 is actual, while data for fiscal year 2016 is estimated. The figures for the state “United States” were computed by summing the spending in all states, then dividing by the U.S. population. These figures are not adjusted for inflation.

Of note is the tab comparing spending in states that have an income tax vs. those that have no income tax.

Click here to access the visualization.

Example from the visualization. Click for larger.
Example from the visualization. Click for larger.

From NASBO, definitions of the funds.

General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.

Federal Funds: Funds received directly from the federal government.

Other State Funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other State Funds” column. For higher education, other state funds can include tuition and fees. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.

Bonds: Expenditures from the sale of bonds, generally for capital projects.

State Funds: General funds plus other state fund spending, excluding state spending from bonds.

Government schools’ entitlement mentality

If the Kansas personal income grows, should school spending also rise?

Kansas Policy Institute has noticed something about the Kansas public school spending establishment, in particular Kansas Association of School Boards. KPI president Dave Trabert wrote “KASB published a three-part series last week, making the case that school funding and other government spending hasn’t kept up with the growth in personal income.”1 KASB believes that if Kansans’ personal income rises, so too should school spending, and in proportion.

This is not the first time KASB has made this argument. Last year I wrote “If Kansas personal income rises but the school spending establishment doesn’t get its cut, something is wrong, they say.”2

I also wrote: “Another indication of the perversity of this argument is that spending less of a share of our income to obtain a product or service is usually viewed as an advancement, not a situation to be cured. For example in 1929, American households spent 23.4 percent of disposable personal income on food. In 2013 it was 9.8 percent. This is a good thing.”

Read the complete article from KPI at Government’s Entitlement Mentality — Part 1.


Notes

  1. Trabert, Dave. Government’s Entitlement Mentality — Part 1. https://kansaspolicy.org/governments-entitlement-mentality-part-1/.
  2. Weeks, Bob. For Kansas schools, a share of your income is the standard. https://wichitaliberty.org/wichita-kansas-schools/kansas-schools-share-income-standard/.

Beware of government arts spending

Art is too important to be dependent on politicians and injecting politics into anything inevitably tarnishes it, writes Lawrence W. Reed of Foundation for Economic Education.

Economist Lawrence W. Reed is president of the Foundation for Economic Education in Atlanta, Georgia. He is the author of the forthcoming book, Real Heroes: Inspiring True Stories of Courage, Character and Conviction. Follow on Twitter and Like on Facebook.

While in Wichita Reed appeared on WichitaLiberty.TV in this episode. An abridged version of the following appeared in the Wichita Eagle.

Beware of Government Arts Spending
By Lawrence W. Reed

While visiting Wichita in October, I learned that city government subsidies for the arts is a local, contentious issue. I’d like to offer a perspective: Don’t do it. Art is too important to be dependent on politicians and injecting politics into anything inevitably tarnishes it.

Proponents of art subsidies argue that because a large majority of people enjoy art and even personally engage in it, it’s therefore a government responsibility. But even larger majorities of people enjoy things like clothing, pets and good movies; this fact is actually an argument for government to butt out and stick to doing its proper duties.

Lawrence W. Reed
Lawrence W. Reed
Those “studies” that purport to show X return on Y amount of government arts spending are a laughingstock among economists. The numbers are cooked and almost never compared to alternative uses of tax money. Even less frequently do subsidy advocates consider what people might choose to do if their earnings weren’t taxed away in the first place.

Every interest group with a claim on the treasury argues that spending for its projects produces some magical “multiplier” effect. Routing other people’s money through politicians and bureaucracy is supposed to somehow magnify wealth, while leaving it in the pockets of those who earned it is somehow a drag. Assuming for a moment that such preposterous claims are correct, wouldn’t it then make sense to direct all income through the government?

What if “public investment” simply displaces a certain amount of private investment? Arts subsidy advocates never raise this issue, but I know that I personally am far less likely to make a charitable donation to something I know is on the dole than to something that depends on the good hearts of willing givers.

What if I, as a taxpayer, could keep what the government would otherwise spend on the arts and invest it in my child’s education and get twice the return than the government would ever get on the arts? The more that government takes, the less we can purchase of the things we value, including tickets to the theatre or a concert.

