Each year the Kansas Department of Transportation surveys the condition of highway pavement and issues a report called the Network Optimization System (NOS) Survey. 1
Of the condition of highways, the report notes: “Since the data was first collected in 1983, the percentage of pavement surface in good condition has appreciably increased while the percentage of poor pavement has significantly decreased.”
Kansas Highway Conditions, through 2017. Click for larger.Here’s a chart of the conditions of Kansas roads and highways. 2 It shows that, for interstate highways, the percent of the system in good condition has been pretty level since 2001, although there is a slight decline recently that is within the range of normal year-to-year variation. For non-interstate highways, the percent in good condition fell starting in 2004, but has rebounded, with a small decline in the most recent year.
Based on these charts, there’s no factual basis to claim that Kansas roads and highways are deteriorating or crumbling.
KDOT notes that the condition report “…also shows that while the last few years have been challenging due to very tight budgets, KDOT and its partners continue to find means to maintain the pavement surface condition.” The most recent financial report from KDOT shows that spending on preservation has fallen significantly the past three years, while spending on maintenance has been level. 3
A look at actual spending on Kansas highways, apart from transfers.
KDOT spending, major road programs. Click for larger.KDOT spending, total road programs. Click for larger.KDOT transfers. Click for larger.KDOT funding sources, partial. Click for larger.When we look at actual spending on Kansas roads and highways, we see something different from what is commonly portrayed. Kansas Department of Transportation publishes a Comprehensive Annual Financial Report that details spending in four categories. These figures represent actual spending on roads and highways, independent of transfers to or from the highway fund.
For fiscal year 2018, which ended June 30, 2018, spending on two categories (Maintenance and Modernization) rose slightly from the year before, while spending on the categories Preservation and Expansion and Enhancement fell.
For these four categories — which represent the major share of KDOT spending on roads — spending in fiscal 2018 totaled $528.234 million. That’s down 28 percent from $736.781 million the year before, and up from a low of $698.770 million in fiscal 2010.
Again, these are dollars actually spent on highway programs. A common characterization of the way Kansas government is funded is called “robbing the bank of KDOT.” To the extent that characterization is accurate, there is a separate line item titled “Distributions to other state funds” that holds these values. It appears in the nearby table. A chart shows sales tax distributions from the general fund to KDOT, and transfers from KDOT. The two values tack closely over history, and in 2018 were nearly identical values.
Many also criticize Kansas government for slashing highway spending, letting our roads crumble. While total spending on these four programs has been falling (after adjusting for inflation), the decline, until recent years, is minor compared to the hysterical claims of those with vested interests in more government, and especially highway, spending.
Kansas law specifies how much sales tax revenue is transferred to the highway fund. Here are recent rates of transfer and dates they became effective: 1
July 1, 2010: 11.427%
July 1, 2011: 11.26%
July 1, 2012: 11.233%
July 1, 2013: 17.073%
July 1, 2015: 16.226%
July 1, 2016 and thereafter: 16.154%
A nearby chart shows the dollar amounts transferred to the highway fund from sales tax revenue. In 2006 the transfer was $98.914 million, and by 2018 it had grown to $530.765 million.
KDOT spending, major road programs. Click for larger.
Kansas has more state government employees per resident than most states, and the trend is rising.
Each year the United States Census Bureau surveys federal, state, and local government civilian employees. 1 The amount of payroll for a single month (March) is also recorded. In this case, I’ve made the data for state government employees available in an interactive visualization.
For 2016, Kansas had 17.90 full-time equivalent state government employees per thousand residents. This ranked 15th among the states. These employees resulted in payroll cost of $979 per resident, which is 21st among the states.
Nearby is an example from the visualization showing state government employment count (full-time equivalent) per thousand residents for Kansas and some nearby states. It shows total employment, and in addition, education employment and hospital employment. (Since nearly all employees in Kansas elementary and secondary schools are employees of local government, not the state, the employees shown are working in higher education. See below for visualizations of local government employees.)
Two things are evident: The level of employment in Kansas is generally higher than the other states, and the trend in Kansas is rising when many states are level or declining. This data counters the story often told, which is that state government employment has been slashed.
