Voice For Liberty

Tag: Janet Miller

Wichita City Council Member Janet Miller

  • In Wichita, a problem with government ethics

    Wichita and Kansas lag behind states like Illinois and New Jersey in laws regarding ethical behavior by elected officials. Last week Wichita saw a lesson in how Wichita Mayor Carl Brewer and a majority of the Wichita City Council failed a test in government ethics. Besides Brewer, long-serving council members Jeff Longwell (district 5, west and northwest Wichita) and Lavonta Williams (district 1, northeast Wichita), as well as Vice Mayor Janet Miller (district 6, north central Wichita) have also displayed a callous disregard for ethical behavior by government officials.

    Today I appeared on the KAKE Television public affairs program This Week in Kansas and explained the recent incidents that ought to cause Wichitans and Kansans to insist on reform regarding government ethics. Pay-to-play laws would be a good start. See Wichita and Kansas need pay-to-play laws.

    For earlier reporting on this matter, see Wichita City Council can’t judge airport contract and Wichita fails ethics test.

  • Wichita fails ethics test

    Yesterday Wichita Mayor Carl Brewer and a majority of the Wichita City Council failed a test, showing that Wichita elected officials, except for one, aren’t interested in ethical behavior.

    The problem is worse than portrayed in a Wichita Eagle editorial, which commented on the appearance of the mayor’s and council’s action. In Wichita, we don’t have the mere appearance of a problem, we have an actual and real problem.

    The problem, in a nutshell, is that the mayor and all members of the city council except for Michael O’Donnell (district 4, south and southwest Wichita) don’t see that’s a problem for them to award no-bid contracts to campaign contributors. They also don’t see that it’s wrong to preside over a hearing in a quasi-judicial manner and award contracts to a campaign contributor. See For Wichita government, an ethics tipping point and Wichita City Council can’t judge airport contract.

    In some states and cities, the routine action of the mayor and council members would be illegal. It ought to be illegal in Kansas. There was no discussion from the council bench about this, and none in the executive session council members took.

    Coincidentally, a group spoke during the public agenda portion of Tuesday’s council meeting about their concern for what they say is the corrupting influence of campaign money in politics.

    None of the group stayed to observe the city council provide a lesson in how most of Wichita’s elected officials willfully ignore the issues the group is concerned with. From the bench Vice Mayor Janet Miller (district 6, north central Wichita) spoke approvingly of the group’s cause. But last year Miller voted for a no-bid contract to be awarded to her campaign contributors, and she voted in Tuesday’s airport contract hearing.

    The behavior of Mayor Brewer and most members of the council gives new urgency for the Kansas Legislature to pass pay-to-play laws, which generally prohibit officeholders from voting on matters that financially benefit their campaign contributors. We can call it “Carl’s Law.” See Wichita and Kansas need pay-to-play laws.

    An example of a pay-to-play law is a charter provision of the city of Santa Ana, in Orange County, California, which states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”

    Kansas has no such law. Certainly Wichita does not, where pay-to-play is seen by many citizens as a way of life — the Wichita way.

  • For Wichita government, an ethics tipping point

    Tomorrow Wichita Mayor Carl Brewer and the Wichita City Council will make a decision that will let the city learn the ethics and character of its elected officials.

    The issue is whether the mayor and five of six council members will decide to preside in a quasi-judicial matter over a case involving a major campaign contributor and personal friend. Now we know that the mayor has also intervened on behalf of Key Construction, recommending exclusively that the firm be hired for a construction project.

    My reporting in Wichita City Council can’t judge airport contract details the campaign contributions made by executives of Key Construction and their spouses.

    On Sunday Bill Wilson of the Wichita Eagle reported on the letter Brewer sent to a retail store planning to build in Wichita. Key was the only construction company the mayor recommended. (Letter from mayor at center of construction bid controversy.)

    Wichita has shown it is willing to disregard the taxpayer in order to award out-sized profits to Key Construction. The most recent scheme — which didn’t pan out for Key — had the council willing to overspend by $1.3 million through a no-bid contract planned for Key. Only the action of council members Pete Meitzner (district 2, east Wichita) and Michael O’Donnell (district 4, south and southwest Wichita) prevented the award of the no-bid contract and saved Wichita taxpayers $1.3 million.

    Despite this, Mayor Brewer wrote in his Key Construction recommendation letter: “Key is known for their consistent quality construction, budget control and on schedule delivery.”

    But in February, Wilson of the Eagle reported on “city-financed downtown parking garages that spiraled well over budget.” Continuing, Wilson wrote: “The most recent, the 2008 WaterWalk Place garage built by Key Construction, an original partner in the WaterWalk project, came in $1.5 million over budget at almost $8.5 million. That’s the biggest parking garage miss, according to figures from the city’s office of urban development, although the 2004 Old Town Cinema garage built by Key Construction came in almost $1 million over budget at $5.225 million.” (Wichita city manager proposes eliminating no-bid construction projects.)

    With a record like this, we have to wonder why Mayor Brewer would recommend Key Construction. Besides the campaign contributions and fishing trips, that is.

    The Wichita mayor’s behavior gives new urgency for the Kansas Legislature to pass pay-to-play laws, which generally prohibit officeholders from voting on matters that financially benefit their campaign contributors. We can call it “Carl’s Law.” See Wichita and Kansas need pay-to-play laws.

