Voice For Liberty

Tag: Greater Wichita Economic Development Coalition

  • Wichita’s growth in gross domestic product

    Wichita City HallCompared to peer areas, Wichita’s record of growth in gross domestic product is similar to that of job creation: Wichita performs poorly.

    Looking at growth in GDP, Wichita lags behind the metropolitan statistical areas that we consider our peers (according to Visioneering Wichita), but not behind all the peer cities that I selected. Wichita does better than Springfield, Illinois, for example. I chose to include that as a peer metropolitan area because that’s the immediate past city that Gary Plummer worked in. He was president of that city’s Chamber of Commerce, and is now president of the Wichita Metro Chamber of Commerce.

    Wichita also does better than Wichita Falls, Texas. That city is the immediate past home of Tim Chase. He was the head of Wichita Falls Economic Development Corporation. He’s now president of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development for the Wichita area.

    What Wichita is missing

    If the Wichita-area GDP grew faster, Wichita could generate many more jobs.

    growth-gdp-metropolitan-area-wichita-2012-01From 2001 to 2012, Wichita GDP grew at a rate of 0.734 percent per year, compounded annually. U.S. Metropolitan areas, as a whole, managed 1.571 percent growth over the same period. That seems like a small difference, just 0.837 percentage points. But over time, compounding adds up, so to speak. Here’s what it could amount to.

    GDP in the Wichita MSA in 2012 was $29,644 million (current dollars). For that year the number of people working averaged 285,600, so each job contributed, on average, $103,796 to GDP.

    A metropolitan area the size of Wichita that grew at the historic growth rate of all U.S. Metropolitan areas would be producing an additional $2,751 million in GDP in ten years, compared to a metropolitan area growing at Wichita’s historical rate. That could mean an additional 26,000 jobs.

    Using the visualization.
    Using the visualization.
    If you’d like to use the interactive visualization of metropolitan GDP data, you may click here to open it in a new window. Data is from U.S. Bureau of Economic Analysis along with author’s own calculations. Visualization created using Tableau Public.

  • A transparency agenda for Wichita

    Wichita City HallKansas has a weak open records law, and Wichita doesn’t want to follow the law, as weak as it is. But with a simple change of attitude towards open government and citizens’ right to know, Wichita could live up to the goals its leaders have set.

    The City of Wichita is proud to be an open and transparent governmental agency, its officials say. Wichita Mayor Carl Brewer often speaks in favor of government transparency. For example, in his State of the City address for 2011, he listed as an important goal for the city this: “And we must provide transparency in all that we do.” When the city received an award for transparency in 2013, a city news release quoted Wichita City Manager Robert Layton:

    “The City Council has stressed the importance of transparency for this organization,” City Manager Robert Layton said. “We’re honored to receive a Sunny Award and we will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”

    Wichita logic open records
    But when we look at some specific areas of government transparency, we find that the city’s efforts are deficient. Below are a few areas in which the city could improve. Much more is available here: Open government in Kansas

    The Kansas Open Records Act (KORA), in KSA 45-216 (a) states: “It is declared to be the public policy of the state that public records shall be open for inspection by any person unless otherwise provided by this act, and this act shall be liberally construed and applied to promote such policy.

    In reality, Kansas has a weak open records law. Wichita doesn’t want to follow the law, as weak as it is. But with a simple change of attitude towards open government and citizens’ right to know, Wichita could live up to the goals its leaders have set.

    Attitude

    Citizen watchdogs need access to records and data. The City of Wichita, however, has created several not-for-profit organizations that are controlled by the city and largely funded by tax money. The three I am concerned with are the Wichita Downtown Development Corporation, Go Wichita Convention and Visitors Bureau, and Greater Wichita Economic Development Coalition.

    I have asked each organization for checkbook-level spending data. Each has refused to comply, using the reasoning that they are not “public agencies” as defined in the Kansas Open Records Act. But consider the WDDC: In every year but one, its percent of revenue derived from taxes is well over 90 percent. In many years the only income WDDC received was from taxes and a small amount of interest earned. Click here to see how much of WDDC’s revenue comes from taxes.

    The Wichita city attorney backs these organizations and their interpretation of the law. So do almost all city council members. After 14 months investigating this matter, the Sedgwick County District Attorney agreed with the city’s position. (Click here to read the determination.) The only course of action open to me as a citizen watchdog is to raise thousands of dollars to fund a lawsuit.

    There is one other course of action, however. That is, these agencies and the city could fulfill the records requests that I have made. These agencies believe the law doesn’t require them to release the records, but the law does not prohibit or restrict releasing the records. They could fulfill requests if they wanted to, which goes back to the attitude of the city. For more, see Wichita, again, fails at open government.

    Citizen watchdogs and others need the ability to examine the spending of tax money. When government creates quasi-governmental bodies that are almost totally funded through taxes and then refuses to disclose how that money is spent, we have to wonder why the city doesn’t want citizens to know how this money is spent.

    An example of why this is important is the case of Mike Howerter, a trustee of Labette Community College in Parsons. He noticed that a check number was missing from a register. Upon his inquiry, it was revealed that the missing check was used to reimburse the college president for a political campaign contribution. While the college president committed no violation by making this political contribution using college funds, this is an example of the type of information that citizens may want regarding the way public funds are spent.

