Personal income in Wichita and Kansas has declined. Today the Bureau of Economic Analysis, an agency of the United States Department of Commerce, released real personal income for the states and metropolitan areas. [1. Bureau of Economic Analysis. Real Personal Income for States and Metropolitan Areas, 2016. Available at https://www.bea.gov/newsreleases/regional/rpp/2018/pdf/rpp0518.pdf.] The data released today is through the complete year 2016. For the state of Kansas, real personal income declined from $137,975 million in 2015 to $137,307 in 2016, a decline of 0.5 percent. For the entire country, the growth was 1.1 percent. Among the states and DC, Kansas ranked forty-fifth…
There is a movement to increase the transparency of government in Kansas, but there's much to be done, starting with attitudes. One of the major economic development programs in Kansas is PEAK, or Promoting Employment Across Kansas. [1. Weeks, Bob. PEAK, or Promoting Employment Across Kansas. Available at https://wichitaliberty.org/kansas-government/peak-promoting-employment-across-kansas/.] It provides benefits to companies when they expand their operations in Kansas, or sometimes when they merely threaten to leave. The recent expansion by Spirit AeroSystems is reported to benefit from $23.5 million in PEAK cash. [1. Jerry Siebenmark. New facility part of Spirit’s new jobs, expansion plan. Available at http://www.kansas.com/news/business/aviation/article201082884.html.]…
The use of PEAK, a Kansas economic development incentive program, varies widely among counties. An economic development incentive program in Kansas is PEAK, or Promoting Employment Across Kansas. This program allows companies to retain 95 percent of the payroll withholding tax of employees. [1. Weeks, Bob. PEAK, or Promoting Employment Across Kansas Available at https://wichitaliberty.org/kansas-government/peak-promoting-employment-across-kansas/.] Data is available for fiscal years 2010 through 2015. For this period, we can see that the application or use of PEAK varies widely among counties. Here is data for the two largest counties in Kansas: Johnson County: 135 projects, 17,643 new or retained jobs,…
Wichita economic development efforts viewed in context. Greater Wichita Partnership is the organization with primary responsibility for economic development in the Wichita area. Data provided by GWP shows that since 2004, GWP takes credit for creating an average 1,847 jobs per year through its economic development efforts. [1. Greater Wichita Partnership - 2017 Investment Request. Part of the February 15, 2017 Sedgwick County Commission meeting. Available at https://goo.gl/hk6RHB.] To determine whether this is an impressive amount, we need context. Over the past ten years the labor force for the Wichita MSA has averaged 314,877 each month (in May 2017 it…
The evaluation of economic development incentives in Wichita and Kansas requires thinking at the margin, not the entirety. When considering the effect of economic development incentives, cities like Wichita use a benefit-cost analysis to determine whether the incentive is in the best interests of the city. The analysis usually also considers the county, state, and school districts (although these jurisdictions have no say over whether the incentive is granted, with a few exceptions). The idea is that by paying money now or forgiving future taxes, the city gains even more in increased tax collections. This is then pitched as a…
The Wichita City Council approves economic development incentives, but citizens should not be proud of the discussion and deliberation. Today's meeting of the Wichita City Council saw the council discuss and approve economic development incentives for a project in downtown Wichita. The item contemplated economic development incentives for redevelopment of an empty building in downtown Wichita to become a Hilton Garden Inn Hotel. The incentives being considered were a Community Improvement District (CID), Industrial Revenue Bonds (IRB), a parking agreement, and a skywalk easement. The discussion by the council was useful for revealing two members who are opposed to some…
In this excerpt from WichitaLiberty.TV: Can we reform economic development in Wichita to give us the growth we need? View below, or click here to view at YouTube. Originally broadcast May 10, 2015. (more…)
Having contributed $5,000 to persuade Wichita voters to raise the sales tax, a company now seeks exemption from paying any sales tax. This week the Wichita City Council will consider an economic development incentive for Foley Industries, Inc. The company is asking to be relieved from paying nearly all property taxes on a proposed expansion, and also asks to avoid sales taxes on purchases related to the expansion. The action the council will consider is a "letter of intent," not the actual granting of the incentive. In practice, these letters are as good as having the actual ordinance in hand.…
An incentives deal for a Wichita company illustrates a capacity problem and the need for reform. Next week the Wichita City Council will consider an economic development incentives package intended to enable a local manufacturing company to expand its operations. City documents give some detail regarding the amounts of property tax to be forgiven on an annual basis, for a period of up to ten years. In the past, city documents have often mentioned other incentive programs that will benefit the company, but that information is missing. Other sources mention two state programs -- PEAK and HPIP -- the company…
Wichita politicians, economic development officials, and civic leaders bemoan the lack of incentives Wichita can offer. A deal under consideration illustrates what is really available. Next week the Wichita City Council will consider a forgivable loan to Figeac Aero North America related to its expansion of its Wichita facility. Following is an explanation of the various incentives and benefits planned for this company. Figeac will receive forgivable loans of $250,000 each from Sedgwick County and the City of Wichita, with the State of Kansas adding $500,00, although it is not clear if that is a grant or forgivable loan. City…
The Kansas STAR bonds program provides a mechanism for spending by autopilot, without specific appropriation by the legislature. Under the State of Kansas STAR bonds program, cities sell bonds and turn over the proceeds to a developer of a project. As bond payments become due, incremental sales tax revenue make the payments. It's only the increment in sales tax that is eligible to be diverted to bond payments. This increment is calculated by first determining a base level of sales for the district. Then, as new development comes online -- or as sales rise at existing merchants -- the increased…
Claims of a reformed economic development process if Wichita voters approve a sales tax must be evaluated in light of past practice and the sameness of the people in charge. If these leaders are truly interested in reforming Wichita's economic development machinery and processes, they could have started years ago using the generous incentives we already have. At a conference produced by Kansas Policy Institute on Friday September 19, a panel presented the "nuts and bolts" of the jobs portion of the proposed Wichita sales tax that voters will see on their November ballots. I asked a question: Listening to…
The case of Beechcraft and economic development incentives holds several lessons as Wichita considers a new tax with a portion devoted to incentives. In December 2010 Kansas Governor Mark Parkinson announced a deal whereby the state would pay millions to Hawker Beechcraft to keep the company in Kansas. The company had been considering a purported deal to move to Baton Rouge, Louisiana. (Since then the company underwent bankruptcy, emerged as Beechcraft, and has been acquired by Textron.) The money from the state was to be supplanted by grants from the City of Wichita and Sedgwick County. At the time, the…