    Until such laws are in place, it is up to the personal judgment and character of the mayor and each city council member who has accepted campaign funds from Key Construction to decide whether they should act as judge in a case where Key is a party and stands to benefit financially. The decisions they make will let us know the future course for government ethics in Wichita. They either take a stand for good government, or fall farther into the morass of political cronyism.

  • Wichita City Council can’t judge airport contract

    On Tuesday the Wichita City Council will conduct a hearing for review of the award of a contract for the construction of the new Wichita Airport terminal. But because of relationships between nearly all council members — especially Wichita Mayor Carl Brewer — and one of the parties to the dispute, the city council should not participate in this decision.

    The contract, worth about $100 million, was awarded to Dondlinger and Sons and its partner. Dondlinger has built many large projects, including INTRUST Bank Arena. But the city then ruled that Dondliger’s bid is “unresponsive.” The reason is that Dondlinger may not have met bid requirements regarding disadvantaged and minority business enterprises.

    The firm next in line to receive the contract is Key Construction of Wichita. If the city council finds against Dondllinger, Key gets the contract, presumably. That’s the source of the problem the city council faces, as Key is heavily involved in politics, with its executives and their spouses often making the maximum allowed campaign contributions to nearly all members of the council. Personal relationships may play a role, too.

    For the mayor and current council members, here is my tabulation of how much Key-associated persons made to each member’s most recent campaign:

    Carl Brewer: $4,500
    Jeff Longwell (district 5, west and northwest Wichita): $4,000
    Lavonta Williams (district 1, northeast Wichita): $3,000
    Pete Meitzner (district 2, east Wichita): $2,500
    Janet Miller (district 6, north central Wichita): $1,500
    James Clendenin (district 3, southeast and south Wichita): $1,000
    Michael O’Donnell (district 4, south and southwest Wichita): $0

    Is there a pattern to these contributions? That is, does Key make contributions to candidates with a specific political philosophy, such as conservatism or liberalism? Of the top three contributors, two have distinctly liberal ideas about taxation and spending, while the other is touting conservative credentials as he campaigns for another office. Patterns like this suggest that the contributions are made to gain access to officeholders, or for favorable consideration when the donor asks the council to vote to give it money or contracts. Key Construction does that a lot.

    Wichita mayor Carl Brewer with major campaign donor Dave Wells of Key Construction.

    The political influence of Key Construction extends beyond campaign contributions, too. Mayor Brewer’s personal Facebook profile has a photo album holding pictures of him on a fishing trip with Dave Wells of Key Construction.

    These political investments have paid off for Key Construction, as it has received a number of no-bid contracts over the years. Last August the council decided to award Key a no-bid contract to build the parking garage that is part of the Ambassador Hotel project. The no-bid cost of the garage was to be $6 million, according to a letter of intent. All council members except Michael O’Donnell (district 4, south and southwest Wichita) voted for the no-bid contract to Key Construction, although Mayor Carl Brewer was absent. It is likely that he would have voted with the majority, however.

    Later the city decided to place the contract for bid. Key Construction won the bidding, but for a price some $1.3 million less.

    What citizens need to know is that the city council, except O’Donnell, was willing to spend an extra $1.3 million on a project awarded to a politically-connected construction firm.

    So should the Wichita City Council make the decision on the airport contract? City documents don’t indicate whether Tuesday’s hearing is of a quasi-judicial nature, as it is sometimes when the council rules on certain matters involving appeal of decisions made by city authorities. But the council is being asked to make decisions involving whether discretion was abused or whether laws were improperly applied.

    That sounds a lot like the role of judges. In 2009 the U.S. Supreme Court ruled that, in the words of legal watchdog group Judicial Watch, “… significant campaign contributions or other electoral assistance pose a risk of actual bias. Writing for the majority, Justice Anthony Kennedy said: ‘Just as no man is allowed to be a judge in his own cause so too can fears of bias arise when a man chooses the judge in his own cause.’”

    Judicial Watch also noted “The ruling will likely affect judges in 39 states that elect them — including Washington, Texas and California — from presiding over cases in which their campaign contributions could create a conflict of interest. The nation’s judicial code has long said that judges should disqualify themselves from proceedings in which impartiality might reasonably be questioned, but the Supreme Court ruling is the first to address hefty election spending.”

    The mayor and council members are not judges. But they’re being asked to make a judge-like decision. If held to the same standards as the U.S. Supreme Court says judges must follow, Mayor Brewer and the five council members who accepted campaign contributions from Key Construction need to recuse themselves from Tuesday’s decision on the Wichita Airport construction contract. A similar argument can be made for city manager Robert Layton and all city employees. Directly or indirectly they serve at the pleasure of the council.

    Finally, this episode is another example of why Wichita and Kansas need pay-to-play laws.

  • Wichita City Council sets hotel tax election date

    In response to a successful petition effort aimed at overturning a Wichita charter ordinance, the Wichita City Council last week considered an agenda item that gave the council two choices: Rescind the ordinance, or set a date for an election. The charter ordinance concerns rebating a portion of the Ambassador Hotel’s guest tax collections back to the hotel for its own use.

    The most important issue to the council seemed to be holding the election on a date convenient to the hotel developers. The recommendation from Sedgwick County Election Commissioner Tabitha Lehman was that the election, if the council decides to hold it, should be on February 28, 2012.