    Website

    The most important way governments can communicate with their subjects is through their websites. Wichita moved to a new website early in 2013. While the former website had its share of problems — such as a search feature that didn’t work very well — the new website has been a step backwards.

    For example, it appears that for citizen review boards like the Metropolitan Area Planning Commission and Historic Preservation Board, agendas and minutes prior to 2012 did not survive the conversion to the new website. Other documents that were previously available but appear to be missing after the conversion include the daily arrest reports. It appears that only a few years of past budgets are available, but the comprehensive annual financial reports are available for about ten years back. (If I missed any documents that are actually available, I apologize. But the fact that I couldn’t find them is its own problem.)

    The prior website had a service called “MyWichita.” This was a very useful service. After registration, citizens could see a list of documents and check the types of documents for which they’d like to receive notification when newly available, such as meeting agenda and minutes. This email reminder service was very valuable. It didn’t survive the conversion to the new website, and there’s nothing new to replace its function.

    The search feature on the new website is better than on the old. But there is a curious twist to the new search: It gives different results depending on the starting page. This could be a potentially useful feature if users were made aware of it. For example, if the user is currently viewing the Finance Department web page and starts a search, the system could give the user a choice of search just the Finance Department, or all of the website. Presently, it appears that the search would be confined to just the Finance Department, and users could easily conclude that documents they searched for don’t exist, when in fact they do.

    Most new websites in recent years will adapt so they are usable from mobile devices like smartphones. Not so with the new Wichita website.

    Spending data

    Many governmental agencies post their checkbooks on their websites. Sedgwick County does, and also the Wichita school district. Not so the City of Wichita.

    wichita-checkbook-register-example
    Even after asking for checkbook spending data, Wichita can supply data of only limited utility. What was supplied to me was data in pdf form, and as images, not text. It would be difficult and beyond the capability of most citizens to translate the data to useful format. Even if someone translated the reports to computer-readable format, I don’t think it would be very useful. This is a serious defect in the city’s transparency efforts.

    Legal notices

    Kansas law requires that local government agencies publish legal notices for a variety of topics. Presently these are published in the Wichita Eagle at great cost to taxpayers. These notices could also be published on the city’s website, where they could be searched and archived. This would increase the usability of these documents at very little cost to the city.

    Publish requests

    When governmental agencies like the City of Wichita fulfill records requests, they could also publish the records on their websites. Most of the time the records are supplied electronically, so this is an additional simple (and low cost) step that would leverage the value of the city’s effort.

    Leveraging our lobbyists

    What do lobbyists, including taxpayer-funded lobbyists, do in Topeka? One thing they do is testify before committees, in both verbal and written form. Another thing they do is to prepare reports for the clients, advising them on upcoming legislation, analyzing how it affects them, and what the prospects for the bill might be. They also meet with legislators and their clients, which are your elected officials.

    Here’s a proposal that will help citizens make best use of their taxpayer-funded lobbyists:

    I see nothing in the Kansas Open Records Act that allows local governmental units in Kansas to refuse to disclose these documents: testimony, reports by lobbyists to their government clients, and the lobbyists’ calendars (or billing records for contract lobbyists). Instead of making citizens ask for these records, possibly paying fees to obtain what they’re already paying for, why don’t local governments post these documents immediately on their websites?

    Citizens could then benefit from the activities of the lobbyists they’re paying for. They could learn more about legislation as it works its way through the process. Citizens could judge whether the positions taken by the government lobbyists they’re paying for are aligned with their policy preferences.

    If the actions taken by taxpayer-funded lobbyists are truly in the public interest, you’d think that cities, counties, and school boards would already be making this information easily available. In any case, there should be no resistance to starting this program.

  • Wichita’s legislative agenda favors government, not citizens

    Wichita’s legislative agenda favors government, not citizens

    city-council-chambers-sign-smallThis week the Wichita City Council will consider its legislative agenda. This document contains many items that are contrary to economic freedom, capitalism, limited government, and individual liberty. Yet, Wichitans pay taxes to have someone in Topeka promote this agenda. I’ve excerpted the document here, and following are some of the most problematic items.

    Agenda: Existing economic development tools are essential for the continued growth and prosperity of our community.

    First. The premise of this item is incorrect. We don’t have growth and prosperity in Wichita. Compared to a broad group of peer metropolitan areas, Wichita performs very poorly. See For Wichita’s economic development machinery, failure for details.

    Second: In general, these incentives don’t work to increase prosperity. Click here for a summary of the peer-reviewed academic research that examines the local impact of targeted tax incentives from an empirical point of view. “Peer-reviewed” means these studies were stripped of identification of authorship and then subjected to critique by other economists, and were able to pass that review.