Money which comes voluntarily from the heart is more meaningful than money that comes at gunpoint (taxes). For that reason I don’t believe in either arts welfare or shotgun marriages. There’s an endless list of desirable, enriching things, very few of which carry a tag that says, “Must be provided by taxes and politicians.”

If we don’t rob Peter the worker to pay Paul the artist, perhaps Paul may have to become a better artist or a better marketer of his art, or perhaps find another profession entirely. Welcome, Paul, to the real world of willing customers and earning an honest living.

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.”

Duane Goossen was Kansas budget director from 1998 to 2010.1 He is critical of the administration of Kansas Governor Sam Brownback and recent sessions of the Kansas Legislature. It’s useful to examine his writings so that Kansans may become aware of the ramifications of his recommendations, and how during his years as budget director he was unable to adhere to the principles he now advocates. Following, some language from his recent article Rise Up, Kansas.

Goossen: “This marks the beginning of a hopeful new chapter in the Kansas story. It also presents a desperately needed opening for comprehensive tax reform.”

Comprehensive tax reform. That sounds good, as “reform” has a positive connotation. It means change for the better. But in this case reform means raising taxes, and by a lot. In fact, advocates of tax increases generally won’t say by how much they want to raise taxes.

As an example, in May a coalition of spending groups called for what they termed “Option 4.” It would eliminate all tax cuts enacted since 2012. This action would reinstate the tax on pass-through business income — the so-called “LLC loophole.” But this would also raise income taxes wage income, as those tax rates also were reduced in 2012. For example, income tax rates for a married family earning up to $30,000 would rise to 3.50 percent from the current 2.70 percent. That’s an increase of 30 percent in the income tax rate. For other income levels the increase is greater.2

A spokesperson for the Option 4 coalition argued that rolling back the tax cuts could increase revenue to the state by $1 billion. By the way, the Option 4 coalition did not call for the rollback of the sales tax increase passed in 2015. I should qualify that with apparently, as no handouts explaining Option 4 can be found. In addition, an audio recording of the press conference has been removed.

Members of the Option 4 coalition included Shannon Cotsoradis of Kansas Action for Children, Bob Totten from the Kansas Contractors Association, Rebecca Proctor of the Kansas Organization of State Employees, and Mark Desetti from the Kansas National Education Association.3

With the exception of the pass-through business income tax, failing to be specific about whose taxes will be raised by how much is characteristic of spending groups. In fact, these spending groups generally shy away from using the term tax. Look at these examples of language from Goossen’s article:

  • damage to state finances
  • hemorrhage revenue
  • can’t start healing while still in triage mode
  • fix our structural revenue imbalance
  • broaden the tax base
  • means reviewing our entire tax code
  • modernizing all revenue sources
  • get our fiscal house back in order
  • begin with commonsense basics
  • new priorities
  • recover the opportunities we lost
  • senseless era of crisis
  • begin restoring those opportunities
  • rise above the political fray
  • find courage to make difficult decisions
  • imagine the possibilities

Commonsense basics. Who could be against that? Yet each of these terms is a call for more and higher taxes.

Goossen: “Three credit rating downgrades”

The Kansas credit rating has declined. In making this decision, Moody’s mentioned “revenue reductions (resulting from tax cuts) which have not been fully offset by recurring spending cuts.4 So Kansas has a decision: Offset revenue reductions with higher taxes or spending cuts. Moody’s doesn’t care which is chosen, but Goossen and the spending coalition does.

KPERS funded ratio through 2014Of note, Moody’s mentions another problem: “an underfunded retirement system for which the state is not making actuarially required contributions.” This is an ongoing problem, as the nearby chart illustrates. The funding ratio of the Kansas retirement plan has deteriorated for many years, including the years when Duane Goossen was Kansas budget director. (Recently Kansas has improved the funding ratio of KPERS, but it did that by borrowing funds, which was an unwise decision. Because of the borrowing, Kansas has delayed schedule KPERS contributions, which effectively pays for current spending with long-term debt.5)

Moody’s also mentioned “In recent years the state has appropriated funds from or shifted costs to the State Highway Fund to help balance the general fund budget.” This too, is an ongoing problem.6 “Raiding the Bank of KDOT” has been a problem for many years, including the years when Duane Goossen was Kansas budget director.