    During discussion, Council Member Pete Meitzner (district 2, east Wichita) wanted to move the election to an earlier date so as to “avoid community discourse and debate.”

    Council Member Janet Miller (district 6, north central Wichita) asked a series of questions designed to produced a response that if the election were held earlier, and if that would make it more expensive, would the developer have to pay these extra costs? (The agreement with the city states hotel developers are responsible for the cost of the election, which has been estimated at $50,000.)

    She also expressed concern over “dragging this out,” and said she wants to “get it over with as soon as we can so that we can move on.” She assumed that the developer would like to have the issue resolved as soon as possible.

    Vice Mayor Lavonta Williams (district 1, northeast Wichita) asked the hotel developers if they would agree to pay extra to hold the election sooner. David Burk appeared on behalf of the hotel development team, and said he would like to see the election held as soon as possible, and would pay additional for that. He said it is “hard on our community,” and that “each day that goes by we’re casting a bad sign on future development in downtown, and in Wichita in general.”

    Council Member Jeff Longwell (district 5, west and northwest Wichita) framed the issue as the election commissioner needing more time “beyond what is required by law.” He suggested that the item be delayed until later in the meeting and that the election commissioner be summoned to appear before the council. A motion was made to that effect, and it passed.

    When the election item was continued later in the meeting, Longwell engaged Commissioner Lehman in a series of questions attempting to manage the election calender for her. Lehman explained the various reasons as to why February 28 is a reasonable date for the election. The Kansas Secretary of State’s office has agreed with this assessment, she added.

    In his remarks, Mayor Carl Brewer said: “This is an issue that really — there’s a lot of things that are going on in the dynamics of this entire thing. And when we have a special election, I believe that this council and the community deserve the right to be able to have it — have an election as quickly as possible. By doing that, it eliminates a lot of turmoil inside the community, unrest. But trying to be fair and giving individuals a fair — coming and going — with a fair process, so that every citizen can be heard. And so the sooner you can actually do it, the better off that we are.”

    The mayor made a motion to set the election date as February 28, and it passed with all members except Williams voting in favor.

    Discussion

    This episode provided another example reinforcing the realization that Wichita has a city council — with the exception of one member, Michael O’Donnell (district 4, south and southwest Wichita) — that is entirely captured by special interests. In this case the special interests are a hotel development team consisting of partners who have made significant campaign contributions to many members of the Wichita city council.

    An example: While city attorney Gary Rebenstorf explained to the council that one option was to rescind the ordinance, there was no discussion of that among council members.

    Another example was the measures the council went through to try and get an early election date, something that many observers feel favors the hotel developers. In particular, it was disconcerting to see Longwell attempt to micromanage the Sedgwick County Election Commissioner. He has no business doing that, especially when his motive is so transparent.

    And why would the council be so eager to please the hotel developers and their desired election date? Don’t the desires and concerns of the other side have any relevance? To this council, the answer is no.

    Perhaps the worst impression to come out of this meeting is that many Wichita city council members simply don’t care much for what citizens think. It’s hard to pick the most telling example, but Meitzner’s concern that we need to “avoid community discourse and debate” ranks right at the top. To Meitzner, it seems that things like discussing and debating issues are harmful, if they would get in the way of satisfying his campaign contributors, or his vision for molding the future of Wichita from the top down.

    The rest of the council members, with the exception of O’Donnell, deserve scorn as well.

    Then there are the mayor’s remarks. He spoke of giving individuals a “fair process” so that they may be heard, but also that the election needs to be held quickly. These two goals contradict each other.

    Mayor Brewer also repeated his practice of making vague criticisms of his opponents without being specific, this time referring to “lot of things that are going on in the dynamics of this entire thing.” Brewer — perhaps in an effort to maintain a sense of decorum or apparent integrity — usually does not mention the names of those he criticizes or specifics of the issues involved. This allows him to appear noble, but without being accountable to actual people — and on the specifics of actual issues — for the things he says.

  • Wichita’s political class

    From June.

    The discussion at yesterday’s Wichita City Council meeting provided an opportunity for citizens to discover the difference in the thinking of the political class and those who value limited government and capitalism.

    At issue was Mid-Continent Instruments, Inc., which asked the city for a forgivable loan of $10,000. It received the same last week from Sedgwick County. According to city documents, the State of Kansas through its Department of Commerce is also contributing $503,055 in forgivable loans, sales tax exemptions, training grants, and tax credits.

    At the city council meeting Clinton Coen, a young man who ran for city council earlier this year, spoke against this measure, which he called corporate welfare.

    In response to Coen, Council Member James Clendenin (district 3, south and southeast Wichita) asked if we should ignore companies that want to do business here, or should we allow them to leave? Implicit in the question is that the threat dangled by Mid-Continent is real: that unless the city gives them $10,000, they will expand somewhere else. How citizens and council members feel about this issue largely depends on their perceived genuineness of this threat.

    When Coen recommended that the city cut spending, Clendenin said “I can guarantee you, from what I have seen, this city government has cut a tremendous amount of spending.” When pressed by Coen for examples of cuts, he demurred. Clendenin also said that the $10,000 is needed to show the city’s commitment to the company.

    Perhaps coming to the rescue of her younger and less experienced colleague, Council Member Janet Miller asked City Manager Bob Layton how much has been cut from the budget, and he replied “we’ve cut over $20 million in the general fund over three years.”