If we look at data for state and local government employees, the conclusions are nearly the same.
Click here to learn more and access the visualization.
Wichita spending data presented as a summary, and as a list.
As part of an ongoing transparency project, I asked the City of Wichita for check register data. I’ve made the data available in a visualization using Tableau Public. This visualization is updated with data through August 31, 2018.
To learn more about this data and use the visualization, click here.
Kansas has nearly the highest number of local government employees per resident, compared to other states.
Local government employment by state. Click for larger.Local government employment in education. Click for larger.For all local government employees, Kansas had 50.59 per thousand residents in 2016, higher than all states (and areas) but the District of Columbia and Wyoming. These employees had an annual payroll of $2,141.16 per resident. Ten states were higher.
Considering elementary and secondary education, Kansas had 30.03 such employees per thousand residents. This was higher than all states but Vermont and Wyoming. The payroll for these employees was $1,150.85 per resident, with eleven states above Kansas.
Kansas is a small state in terms of population. Might small states have higher needs for employees on a per-resident basis? A plot of employees vs. population shows nearly no relationship between the two.
These are local government employees only. State and federal government employees are not included.
Of note, Hawaii has no local employees in elementary and secondary education, as it has one school district which is run by the state. 1
The source of this data is the United States Census Bureau. I’ve gathered it and placed in in an interactive visualization. Click here to learn about the visualization and use it to make your own charts and tables.
State population vs. local government employment per resident. Click for larger.
A Wichita Eagle editorial argues for higher property taxes to help the city grow.
In a recent op-ed, the Wichita Eagle editorial board writes: “It’s hard to make the argument that Wichitans are overtaxed by their city government. It’s time for the community to look at how it helps the city grow. A responsible plan that asks Wichita families to chip in the cost of a family meal should be part of the conversation.” 1
The argument that a tax increase is only “the cost of a family meal” is weak. (From the editorial: “A 1-mill increase would cost a property owner $11.50 annually for every $100,000 of appraised value of a home.”) In other words, it’s just a little bit. Just one dollar each month. You won’t even notice it.
This is a standard argument made by those who want higher taxes and those who oppose tax cuts. The problem is just that: Everyone makes this argument, and when added together, the nickels and dimes add up to real money.
Besides, there are families in Wichita who have trouble paying for family meals.
Then, there’s the effect on business. An ongoing study reveals that generally, property taxes on commercial and industrial property in Wichita are high. Specifically, taxes on commercial property in Wichita are among the highest in the nation. Commercial property is taxed at 2.180 times the rate as residential property. (The U.S. average is 1.683.) Because Wichita’s ratio is high, it leads to high property taxes on commercial property. 2
Raising taxes on commercial enterprise shifts economic activity from the private sector to government. Citizens may want to ask where money is spent most beneficially.
The Eagle editorial board says higher property taxes could help the city grow. There’s no doubt the city needs help growing. But given the record of our local government leaders — both elected and bureaucratic — it’s difficult to see how giving them more money to spend will help.
WaterWalk, downtown Wichita, September 30, 2014. There has been little change since then, except for the loss of Gander Mountain.As an example of government helping the city grow, consider the Waterwalk development in downtown Wichita. Despite some $41 million in taxpayer subsidy, the development languishes. On top of that, the city doesn’t enforce agreements that might benefit taxpayers. 3
The Wichita Eagle editorialized “Seven years into a project that was supposed to give Wichita a grand gathering place full of shops, restaurants and night spots as well as offices and condos, some City Council members and citizens remain skeptical at best about WaterWalk’s ability to deliver on its big promises. … True, the skepticism to date is richly deserved.” 4
Oh. That editorial was written in 2009, nine years ago. Since then, there has been some improvement, like the Marriott Fairfield Inn and Suites Hotel and the fountain. But, Gander Mountain — the development’s retail anchor — closed.
The present Eagle editorial board calls for a “responsible plan.” But when we see the city spending on things like Waterwalk and then failing to uphold agreements designed to protect taxpayers — well, the city hasn’t been acting responsibly.