Goossen: “It will likely take a generation to fully recover from this horrible experiment.”

Spending in Kansas. Click for larger.
Spending in Kansas. Click for larger.
Goossen is not specific as to the nature of the damage. Generally, a claim of slashed state spending is made. But it’s difficult to see the purported decline. Some programs may have been cut, but overall, spending is level or climbing, as can be seen in the nearby chart.7 Additionally, in comparison to other states Kansas spends a lot, and continues to.8

Goossen: “lifting the burden the Brownback plan forced onto our lowest-earning Kansans.”

Yes, we should sharply reduce or eliminate the sales tax on groceries. It affects low-income households most severly.9

Goossen: “And it means establishing a responsible state savings account.”

Kansas General Funding ending balance. Click for larger.
Kansas General Funding ending balance. Click for larger.
Kansas doesn’t have what some states have, which is a true rainy day fund that is governed by statute as to when contributions must be made and when the fund may be used. Instead, Kansas has a simple requirement for an ending balance of 7.5 percent, which the state has regularly ignored for decades. Low ending balances are a hallmark of Kansas government, including the years when Duane Goossen was Kansas budget director. In fact, in one year his budget had a negative ending balance.10


Notes

  1. Goossen, Duane. Kansas Budget Blog. http://www.kansasbudget.com/.
  2. Kansas Policy Institute. *Option 4: Soak the poor. https://kansaspolicy.org/option-4-soak-poor/.
  3. Hancock, Peter. Session resumes with call for total repeal of Brownback tax cuts. Lawrence Journal-World, April 27, 2016. http://www2.ljworld.com/news/2016/apr/27/session-resumes-call-total-repeal-brownback-tax-cu/.
  4. Moody’s Investors Service, Inc. Moody’s downgrades Kansas issuer rating to Aa2 from Aa1, notched ratings to Aa3 from Aa2 and KDOT highway revenue bonds to Aa2 from Aa1; outlook stable. April 30, 2014. https://www.moodys.com/research/Moodys-downgrades-Kansas-issuer-rating-to-Aa2-from-Aa1-notched–PR_298383.
  5. Weeks, Bob. This is why we must eliminate defined-benefit public pensions. https://wichitaliberty.org/kansas-government/we-must-eliminate-defined-benefit-public-pensions/.
  6. Weeks, Bob. Kansas transportation bonds economics worse than told. https://wichitaliberty.org/kansas-government/kansas-transportation-bonds-economics-worse-than-told/.
  7. Weeks, Bob. Kansas government spending. https://wichitaliberty.org/kansas-government/kansas-government-spending-2/.
  8. Weeks, Bob. Spending in the states, per capita. Interactive visualization. https://wichitaliberty.org/economics/spending-states-per-capita-2/.
  9. Weeks, Bob. Kansas sales tax has disproportionate harmful effects. https://wichitaliberty.org/taxation/kansas-sales-tax-has-disproportionate-harmful-effects/.
  10. Weeks, Bob. Kansas General Fund. https://wichitaliberty.org/kansas-government/kansas-general-fund-2/.

Kansas school spending: Visualization

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

The accompanying visualization holds both nominal dollar amounts and amounts adjusted to reflect 2016 dollars. Data includes state aid, local aid, federal aid, and total spending for each school district, both total and per pupil. The visualization includes both tables and charts.

Kansas school spending, entire state, through 2016. Click for larger. This is an example from the visualization.
Kansas school spending, entire state, through 2016. Click for larger. This is an example from the visualization.
For the school year ending in 2016, total spending per pupil was $13,015. This is down from an inflation-adjusted $13,222 for 2015, a decline of 1.56 percent. Considering state funding only, per-pupil funding for 2016 was $8,540, down from an inflation-adjusted $8,631 for 2016, a decline of 1.05 percent.

Kansas Policy Institute has spending data without KPERS (retirement) spending at Non-KPERS funding sets another per-pupil record in 2015-16.