    In saying that, Layton is using the language and mind-set of bureaucrats and politicians. In this world, it’s a cut if spending does not rise as fast as planned or hoped for. As you can see from the accompanying chart, Wichita general fund spending has not been cut in recent years. It has risen in each of the last three years, and plans are for it to keep rising.

    Wichita general fund spending

    This illustrates a divide between the thinking of the political class and regular people. Blurring the distinction between plans and reality lets politicians and bureaucrats present a fiscally responsible image — they cut the budget, after all — and increase spending at the same time. It’s a message that misinforms citizens about the important facts.

    Miller also praised the return on investment the city receives for its spending on economic development, citing Wichita State University Center for Economic Development and Business Research and the cost-benefit calculations it performs. These calculations take the cost of providing the incentives and compare it to the returns the city and other governmental entities receive.

    What is rarely mentioned, and what I think most people would be surprised to learn, is that the “returns” used in these calculations is manifested in the form of increased tax revenue. It’s not like in the private sector, where business firms attempt to increase their sales and profits by providing a product or service that people willingly buy. No, the city increases its revenue (we can’t call it profit) by collecting more taxes.

    It’s another difference between the political class and everyone else: The political class craves tax revenue.

    Aside from this, the cost-benefit calculations for the city don’t include the entire cost. The cost doesn’t include the county’s contribution, the majority of which comes from residents of its largest city, which is Wichita. Then, there’s the half-million in subsidy from the state, with a large portion of that paid for by the people of Wichita.

    But even if you believe these calculations, there’s the problem of right-sizing the investment. If an investment of $10,000 has such glowing returns — last week Sedgwick County Commissioner Jim Skelton called the decision a “no-brainer” — why can’t we invest more? If we really believe this investment is good, we should wonder why the city council and county commission are so timid.

    Since the applicant company is located in his district, Council Member Pete Meitzner (district 2, east Wichita), praised the company and the state’s incentives, and made a motion to approve the forgivable loan. All council members except Michael O’Donnell (district 4, south and southwest Wichita) voted yes.

    Going forward

    While the political class praises these subsidies and the companies that apply for them, not many are willing to confront the reality of the system we’re creating. Some, like O’Donnell and Sedgwick County Commissioner Richard Ranzau, have recognized that when government is seen as eager to grant these subsidies, it prompts other companies to apply. The lure of a subsidy may cause them to arrange their business affairs so as to conform — or appear to conform — to the guidelines government has for its various subsidy programs. Companies may do this without regard to underlying economic wisdom.

    We also need to recognize that besides simple greed for public money, businesses have another reason to apply for these subsidies: If a publicly-traded company doesn’t seek them, its shareholders would wonder why the company didn’t exercise its fiduciary duty to do so. But this just perpetuates the system, and so increasing amounts of economic development fall under the direction of government programs.

    While most people see this rise in corporate welfare as harmful — I call it a moral hazard — the political class is pleased with this arrangement. As Meitzner said in making his motion, he was proud that Wichita “won out” over the other city Mid-Continent Instruments considered moving to.

    Another harmful effect of these actions is to create a reputation for having an uncompetitive business environment. Not only must businesses of all types pay for the cost of these subsidies, some face direct competition by a government-subsidized competitor. This is the situation Wichita-area hotels face as a result of the city granting millions in subsidy to a hotel developer to build a Fairfield Inn downtown.

    Even those not in direct competition face increased costs as they attempt to hire labor, buy supplies, and seek access to capital in competition with government-subsidized firms. Could this uneven competitive landscape be a factor that business firms consider in deciding where to locate and invest?

    We can expect to see more government intervention in economic development and more corporate welfare. Former council member Sue Schlapp in April took a job with the Kansas Department of Commerce. Her job title is “senior constituent liaison,” which I think can be better described as “customer service agent for the corporate welfare state.” Her office is in Wichita city hall.

    Increasingly we see politicians and bureaucrats making decisions based on incorrect and misleading information, such as claiming that the city’s general fund budget has been cut when spending has increased. Sometimes they are fed incorrect information, as in the case of a presentation at Sedgwick County Commission that bordered on fraudulent.

    Sometimes, I think, officeholders just don’t care. It’s easiest to go along with the flow and not raise ripples. They participate in groundbreakings and get their photograph in the newspaper and on television that way. Which brings up an important question: why do none of our city’s mainstream media outlets report on these matters?

  • Kansas and Wichita quick takes: Monday October 10, 2011

    AFP meeting features former Congressman Tiahrt. Tonight’s (October 10th) meeting of Americans for Prosperity, Kansas features former United States Representative Todd Tiahrt speaking on “How regulations affect our economy.” There will be a presentation followed by a group discussion. Tiahrt represented the fourth district of Kansas from 1995 to 2011. He is presently our states Republican National Committeeman. … This free meeting is from 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

    Government planning. In an address from 1995, Gerald P. O’Driscoll Jr. spoke on Friedrich Hayek and his ideas on government interventionism. His conclusion should be a caution to those — such as Wichita City Council members and city hall bureaucrats — who believe they can guide the economic future of Wichita through interventions such as TIF districts, grants, forgivable loans, tax credits, tax abatements, sweetheart lease deals, eminent domain, zoning, and other measures: “In all his work, Hayek focused on the self-ordering forces in society. Hayek’s fellow Nobel laureate Kenneth Arrow has suggested that ‘the notion that through the workings of an entire system effects may be very different from, and even opposed to, intentions is surely the most important intellectual contribution that economic thought has made to the general understanding of social processes.’ The Arrovian formulation echoes Adam Smith’s observation that, as a consequence of the interaction of conflicting interests, man is ‘led by an invisible hand to promote an end which was no part of his intention.’ The classic Hayekian statement visualizes economics as analyzing ‘the results of human action but not of human design.’ The economic conception of society is an affront to the conceit of those who would impose order from above. Economic forces defy the will of authoritarians seeking to mold social outcomes. Human beings respond to each government intervention by rearranging their lives so as to minimize its disruptive effects. The resulting outcome may thus be different from and even opposed to the intention of the intervention.” The full lecture is at The Meaning of Hayek.