Contrast downtown’s Waterwalk with Waterfront, a development at 13th and Webb Road in east Wichita that started around the same time as Waterwalk. There, developers spent millions of their own money to build a beautiful parkway, sewers, traffic lights, and the like. 5
Merchants at Wichita’s Waterfront. Click for larger.It is at Waterfront where we see large first-class office buildings and small executive offices. It is there we find desirable nationally-known restaurants like Abuelo’s Mexican Food Embassy, Bonefish Grill, PF Chang’s China Bistro, and Red Robin. We also see fine local restaurants like Chester’s Chophouse & Wine Bar. It is at Waterfront we find lodging like Homewood Suites by Hilton, retail stores like Ethan Allen, and the city’s only Whole Foods Market.
All this at Waterfront was done without help from the taxpayers, unlike downtown’s Waterwalk consuming our $41 million. Other popular developments like Bradley Fair and New Market Square were developed with little or no government help.
Trends of business activity in downtown Wichita. Click for larger.Even the subsidized “development” that most people agree is a success is not all it’s cracked up to be. That is downtown Wichita, where there has been hundreds of millions in private and public investment over the past decade. The result is that over the same time, business activity in downtown Wichita has been on a downhill trend. The data for 2016 (the most recent year for data) is a bit of good news, with the decline stopping and business activity remaining mostly unchanged. It isn’t the vibrant growth we’ve been told is happening in downtown Wichita, but at least things are not getting worse. 6
So: Do we trust Wichita’s political and bureaucratic leaders to develop a “responsible plan?” Give this record, do we want to shift more resources from the private sector to the government sector?
Competing tax hikes
It’s surprising that the Eagle editorial board would recommend higher property taxes right now. That’s because it’s likely we’ll be asked to approve more taxation, probably soon. There is support among the city’s elite for a renovated or new performing arts and convention center, something that probably can’t be done without more tax revenue. Project Wichita is seen by many as an effort to persuade the region for higher taxes.
Also: In 2014 the steering committee for the Wichita/Sedgwick County Community Investments Plan delivered a report to the Wichita City Council. This report told the council that the “cost to bring existing deficient infrastructure up to standards” is an additional $45 to $55 million per year over current levels of spending. 7
I’m not aware of the city directing additional spending to cure this maintenance gap. As time passes, the gap becomes larger. Although: The city decided to spend an additional $10 million on street repair. But that was a one-time infusion made available when the city sold a capital asset.
This backlog of maintenance is a manifestation of the city not being responsible with assets Wichita taxpayers paid for. And if it is true that we need to spend an additional $45 to $55 million per year, where will the city get those funds? The Eagle urges a one mill property tax increase, which it says means the “city budget would gain $3.5 million to $4 million.” To fix our maintenance backlog would require a property tax increase of over ten mills, if that is how the city decides to raise the funds.
Analysis of criticism by Hugh Nicks, a candidate for Sedgwick County Commission, demonstrates that the candidate is either misinformed or lying.
On his Facebook page, Sedgwick County Commission candidate Hugh Nicks accuses Richard Ranzau of “Voting against our community’s children and babies.” As evidence, Nicks supplies a link to an article in the Wichita Eagle. 1
What’s notable about this claim is this paragraph from the article Nicks uses as evidence:
In 2015, Ranzau and other commissioners voted to cut the federal Women, Infants and Children program grant by $320,000 to $1.9 million. He said at the time that WIC could be more efficient because it was serving fewer clients. The county health department used only $1.83 million of the $2.15 million it was awarded the year before. 2
Note that the amount Ranzau (and others) voted to spend on WIC was slightly more than what was spent the year before, at a time when WIC demand was declining, as there were fewer clients. At the time, KMUW Radio reported: “Citing a recent decline in WIC participants that coincides with an increase in employees with the program, the commission’s majority voted to accept only a portion of the grant, saying the full amount wasn’t needed.” 3
So no needy women or children went without the ability to use this program. The commission voted to reduce spending on administrative costs. The commission does not have the authority to set qualifications for participating in the program, nor does the commission set the level of benefits, that is, the amount of money and services participants receive. The county merely administers the program according to federal and state guidelines.
What does Hugh Nicks think of this? In the Eagle article he uses in his Facebook post, the reporter wrote this about Nicks:
He also called the WIC program “one of the saddest things I’ve seen recently.”