Spending and revenue data is from Kansas State Department of Education. Inflation-adjusted data calculated using Consumer Price Index, all items, 1982-84=100 (series CUUR0000SA0) from U.S. Bureau of Labor Statistics. The price level used for 2016 is for the first half of 2016. Visualization created using Tableau Public.

Click here to open the visualization in a new window.

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.

Are low taxes important to an economy, especially a state economy? When the Tax Foundation looked at the issue, it concluded this: “In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth.”1

Per-capita tax collections, Kansas and nearby states. Click for larger.
Per-capita tax collections, Kansas and nearby states. Click for larger.
Many of these studies concerned the national economy and taxes, but some looked at state taxes. When we look at Kansas, we see that Kansas already taxes and spends quite a lot, compared to other states. Nearby is a chart showing per-capita state tax collections in Kansas and Colorado.2

State and Local Government Employee and Payroll. Click for larger.
State and Local Government Employee and Payroll. Click for larger.
Looking at other data, I found that considering all state and local government employees in proportion to population, Kansas has many, compared to other states, and especially so in education.3

State and local government employment and costs, selected states. Click for larger.
State and local government employment and costs, selected states. Click for larger.
From another source of data, I found this: “In the visualization, you can see that Kansas spends quite a bit more than nearby states. Of special interest is Minnesota, which is often used as an example of a high-tax state, and a state with excellent schools and services. But Minnesota spends barely more than Kansas, on a per-person basis. What about Colorado? It seems that Kansans often look to Colorado as a state full of bounty. But Kansas outspends Colorado. Same for New Mexico, Wisconsin, Texas, and — especially — Missouri.”4

Please don’t argue that the economic health of a state is determined by its budget, that is, whether it is balanced or not. And if you want to argue that Kansas has borrowed money through the highway fund and spent it in the general fund: That’s true, and we should not do that. But that action allowed Kansas to keep spending, much like borrowing allows the federal government to keep spending more that it raises through taxes.

Some argue that if the state taxes more, it can spend more, and therefore the economy expands. But: The money taken from Kansans is money that they can’t spend. And if one wants to argue that government spends more carefully and efficiently than do private individuals spending their own money — well, give it a try. Empirically, not many people believe this.

And isn’t government spending the purpose of taxation? Nearby are figures showing Kansas general fund spending. You can see that for two years Kansas spent much more than it collected in revenue, using a large ending balance as the source of funds. If one believes in the Keynesian theory of fiscal effects — which most liberals and progressives do — this “deficit” spending spared spending cuts and therefore boosted the Kansas economy.

Kansas General Fund spending, showing large deficits of revenue compared to spending in 2014 and 2015.
Kansas General Fund spending, showing large deficits of revenue compared to spending in 2014 and 2015.

Regarding the spending cuts that some claim: Have there been severe spending cuts in Kansas? While some programs have been trimmed, overall state spending continues on a largely upward trend (for all funds spending) or remains mostly flat (for general fund spending), after accounting for population and inflation.5

kansas-per-capita-spending-adjusted-for-cpi-2016-10

Kansas revenue estimate errors. Click for larger.
Kansas revenue estimate errors. Click for larger.
We also hear that the Kansas economy is in bad shape because tax revenue has fallen short of estimates. This is not a good indicator of economic health. Instead, it illustrates the difficulty of economic forecasting. Moreover, the negative estimate variances — revenue shortfalls, in other words — in 2002 to 2003 and 2009 to 2010 were generally much larger in magnitude than those of recent years.6 Remember how the Obama administration told us that without the 2009 stimulus package unemployment would rise to a certain level? Well, the stimulus bill passed, we spent the money, and unemployment was higher than what the administration said it would be without the stimulus. And for a long time, too.7

We also hear that transfers from KDOT — the highway fund — have hurt Kansas, especially in construction jobs. Our state’s two largest newspapers recently editorialized on this matter.8 They correctly reported that Kansas construction jobs were down. But it wasn’t highway construction jobs that caused the loss of jobs, except for a very small portion.