    Longwell joins Democrats to defeat Republicans. While Wichita city council members are officially non-partisan — meaning they don’t run for election as members of political parties — most members are closely identified with a party. Some, like Jeff Longwell (district 5, west and northwest Wichita), see themselves as leaders in their parties, the Republican Party in this case. Last week, however, Longwell joined with the three Democrats on the Wichita City Council to oppose the votes of three Republicans. (There was a nuance to that vote, but nonetheless Longwell voted with the Democrats.) On Sunday he teamed with left-wing Council Member Janet Miller (district 6, north central Wichita) to write an op-ed that appeared in The Wichita Eagle (Grant helps region). The piece approved increased federal government spending, increased federal government control, and increased centralized planning.

    Optimal size of government. Is government too large? Yes, and trying to determine an optimum size for government is impossible. So says a new policy briefing paper from the Center for Global Liberty and Prosperity, a project of the Cato Institute.

    Can We Determine the Optimal Size of Government? by James A. Kahn. In the executive summary, we can read this: “The massive spending programs and new regulations adopted by many countries around the world in response to the economic crisis of 2008 have drawn renewed attention to the role of government in the economy. Studies of the relationship between government size and economic growth have come up with a wide range of estimates of the ‘optimal’ or growth-maximizing size of government, ranging anywhere between 15 and 30 percent of gross domestic product (GDP).

    This paper argues that such an exercise is ill conceived. Modern growth economics suggests, first, that government policies leave their long-term impact primarily on the level of economic activity, not the growth rate; and, second, that the sources of this impact are multi-dimensional and not necessarily well measured by conventional measures of ‘size,’ such as the share of government spending in GDP.

    In fact, measures of economic freedom more closely relate to per capita GDP than do simple measures of government spending. The evidence shows that governments are generally larger than optimal, but because the available data include primarily countries whose governments are too large, it cannot plausibly say what the ideal size of government is. The data can realistically only say that smaller governments are better, and suggest that the optimal size of government is smaller than what we observe today.”

    Steve Jobs. What is his legacy? From Richard A. Viguerie: “Steve Jobs, Apple Computer’s late founder and CEO, gave the vast majority of his hundreds of thousands of dollars in political contributions to liberal Democrats, such as Nancy Pelosi, Ted Kennedy and California Governor Jerry Brown. Yet it is hard to think of a 21st Century entrepreneur who has done more to empower individuals and free them from the demands of the liberal collective than Steve Jobs did through the invention of the iPod, and iPad and the popularization of personal computing. Through the innovative products Apple brought to market, Jobs proved the collectivist premise of John Kenneth Galbraith’s The Affluent Society to be both absolutely true and utterly wrong.” … More at Steve Jobs’ Conservative Legacy.

    Lieutenant Governor in Wichita. This week’s meeting (October 14th) of the Wichita Pachyderm Club features Lieutenant Governor Jeff Colyer, M.D. speaking on “An update on the Brownback Administration’s ‘Roadmap for Kansas’ — Medicaid Reform” … Upcoming speakers: On October 21st: N. Trip Shawver, Attorney/Mediator, on “The magic of mediation, its uses and benefits.” … On October 28th: U.S. Representative Tim Huelskamp, who is in his first term representing the Kansas first district, speaking on “Spending battles in Washington, D.C.” … On November 4th: Chris Spencer, Vice President, Regional Sales Manager Oppenheimer Funds, speaking on “Goliath vs Goliath — The global battle of economic superpowers.” … On November 11th: Sedgwick County Commission Members Richard Ranzau and James Skelton, speaking on “What its like to be a new member of the Sedgwick County Board of County commissioners?” … On November 18th: Delores Craig-Moreland, Ph.D., Wichita State University, speaking on “Systemic reasons why our country has one of the highest jail and prison incarceration rates in the world? Are all criminals created equal?”

    When governments cut spending. Advocates of government spending argue that if it is cut, the economy will suffer. Is this true? Is government spending necessary to keep the economy functioning? “There is no historical credence to this very popular idea that cutting spending now will actually slow down the economy and actually lead to a double dip recession or an increase in economic stagnation.” This is the conclusion of Dr. Stephen Davies in a short video. As one example — he cites others — Davies explains that there was fear in the United States that the end to massive government spending during World War II would lead to a return of the Great Depression. “In fact, as we know, exactly the opposite happened. As the defense spending of the war years was wound down, and as government was pulled back in other ways as well under the Truman and Eisenhower administrations, the result was an enormous period of sustained growth in the United States and other countries that went through a similar process.” Davies says that economic growth accelerates when government reduces its spending. Reasons include the greater productivity of private sector spending as compared to government spending, and increased confidence of private sector investors. … The video is from LearnLiberty.org, a project of Institute for Humane Studies.