“When it comes to infants and children, I’m not too worried about politics, but I am concerned about children’s health and safety,” Nicks said. “The commission has a duty to protect the most vulnerable among us, particularly when they have nowhere else to turn.”
Since no women and children lost their benefits or had them cut, it’s difficult to see why Nicks is sad.
Is he concerned that the county trimmed administrative costs? Consider some of the values listed in Nicks’ campaign literature: “Ask tough questions” and “Be conservative with finances.”
That is what the commission did, under Richard Ranzau’s chairmanship. Trimming administrative costs — no matter who is paying them — is financially conservative.
Those savings came from “asking tough questions,” a value Nicks upholds. Yet for doing that, Nicks blasts the commission, including Ranzau, as “sad” and “political.”
Voters ought to ask: Is Hugh Nicks merely uninformed, or is he lying? It might be tempting to dismiss these remarks as having been made by an uninformed candidate. But Nicks says he has been running since October 2017 so that he can learn about the issues.4
If we eliminate “uninformed,” we’re left with “lying.”
—
Nearby, see Richard Ranzau speak on this issue. (Hugh Nicks and his campaign surrogates were also invited, but would not appear.) Or, click here to view at YouTube.
Following, some excerpts from the commission meeting where this matter was discussed: 5
Ms. Adrienne Byrne-Lutz, Director of the Health Department: “The Health Department has provided WIC services for well over 40 years, and the program is funded entirely through the United States Department of Agriculture that passes through KDHE.”
Later:
Chairman Ranzau said, “Our assigned caseload is going down 9.88 percent, expenditures going up 5.51 percent, and we’re actually combining two, last year there were two separate, the WIC and then the breastfeeding.”
Ms. Adrienne Byrne-Lutz said, “That’s correct.”
Later:
Chairman Ranzau said, “Historically, the past, we tend to spend less than what we’re actually given. Like the last two years, we spent about $320,000 less than what we were given to begin with?”
Ms. Adrienne Byrne-Lutz said, “Well, we don’t get a lump sum from WIC. We just get what we spend.”
Chairman Ranzau said, “But we spent $320,000 less than what we were authorized to spend?”
“You may wonder why I’m announcing so early, since the Republican Primary for the County Commission seat isn’t until August 2018. The reason is simple. I like to do my homework. I want to learn about the way Sedgwick County governs, and the rationale behind the decisions that have been made. I want to learn about the issues that are most important to the people in the 4th District. I think serving as County Commissioner is too important to take an on-the-job-training approach, and I don’t want to be on a learning curve at the taxpayers’ expense.” Nicks4commissioner.com. News. October 19, 2017. Available at http://www.nicks4commissioner.com/news.html. . ↩
Is the pursuit of intergovernmental grants wise? Would local governments fund certain programs if the money was not seen as “free?”
An eariler version of this article failed to distinguish Jim Howell’s position from the majority of candidates. I regret the error.
At a forum of candidates for Sedgwick County Commission, the subject of intergovernmental grants was discussed. All candidates except for current commissioners Richard Ranzau and Jim Howell were fully in favor — enthusiastic, even — of the grant system. Both Ranzau and Howell expressed skepticism of the wisdom and efficacy of the grant system.
Other candidates participating in the forum had several justifications for accepting intergovernmental grants: It’s our tax money we sent to Washington or Topeka, it’s foolish not to try to get back our tax money, the grants are already funded, the money will simply go somewhere else. There are a few problems with these lines of reasoning.
First, the grants are not “already paid for.” Since the federal government runs a deficit, we’re not paying the entire cost of government. To say that some things (program A, B, and C) are paid for, and other things (programs D, E, and F) are not paid for, is making artificial distinctions that can’t be justified.
But deficit spending (on grants or other things) makes sense to politicians who want to deliver more government services than are being paid for by current levels of taxation. Federal and state grants make sense to local politicians and bureaucrats who want to be able to say they “won” federal or state dollars, so that the county or city can spend at no one’s cost. That’s how grant money is often characterized: Spending at no one’s cost.
But politicians and bureaucrats across the nation make the same argument. We all wind up spending money at no one’s cost, so they say.