KDOT spending on major road programs. Click for larger version.
KDOT spending on major road programs. Click for larger version.
Furthermore, the state has continued to spend on highway programs, without regard to transfers from the highway fund. When we look at actual spending on roads, we see something different from what is often told. KDOT’s Comprehensive Annual Financial Report shows spending in the categories “Preservation” and “Expansion and Enhancement” has grown rapidly over the past five years. Spending in the category “Maintenance” has been level, while spending on “Modernization” has declined. For these four categories — which represent the major share of KDOT spending on roads — spending in fiscal 2015 totaled $932,666 million, up from a low of $698,770 in fiscal 2010.

We should not borrow money, place it in the highway fund, and then transfer the funds to the general fund, as the state has done for many years. But actual spending on highways has risen, nonetheless.

So: Just how will higher taxes help the Kansas economy?


Notes

  1. McBride, William. What Is the Evidence on Taxes and Growth? Tax Foundation, 2012. http://taxfoundation.org/article/what-evidence-taxes-and-growth.
  2. Weeks, Bob. Tax collections by the states. Interactive visualization. https://wichitaliberty.org/economics/tax-collections-states-2/.
  3. Weeks, Bob. State and local government employee and payroll. Interactive visualization. https://wichitaliberty.org/economics/state-local-government-employee-payroll/.
  4. Weeks, Bob. Kansas, a frugal state? Interactive visualization. https://wichitaliberty.org/economics/kansas-frugal-state/
  5. Weeks, Bob. Kansas government spending. https://wichitaliberty.org/kansas-government/kansas-government-spending-2/.
  6. Weeks, Bob. Kansas revenue estimates. https://wichitaliberty.org/kansas-government/kansas-revenue-estimates/.
  7. Weeks, Bob. Brownback and Obama stimulus plans. https://wichitaliberty.org/economics/brownback-and-obama-stimulus-plans/.
  8. Weeks, Bob. Topeka Capital-Journal falls for a story. https://wichitaliberty.org/kansas-news-media/topeka-capital-journal-falls-story/.

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.

A sampling of campaign literature from Kansas Democratic candidates in south and west Wichita for the Kansas Legislature1 reveals several common threads:

  • Few will identify themselves as Democrats.
  • Eliminating the LLC loophole is popular.
  • Eliminating or reducing sales tax on food is popular.
  • Eliminating the 2015 sales tax increase is popular.
  • Fully funding schools is popular.
  • None of these show the cost of these ideas, nor do they offer ideas on how to pay for these things, except for eliminating the LLC loophole.

What will these things cost? Here’s some figures.

LLC loophole and food sales tax: This year a bill was proposed in the Kansas Legislature to restore taxation of non-wage business income, that is, to eliminate the so-called “LLC loophole.” It would also reduce the sales tax on food from 6.5 percent to 2.6 percent. The fiscal note for this bill estimated an increase in tax revenue to the state of $260.9 million from the non-wage business income, and a loss of revenue to the state of $234.1 million for the sales tax reduction.2

Extrapolating the food sales tax figures implies that eliminating the sales tax on food would mean a loss of revenue to the state of $435 million, assuming no change in consumer behavior.

Rollback general sales tax: In 2015 when the legislature voted to raise the statewide sales tax from 6.15 percent to 6.50 percent on July 1, 2015, it was estimated that revenue to the state would increase by 164.2 million. For fiscal year 2017, by 186.7 million.3

(By the way, the tax on cigarettes was increased by an estimated $40.39 million. If we’re rolling back sales tax increases, we should roll back this 50 cent per pack increase, too. I haven’t seen any advocates for this.)

Fully funding schools: Who knows what “full funding” really means? The Kansas Supreme Court believes it — and it alone — has the ability to put a number on this. A consensus seems to be developing at around $450 million per year in additional school funding is what the court may order.

Adding up the costs (using some numbers a few years old): $260.9 million – $435 million – $164.2 million – $450 million equals -$1,310.1 million in changes to annual general fund revenue. ($-1,350.5 million if we want to be fair to smokers.)