  • Wichita City Council campaign contributions and Douglas Place/Ambassador Hotel

    Many people make campaign contributions to candidates whose ideals and goals they share. This is an important part of our political process. But when reading campaign finance reports for members of the Wichita City Council, one sees the same names appearing over and over, often making the maximum allowed contribution to candidates. Their spouses also contribute.

    Looking at the candidates these people contribute to, we find that often there’s no commonality to the political goals and ideals of the candidates. Some contribute equally to liberal and conservative council members. At first glance, it’s puzzling.

    But then, when these people appear in the news after having received money from the Wichita City Council, it snaps into place: These campaign donors are not donating to those whose ideals they agree with. They’re donating so they can line their own pockets.

    All told, parties associated with the proposed Douglas Place/Ambassador Hotel project contributed at least $24,500 to current city council members during their most recent campaigns. This is split between two groups of people: executives associated with Key Construction and their spouses, and David Burk and his wife.

    Those associated with Key Construction contributed $16,500, and the Burks contributed $8,000.

    At a recent city council meeting, Mayor Brewer, along with council members Janet Miller and Lavonta Williams expressed varying degrees of outrage that people would link their acceptance of campaign contributions with their votes and conduct as officeholders.

    But Burk and some others often make the maximum contribution to all — or nearly all — candidates, even those with widely varying political stances. How else can we explain Burk’s (and his wife’s) contributions to big-government liberals like Miller and Williams, and also to conservatives like Jeff Longwell, Pete Meitzner, and former council member Sue Schlapp?

    Burk and the others must be expecting something from these campaign contributions. There’s no other reasonable explanation. Candidates and officeholders who accept these contributions know that Burk and his business partners are likely to appear before the council asking for money. If they find this distasteful or repugnant, they could simply refuse to accept Burk’s contributions, as well as those from people associated with Key Construction. But they don’t.

    This is what writers like Randal O’Toole mean when he wrote “TIF puts city officials on the verge of corruption, favoring some developers and property owners over others.”

    Some states and cities have “pay-to-play” laws which govern conduct of officeholders who have accepted campaign contributions from those seeking government contracts. An example is a charter provision of the city of Santa Ana, in Orange County, California, which states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.”

    If Wichita had such a law, the city council couldn’t muster a quorum of its members to vote on the Douglas Place project, so pervasive are the campaign contributions.

    Contributions by Douglas Place participants

    In Wichita city elections, individuals may contribute up to $500 to candidates, once during the primary election and again during the general election. As you can see in this table complied from Wichita City Council campaign finance reports, spouses often contribute as well. So it’s not uncommon to see the David and DJ Burk family contribute $2,000 to a candidate for their primary and general election campaigns. That’s a significant sum for a city council district election campaign cycle. Click here for a compilation of campaign contributions made by those associated with the Douglas Place/Ambassador Hotel project.

    Council Member Jeff Longwell (district 5, west and northwest Wichita), in his second term as council member and with his heart set on becoming the next mayor, leads the pack in accepting campaign contributions from parties associated with the Douglas Place project. For his most recent election, he received $4,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife. Total from parties associated with the Douglas Place project: $6,000.

    Council Member Lavonta Williams (district 1, northeast Wichita), who is also vice mayor, received $5,000 from parties associated with Douglas Place/Ambassador Hotel: $3,000 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

    Wichita Mayor Carl Brewer received $5,000 from parties associated with Douglas Place/Ambassador Hotel: $4,500 from parties associated with Key Construction, and $500 DJ Burk, David Burk’s wife.

    Council Member Janet Miller (district 6, north central Wichita) received $3,500 during her 2009 election campaign from parties associated with Douglas Place/Ambassador Hotel: $1,500 from parties associated with Key Construction, and $2,000 from David Burk and his wife.

    For his 2011 election campaign, newly-elected Council Member Pete Meitzner (district 2, east Wichita) received $3,500 from parties associated with Douglas Place/Ambassador Hotel: $2,500 from parties associated with Key Construction, and $1,000 from David Burk and his wife.

    For his 2011 election campaign, newly-elected Council Member James Clendenin (district 3, southeast and south Wichita) received $1,500 from parties associated with Douglas Place/Ambassador Hotel: $1,000 from parties associated with Key Construction, and $500 from David Burk and his wife.

    This article has been updated to include information from campaign finance reports filed in January 2012.

  • At Wichita City Council, facts are in dispute

    Some Wichita City Council members, including Mayor Carl Brewer criticize people who speak at council meetings for using inaccurate information. Although most citizens who speak are willing to take questions at the time they present their testimony, most council members will not engage in dialog with them, instead choosing to level their criticism at a time when the speakers are not able to defend themselves.

    So let’s take a look at some of the statements made by city council members at the September 13th meeting, where the council approved by a six to one vote a package of incentives for the Douglas Place project, a downtown hotel.

    James Clendenin

    At the September 13th meeting, James Clendenin (district 3, south and southeast Wichita) said “I heard a lot of misinformation, and I heard a lot of good information.” He seemed to be most interested in the jobs that the hotel will create. Referring to the contention that the hotel will create 100 jobs, he said: “That’s all people ask me about — how many jobs. Just tell me jobs. I want to know jobs — jobs, jobs, jobs — people want to know jobs. I know that when Old Town was started 20 years ago, no jobs where in that part of the city. 20 years later we have jobs. … But I see people employed 20 years later that would never would have been employed unless a developer stepped up.”