    Third: Wichita leaders often complain that Wichita doesn’t have enough “tools in the toolbox” to compete effectively in economic development. The city’s document lists the tools the city wants the legislature to protect:

    • GWEDC/GO WICHITA: Support existing statutory records exemptions
    • Industrial Revenue Bond tax abatements (IRBX)
    • Economic Development Exemptions (EDX)
    • Tax Increment Financing (TIF)
    • Sales Tax Revenue (STAR) Bonds
    • Community Improvement Districts (CID)
    • Neighborhood Revitalization Area (NRA) tax rebates
    • Special Assessment financing for neighborhood infrastructure projects, facade improvements and abatement of asbestos and lead-based paint.
    • State Historic Preservation Tax Credits (HPTC)
    • State administration of federal Low Income Housing Tax Credits (LIHTC)
    • High Performance Incentive Program (HPIP) tax credits
    • Investments in Major Projects and Comprehensive Training (IMPACT) grants
    • Promoting Employment Across Kansas (PEAK) program
    • Economic Revitalization and Reinvestment Act bonding for major aviation and wind energy projects
    • Kansas Industrial Training (KIT) and Kansas Industrial Retraining (KIR) grants
    • Network Kansas tax credit funding
    • State support for Innovation Commercialization Centers in Commerce Department budget

    That’s quite a list of incentive programs. Some of these are so valuable that Kansas business leaders told the governor that they value these incentives more than they would value elimination of the state corporate income tax.

    Agenda: GWEDC/GO WICHITA: Support existing statutory records exemptions

    This may refer to the city wanting to prevent these agencies from having to fulfill records requests under the Kansas Open Records Act. (If so, I wonder why the Wichita Downtown Development Corporation was left off.) City leaders say Wichita has an open and transparent government. But Kansas has a weak records law, and Wichita doesn’t want to follow the law, as weak as it is. This is an insult to citizens who are not able to access how their taxes are spent. For more on this issue, see Open Records in Kansas.

    Agenda: The Wichita City Council opposes any legislative attempts to restrict the taxing and spending authority of local governments.

    As Wichita city leaders prepare to ask for a higher sales tax rate in Wichita, we can hope that the legislature will save us from ourselves. At best, we can hope that the legislature requires that all tax rate increases be put to popular vote.

    Agenda: The Wichita City Council opposes any restrictions on the use of state and/or local public monies to provide information to our citizens and to advocate on their behalf.

    This is the taxpayer-funded lobbying issue. As you can see in this document, many of the things that Wichita city leaders believe people want, or believe that will be good for their constituents, are actually harmful. Additionally, many of the methods the city uses to engage citizens to determine their needs are faulty. See In Wichita, there’s no option for dissent for an example. Also, see Wichita survey questions based on false premises.

    Agenda: The Wichita City Council supports the current framework for local elections, continuing the current February/April schedule of local primary and general elections, as well as the local option allowing non-partisan elections.

    The present system of non-partisan elections held in the spring results in low voter turnout that lets special interest groups exercise greater influence than would be likely in fall elections. See my legislative testimony in Kansas spring elections should be moved.

    Agenda: The Wichita City Council supports the development of appropriate state and local incentives to nurture and preserve arts activity throughout the City of Wichita and the State of Kansas.

    Translation: The city knows better than you how to provide for your entertainment and cultural edification, and will continue to tax you for your own benefit.

    Agenda: Public support and awareness of the possibility of passenger rail service connecting Oklahoma City and Wichita/Newton has grown over the past two years.

    I’m not sure where the claim of public support and awareness growing comes from, but people are definitely not informed about the economics of passenger rail. In 2010, when the state rolled out several plans for this passenger rail service link, I reported as follows:

    Expansion of rail service in Kansas is controversial, at least to some people, in that any form of rail service requires taxpayer involvement to pay for the service. First, taxpayer funding is required to pay for the start-up costs for the service. There are four alternatives being presented for rail service expansion in Kansas, and the start-up costs range from $156 million up to $479 million.

    After this, taxpayer subsidies will be required every year to pay for the ongoing operational costs of providing passenger rail service. The four alternatives would require an annual operating subsidy ranging from $2.1 million up to $6.1 million. Taking the operating subsidy and dividing by the estimated number of passengers for each alternative, the per-passenger subsidy ranges from $35 up to $97 for every passenger who uses the service.

    It would be one thing if tickets sales and other revenue sources such as sale of food and beverage paid for most of the cost of providing passenger rail service, and taxpayers were being asked to provide a little boost to get the service started and keep it running until it can sustain itself. But that’s not the case. Taxpayers are being asked to fully fund the start-up costs. Then, they’re expected to pay the majority of ongoing expenses, apparently forever.

    Also, in Amtrak, taxpayer burden, should not be expanded in Kansas I reported on the Heartland Flyer route specifically. This is from 2010, but I doubt much has changed since then.

    For the Heartland Flyer route, which runs from Fort Worth to Oklahoma, and is proposed by taxpayer-funded rail supporters to extend into Kansas through Wichita and Kansas City, we find these statistics about the finances of this operation:

    Amtrak reports a profit/loss per passenger mile on this route of $-.02, meaning that each passenger, per mile traveled, resulted in a loss of two cents. Taxpayers pay for that.

    But this number, as bad as it is, is totally misleading. Subsidyscope calculated a different number. This number, unlike the numbers Amrak publishes, includes depreciation, ancillary businesses and overhead costs — the types of costs that private sector businesses bear and report. When these costs are included, the Heartland Flyer route results in a loss of 13 cents per passenger mile, or a loss of $26.76 per passenger for the trip from Fort Worth to Oklahoma City.

    Asking the taxpayers of Wichita to pay subsidies each time someone boards an Amtrak train: This doesn’t sound like economic development, much less a program that people living in a free society should be forced to fund.