This is the proposed change to Kansas general fund revenue that these candidates omit from their campaigns. It is the amount by which taxes must be raised, or spending be cut (or a combination of taxes and cuts). Some of these numbers are estimates that could be off by a lot. There can be some quibbling, such as reducing the food sales tax instead of eliminating it, which will change the numbers. But there’s no doubt that the plans Kansas Democrats propose will cost a lot of money.

Total revenue to the general fund in 2016 was $6,073.4 million. Major sources include:
Income taxes (individual, corporate, financial institution): $2,640.8 million
Excise taxes (sales, compensating use, cigarette, liquor, severance): $2,927.7 million

So if the state wanted to raise spending by, say, $1.310 billion dollars, it would have to raise income taxes by 49.7 percent, or excise taxes by 44.7 percent. Or a combination. Either way, that’s a lot.

When you see candidates for the Kansas Legislature — Democratic and Republican — mention these programs, ask if they know how much they will cost. Ask whose taxes will be raised or whose programs will be cut.

And ask this really important question: Just how will all this make Kansas a better state?

  1. Photographs of a number of pieces may be viewed in this folder at Flickr: https://flic.kr/s/aHskMJfGNc.
  2. Kansas Legislature. HB 2444. Eliminating the business non-wage income tax exemption and reducing the sales tax rate on food. http://www.kslegislature.org/li/b2015_16/measures/hb2444/.
  3. Kansas Legislature. Revenue Enhancements and Other Provisions; Senate Sub. for HB 2109, as amended by House Sub. for SB 270 and HB 2142. http://www.kslegislature.org/li/b2015_16/measures/documents/summary_hb_2109_2015.pdf.

WichitaLiberty.TV: Wichita and Kansas economics, and government investment

In this episode of WichitaLiberty.TV: Wichita sells a hotel, more subsidy for downtown, Kansas newspaper editorialists fall for a lobbyist’s tale, how Kansas can learn from Arizona schools, and government investment. View below, or click here to view at YouTube. Episode 131, broadcast October 30, 2016.

Shownotes

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.

The City of Wichita has sold the Hyatt Regency Hotel for $20 million. Now, what should the city do with these funds? In a workshop this week, the city manager and council recognized that these funds should not be used for operating purposes. This is important. The Hyatt Hotel was paid for with long-term debt, which the city says has been retired. The proceeds from this sale should be used in a similar way: For long-term capital investment, not day-to-day operating expenses. But the council heard two proposals that are decidedly more like operating expenses rather than capital investment.

One proposal, presented by Public Works Director Alan King, is to spend $10 million on street repair over two years. Part of that expense is to purchase a new truck, which is a capital, not operating, expense. But King later revealed that the truck could be purchased out of the existing capital budget.

Street maintenance, however, is an operating expense.

A second proposal, from the Wichita Transit System, would use about $4 million to sustain and improve current bus service. It was presented to the council as a “bridge to a long term solution.”

This, too, is an operating expense.

As these proposals were presented in a workshop, no decision was made.

These two proposed uses of the $20 million Hyatt sales proceeds are contrary to the goal of not using the funds for operating purposes. If the city decides to use the sales proceeds in this way, a capital investment will have been sold in order to pay for day-to-day expenses.

Instead of spending on these two projects, the city should simply return the money to those who paid for the Hyatt in the first place. Those people are, of course, the taxpayers of Wichita. It would be difficult to give back the funds to individual taxpayers in proportion to the amount they supplied. So what the city should do is retire $20 million of the city’s long-term debt.

If not that, then the city should use the Hyatt proceeds to pay for another long-lived asset, perhaps the new downtown library. Either of these alternatives respects the principles of sound financial practice, and also respects the taxpayers.

Kansas Governor Sam Brownback on myths and reality

Kansas Governor Sam Brownback addressed a luncheon gathering at the Wichita Pachyderm Club to set the record straight on what he called myths. Recorded on October 14, 2016.

Myths

  • The Kansas tax plan is failing.
  • Kansas schools have been cut.
  • State employee pensions are severely underfunded.
  • Kansas highways are crumbling.
  • Welfare numbers are down because we are kicking people off.
  • Vulnerable Kansans aren’t being served.
  • Kansans are fleeing to Missouri.