    I can understand the concern for jobs and how council members want to be seen doing things that they believe will create jobs. But it’s difficult to see how this hotel will create new jobs, except perhaps on the several times each year that the hotel might be used to support the larger conventions the city hopes to draw.

    Instead, it’s much more likely that the hotel will simply draw most of its customers from the pool of people already planning to come to Wichita. And this hotel will have a big advantage in competing for these existing customers, especially those looking for a high-end hotel. As reported in the Wichita Eagle, the hotel developers said that without the city subsidy, the rooms would cost $250 per night. Their plans, however, are to offer the rooms for $150.

    So with the help of taxpayers, the developers get to offer a $250 product for $150. That’s quite a competitive boost. My research shows that currently there are four downtown Wichita hotels offering rooms at that rate or higher. I wonder how they will feel when undercut by a taxpayer-subsidized competitor? (First, the owners of these hotels will have to realize that they, too, have received substantial subsidy.)

    As to the impact of subsidies like Tax increment financing, or TIF: The important paper Tax Increment Financing: A Tool for Local Economic Development by Richard F. Dye and David F. Merriman comes to these conclusions:

    If the use of tax increment financing stimulates economic development, there should be a positive relationship between TIF adoption and overall growth in municipalities. This did not occur. If, on the other hand, TIF merely moves capital around within a municipality, there should be no relationship between TIF adoption and growth. What we find, however, is a negative relationship. Municipalities that use TIF do worse.

    We find evidence that the non-TIF areas of municipalities that use TIF grow no more rapidly, and perhaps more slowly, than similar municipalities that do not use TIF. (emphasis added)

    Later, the paper concluded: “TIF subsidies might be helping growth within the TIF district, but they are hurting growth outside the district by a larger amount.”

    This paper addresses economic growth, which is not, strictly speaking, equivalent to jobs, although the two are closely related. A paper that does address the impact of TIF on jobs is from Paul F. Byrne of Washburn University. The title of the report is Does Tax Increment Financing Deliver on Its Promise of Jobs? The Impact of Tax Increment Financing on Municipal Employment Growth, and in the abstract we find this conclusion regarding the impact of TIF on jobs:

    Increasingly, municipal leaders justify their use of tax increment financing (TIF) by touting its role in improving municipal employment. However, empirical studies on TIF have primarily examined TIF’s impact on property values, ignoring the claim that serves as the primary justification for its use. This article addresses the claim by examining the impact of TIF adoption on municipal employment growth in Illinois, looking for both general impact and impact specific to the type of development supported. Results find no general impact of TIF use on employment. However, findings suggest that TIF districts supporting industrial development may have a positive effect on municipal employment, whereas TIF districts supporting retail development have a negative effect on municipal employment. These results are consistent with industrial TIF districts capturing employment that would have otherwise occurred outside of the adopting municipality and retail TIF districts shifting employment within the municipality to more labor-efficient retailers within the TIF district. (emphasis added)

    I would ask that council member Clendenin and the others read research like this before they come to their conclusions.

    Furthermore, we might ask the hotel developers if they are going to run their hotel as a jobs program, or are they going to seek to minimize the use of labor, employing only as much as is required to run the hotel the way they want? In a competitive marketplace, this is what businesses are forced to do, if they want to stay in business.

    Finally, the contention of Clendenin that there are people who are employed only because of Old Town is laughable.

    Pete Meitzner

    Newly-elected council member Pete Meitzner (district 2, east Wichita) seemed impressed and secure in that the hotel developers have agreed to personally guarantee any shortfall in property tax revenue below what is necessary to cover the payments on the bonds the city is issuing under tax increment financing.

    This guarantee is quite unlikely to ever be tapped, and is an example of offering something at little risk and no cost to the developers. Then, gullible city council members lap it up.

    Here’s how the arithmetic works: According to city documents, the projected debt service required to pay the TIF bonds in 2016 is $340,000. For the same year, the projected revenue from the hotel’s property tax that is applicable to the TIF bond repayments is $262,000. (Remember these property taxes are taxes the hotel must pay, no matter what they’re used for.)

    For the hotel owners to become in a position where they would have to pay to cover a shortfall, the value of the hotel would have to drop by 23 percent. That’s not likely to happen, and if something like that did, it would be a signal of severe problems across the entire city, or country, for that matter.

    Jeff Longwell

    Speaking from the bench when he could not be rebutted by citizens, Council Member Jeff Longwell criticized citizens who testified, saying they are using “wrong numbers.” Longwell’s criticisms deserve scrutiny.

    During the council meeting, there were several ratios presented as a way to evaluate the hotel, and Longwell confused them. He said: “You can argue if it’s 6 to 1, or 5 to 1, but I’ll tell you, even if it’s as low as 2.6 to 1 return, folks, that’s a great investment.”

    The 6 to 1 ratio is the ratio of private investment to public investment, as calculated by the city.

    The 2.6 to 1 return is a payback to the city, based on expected increased tax revenues compared to the city’s cost. This is calculated by the Wichita State University Center for Economic Development and Business Research.

    The 6 to 1 ratio is based on balance sheet concepts. It refers to assets.