  • For Wichita’s economic development machinery, failure

    Delano Clock Tower, WichitaCompared to a broad group of peer metropolitan areas, Wichita performs very poorly. As Wichita embarks upon a new era of economic development, we need to ask who to trust with this important task.

    The good news: In a recent op-ed, Wichita Mayor Carl Brewer wrote that the city needs to make a decision regarding “A more aggressive approach to job creation.” (Carl Brewer: Wichita can have a great next year, December 22, 2013 Wichita Eagle)

    The bad news: Wichita has performed very poorly in job creation in recent decades, and even if we decide on a more aggressive approach, pretty much the same crew is in charge.

    Many in Wichita don’t want to recognize and confront the bad news about the performance of the Wichita-area economy. Last year, when presenting its annual report to local governmental bodies, the leaders of Visioneering Wichita would not present benchmark data to elected officials.

    Some, however, have recognized the severity of the problem. In 2008 Harvey Sorensen, who has been chair of Visioneering Wichita, chair of the Wichita Metro Chamber of Commerce, and has held other civic leadership positions, wrote in the pages of the Wichita Eagle: “We are losing ground competitively with our peer communities.” (Community Needs a Common Vision, August 24, 2008 Wichita Eagle)

    wichita-peer-job-growth-1990-2014-01

    So what is the record of the Wichita metropolitan area regarding job creation, that seeming to be the most popular statistic our leaders cite and promote? I’ve prepared statistics from the Bureau of Labor Statistics, U.S. Department of Labor for Wichita and a broad group of peer cities. I included our Visioneering peer cities, cities that Visioneers traveled to on official visits, and a few others. The result, shown nearby, is not pretty. (Click on charts for larger versions, or click here to use the interactive visualization)

    wichita-peer-job-growth-2007-2014-01

    If we look at job creation starting in 1990, Wichita lags behind our Visioneering peers, but not behind all the peer cities that I selected. Wichita does better than Springfield, Illinois, for example. I chose to include that as a peer metropolitan area because that’s the immediate past city that Gary Plummer worked in. He was president of that city’s Chamber of Commerce, and is now president of the Wichita Chamber. Note the position of Springfield: Last place.

    In next-to-last place we see Wichita Falls, Texas. I chose to include it because it is the immediate past home of Tim Chase. He was the head of Wichita Falls Economic Development Corporation. He’s now president of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development for the Wichita area.

    In second-to-last place we see Pittsburgh, which I added because Visioneering leaders recently made a visit there.

    Then, we come to Wichita.

    If we look at job creation since 2007, the year before Sorensen wrote his op-ed, we find Wichita in a common position: Last place in job creation, and by a wide margin except for two cities. One is Wichita Falls, where our present GWEDC president recently worked. The other city that barely out-performs Wichita is Chattanooga, which I included because Visioneering civic leaders recently traveled there to learn from that city.

    Over the decades in which Wichita has performed poorly, there have been a few common threads. Brewer has been council member or mayor since 2001. Economic development director Allen Bell has been working for the city since 1992. City Attorney Gary Rebenstorf has served for decades. At Sedgwick County, manager William Buchanan has held that position for more than two decades. On the Sedgwick County Commission, Dave Unruh has been in office since 2003, and Tim Norton since 2001. It is these officials who have presided over the dismal record of Wichita.

    Wichita City Manager Robert Layton has had less time to influence the course of economic development in Wichita. But he’s becoming part of the legacy of Wichita’s efforts in economic development.

    toolbox-29058_640

    These leaders often complain that Wichita does not have enough “tools in the toolbox” to compete with other cities in economic development. Wichita does, however, have and use incentives. The State of Kansas regularly offers incentives so generous that Kansas business leaders told the governor that they value these incentives more than they would value elimination of the state corporate income tax.

    Incentives: We have them. They haven’t worked for us.

    It is nearly certain that this year Wichitans will be asked to approve a higher sales tax in order to pay for many things, including the more aggressive approach to job creation that Brewer mentioned. Based on the track record of our elected officials and bureaucrats, we need to do this: Before approving the tax and expenditures, Wichitans need to take a long look at the people who have been in charge, and ask what will be different going forward.

  • In Wichita, ‘free markets’ used to justify business welfare

    Wichita City HallIncredibly, a prominent Wichita business uses the free market to justify its request for economic development incentives. A gullible city council buys the argument.

    At the December 10, 2013 meeting of the Wichita City Council, Bombardier LearJet received an economic development incentive that will let it avoid paying some property taxes on newly-purchased property. The amount involved in this particular incident is relatively small. According to city documents, “the value of the abated taxes on that investment could be as much as $1,980.”

    (Bombardier receives millions each year in other government subsidies; see Kansas PEAK program: corporate welfare wrapped in obfuscation and Bombardier Learjet should pay just a little for examples.)

    While the amount of the incentive granted in the December 10 action is small, the meeting was useful in letting us understand how some prominent members of Wichita’s business community have distorted the principles of free markets and capitalism. As illustrated by the fawning of Wichita City Council Member and Vice Mayor Pete Meitzner (district 2, east Wichita) and others, elected officials have long forsaken these ideas.