View below, or click here to view at YouTube.

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.

As Kansans debate school funding, as the Kansas Supreme Court considers ordering more school spending, and as school spending boosters insisting that school spending has been slashed, a fact remains constant: Kansas schools don’t spend all the money they’ve been given. Fund balances grew in many years, and rose rapidly this year.

Fund balances are necessary for cash flow management. The issue is what levels of balances are necessary. Based on recent data from the Kansas State Department of Education, fund balances rose rapidly after 2008, remained largely level from 2011 through 2015, and rose for 2016.

For the school year ending in 2015, total cash balances were $1,745,557,046. (This total does not include non-school funds like museums and recreation center funds.) For 2016, the figure was $1,871,026,493. This is an increase of $125,469,450, or 7.2 percent.

Kansans might wonder why schools did not spend some of these funds to offset cuts they have contended were necessary.

I’ve gathered data about unspent Kansas school funds and presented it as an interactive visualization. You may explore the data yourself by using the visualization. Click here to open the visualization in a new window. Data is from Kansas State Department of Education. Visualization created using Tableau Public.

Kansas school fund balances, all districts. Click for larger.
Kansas school fund balances, all districts. Click for larger.

Kansas revenue estimates

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

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

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

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

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

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

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

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

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

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

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

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

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

Kansas revenue estimate errors. Click for larger.
Kansas revenue estimate errors. Click for larger.


Notes

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

Kansas, a frugal state?

Is Kansas a frugal state, compared to others?

frugal-kansas-on-facebook-2016-10-12-excerptOn Facebook, a person wrote “We were already a frugal state …” (I’ve obscured the name to protect the uninformed.)

Is this true? What is the state and local government spending in Kansas, on a per-person basis? How does it compare to other states?

Every five years the U.S. Census Bureau conducts a census of governments. In its own words: “The Census of Governments identifies the scope and nature of the nation’s state and local government sector; provides authoritative benchmark figures of public finance and public employment; classifies local government organizations, powers, and activities; and measures federal, state, and local fiscal relationships.”1

I’ve gathered data from the 2012 census of governments — which is the most recent — and made it available in an interactive visualization. Nearby is a snapshot from the visualization, showing Kansas and nearby states, and a few others. (Using the visualization, you may select your own set of states to compare.)

In the visualization, you can see that Kansas spends quite a bit more than nearby states. Of special interest is Minnesota, which is often used as an example of a high-tax state, and a state with excellent schools and services. But Minnesota spends barely more than Kansas, on a per-person basis.

What about Colorado? It seems that Kansans often look to Colorado as a state full of bounty. But Kansas outspends Colorado. Same for New Mexico, Wisconsin, Texas, and — especially — Missouri.

So: Is Kansas a frugal state? It doesn’t seem it is.

Click here to access and use the visualization.

State and local government employment and costs, selected states. Click for larger.
State and local government employment and costs, selected states. Click for larger.


Notes

  1. U.S. Census Bureau. Census of Governments. Available at www.census.gov/govs/cog/.

Kansas government spending

Kansas government spending, starting in 1967. Total spending and per capita spending, adjusted for inflation. Also spending as percent of Kansas GDP.

Sources of data:
* Kansas Fiscal Facts 2016
* 2016 and 2017 are approved figures, not actual spending
* 2015 and beyond population are my estimates
* CPI is Consumer Price Index – All Urban Consumers, CUUR0000AA0
* 2016 and later GDP is estimated

Click charts for larger versions.

kansas-spending-adjusted-for-cpi-2016-10

kansas-per-capita-spending-adjusted-for-cpi-2016-10

kansas-spending-as-percent-of-private-sector-gdp-2016-10

GetTheFactsKansas launched

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

GetTheFactsKansas.com aims to provide Kansans with factual information about our state. Sometimes this is in short supply, so this effort is welcome.

get-the-facts-kansas-logoAs an example, when explaining school spending, the site notes: “At $13,124 per-pupil, 2015 marked the third consecutive year of record-setting funding according to the Kansas Department of Education (KSDE). And if the Department’s estimates hold, another new record will be set when the 2016 final results are reported. Record funding is not the result of accounting changes; emails from KSDE confirm that no accounting changes impacted state or district funding totals for more than ten years. There was a correction effective in 2015 when the state-mandated 20 mills of property tax began being properly recorded as State Aid instead of Local Aid, but there would have been an increase in State Aid without that change.”