    The 2.6 to 1 ratio is a calculation from an income statement. It refers to income relative to expenses.

    The only conclusion to draw is that Longwell is sorely confused. Perhaps worse, Allen Bell, Wichita’s Director of Urban Development had just explained these numbers in response to a question by Meitzner. But Bell didn’t correct Longwell. Neither did the city manager, who undoubtedly knows the difference between the two sets of numbers.

    Besides this, the 6 to 1 ratio is calculated using an extremely narrow view of the city’s investment in the project, and an overly expansive assessment of the developer’s investment. It ignores many subsidies being provided to the developers, some at city expense, and also at the expense of state and federal taxpayers.

    Further, for that ratio to make any sense, you have to assume city ownership of the hotel. “We” — meaning the city of Wichita — don’t own the “6” part of the ratio. The hotel developers do. It’s not a public asset.

    Janet Miller

    Like Clendenin and Longwell, Council Member Janet Miller (district 6, north central Wichita) criticized the inaccurate information presented by citizens: “A lot of the information that was shared this morning was not accurate. … I’m not going to be able to address everything.”

    Here’s an example of the reasoning of Miller. Referring to the issue of tax money being diverted to the Douglas Place project, she said: “Other taxes, such as the historic and federal tax credits are not property taxes, they’re not sales taxes, those are credits toward income taxes. So unless you’re paying the income taxes those are not your taxes.”

    Here Miller is ignoring the effect of tax credits on the budgets of states and the federal government. Tax credits reduce the revenue of the issuing body by the amount of the credit. So when the state of Kansas issues $3,800,000 in tax credits to the Douglas Place project, it reduces revenue to the state by that same amount.

    Now if the state were to reduce its spending by that same amount, specifically based on the issuance of this tax credit, we’d be left with no impact on the state’s budget.

    But the state isn’t going to to that — it never has. So taxpayers across the state must make up the difference — directly contradicting Miller’s contention that “those are not your taxes.”

    The same reasoning applies to the federal tax credits of $3,500,000 that this project is seeking.

    Miller also contended that the guest taxes paid by this hotel are “not your taxes.” According to the city’s budget, the purpose of the Tourism and Convention Fund, which is funded by the guest tax, is to “support tourism and convention, infrastructure, and promotion of the City.” Its outlined priorities are to be “debt service for tourism and convention facilities, operational deficit subsidies, and care and maintenance of Century II.”

    So, yes, I would say that the guest tax is “our” tax. There are those who are asking for millions to renovate Century II. Since this hotel’s guest tax — most of it — will not be going to that goal, someone else has to pay.

    Further, to the extent that the new hotel draws guests from other hotels, that guest tax is being diverted away from the Tourism and Convention Fund. (Of course, we have to remember that many other hotels have a similar deal to benefit from their guest taxes. Last year the city gifted the Fairfield Inn & Suites Wichita Downtown, part of the heavily subsidized WaterWalk project, $2,500,000, to be paid back by the hotel’s guest tax receipts.)

    Miller also took issue with those who contend that the original plan called for Key Construction to build the parking garage: “While there was a general contractor, and that part of the project would not have been bid out, the rest of it would have been bid thorough the city’s process. So the vast majority, except for about 6 percent of the project, would have been bid out through the city’s bid project.”

    Miller is specifically contradicted by the letter of intent that she voted for at the August 9th meeting of the council. The letter states: “Douglas Place LLC, will acquire and rehabilitate the Douglas Building and will construct the parking garage and urban park.”

    Does she think that the principals of Key Construction — who are part of the development team of the Douglas Place project, and who have made heavy campaign contributions to Miller and others — would let someone else build the garage?

    Furthermore, at the same meeting City Attorney Gary Rebenstorf said it was the developer’s preference that the garage be built without competitive bidding — again contradicting Miller’s contention that the garage would be bid on.

    And if we take Miller’s statement at face value — “the vast majority, except for about 6 percent of the project, would have been bid out” — does this imply that 94 percent of the project will be bid out? This would imply that the hotel itself would be placed for public bid, and I don’t think there’s been any consideration of that.

    Miller also addressed the issue of special assessment financing. That is part of the Douglas Place project, with $1,500,000 to be used for facade improvement and lead paint and asbestos removal. Miller said: “Just as a reminder: The facade improvement and asbestos removal expenses, all of that — those dollars are being repaid through special assessments. For those of you who are critical of special assessment financing, I would encourage you to look at your annual tax bill and see if it says special assessment on there. If it does, we have loaned your developer money to put in public improvements around your property. There’s a very large share of Wichita’s outstanding debt that is developers’ specials. So if we want to be critical of developers specials, that’s gonna be a really big conversation that will include all the housing developers in this city and how those dollars are lent and repaid over years.”

    There’s a big distinction between the way special assessment financing is used for new development as compared to this project. On new developments, special assessment financing is used to pay for public improvements like streets, sewers, water mains, and storm water drainage. After they are built, these assets are then owned by the city. They become city assets, but were paid for by the developer.

    That’s not going to happen with this hotel. Its owners will not deed over the building’s facade to the city. It will remain a private asset.

    Furthermore, in new development, the assets that special assessment financing is used to pay for support development that generally ends up on the tax roles, providing the tax revenue stream that city council members promote as good. But not so with this hotel. Being in a TIF district, its property taxes — except for 30 percent — do not benefit the city, as they are used to benefit the developers.