    Bombardier’s argument

    Don Pufahl, who is Director of Finance at Bombardier Learjet, addressed the council regarding this matter. He started his remarks on a positive note, telling the council “There are various aspects to a free-market economy. There’s the rule of law, there’s property rights, and another major aspect is incentives.”

    We must be careful when using the term incentive. In a free-market economy or capitalism, incentive refers to the motivation of the possibility of earning profits. Another incentive — the flip side of the same coin — is avoiding losses. That’s why capitalism is called a profit-and-loss system. The losses are just as important as profits, as losses are a signal that the economic activity is not valued, and the resources should be shifted to somewhere else where they are valued more highly.

    But in the field of economic development as practiced by government, incentive means something given to or granted to a company. That’s what the representative from Bombardier meant by incentive. He explained: “One party, in this case, the local government, uses incentives for another party, in this case our company, to invest in the community.”

    A few thoughts: First, Bombardier is not investing in the community. The company is investing in itself.

    Second, the free market system that the speaker seemed to praise is a system based on voluntary exchange. That flows from property rights, which is the fundamental idea that people own themselves and the product of their labor, and are free to exchange with others, or to not exchange. But when government uses incentives, many people do not consent to the exchange. That’s not a free market system.

    Third, an important part of a free market system is market competition. That is, business firms compete with others for customers. They also compete with other business firms for resources needed for production, such as capital. When government makes these decisions instead of markets, we don’t have a free market system. Instead, we have cronyism. Charles G. Koch has described the harm of cronyism, recently writing: “The effects on government are equally distorting — and corrupting. Instead of protecting our liberty and property, government officials are determining where to send resources based on the political influence of their cronies. In the process, government gains even more power and the ranks of bureaucrats continue to swell.”

    In the same article Koch wrote: “We have a term for this kind of collusion between business and government. It used to be known as rent-seeking. Now we call it cronyism. Rampant cronyism threatens the economic foundations that have made this the most prosperous country in the world.” (Charles G. Koch: Corporate cronyism harms America)

    The representative from Bombardier also said that the city’s incentives would reduce Bombardier’s investment risk. There is little doubt this is true. What has happened, however, is that the risk has not been eliminated or reduced. It has merely been shifted to the people of Wichita, Sedgwick County, the Wichita public school district, and the State of Kansas. When government does this on a piecemeal basis, this is called cronyism. When done universally, we call this socialism.

    We can easily argue that actions like this — and especially the large subsidies granted to Bombardier the by state — increase the risk of these investments. Since the subsidies reduce the cost of its investment, Bombardier may be motivated to make risky investments that it might otherwise not make, were it investing its own funds (and that of its shareholders).

    The cost of Bombardier’s investments, and 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 these. We don’t know who they are. But we need an economic development strategy that creates an environment where these young entrepreneurial firms have the greatest chance to survive. (See Kansas economic growth policy should embrace dynamism and How to grow the Kansas economy.)

    Now the city and Bombardier will say that these investments have a payoff for the taxpayer. That is, if Bombardier grows, it will pay more in taxes, and that constitutes “profit” for taxpayers. Even if we accept that premise — that the city “profits” from collecting taxes — why do we need to invest in Bombardier in order to harvest its “profits” when there are so many companies that pay taxes without requiring subsidy?

    Finally, the representative from Bombardier said that these incentives are not a handout. I don’t see how anyone can say that and maintain a straight face.

    wichita-chamber-job-growth-2013-12
    It would be one thing if the Wichita area was thriving economically. But it isn’t. We’re in last place among our self-identified peers, as illustrated in Wichita and Visioneering peers job growth. Minutes from a recent meeting of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development, holds this paragraph: “As shown in the Chart below Wichita economy suffered the largest loss of employment among peer cities and has not seen any signs of rebounding as the other communities have. Wichita lost 31,000 jobs during the recession principally due to the down turn in general aviation.”

    Following is a fuller representation of the Bombardier representative’s remarks to the council.

    There are various aspects to a free-market economy. There’s the rule of law, there’s property rights, and another major aspect is incentives.

    One party, in this case, the local government, uses incentives for another party, in this case our company, to invest in the community.

    As the company moves forward to invest in the community, those investments are not without risk. … Your incentives allow us to offset some of that risk so that we can move forward with those investments, which hopefully create new jobs and also then also improves the quality of life in our community. … These incentives are not a handout. They are a way that the local government uses such things to offset some of the risk that is involved in local companies as they invest in the community, bring jobs to the community, and improve the community overall.


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  • Employment visualization updated; Wichita still in last place

    city-council-chambers-sign-smallWichita continues to lag behind its peer cities in job growth, according to data from the Bureau of Labor Statistics.

    The interactive visualization referenced below lets you select any number of metropolitan areas (or states) and track progress in job growth.

    employment-growth-visioneering-2013-12

    The nearby chart shows Wichita and its Visioneering peer cities (click on charts for larger versions). For about the last ten years Wichita has been in last place in job growth, and by no small margin. It wasn’t always that way. Results like this should cause us to question our economic development strategies and the people and organizations we have charged with managing this effort.

    wichita-chamber-job-growth-2013-12

    This poor performance of Wichita compared to peers has not gone unnoticed. Minutes from a recent meeting of Greater Wichita Economic Development Coalition, the primary organization in charge of economic development, holds this paragraph: “As shown in the Chart below Wichita economy suffered the largest loss of employment among peer cities and has not seen any signs of rebounding as the other communities have. Wichita lost 31,000 jobs during the recession principally due to the down turn in general aviation. To improve our local economy we have to add new economic engines to the aviation sector thereby insulating the regional economy from future massive fluctuations.”