Information like this rebuts two arguments that Kansas progressives use. First, that the increase in school spending is due to a recent change in the way KPERS payments are reported. But, there has been no change in ten years. Second, that the shift in the reporting of local property taxes is used to falsely inflate state spending. As KPI notes, even after adjusting for this change, state funding of schools has risen.

Access the website at GetTheFactsKansas.com and follow its Facebook page at Get The Facts Kansas.

Cost per visitor to Wichita cultural attractions

Wichitans might be surprised to learn the cost of cultural attractions.

The price of adult admission to the Wichita Art Museum is $7.00, or free on Saturdays thanks to the generosity of Colby Sandlian, a Wichita businessman.

But the cost of admission is much higher. For 2015, Wichita city documents report a cost per visitor of $55.37. This was eight percent over the target cost of $51.24.

Cost per visitor to Wichita cultural attractions. Click for larger.
Cost per visitor to Wichita cultural attractions. Click for larger.

The cost per visitor figures the city reports each year are presented in a nearby table. For each year the city reports the cost per visitor along with a target for the next years. In the nearby chart, the target values are represented by dotted lines of the same color as the actual cost.

We should note that for these attractions much of their costs are fixed, meaning they do not vary with the number of visitors. An example is the employment cost of a museum director. As the number of visitors rises or falls, the salary stays the same. This means that if attendance increased, the cost per visitor would fall, and fall dramatically. (Of course, if attendance really boomed, the museum might need more directors. But that’s a long term decision.)

The source of this data is Wichita city budgets and performance reports. All are available on the city’s website at wichita.gov.

Cost per visitor to Wichita cultural attractions. Click for larger.
Cost per visitor to Wichita cultural attractions. Click for larger.

Kansas construction employment

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

When investigating the claims of a lobbying group, Kansas Policy Institute found that the statistics — when examined closely — do not support the narrative the group promotes. Unfortunately, the Wichita Eagle editorial board did not examine the group’s claims closely enough to determine their validity.

Kansas Construction Employment, 12-Month Moving Average. Click for larger.
Kansas Construction Employment, 12-Month Moving Average. Click for larger.

At issue is the claim that transfers from the Kansas highway fund have lead to the loss of highway construction jobs. It’s repeated not only by the state’s highway construction lobbyists, but also by others. The statistics that are cited deserve further investigation, which is what KPI did on its article Media and highway contractors mislead again. KPI’s Dave Trabert found:

Had the Eagle bothered to examine Mr. Totten’s claim, they would have learned that only 2 percent of the construction job decline was attributable to highway construction and that the loss of 100 jobs is less than 1 percent of total highway jobs.

In addition to learning that Mr. Totten was grossly exaggerating, they would have learned that employment for construction of new homes and non-residential buildings showed very nice growth and the real problem is in specialty trade contractors for non-highway projects.

Trabert is referring to the Wichita Eagle editorial board citing figures from a self-interested lobbying group — in this case, Bob Totten, executive vice president of the Kansas Contractors Association — without investigating the true nature of the figures.

KDOT spending on major road programs. Click for larger version.
KDOT spending on major road programs. Click for larger version.
I’ve taken the same numbers from the Bureau of Labor Statistics. Because these values are available only in not seasonally adjusted form, I’ve created a chart using the moving average of the past 12 months. A second chart shows the change from the same month of the previous year. The charts confirm what KPI found, which is employment in the “Heavy and Civil” category is not responsible for the decline in Kansas construction jobs. In fact, employment in this category is on an upward trend over the past 18 months. It is employment in the category “Specialty Trade” that has fallen. This isn’t related to highway construction.

This data is available in an interactive visualization which you may access here. For more information on highway spending in Kansas, see Kansas highway spending.

Kansas Construction Employment, Change From Year Before. Click for larger.
Kansas Construction Employment, Change From Year Before. Click for larger.