Then: We must “try to get back our tax money.” This highlights another absurdity of government grants. We pay taxes, and then hope that we win the competition to get back our money. Who developed this system? Again, politicians like to boast they “won” grant funding that has no cost. Bureaucrats thrive on the jobs and power that grants provide, both locally and at the state and federal levels. Someone has to collect the taxes, write the applications for grants, evaluate the applications, administer the grant money at the state or federal level, administer the grant money at the local level, write reports on how the grant money is spent, and then someone has to read the reports. This creates a lot of jobs for bureaucrats. It also costs a lot, which is a deadweight cost, that is, costs that provide no benefit.
(If politicians and bureaucrats in other states, cities, and counties are smarter than us, do we have a fair chance of getting our tax money back in the form of grants?)
Finally: There is evidence that intergovernmental grants accepted today result in higher taxes tomorrow. Worse, this is for spending that local governments might not choose if local government bore the entire cost. But after the grant ends and after a constituency is created, it’s difficult to stop the spending.
Following, from 2013, a presentation of research on grants and future taxation.
Federal grants seen to increase future local spending
“Nothing is so permanent as a temporary government program.” — Nobel Laureate Milton Friedman
Is this true? Do federal grants cause state and/or local tax increases in the future after the government grant ends? Economists Russell S. Sobel and George R. Crowley have examined the evidence, and they find the answer is yes.
The difference between this research and most other is that Sobel and Crowley look at the impact of federal grants on state and local tax policy in future periods.
This is important because, in their words, “Federal grants often result in states creating new programs and hiring new employees, and when the federal funding for that specific purpose is discontinued, these new state programs must either be discontinued or financed through increases in state own source taxes.”
The authors caution: “Far from always being an unintended consequence, some federal grants are made with the intention that states will pick up funding the program in the future.”
The conclusion to their research paper states:
Our results clearly demonstrate that grant funding to state and local governments results in higher own source revenue and taxes in the future to support the programs initiated with the federal grant monies. Our results are consistent with Friedman’s quote regarding the permanence of temporary government programs started through grant funding, as well as South Carolina Governor Mark Sanford’s reasoning for trying to deny some federal stimulus monies for his state due to the future tax implications. Most importantly, our results suggest that the recent large increase in federal grants to state and local governments that has occurred as part of the American Recovery and Reinvestment Act (ARRA) will have significant future tax implications at the state and local level as these governments raise revenue to continue these newly funded programs into the future. Federal grants to state and local governments have risen from $461 billion in 2008 to $654 billion in 2010. Based on our estimates, future state taxes will rise by between 33 and 42 cents for every dollar in federal grants states received today, while local revenues will rise by between 23 and 46 cents for every dollar in federal (or state) grants received today. Using our estimates, this increase of $200 billion in federal grants will eventually result in roughly $80 billion in future state and local tax and own source revenue increases. This suggests the true cost of fiscal stimulus is underestimated when the costs of future state and local tax increases are overlooked.
So: Not only are we taxed to pay for the cost of funding federal and state grants, the units of government that receive grants are very likely to raise their own levels of taxation in response to the receipt of the grants. This is a cycle of ever-expanding government that needs to end, and right now.
Recently Kansas Policy Institute, along with Americans for Prosperity and Kansas Chamber of Commerce, held a series of briefings for candidates for the Kansas Legislature. The presentations in Wichita were recorded, and are available as follows:
What Was Really the Matter with the Kansas Tax Plan. KPI President Dave Trabert spoke on the reality and myths of the state’s tax plan. Click here to view at YouTube.
Kansas K-12 Education Spending and Achievement. KPI President Dave Trabert spoke on K-12 education spending and achievement. Click here to view.
Medicaid Expansion. Melissa Fausz, a senior policy analyst with Americans for Prosperity, spoke about Medicaid expansion. Click here to view.
Kansas Chamber Legislative Update. Eric Stafford, vice president of government affairs for the Kansas Chamber of Commerce, spoke on the legislative process in Kansas. Click here to view.
Property Taxes. KPI President Dave Trabert spoke on property taxes in Kansas. Click here to view.