    Data is from the Bureau of Labor Statistics of the U.S. Department of Labor. Visualization created by myself using Tableau Public. Click here to open the visualization in a new window.

    kansas-employment-sample-2013-12

  • Wichita can advocate for government transparency, or not

    Wichita City HallGovernment should be responsive to citizens when they make legitimate requests for records. Wichita should not hide behind non-profit entities and tortured interpretations of the law in order to keep records secret.

    When the Wichita City Council considers renewing its contract with Go Wichita Convention and Visitors Bureau, the council has another opportunity to decide whether it is truly in favor of open government and citizen access to records.

    Go Wichita, along with the Wichita Downtown Development Corporation and Greater Wichita Economic Development Coalition, contends that it is not a “public agency” as defined in Kansas law, and therefore does not have to fulfill records requests. Mayor Carl Brewer and most council members are comfortable with this tortured interpretation of the law. Inexplicably, the Sedgwick County District Attorney agreed with the city.

    I, along with many others, believe the city’s interpretation of the law is incorrect. So do many in the Kansas Legislature, and action may be taken there to eliminate the ability of Wichita to keep public records from the public. We can call it Gary’s Law, after Wichita City Attorney Gary Rebenstorf, who provides the legal advice the city relies upon.

    The legal stance of the City of Wichita certainly isn’t good public policy. Citizens should be able to learn how taxpayer money is spent. Agencies like Go Wichita, WDDC, and GWEDC need to open their check registers as has Sedgwick County, for example.

    In the meantime, there is nothing to prevent the city from asking Go Wichita to act as though it was a public agency as defined in the Kansas Open Records Act and to fulfill records requests. This would let Wichitans know that the city is truly interested in open and transparent government.

    It’s easy to bluster about open government. In one of his “State of the City” addresses, Mayor Brewer promoted the city’s efforts in accountability and transparency, telling the audience: “We must continue to be responsive to you. Building on our belief that government at all levels belongs to the people. We must continue our efforts that expand citizen engagement. … And we must provide transparency in all that we do.” Many other city documents mention transparency as a goal for the city.

    Earlier this year, the city won an award for government transparency regarding the city’s website. In a statement, the city manager said the city “will continue to empower and engage citizens by providing information necessary to keep them informed on the actions their government is taking on their behalf.”

    Until the city asks that these quasi-governmental organizations subject themselves to the Kansas Open Records Act, the message from the City of Wichita is clear: Accountability and transparency is provided on the city’s terms, not on citizens’ terms and the law.

    Why open records are important

    labette-community-college-donationHere’s an example as to why this issue is important: In 2009 Mike Howerter, a trustee for Labette Community College, noticed that a check number was missing from a register. Based on his inquiry, it was revealed that the missing check was used to reimburse the college president for a political contribution. While it was determined that the college president committed no crime by making this political contribution using college funds, this is an example of the type of information that citizens may want regarding the way public funds are spent.

    This is the type of information that I have requested. It is what is needed to perform effective oversight. It is what the City of Wichita has decided to avoid.

    This item in the past

    Two years ago I asked that the city council approve the contract with Go Wichita only after adding a provision that Go Wichita consider itself a public agency under the Kansas Open Records Act. Following are a few notes from the meeting (video may be viewed here or at the end of this article):

    Discussion of this matter at the meeting reveals that city staff believes that the annual reports filed by Go Wichita along with periodic checks by city staff are sufficient oversight.

    City Attorney Gary Rebenstorf cited the law regarding enforcement of the Kansas Open Records Act, stating that the Kansas Attorney General or the courts is the next step to seek enforcement of KORA. While Rebenstorf is correct on the law, the policy of the Kansas Attorney General is to refer all cases to the local district attorney. The Kansas AG will not intervene in this matter.

    Randy Brown, who is chair of the Kansas Sunshine Coalition for Open Government and former opinion page editor of the Wichita Eagle was at the meeting and spoke on this matter. In his remarks, Brown said “It may not be the obligation of the City of Wichita to enforce the Kansas Open Records Act legally, but certainly morally you guys have that obligation. To keep something cloudy when it should be transparent I think is foolishness on the part of any public body, and a slap in the face of the citizens of Kansas. By every definition that we’ve discovered, organizations such as Go Wichita are subject to the Kansas Open Records Act.”

    Brown said that he’s amazed when public officials don’t realize that transparency helps build trust in government, thereby helping public officials themselves. He added “Open government is essential to a democracy. It’s the only way citizens know what’s going on. … But the Kansas Open Records Act is clear: Public records are to be made public, and that law is to be construed liberally, not by some facile legal arguments that keep these records secret.”

    He recommended to the council, as I did, that the contract be contingent on Go Wichita following the Kansas Open Records Act.

    Misunderstanding the scope of KORA

    In remarks from the bench Wichita City Council Member James Clendenin (district 3, southeast and south Wichita) asked the city manager a series of questions aimed at determining whether the city was satisfied with the level of service that Go Wichita has provided. He then extended that argument, wondering if any company the city contracts with that is providing satisfactory products or service would be subject to “government intrusion” through records requests. Would this discourage companies from wanting to be contractors?

    First, the Kansas Open Records Act does not say anything about whether a company is providing satisfactory service to government. That simply isn’t a factor, and is not a basis for my records request to Go Wichita. Additionally, the Kansas Open Records Act contains a large exception, which excepts: “Any entity solely by reason of payment from public funds for property, goods or services of such entity.” So companies that sell to government in the ordinary course of business are not subject to the open records law. Go Wichita is distinguished, since it is almost entirely funded by taxes and has, I believe, just a single client: the City of Wichita.

    Finally, we should note that the open records law does not represent government intrusion, as Clendenin claimed. Open records laws offer citizens the ability to get an inside look at the working of government. That’s oversight, not intrusion.

    Is the city overwhelmed with records requests?

    Wichita City Council Member Pete Meitzner (district 2, east Wichita) asked that there might be a workshop to develop a policy on records requests. He expressed concern that departments might be overwhelmed with requests from me that they have to respond to in a timely fashion, accusing me of “attempt to bury any of our departments in freedom of information acts [sic].”

    In making this argument, Mr. Meitzner might have taken the time to learn how many records requests I’ve made to the city. The answer, to the best of my recollection, is that I have made one request this year to the city citing the open records act. It was denied. I have made perhaps a half-dozen informal requests, most of which I believe were fulfilled consuming just a few moments of someone’s time.

    As to his concern over the costs of fulfilling records requests: The law allows for government and agencies to charge fees to fulfill requests. They often do this, and I have paid these fees. But more important than this, the attitude of council member Meitzner is typical of elected officials — disdain for providing records to citizens. Government should be responsive to citizens. As Randy Brown told the council, government should welcome opportunities to share information and be open and transparent. The city should not hide behind non-profit entities and torture the law in order to keep records secret.

    Wichita’s attitude towards citizens

    Randy Brown’s remarks are an excellent summation of the morality and politics of the city’s action and attitude regarding this matter.

    The council ought to be wary of taking legal advice from city attorney Gary Rebenstorf. He has been wrong several times before when issuing guidance to this council regarding the Kansas Open Meetings Act, which is similar to the Open Records Act. He’s taken the blame and apologized for these violations. He was quoted in the Wichita Eagle as saying “I will make every effort to further a culture of openness and ensure that like mistakes are avoided in the future.”

    But Rebenstorf’s attitude, as gauged accurately by Randy Brown, is to rely on facile legal arguments to avoid complying with the clear meaning and intent of the law.

    Why city council members would be opposed to what I have asked is unknown. Perhaps they know that among the public, issues relating to open records generally aren’t that important. Citizens ought to note the actions of Mayor Brewer. The mayor could easily put this matter to an end. He speaks of wanting to have open and transparent government, but when it comes time to make a tough call, his leadership is missing.

    It’s becoming evident that Kansans need a better way to enforce compliance with the Kansas Open Records Act. It seems quite strange that local district attorneys are placed in a quasi-judicial role of deciding whether citizen complains are justified. If citizens disagree — and nearly everyone I’ve talked to thinks that the opinion issued by the Sedgwick County District Attorney is this matter is nonsensical and contrary to the letter and spirit of the law — they find themselves in the position of suing their government. That is costly, and citizens soon realize their own taxpayer dollars are used against them.

    Wichita logic open records

  • Wichita economic development not being managed

    The Wichita Eagle has reported that Wichita has increased its granting of property tax exemptions in recent years. (Wichita doubles property tax exemptions for businesses, October 20, 2013) Buried in the story is the really important aspect of public policy. In his reporting, Bill Wilson wrote:

    The Eagle asked the city last week for an accounting of the jobs created over the past decade by the tax abatements, a research project that urban development staffers have yet to complete.

    “It will take us some time to pull together all the agenda reports on the five-year reviews going back to 2003. That same research will also reveal any abatements that were ‘retooled’ as a result of the five-year reviews,” city urban development director Allen Bell said. “I can tell you that none of the abatements were terminated.”

    wichita-economic-development

    One might have thought that the city was keeping records on the number of jobs created on at least an annual basis for management purposes, and would have these figures ready for immediate review. But apparently that isn’t the case.

    We need to recognize that because the city does not have at its immediate disposal the statistics about job creation, it is evident that the city is not managing this effort. Or, maybe it just doesn’t care.

    This is a management problem at the highest level. In January when the city council awarded city manager Robert Layton a large raise, the praise from council members was effusive. This means one of several things: (a) that the mayor and city council have not asked for these job creation numbers, or (b) city council members don’t care about the numbers, or (c) they’re not interested in knowing the numbers. There could be other explanations, but all point to a lack of bureaucratic management and political oversight.

    I wonder why the city officials didn’t explain that according to their analysis and way of thinking, these tax abatements don’t have a cost. When presented to the council, each abatement opportunity is generally accompanied by a benefit-cost analysis that purports to show that the city, county, school district, and state gain more in tax revenue than they forego from the abatement. Does this extra government revenue create jobs?

    In any case, the number of jobs stemming from our economic development efforts is small. In his State of the City Address for 2012, Mayor Carl Brewer said that the city’s efforts in economic development had created “almost 1000 jobs.” While that sounds like a lot of jobs, that number deserves context. According to estimates from the Kansas Department of Labor, the civilian labor force in the City of Wichita for December 2011 was 192,876, with 178,156 people at work. This means that the 1,000 jobs created accounted for from 0.52 percent to 0.56 percent of our city’s workforce, depending on the denominator used. This minuscule number is dwarfed by the normal ebb and flow of other economic activity. (The mayor didn’t mention job creation figures in his 2013 address.)

    The case of InfoNXX

    Here’s an example of property tax abatements granted for which the city received little in return. In 2005, with great fanfare, the city announced that its economic development recruitment efforts had landed InfoNXX, an operator of call centers. The council agenda report of November 15, 2005 recommended that the council approve a letter of intent for tax abatements. The report stated this:

    The Greater Wichita Economic Development Coalition has worked with a national site consultant to recruit a new company to Wichita. InfoNXX, Inc., major provider of telephone directory assistance and enhanced information services to leading communications companies, businesses and consumers located principally in the United States, United Kingdom, France, and Italy. As a result of the recruitment effort, InfoNXX will locate a large customer service center in the former MCI Building, near Rock Road and K-96 in northeast Wichita, and hire over 900 customer care representatives. As an economic development incentive, the City offered InfoNXX Industrial Revenue Bonds (IRBs) and property tax abatement on equipment and furnishings, subject to City Council approval.

    RECOMMENDED ACTION: Approve a Letter of Intent to InfoNXX Inc. for Industrial Revenue Bonds in an amount not-to-exceed $6 million, subject to the Letter of Intent conditions, for a term of six-months, approve a 100% tax abatement on all bond-financed property for an initial five-year period plus an additional five years following City Council review, and authorize the application for a sales tax exemption on bond-financed property.

    On December 13, 2005 the council approved the ordinance granting the tax abatements.

    Fast forward to the February 15, 2011 council agenda packet. The five year initial property tax abatement granted in 2005 was over, and the council could extend it for another five years if the committed goals had been met. The agenda report gave this summary for capital investment: “Purchase furniture, fixtures and equipment for a capital investment of $6 million.” Results, according to city documents, were “Invested $7,331,379 million [sic] in FF&E.”

    For job creation, the 2005 commitment was “Create 944 new jobs in five years.” Results, according to city documents, were “Created 870 new jobs; current job level is 185.”

    InfoNXX was short of its job creation commitments, but the city used a loophole to grant a one-year extension of the tax abatement. That one-year extension was never the subject of further consideration, as InfoNXX changed its name, and in January 2012 closed the Wichita facility that was the subject of these incentives.

    It’s unfortunate for Wichita and the InfoNXX employees that the facility closed. The important public policy consideration is that we learn from this. So, when Wichita counts the number of jobs created, does it adjust for short-lived jobs like these?

    The answer, I believe, is no. We don’t adjust our job creation statistics, and we don’t learn.

    gwedc-office-operations

    In fact, we don’t even keep current. GWEDC — that’s the Greater Wichita Economic Development Coalition credited with recruiting InfoNXX to Wichita — doesn’t update its website to reflect current conditions. InfoNXX closed its facility in Wichita in 2012, and as we saw above, city documents said that at its peak the company employed 870 in Wichita. As of today, here’s what GWEDC says on a page titled Office Operations:

    Wichita hosts over a dozen customer service and processing centers – including a USPS Remote Encoding Center (985 employees), InfoNXX (950), T-Mobile (900), Royal Caribbean (700), Convergys (600), Protection One (540), Bank of America (315) and Cox Communications (230.) (emphasis added)

    So the official Wichita-area economic development agency proclaims the existence of a company that no longer exists in Wichita, and claims a job count that the company never achieved. This is beyond careless negligence. This is malpractice.

    The USPS Remote Encoding Center mentioned? It’s being closed this year.

    Going forward

    In his State of the City address for 2013 the Wichita mayor lamented the fact that Wichita has no dedicated funding source for economic development. It’s likely that Wichitans will be asked to approve increased taxes for economic development, as well as for many other things we want like a new central library, new water and sewer pipes, improved public transit, and downtown development.

    But before Wichita officials ask for more taxes so there can be more spending, they need to convince us that they care about measuring and managing results. They haven’t shown this so far.

  • Wichita job growth under the Visioneering/Brewer regime

    Wichita has set ambitious goals in job growth, but it doesn’t seem that the Visioneering program has produced results. But apparently Wichita government officials are satisfied.

    One of the benchmarks of Visioneering is “Exceed the highest of the annual percentage job growth rate of the U.S., Omaha, Tulsa, Kansas City and Oklahoma City.”

    In May, Suzie Ahlstrand of the Wichita Chamber of Commerce presented Wichita City Council members with the benchmark documents, but didn’t elaborate on these in her presentation.

    I can understand her reluctance to focus on these numbers. They’re not good. Tremendous opportunities have been lost and wasted, and people have suffered. Yet, city leaders seem satisfied. Thrilled, even.

    An interactive visualization holding job numbers for Wichita and our Visioneering peers is available at Wichita job growth and Visioneering peers. Or, watch the video below (or click here to watch at YouTube, which may work better for some people).